National Ass'n of Broadcasters v. Librarian of Congress

Decision Date26 June 1998
Docket Number96-1450 and 96-1451,Nos. 96-1449,s. 96-1449
Parties, 1998 Copr.L.Dec. P 27,795, 47 U.S.P.Q.2d 1385, 12 Communications Reg. (P&F) 1206 NATIONAL ASSOCIATION OF BROADCASTERS, Petitioner, v. LIBRARIAN OF CONGRESS and Register of Copyrights, Respondents, Canadian Claimants, et al., Intervenors. PROGRAM SUPPLIES, Petitioner, v. LIBRARIAN OF CONGRESS and Register of Copyrights, Respondents, National Association of Broadcasters, Intervenor. DEVOTIONAL CLAIMANTS, Petitioner, v. LIBRARIAN OF CONGRESS and Register of Copyrights, Respondents.
CourtU.S. Court of Appeals — District of Columbia Circuit

On Petitions for Review of an Order of the United States Department of Justice.

Dennis Lane argued the cause for petitioner Program Suppliers.

John I. Stewart, Jr. argued the cause for petitioner National Association of Broadcasters. Jacqueline E. Davis, Jessica R. Herrera and Henry L. Baumann were on brief.

Barry H. Gottfried argued the cause for petitioner Devotional Claimants. Clifford M. Harrington, John H. Midlen, Jr., George R. Grange, II, Richard M. Campanelli and W. Thad Adams, III, were on brief.

Bruce G. Forrest, Attorney, United States Department of Justice, argued the cause for the respondents. Frank W. Hunger, Assistant Attorney General, and William G. Kanter, Attorney, United States Department of Justice, were on the brief.

Timothy C. Hester argued the cause for intervenors Canadian Claimants, et al. Michele J. Woods, L. Kendall Satterfield and Victor J. Cosentino were on brief.

Ronald A. Schechter argued the cause for amicus curiae Joint Sports Claimants. Robert Alan Garrett, Philip R. Hochberg and Judith Jurin Semo were on brief.

Before: GINSBURG, HENDERSON and RANDOLPH, Circuit Judges.

KAREN LECRAFT HENDERSON, Circuit Judge:

A cable television system must pay royalty fees to the Register of Copyrights (Register) in exchange for the privilege of retransmitting to its subscribers certain copyrighted programming. See 17 U.S.C. § 111(d). The Librarian of Congress (Librarian) then distributes the collected royalties to the copyright owners. Id. § 111(d)(4). In Phase I of the distribution process, royalties are apportioned among eight classes of claimants. See Distribution of 1990, 1991 and 1992 Cable Royalties, 61 Fed.Reg. 55,653, 55,655 (1996) (hereinafter Librarian Decision). In Phase II awards are made to individual copyright owners within each of the classes. Id. If at either stage a controversy arises regarding the appropriate disposition of all or a portion of the royalties, the Librarian convenes a Copyright Arbitration Royalty Panel to propose a settlement. See 17 U.S.C. § 111(d)(4)(B); Majority Report of the Copyright Arbitration Royalty Panel (5/31/96) (hereinafter Panel Report). The panel's proposal is then forwarded to the Librarian, who, on the recommendation of the Register, adopts it or rejects it (in whole or in part) and distributes the disputed royalties accordingly. 17 U.S.C. § 802(f).

Each of the petitioners here is a disappointed class claimant challenging the Librarian's Phase I distribution of royalties collected for the years 1990, 1991 and 1992. Because our review of the Librarian's decision is limited, and because on our limited review none of the petitioners has established a basis to alter or modify its royalty award, we reject their challenges and affirm the Librarian.

I. BACKGROUND

In 1974 the Supreme Court ruled that a cable television system's retransmission of non-network copyrighted programing to markets distant from those to which it was originally broadcast was not a "performance" under the Copyright Act of 1909, 17 U.S.C. §§ 1 et seq., (hereinafter 1909 Act) and therefore an action for copyright infringement did not lie against the cable system. See Teleprompter Corp. v. CBS, 415 U.S. 394, 94 S.Ct. 1129, 39 L.Ed.2d 415 (1974); cf. Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390, 88 S.Ct. 2084, 20 L.Ed.2d 1176 (1968) (retransmission of non-network copyrighted programming to local markets did not give rise to infringement liability under 1909 Act). While it recognized the adverse effect the retransmissions could have on copyright owners, the Supreme Court concluded that "[d]etailed regulation of these relationships [between cable operators and copyright owners], and any ultimate resolution of the many sensitive and important problems in this field, must be left to Congress." Teleprompter, 415 U.S. at 414, 94 S.Ct. 1129; accord Fortnightly, 392 U.S. at 401, 88 S.Ct. 2084 ("We have been invited ... to render a compromise decision in this case that would, it is said, accommodate the various competing considerations of copyright, communications, and antitrust policy. We decline the invitation. That job is for Congress.").

A. The Evolving Statutory Framework

In response to the Fortnightly and Teleprompter decisions, and having struggled with the matter since 1965, the Ninety-Fourth Congress enacted legislation to address the retransmission royalty problem. See The Copyright Act of 1976, Pub.L. No. 94-553 (codified as amended at 17 U.S.C. §§ 101 et seq.) (hereinafter 1976 Act); see also H.R.Rep. No.94-1476, at 89 (1976), U.S. Code Cong. & Admin. News at 5659, 5703-5704 ("The difficult problem of determining the copyright liability of cable television systems has been before the Congress since 1965.") (hereinafter 1976 House Report). The 1976 Act permitted recovery of royalties for non-network programming retransmitted to distant markets but not for other types of retransmitted programming:

The Committee determined ... that there was no evidence that the retransmission of "local" broadcast signals [to the same markets served by the local broadcasters] threatens the existing market for copyright program owners. Similarly, the retransmission of network programming, including network programming which is broadcast in "distant" markets, does not injure the copyright owner. The copyright owner contracts with the network on the basis of his programming reaching all markets served by the network and is compensated accordingly.

By contrast, their [sic] transmission of distant non-network programming by cable systems causes damage to the copyright owner by distributing the program in an area beyond which it has been licensed. Such retransmission adversely affects the ability of the copyright owner to exploit the work in the distant market. It is also of direct benefit to the cable system by enhancing its ability to attract subscribers and increase revenues. For these reasons, the Committee has concluded that the copyright liability of cable television systems under the compulsory license should be limited to the retransmission of distant non-network programming.

1976 House Report at 90, U.S. Code Cong. & Admin. News at 5704-5705; accord National Ass'n of Broadcasters v. Copyright Royalty Tribunal, 675 F.2d 367, 373 (D.C.Cir.1982) ("The Act therefore was not intended to compensate network broadcasts or even local broadcasters whose programs are retransmitted locally by a cable system in the same area.") (hereinafter NAB I); Christian Broadcasting Network, Inc. v. Copyright Royalty Tribunal, 720 F.2d 1295, 1303 (D.C.Cir.1983) (similar) (hereinafter CBN).

Because the Congress believed "that it would be impractical and unduly burdensome to require every cable system to negotiate with every copyright owner whose work was transmitted by a cable system," 1976 House Report at 89, it established a centralized process for the collection and payment of royalties. See National Broadcasting Co. v. Copyright Royalty Tribunal, 848 F.2d 1289, 1291 (D.C.Cir.1988) ("The purpose of this regulatory structure is to facilitate the exploitation of copyrighted materials by removing the prohibitive transaction costs that would attend direct negotiations between cable operators and copyright holders, while at the same time assuring copyright holders compensation for the use of their property.") (hereinafter NBC). To administer the process, the Congress established the Copyright Royalty Tribunal (Tribunal) and authorized it to periodically adjust royalty rates and distribute collected royalties. See 17 U.S.C. §§ 111(d), 801-810 (1976).

Under the 1976 Act, if claimants could not agree on the proper distribution of collected royalties, the Tribunal declared a controversy as to the portion of royalties in dispute and conducted hearings to determine the appropriate apportionment of the funds. Id. § 804(d)-(e). The Tribunal had one year to complete its proceedings, id. § 804(e), and in its final determination it was to "state in detail the criteria that the Tribunal determined to be applicable to the particular proceeding, the various facts that it found relevant to its determination in that proceeding, and the specific reasons for its determination," id. § 803(b).

The Congress did not, however, prescribe the criteria or procedures according to which the Tribunal should assess a claim for royalties:

The Committee recognizes that the bill does not include specific provisions to guide the Copyright Royalty [Tribunal] in determining the appropriate division among competing copyright owners of the royalty fees collected from cable systems under Section 111. The Committee concluded that it would not be appropriate to specify particular, limiting standards for distribution. Rather, the Committee believes that the Copyright Royalty [Tribunal] should consider all pertinent data and considerations presented by the claimants.

1976 House Report at 97, U.S. Code Cong. & Admin. News at 5712. Accordingly, the Tribunal developed three primary criteria--" the harm caused to copyright owners by secondary transmissions of copyrighted works by cable systems, the benefit derived by cable systems from the secondary transmissions of certain copyrighted works, and the marketplace value of the works transmitted," NAB I, 675...

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