HR 1417 will help webcasters
p2pnet.net News:- Small Internet radio stations are facing improved odds of survival after the House of Representatives approved a bill, yesterday, to make it more affordable for them to negotiate royalty deals with music publishers and the recording, says the Webcaster Alliance here.
HR 1417 designed to get rid of the CARP panels, which caused so much trouble in determining licensing rates for online webcasters, has passed the House in a 406-0 vote.
It’ll replace the existing administrative construct within the US Copyright Office that determines copyright royalty rates and the distribution of related royalties under various compulsory licenses.
CARP panels were originally called the Copyright Royalty Arbitration Panels.
Now read on >>>>>>>>>>>
From Bill Evans - IMIRA
(Updated March 4, 2004)
Background
The Copyright Royalty Tribunal Reform Act of 1993 (P.L. 103-198) empowers the Librarian of Congress to convene Copyright Arbitration Royalty Panels, or ‘CARPs, whenever private negotiations among affected parties fail to establish rates or distribute royalties governing the commercial use of certain copyrighted works, such as movies and music.
In brief, critics of the existing CARP system offer the same general complaints:
- CARP decisions are unpredictable and inconsistent.
- Arbitrators lack appropriate expertise to render decisions, and frequently reflect either a “content” or user” bias.
- The process is unnecessarily expensive.
In response to these and other criticisms, the Subcommittee on Courts, the Internet, and Intellectual Property conducted a June 2002 oversight hearing regarding the CARP structure and process. The witnesses, including the Register of Copyrights, agreed that the system is dysfunctional and should be changed.
Subsequent to the hearing, the Subcommittee and the Copyright Office convened a government-industry roundtable on the subject, which included 32 participants who offered recommendations for improving the current system.
Expanded Summary
H.R. 1417, as reported by the Judiciary Committee, contains the following elements:
Copyright Royalty Judges (CRJ). Three Copyright Royalty Judges (CRJ) will preside over the new process. The three judges will possess different skill sets, but all three must have at least seven years of legal experience. One judge will be designated the Chief Judge (CCRJ) and will be required to have five years of adjudicatory experience. Of the two remaining judges, one will be required to have significant knowledge in copyright, while the other shall possess significant knowledge in economics. The Librarian will still be authorized to appoint each CRJ, but only for a term of six years. The terms shall be staggered every two years, with the first three CRJs holding two-, four-, and six-year terms respectively. The Librarian shall also still have the ability to remove any CRJ for cause.
The Chief Judge shall assign each subordinate CRJ to small claims proceedings and such other collateral and administrative proceedings that may arise. Although these proceedings may be conducted by one CRJ, all orders arising out of the proceedings must receive support from at least one other CRJ. Any dissenting CRJ shall have the opportunity to express their views in a written opinion.
All other proceedings shall be conducted on the same terms but heard en banc.
The addition of two CRJs alleviates the need for the two professional staffers under the bill as originally written.
Small Claimants in Distribution Proceedings. The “amount in controversy” dollar figure a claimant would pay is $10,000 or less. Any claimant who knowingly files a “bad faith” claim will be subject to a fine equaling the difference between the amount of the claim being sought as well as the actual royalty amount awarded.
Evidentiary Rules. In an attempt to balance competing interests over the application of the Federal Rules of Evidence (FRE), the bill permits expanded discovery in rate-setting proceedings that include the use of interrogatories and depositions. Furthermore, the bill incorporates a “relevant and material” standard similar to Federal Rule of Civil Procedure 104 that a CRJ shall apply to all requests that compel or expand discovery.
With regard to distribution proceedings, most participants assert that expansion of discovery would not be beneficial and might generate unnecessary costs. As such, the discovery rules under the current system regarding distribution proceedings remain intact.
Judicial Review. The Register of Copyrights testified that occasionally new and relevant information arises after a CARP judgment has been rendered. She advocates that the CRJ (s) retain jurisdiction to amend judgments in such cases. The bill therefore provides that a party may petition the CCRJ for a re-hearing in “exceptional” cases. The CCRJ is empowered to call for a re-hearing and to require that an opposing party respond.
Critics of the current standard of review note that it is not based on any existing body of law. Given this sentiment, and the changes that promote a more extensive fact-finding process, the consensus view among participants is that the Court of Appeals should use an “arbitrary-and-capricious” standard of review.
Costs. Most participants believe that the new proceedings should be financed with appropriated funds. The bill reflects this logic since Congress, as a matter of public policy, created the compulsory licenses that necessitated the existence of a rate-making and distribution mechanism.
Partial Distribution Requests. In distribution proceedings, the CRJs shall have the authority to authorize partial distributions of royalty amounts still in controversy to parties when all parties to a proceeding have agreed. To alleviate concerns by employees of the licensing division of the Library of Congress that they would be personally liable for making distributions to recipients in advance of a final determination, this bill relieves them of future liability.
Timing of the Licenses. It is important to preserve the integrity of privately negotiated agreements and to maintain the uniformity of the five-year extension of licensing periods. This bill therefore staggers the licenses accordingly. In the case of a rate-making determination, to avoid having an interim time period wherein no rate exists due to a license term having ended while a rate-making determination is still proceeding, the amendment ensures that the rate-making process is prospective in nature.
Petitions to Participate. In the past, parties who lacked standing in federal court were still granted the ability to participate in a CARP proceeding. In addition, parties who had not participated in the underlying proceeding sometimes participated in the related appellate proceeding.
In response, this bill requires parties, in their Petitions to Participate, to set forth sufficient evidence showing that they have a “significant interest” in the proceeding. If the CRJ determines that a party does have a “significant interest,” that party shall be allowed to participate.
Voluntary Settlement Period. The voluntary settlement period is set forth by statute in some of the rate-making licenses. In other rate-making licenses, it is prescribed by regulations; in the case of distribution licenses, it is not addressed.
In the interest of uniformity, this bill mandates that the CRJs must initiate a voluntary settlement period for all licenses. The duration of each license is a function of CRJ discretion.
Adoption of Privately Negotiated Agreements. In addition to the voluntary settlement period and the mandatory settlement period, which allow set times to focus solely on the goal of reaching a settlement agreement, this bill now allows for the CRJs to adopt at any time in the process a privately negotiated agreement. However, upon objection by a participant, and based upon the record before them, CRJs may reject such an agreement as the basis for statutory terms and rates or distribution.
Paper Proceedings. Upon motion by participants or the CRJ, a rate-making determination may be conducted via an all paper proceeding if: all participants to the proceeding agree, there exists no genuine issue of material fact, there is no need for evidentiary hearings, and in such other circumstances as the CRJ deems necessary.
Discovery Conference. Following submission of parties’ written direct statements, the CRJs shall meet with participants for the purpose of setting a schedule for conducting and completing discovery. This idea is based on FRE 26(b)(2).
Discovery. Any participant in a proceeding may upon written notice seek discovery of information relevant and material to a proceeding. A CRJ may deny such request only for good cause shown. Good cause shown incorporates in principle the following standards from the FRE: whether the discovery sought is unreasonably cumulative or duplicative, whether there has already occurred ample opportunity to obtain such information, and the burden or expense of the proposed discovery versus the likely benefits.
Hearsay. This bill rejects the treatment of hearsay under the FRE since this model inhibits the admission of evidence. Instead, this bill empowers the CRJs to admit a hearsay submission based on their discretion.
Mandatory Settlement Period. The bill includes a second statutory settlement period to promote settlements.
The bill includes a protective order mechanism by which such settlements will only be required to make public the rates and terms of the settlement. All privileged and confidential materials are otherwise redacted.
Consultations. The CRJs may consult the Copyright Office on any questions other than issues of fact. All questions of law made to the Copyright office shall be on the record. This includes, but is not limited to, all “novel questions.” In addition, this bill clarifies that the CRJs will be the sole triers of fact, and that any advice given by the Copyright Office in addition to that of “novel questions” will not be binding on the CRJs.
Precedent. The bill clarifies that the CRJs shall also be bound by any court decisions which reviewed determinations of the CRT, CARP, the Librarian, or CRJs. That includes decisions of the federal courts resulting from appeals of decisions from the CRT and the Librarian.
Appeals. The standard for appellate review is set forth in the Administrative Procedures Act (APA) (5 U.S.C. §706).
Enactment. Section 6 of the bill as it was originally drafted provided that the Act and amendments to the Act take effect 30 days after the date of enactment (with certain exceptions). Concern was expressed that if an appropriation is not forthcoming in a given cycle, there will be no funds to support the new CRJ system. Therefore, the effective date is changed to six months, after the date of enactment. The Librarian is given 90 days to appoint interim CRJs.
Pay for Staffers. The bill raises the pay of one of the staffers to GS -15 status.
Publication of Decisions. To alleviate concerns that the CRJs would be dictating how the Copyright Office operates, this bill mandates that the Librarian must post the requisite CRJ findings and decisions on the Internet. Additionally, the Librarian shall perform the ministerial act of publishing final CRJ decisions in the Federal Register.
