Program Suppliers v. Librarian of Congress, 04-1070.
| Decision Date | 31 May 2005 |
| Docket Number | No. 04-1070.,No. 04-1071.,04-1070.,04-1071. |
| Citation | 409 F.3d 395 |
| Parties | PROGRAM SUPPLIERS, Appellant v. LIBRARIAN OF CONGRESS, Appellee NATIONAL ASSOCIATION OF BROADCASTERS, et al., Intervenors |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Gregory O. Olaniran argued the cause for appellant Program Suppliers. With him on the briefs was Michael E. Tucci.
Timothy C. Hester argued the cause for appellant Public Broadcasting Service. With him on the briefs were Ronald G. Dove, Jr., and Paul Greco.
Mark S. Davies, Attorney, U.S. Department of Justice, argued the cause for appellee. With him on the brief were Peter D. Keisler, Assistant Attorney General, and William G. Kanter, Deputy Director. Anne M. Murphy, Attorney, entered an appearance.
Robert Alan Garrett argued the cause for intervenors Joint Sports Claimants, et al. With him on the brief were John I. Stewart, Jr., Michael L. Lazarus, L. Kendall Satterfield, and Victor J. Cosentino. James L. Cooper and Philip R. Hochberg entered appearances.
Before: SENTELLE, RANDOLPH, and TATEL, Circuit Judges.
Two parties — Program Suppliers and Public Broadcasting Service — appeal the Librarian of Congress's order distributing 1998 and 1999 copyright royalty payments among classes of claimants in accordance with the recommendation of a Copyright Arbitration Royalty Panel. Because the Librarian's order survives our exceptionally deferential standard of review, we affirm.
Cable system operators (CSOs) make most of their money by convincing subscribers to buy their cable services, which typically consist of many channels. CSOs get their channels in two ways. First, they contract to carry cable networks, such as ESPN or CNN, that sell their programming only to CSOs. Second, they retransmit signals broadcast by over-the-air stations, such as independent television stations, public broadcasting stations, or affiliates of broadcast networks like ABC or CBS.
Under section 111 of the Copyright Revision Act of 1976, Pub.L. 94-553, 90 Stat. 2541, 2550, CSOs, assuming they fulfill certain requirements irrelevant to the issues before us, commit no copyright violations when they retransmit broadcast signals to their subscribers. 17 U.S.C. § 111. In return for these retransmission privileges, CSOs pay royalty fees into one or more of three related funds maintained by the Register of Copyrights. These funds compensate copyright owners for the distant retransmission of non-network programming, i.e., retransmission that reaches viewers beyond the range of the signal broadcast. See Nat'l Ass'n of Broadcasters v. Copyright Royalty Tribunal, 675 F.2d 367, 373 (D.C.Cir.1982) (). The Librarian of Congress distributes each year's funds to copyright owners. See 17 U.S.C. § 111(d)(2)-(3) (2003); but see Copyright Royalty and Distribution Reform Act of 2004, Pub.L. No. 108-419, 118 Stat. 2341 (2004) ().
Ideally, copyright owners agree on the proportional distribution of funds. See 17 U.S.C. § 111(d)(4). If they fail to reach agreement, then the statute provides a process for sharing the pie — a process that typically takes place in two stages. In Phase I, royalties are distributed among classes of claimants: a percentage goes to Program Suppliers, the copyright owners of movies and syndicated shows; a percentage goes to the National Association of Broadcasters (NAB), which represents copyright owners of news programs; and so forth. In Phase II, royalties are distributed within each class: Program Suppliers' share, for example, gets split among Paramount Pictures, Twentieth Century Fox Film Corporation, and other individual claimants.
For both phases, the adjudicative process is the same. In the version of the statute applicable to this case, the process begins with the Librarian appointing an ad hoc Copyright Arbitration Royalty Panel. 17 U.S.C. § 802(a)-(b) (2003). Consisting of three arbitrators, this "CARP" hears evidence and submits a report to the Librarian recommending a particular distribution. Id. § 802(c)-(f). The CARP "shall act on the basis" of the record and precedent, including prior decisions by the Librarian, other CARPs, and the Copyright Royalty Tribunal (a body that adjudicated royalty disputes under an earlier version of the statute). Id. § 802(c).
Once the CARP finishes its report, the Register advises the Librarian whether to adopt it, and the Librarian "shall adopt" the report unless he "finds that the determination is arbitrary or contrary to the applicable [statutory] provisions." Id. § 802(f). If the Librarian rejects the report, he examines the record and allocates the funds himself. Id. The Librarian's decision "may be appealed [to this court] by any aggrieved party who would be bound by the determination." Id. § 802(g). (Although the parties in this case style their papers as petitions for review, the statute's use of the word "appeal" controls, so we treat the "petitions" as appeals.)
This case involves the Phase I distribution of roughly $216 million in royalties for 1998 and 1999. For the first time since the 1990-92 royalty distribution, the copyright owners failed to agree on the Phase I distribution. The Librarian accordingly appointed a CARP to split the royalties among the following groups: Program Suppliers, Joint Sports Claimants (JSC), Public Television Claimants (PTV), NAB, Music Claimants, Canadian Claimants, Devotional Claimants, and NPR. The last two parties settled with the others, leaving the CARP with six claims to reconcile. The remaining parties submitted reams of evidence, including updated versions of two reports, the Nielsen study and the Bortz survey, that the last Phase I CARP (the "1990-92 CARP") and that CARP's predecessor, the Copyright Royalty Tribunal, had used in making awards.
Presented to the CARP by Program Suppliers, the Nielsen study measures what cable subscribers watch. It does this by tracking a random set of cable-subscribing households and recording the viewing choices of individual household members. Aggregating this information, the study's authors estimate how total viewing distributes across different types of programming. The authors found that viewers watching cable retransmissions of distant signals in 1998 spent 59.1% of their time watching movies/syndicated shows (Program Suppliers' programming), 16.5% watching public television (PTV programming), 14.4% watching news (NAB programming), 9.4% watching sports (JSC programming), and .6% watching other programming. The 1999 Nielsen numbers showed a similar distribution.
The Bortz survey, supplied by JSC, measures what CSOs perceive as the relative market value of different types of programming. Researchers interview a sample of CSOs and ask how, if they had to negotiate for the right to retransmit broadcast signals distantly, they would allocate a fixed budget among different types of programming. As compared to the Nielsen study, Bortz gave a far higher value to sports and a far lower value to movies/syndicated shows and public television. Specifically, CSOs surveyed in 1998 said they would allocate 39.7% to movies and syndicated shows, 2.9% to public television, 14.8% to news programs, 37% to sports, and the rest to devotional and Canadian signals. The 1999 Bortz survey produced similar results.
Critical to one of the two issues we face here, Bortz's methodology had two anti-PTV biases. First, the researchers excluded from the otherwise random sample all CSOs that carry only public television stations, thus leaving out those CSOs that might be expected to assign the highest relative value to PTV. Second, when interviewing CSOs that distantly retransmit only commercial signals, the researchers did not list public television as a type of programming. Accordingly, none of these CSOs assigned any value to public television, though they might have done so if asked. Although this second bias had occurred in earlier Bortz surveys, the first affected no Bortz survey prior to 1998.
In addition to the Nielsen and Bortz studies, the parties submitted other evidence, including evidence identifying relevant changes since 1992, the year of the last CARP award. For purposes of this appeal, three changes merit mention.
First, WTBS, a superstation as defined in 17 U.S.C. § 119(d)(9), which generated roughly 45% of all section 111 royalties in 1992, became a cable network in 1998. With the elimination of WTBS and another commercial superstation from the broadcast station pool, the relative Nielsen viewing shares for Program Suppliers (whose programming was featured heavily on WTBS) fell significantly, and the relative viewing shares for PTV rose to roughly four times their 1992 level.
Second, cable networks developed more shows that resembled PTV programming, especially PTV's signature children's programs. This competition from "look-alike" cable networks may have affected PTV's value compared to commercial broadcast stations, which faced less content competition from cable networks.
Third, in 1992 Congress passed the Cable Television Consumer Protection and Competition Act, Pub.L. 102-385, 106 Stat. 1460, which, among other things, required CSOs to carry a certain number of local broadcast signals from both public television and commercial stations. See Turner Broadcasting System, Inc. v. FCC, 512 U.S. 622, 630-32, 114 S.Ct. 2445, 129 L.Ed.2d 497 (1994) (). These so-called "must-carry rules"...
To continue reading
Request your trial
-
Group v. Library of Cong.
...distinct royalty claims as a “program supplier.” Program suppliers are “the copyright owners of movies and syndicated shows.” Program Suppliers, 409 F.3d at 397. IPG pressed its claim in that category until March 2004, when Oshita entered into a settlement agreement with the Motion Picture ......
-
Family Redirection Inst., Inc. v. Commonwealth
...failure to make this obvious point clear to FRI did not violate due process principles. See generally Program Suppliers v. Librarian of Cong., 409 F.3d 395, 402 (D.C.Cir.2005) (noting that “[w]hile due process may require that parties receive notice and an opportunity to introduce relevant ......