Company takes on royalty board

Royalty Logic challenges law that created board

NEW YORK -- Royalty Logic hopes to challenge the very existence of the U.S. Copyright Royalty Board, which sets rates for compulsory licenses under federal copyright law.

The company filed a motion Tuesday with the federal Appeals Court in Washington, D.C., which will be hearing the webcasters' appeal of the CRB's rate decision from last year, asking for permission to file additional legal arguments. The arguments challenge the constitutionality of the law that created the CRB.

Royalty Logic was a party in the webcaster rate trial. The company wanted the authority to compete with SoundExchange, which the CRB denied. SoundExchange is the only organization currently authorized to license and collect royalties for sound recording owners, musicians and vocalists under section 114 of the Copyright Act.

That section authorizes the public performance (e.g., streaming) of sound recordings over non-interactive digital services as long as certain royalties are paid and other conditions are met. The CRB is authorized by law to set those rates through a two-year rate-setting process.

The deadline for filing legal briefs with the Appeals Court has passed. Therefore, Royalty Logic is asking the court to permit the filing of additional arguments for consideration.

If permitted to file the brief, Royalty Logic will argue that the law creating the CRB violates the appointments clause of the U.S. Constitution. In other words, Congress improperly permitted the Librarian of Congress, which controls the Copyright Office, to appoint the three Copyright Royalty Judges.

If a court held that the law is unconstitutional, it is conceivable that decisions made by the CRB would be null and void.