Johnson v. Copyright Royalty Bd.

Citation969 F.3d 363
Decision Date07 August 2020
Docket NumberNo. 19-1028,C/w 19-1058, 19-1059, 19-1060, 19-1061, 19-1062,19-1028
Parties George JOHNSON, Appellant v. COPYRIGHT ROYALTY BOARD and Librarian of Congress, Appellees Nashville Songwriters Association International, et al., Intervenors
CourtU.S. Court of Appeals — District of Columbia Circuit

969 F.3d 363

George JOHNSON, Appellant
v.
COPYRIGHT ROYALTY BOARD and Librarian of Congress, Appellees

Nashville Songwriters Association International, et al., Intervenors

No. 19-1028
C/w 19-1058, 19-1059, 19-1060, 19-1061, 19-1062

United States Court of Appeals, District of Columbia Circuit.

Argued March 10, 2020
Decided August 7, 2020


Andrew J. Pincus and Scott H. Angstreich, Washington, DC, argued the causes for appellants Amazon Digital Services LLC, Google LLC, Pandora Media, LLC, and Spotify USA Inc. With them on the briefs were Benjamin E. Marks, Gregory Silbert, Aaron J. Curtis, Kenneth L. Steinthal, Jeffrey S. Bucholtz, Washington, DC, Jason Blake Cunningham, Leslie V. Pope, Washington, DC and A. John P. Mancini.

Harold Feld, Washington, DC, was on the brief for amicus curiae Public Knowledge in support of appellants Amazon Digital Services LLC, Google LLC, Pandora Media, LLC, and Spotify USA Inc.

Kannon K. Shanmugam, Washington, DC, argued the cause for appellants National Music Publishers’ Association and Nashville Songwriters Association International. With him on the briefs were William T. Marks, Washington, DC, Benjamin E. Moskowitz, Donald S. Zakarin, Frank P. Scibilia, Benjamin K. Semel, and Aaron J. Marks.

George Johnson, appellant appearing pro se, argued the cause and filed the briefs on his own behalf.

Jennifer L. Utrecht, Attorney, U.S. Department of Justice, argued the cause for appellees. With her on the brief was Joseph H. Hunt, Assistant Attorney General at the time the brief was filed, and Daniel Tenny, Attorney. Mark R. Freeman, Attorney, entered an appearance.

Jacqueline C. Charlesworth was on the brief for amici curiae Songwriters of North America, et al. in support of appellees and affirmance.

Kannon K. Shanmugam argued the cause for intervenors National Music Publishers’ Association and Nashville Songwriters Association International. With him on the briefs were William T. Marks, Benjamin E. Moskowitz, Donald S. Zakarin, Frank P. Scibilia, Benjamin K. Semel, and Aaron J. Marks.

Andrew J. Pincus, Washington, DC, argued the cause for intervenors Amazon Digital Services LLC, Google LLC, Pandora Media, LLC, and Spotify USA Inc. With him on the briefs were Benjamin E. Marks, Gregory Silbert, Aaron J. Curtis, Kenneth L. Steinthal, Jeffrey S. Bucholtz, Washington, DC, Jason Blake Cunningham, Leslie V. Pope, and A. John P. Mancini.

Harold Feld, Washington, DC, was on the brief for amicus curiae Public Knowledge in support of intervenors Amazon Digital Services LLC, Google LLC, Pandora Media, LLC, and Spotify USA Inc.

Before: Henderson, Garland, and Millett, Circuit Judges.

Millett, Circuit Judge:

The Copyright Act requires the Copyright Royalty Board to undertake, every

969 F.3d 367

five years, the difficult task of setting the copyright royalty rates for the rights to reproduce and distribute musical works. See 17 U.S.C. § 115 (2012). These consolidated appeals deal with the royalty rates and terms established by the Board for the period January 1, 2018 through December 31, 2022. 84 Fed. Reg. 1918 (Feb. 5, 2019).

The appellants in this case are (i) four music streaming services—Amazon Digital Services LLC, Google LLC, Pandora Media, LLC, and Spotify USA Inc. (collectively, "Streaming Services"); (ii) the National Music Publishers’ Association and the Nashville Songwriters Association International (collectively, "Copyright Owners"); and (iii) George Johnson, a songwriter proceeding pro se . They disagree on multiple fronts with the Board and with each other. As a result, many issues devolved into Goldilocks’ arguments, with the Streaming Services protesting that the rates are too high; the Copyright Owners objecting that they are too low; and the Copyright Royalty Board saying they are just right.

Having considered all of those arguments and the extensive administrative record, we affirm in part and vacate and remand to the Copyright Royalty Board in part because it failed to give adequate notice or to sufficiently explain critical aspects of its decisionmaking. Specifically, the Board failed to provide adequate notice of the rate structure it adopted, failed to explain its rejection of a past settlement agreement as a benchmark for rates going forward, and never identified the source of its asserted authority to substantively redefine a material term after publishing its Initial Determination.

I

A

1

The Copyright Act, 17 U.S.C. §§ 101 et seq. , grants copyright owners certain legal rights in their copyrighted works. Those rights include the exclusive authority to reproduce, distribute, and perform the copyrighted work, and to allow others to do the same. Id. § 106.

This case deals with two specific types of copyrightable works: musical works and sound recordings. A "musical work" refers to the notes, lyrics, embedded performance directions, and related material composed by the creator of a song. See SoundExchange, Inc. v. Librarian of Congress , 571 F.3d 1220, 1222 (D.C. Cir. 2009). Think the Gershwin Brothers composing "Embraceable You."

A "sound recording," on the other hand, is a performing artist's particular recording of a musical work. See Music Choice v. Copyright Royalty Bd. , 774 F.3d 1000, 1004 (D.C. Cir. 2014) ; see also 17 U.S.C. § 101 ; SoundExchange , 571 F.3d at 1222. Think Billie Holiday's stirring rendition of that jazz standard. BILLIE HOLIDAY , Embraceable You , on BODY AND SOUL (Verve Label Group 1957).

How those copyrighted works get from the songwriters into your ears is rather complicated. For starters, while "almost always intermingled in a single song, [the musical work and sound recording] copyrights are legally distinct and may be owned and licensed separately." Recording Indus. Ass'n of America, Inc. v. Librarian of Congress , 608 F.3d 861, 863 (D.C. Cir. 2010).

So when you stream a particular recording of a song from your interactive music streaming service of choice, the service must have first obtained permission to disseminate both the underlying musical work and the specific sound recording. Specifically, such streaming services must acquire licenses to make and distribute copies of the sound recording and the musical work, 17 U.S.C. § 106(1), (3), as well as to

969 F.3d 368

publicly perform those copyrighted works, id . § 106(4), (6). In the context of interactive streaming services, the Copyright Royalty Board has the authority to set certain royalty rates for musical works, but not for sound recordings.1

As relevant here, Section 115 of the Copyright Act creates a compulsory license, which is a statutorily conferred authority to use certain copyrighted material in a specified manner as a matter of law, without the actual consent of the copyright holder. See Independent Producers Group v. Library of Congress , 759 F.3d 100, 101 (D.C. Cir. 2014). The Section 115 license allows any person who satisfies certain conditions, including the payment of a royalty, to reproduce and to distribute phonorecords of a copyrighted musical work. 17 U.S.C. § 115 (2012).2 This is commonly referred to as the "mechanical license." 84 Fed. Reg. at 1918–1919. The Copyright Act charges the Copyright Royalty Board with setting the royalty rates and terms for the mechanical license. 17 U.S.C. §§ 115, 801(b)(1) (2012).3

Section 115 ’s compulsory license, however, does not include the right to publicly perform a musical work. See 17 U.S.C. § 115 (2012). Nor does Section 115 create a compulsory license for the sound recordings themselves. See id. ; Recording Indus. , 608 F.3d at 863. Therefore, interactive streaming services seeking the right to make, distribute, or publicly perform a sound recording, and those seeking the right to publicly perform a musical work, must negotiate with and obtain permission from the appropriate rightsholders. See 17 U.S.C. § 106(1), (3), (4), (6).

2

The Copyright Royalty Board is an "institutional entity in the Library of Congress" that "house[s] the Copyright Royalty Judges." 37 C.F.R. § 301.1. The three Copyright Royalty Judges are responsible for presiding over royalty proceedings and for making "determinations and adjustments of reasonable terms and rates of royalty payments[.]" 17 U.S.C. § 801(a), (b)(1) (2012).

The Copyright Royalty Board initiates ratemaking proceedings every five years to set the royalty rates and terms associated with the compulsory mechanical license. 17 U.S.C. § 804(b)(4). After the commencement of those proceedings, the Copyright Act gives interested parties an opportunity first to try and settle on the royalty rate. Id. § 803(b)(3). If no settlement emerges, the Board presides over a contested royalty ratemaking proceeding. See id. § 803. Any person that the Board determines has

969 F.3d 369

a "significant interest in the proceeding" may participate. See id. § 803(b)(2)(C).

At the time the proceedings at issue here were initiated, the Copyright Act required that the Board prioritize four objectives when developing "reasonable [royalty] rates and terms" for the mechanical...

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