Copyright Arbitration Royalty Panel

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COPYRIGHT ARBITRATION ROYALTY PANEL

Three-member ad hoc board empowered to make decisions regarding ratemaking and distributions ofcopyright royaltiescollected for compulsory licenses under the Copyright Act of 1976.

In order for a person to use another's copyrighted work, the person must generally obtain a license from the copyright owner. The terms of the agreement normally depend upon market conditions at the time of the agreement. However, the Copyright Act of 1976, codified in Title 17 of the United States Code, creates an exception under some circumstances whereby a prospective user may obtain a compulsory license that allows the individual to use a copyrighted work without the owner's permission. The compulsory license applies so long as the person applying for the license meets statutory requirements and pays the required royalties.

Congress in the 1976 act created the copyright royalty tribunal (CRT), an independent federal agency empowered to distribute royalties collected under the compulsory license provisions, as well as to make periodic adjustments to the royalty rates attached to the compulsory licenses. The original copyright act provided for four compulsory licenses, including those for cable television, musical mechanical, noncommercial broadcasting, and jukeboxes. In 1992, Congress extended responsibility to the CRT to include distribution of levies collected from manufacturers and importers of digital recording devices.

The Copyright Royalty Tribunal was controversial from its inception. Although the ratemaking provisions were generally clear, the statute was rather ambiguous regarding the methods by which the tribunal should distribute royalties. The tribunal's decisions with respect to its ratemaking powers led to frequent criticism and litigation. Moreover, critics charged that Congress had created a full-time independent agency to perform a part-time job. In 1990, Congress reduced the number of commissioners on the tribunal from five to three, and during hearings in the House of Representatives in 1993, two of the three commissioners testified that they were in favor of abolishing the Copyright Royalty Tribunal.

In 1988, Congress enacted the Satellite Home Viewer Act, Pub. L. No. 100-667, 102 Stat. 3935, which created, at that time, a fifth compulsory license. However, the act required the formation of ad hoc arbitration panels to amend royalty fees for satellite retransmissions, thus bypassing the authority of the CRT. The success of these arbitration panels persuaded Congress to use them for the other forms of compulsory licenses under the Copyright Act. The Copyright Royalty Tribunal Reform Act of 1993, Pub. L. No. 103-198, 107 Stat. 2304, immediately abolished the Copyright Royalty Tribunal and allowed for the formation of ad hoc copyright arbitration royalty panels.

The 1993 act did not change the system of compulsory licenses, but rather it shifted authority from the CRT to the new panels. Arbitrators on these panels are appointed and convened by the librarian of Congress, who acts on the recommendation of the Register of Copyrights. The arbitrators must meet minimum criteria set forth under the statute in order to quality for the position.

At the time of the creation of these arbitration panels, the librarian of Congress was directed to adopt the rules and regulations of the CRT in their entirety, though the CRT no longer existed. These rules and regulations were to remain in force until the librarian decided to supplement or supersede them. The adoption of the tribunal's former rules and regulations presented problems, however, because the 1993 act eliminated a single body—the CRT—and replaced it with a system of ad hoc panels. In December 1993, the librarian of Congress adopted the former CRT rules on an interim basis. One year later, the librarian issued new rules governing the panels, effective January 6, 1995. Additional revisions to the rules governing the panels have also been made since the 1994 revisions.

Like the CRT, the arbitration panels make decisions regarding distribution of royalties and ratemaking for royalties under the compulsory license provisions. Unlike the CRT, the purposes of the copyright arbitration royalty panels are set out clearly in the statute. Among the many purposes of the panels in the statute is the maximization of the availability of creative works to the public; the assurance that copyright owners receive a fair return for their creative works; and the guarantee that the roles of the copyright owner and the copyright user in the product made available to the public were reflected. 18 U.S.C.A. § 801(b) (1998). The statute lists other purposes as well.

The copyright arbitration royalty panels have proven more popular than the former CRT, although disputes still arise regarding ratemaking or distribution decisions by the panels. Convening a panel to make a rate adjustment is more difficult than the procedure that was followed under the CRT, which was a permanent body. The time frame under which a panel decision must be completed is also a concern for those involved in a panel proceeding. All actions by the parties—including discovery, testimony, studies, arguments, motions, and so forth—as well as rulings, orders, and final report issued by the panel, must be completed within 180 days after the librarian of Congress directs the formation of the arbitration panel. Nevertheless, these procedures are generally believed to promote efficiency when these panels make these determinations, and the panels have not been subjected to the same level of criticism as the former tribunals.