This could have been a landmark copyright case if the Court had delved into a description of copyright registration or tried to answer whether registration was a hard-line requirement or more malleable. The Court avoided these evaluations, wisely in my humble opinion, and constrained its background discussion and analysis. Registration plays such a foundational role on so many issues in copyright that dicta and ancillary findings probably would have been twisted in all types of ways downstream. It  seems better to leave play in the joints on many of the ancillary issues and push them to district and appellate courts, even if the outcomes will sometimes be inconsistent.

William & Mary Professor Scott Dodson on the civil procedure aspects of the case at Civ Pro and Federal Courts Law Blog. The majority and concurring opinion agreed that the two integral cases were Arbaugh v. Y & H Corp., 546 U. S. 500 (2006) and Bowles v. Russell, 551 U.S. 205 (2007). Both agreed that a passage from Arbaugh was controlling:

If the Legislature clearly states that a threshold limitation on a statute’s scope shall count as jurisdictional, then courts and litigants will be duly instructed and will not be left to wrestle with the issue. But when Congress does not rank a statutory limitation on coverage as jurisdictional, courts should treat the restriction as nonjurisdictional in character. Applying that readily administrable bright line to this case, we hold that the threshold number of employees for application of Title VII is an element of a plaintiff’s claim for relief, not a jurisdictional issue.” 546 U. S., at 515–516 (citation and footnote omitted). [Italics added.]

The majority opinion and concurring opinion, however, conspicuously differed in their quotations from Arbaugh. Justice Thomas, writing for the majority, did not include the “bright line” language from Arbaugh that I italicized above. Justice Ginsburg, concurring, embraced the phrase “bright line” in four different places.  Linguistics aside (but words matter) both the majority and concurring opinion seemed to apply the test from Arbaugh as the first and primary benchmark.

The second case both the majority and concurring opinion used prominently was  Bowles v. Russell, 551 U.S. 205 (2007). Justice Thomas characterized Bowles as standing for the proposition that “context, including this Court’s interpretation of similar provisions in many years past, is relevant to whether a requirement as jurisdictional.” Applying Bowles to Reed, the majority found that  §411(a)’s historical treatment was “jurisdictional,” and a “factor in the analysis,” but “not dispositive.” Found Justice Thomas, “The other factors discussed above demonstrate that §411(a)’s registration requirement is more analogous to the nonjurisdictional conditions we considered in Zipes and Arbaugh than to the statutory time limit at issue in Bowles.”

Justice Ginsburg, concurring, viewed Bowles as conflicting with Arbaugh, but found that it was possible to reconcile the case if it’s read as ” relying on a long line of this Court’s decisions left undisturbed by Congress.” Union Pacific R. Co. v. Locomotive Engineers and Trainmen Gen. Comm. of Adjustment, Central Region, 558 U. S. ___, ___ (2009) (slip op., at 13) (citing Bowles, 551 U. S., at 209–211).” Noted Ginsburg, “The same is true of our decision, subsequent to Bowles, in John R. Sand & Gravel Co. v. United States, 552 U. S. 130 (2008).”

Justice Ginsburg found that the judicial history interpreting 411(a) did not satisfy a Bowles analysis. Justice Ginsburg noted that the two hundred opinions on the topic were almost all “‘drive-by jurisdictional rulings’ thatshould be accorded ‘no precedential effect,’” Arbaugh, 546 U. S., at 511 (quoting Steel Co. v. Citizens for Better Envi-ronment, 523 U. S. 83, 91 (1998)); see Arbaugh, 546 U. S., at 511–513; ante, at 5–6.

So, it would appear that the majority and concurring opinions were distinguishable along a couple of fronts:

• The majority opinion rejected the phrase “bright line” rule from Arbaugh to describe the case’s test, while the concurring opinion embraced it.
• The majority opinion seemed to imply that all context (“context, including this Court’s interpretation of similar provisions in many years past”) should be taken into consideration under a Bowles analysis, while the concurring opinion could be read as limiting Bowles to narrowly applying only to long lines of Court decisions left untouched by Congress.
• The majority opinion found that the historical legacy of 411(a) was that it was a jurisdictional requirement but that when all factors were considered, the provision did not restrict a federal court’s subject matter jurisdiction. The concurring opinion found that the cases interpreting 411(a) were merely drive-by jurisdictional rulings, and did not weigh in favor of a finding that 411(a) restricted a federal court’s subject matter jurisdiction.

Earlier posts on Reed Elsevier v. Muchnick:

• Supreme Court grants cert in Reed Elsevier, et al., v. Muchnick, et al. (March 3, 2009)
• Judge Posner weighs in on Reed Elsevier v. Muchnick (April 17, 2009)
• Breaking News: Every pending copyright case lacks jurisdiction (May 20, 2009)
• Merit briefs posted for Reed Elsevier v. Muchnick (May 27, 2009)
• Solicitor General files amicus in Reed Elsevier arguing that 17 U.S.C. 411(a) is a rigid claim processing rule (June 17, 2009)
• AIPLA files amicus in Reed Elsevier v. Muchnick (June 19, 2009)
• Supreme Court docket roundup of copyright cases (June 30, 2009)
• Copyright at the Supreme Court this week (Oct 5, 2009)
• Supreme Court hears oral arguments in Reed Elsevier (Oct 8, 2009)
• Form 19 and oral arguments in Reed Elesevier v. Muchnick (Nov 16, 2009)

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We previously discussed this case in early September. Live365 filed a facial challenge against the CRB and the Librarian of Congress, arguing that the appointment of the Board transgressed Article 2, Section 2, Clause 2 of the U.S. Constitution. In the motion at bar, Live365 sought a preliminary injunction seeking a stay of In Re Digital Performance Right in Sound Recordings and Ephemeral Recordings, Docket No. 2009-1 (CRB Webcasting III).  The Defendant’s responded with a motion to dismiss for lack of subject matter jurisdiction. The D.C. District Court denied both.

Defendants motion to dismiss for lack of subject matter jurisdiction

The Defendants argued that the Court had no jurisdiction to hear the challenge because under 17 U.S.C. § 803(d)(1), “[a]ny determination’ of the Copyright Royalty Judges in the Webcaster III proceeding [is vested exclusively with] the District of Columbia Circuit.” The Defendants also contended that the case didn’t come within the exception that permits a district court to exercise jurisdiction over  a facial challenge to the constitutionality of a statute under which the agency was proceeding  because the plaintiff’s claim was a direct challenge to the Webcaster III proceeding itself.

In this regard, the defendants argue that this case is distinguishable from Free Enterprise Fund v. Public Co. Accounting Oversight Bd., 537 F.3d 667, 676 (D.C.Cir.2008), cert. granted, — U.S. —-, 129 S.Ct. 2378 (2009), and Time Warner Entertainment Co. v. FCC, 93 F.3d 957 (D.C.Cir.1996), because here the plaintiff’s suit “is not independent of any administrative proceeding.” Id. Specifically, the defendants claim that, “among other things,” the plaintiff is seeking to have an order issued by the CR Board judges in the Webcasting III proceeding altered to extend a filing deadline imposed by that order. Id. Therefore, the defendants contend that jurisdiction rests exclusively with the District of Columbia Circuit. Id.

Live365 argued that the Court had jurisdiction via Section 1331, as a civil action that arises under the Constitution.  The Plaintiff further argued that its claims were independent of the Webcaster III proceeding and that the remedy sought (a stay of the Webcaster III proceeding) didn’t change the fact that its challenge was independent of the proceeding.

The Court found that 17 U.S.C. § 803(d)(1) limited judicial review of determinations of the CRB judges to the District of Columbia Circuit, but not an attack on the legislation which established the CRB.  The Court found that the action fell  “squarely within the exception recognized by Time Warner and Free Enterprise, which authorize[d the] Court to exercise jurisdiction over a facial challenge to the constitutionality of a statute”:

The government’s argument that this case is distinguishable from Free Enterprise and Time Warner because the Complaint targets a specific ongoing proceeding is unpersuasive. In General Electric, the plaintiff’s due process challenge against the Environmental Protection Agency (“EPA”) pursued in this court was sanctioned by the Circuit despite there having been “ongoing interactions over remediation at several locations” between the parties, because “the lawsuit [did] not challenge any particular action or order by the EPA.” Id. at 191. Thus, although the plaintiff’s injunction request could have the effect of extending the September 29, 2009 deadline set by the CR Board judges and could inevitably impact the progression of the Webcasting III proceeding, their request for the injunction is derived from their constitutional facial challenge to the appointment of the CR Board judges, which is wholly independent of any action actually taken or expected to be taken in the future by the CR Board judges.

Appointments Clause challenge

To briefly review Appointments Clause structures at an oversimplified level, courts have interpreted the Appointments Clause as creating a four-pronged structure for evaluating members of the executive branch: Head of Departments, principal officers, inferior officers and employees. Head of Department and principal officers must be appointed by the President with the advice and consent of the Senate. Inferior Officers must be appointed by either the President or a Head of Departments. Lesser employees do not transgress the Appointments Clause regardless of their appointment method.

Live365 argued that the CRB judges were principal officers who may only be appointed by the President; or in the alternative, that they were inferior officers whose appointment was unconstitutional because the Librarian of Congress was not a Head of Department in the Executive Branch.

Whether the Librarian of Congress is a principal officer

The most interesting issue in App0ointments Clause challenges, for me at least,  is how courts struggle with the majority opinion’s finding from Freytag v. Comm’r of Internal Revenue, 501 U.S. 868 (1991) that a Head of Department is confined to heads of  “Cabinet-level departments,” which  are “limited in number and easily identified.” The Court in Live365 sidestepped Freytag and instead looked to Eltra Corp. v. Ringer, 579 F.2d 294, 300 (4th Cir. 1978), which was issued thirteen years before Freytag, for the presumably intentionally circular proposition that if an officer is appointed by the President and invested with the power to appoint other officers, she is a principal officer:

The Register is appointed by the Librarian of Congress, who in turn is appointed by the president with the advice and consent of the Senate. By the nature of his appointment the Librarian is a[ ] [principal] [o]fficer of the United States, with the usual power of such officer to appoint ‘such inferior [o]fficers (i.e., the Register [and the CR Board judges] ), as (he) think(s) proper. 579 F.2d at 300 (internal citation and quotation marks omitted).

Accordingly, the Librarian is seemingly a principal officer that heads an Executive Department, and therefore, has the power to appoint inferior officers. Thus, given the manner in which the Librarian is appointed and considering many of the functions assigned to him, the plaintiff has not met its burden of showing that there is a substantial likelihood that it will succeed on the merits of its alternative Appointments Clause challenge.

Whether the Librarian is a member of the executive branch

The Court also looked to Eltra for precedence on the issue of whether the Librarian was a member of the executive branch.  As the Court noted, the Librarian is appointed by the President with the advice and consent of the Senate; the President, not Congress, has the power to remove the Librarian at will; and while the Library is codified under Title 2 of the United States Code, which addresses specifically the Legislative Branch,  “such code-grouping cannot determine whether a given function is executive or legislative.” Eltra at 579 F.2d at 301.

Whether the CRB judges are principal or inferior officers

Live365 argued that the CRB judges were principal officers and must be appointed by the President. The Court found that CRB Judges were “sufficiently subordinate to both the Librarian of Congress and the Register of Copyrights to qualify as inferior officers, and thus, their appointments by the Librarian do not offend the Appointments Clause.”

In both Edmond and Freytag, the judges were held to be inferior officers despite the fact that their duties included taking testimony, ruling on the admissibility of evidence, issuing protective orders, and issuing subpoenas, and the CR Board judges exercise many of those same responsibilities. Thus, the guiding precedent of the Supreme Court seemingly requires the conclusion that despite the level of autonomy the CR Board judges exercise, the degree of direction and supervision exercised over them by the Librarian and the Register renders them inferior rather than principal officers.

Previous posts on an Appointments Clause challenge to the Copyright Royalty Board:

• LIVE365 files Appointments Clause challenge to the Copyright Royalty Board (September 9, 2009)
• Filings from D.C. Court of Appeals review of Copyright Royalty Board order (March 24, 2009)
• Royalty Logic’s Appointments Clause challenge of the Copyright Royalty Judges (March 31, 2009)
• Supreme Court to hear Appointments Clause challenge; Ramifications for the Copyright Royalty Board litigation (May 19, 2009)
• Breaking News: Every pending copyright case lacks jurisdiction (May 20, 2009)
• Supreme Court docket roundup of copyright cases (June 30, 2009)

A Greek Orthodox Monastery brought a copyright suit alleging that an archbishop had infringed a series of its translations of religious texts and that the Archbishop had breached a Settlement Agreement reached in a prior lawsuit involving one of the disputed works.

Ownership

The Archbishop argued that the copyright to one of the works should as a matter of church law be transferred to the Rusian Orthodox Church Outside Russia. The argument was derived from an ongoing dispute that arose when the Greek Orthodox Monastery elected to leave the ROCOR. In 1994, the Massachusetts Supreme Judicial Court found that the Greek Orthodox Monastary was congregational in terms of property ownership and was the sole owner of all of its assets, not the ROCOR. See, e.g., Primate and Bishops’ Synod of the Russian Orthodox Church Outside Russia v. Russian Orthodox Church of the Holy Resurrection, Inc., 418 Mass. 1001, 636 N.E.2d 211 (1994). The Court found that it didn’t need to re-open the dispute because there was no written transfer:

The court need not, however, accept the Archbishop’s invitation to delve into the intricacies of the doctrine of neutral principles as it applies to ecclesiastical disputes. The Copyright Act provides a simpler statutory answer. After 1978, a transfer of copyright, other than by operation of law, “is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent.” 17 U.S.C. § 204(a).

As a side note, you can’t say for certain from the factual record, but this case may raise similar issues to those discussed in Schrock v. Learning Curve International, Inc., No. 08-1296 (7th Cir. 2009).  The exclusive rights granted to a work employing preexisting material covered by copyright, such as many translations,  do not extend to any part of the work in which the material was used without permission. 17 U.S.C. 103(a).

If the greek text of the disputed work contains copyrightable subject matter added by the ROCOR, such as annotations or editing choices made recent enough so that they are not in the public domain, the Monastary may, or may not, possess exclusive rights in its translation of the text. The outcome would depend on whether the Court adopted the Seventh Circuit’s finding from Schrock that when a rightsholder grants permission to a second author to make a derivative work, barring an agreement between the parties otherwise, the second author retains a copyright in the derivative work, even if the rightsholder later attempts to revoke permission.

Fair Use

The Archbishop’s copying of one of the works at issue omitted footnotes and three words, added some question marks, changed the spelling of six words, and added some headlines.  The Court found that the work was substantially similar to the Monastery’s.

The Court then looked to whether the copying was a non-infringing fair use. The Court cited Campbell v. Acuff Rose for the proposition that not only is fair use an affirmative defense, but that a defendant has a “burden of proof” to show that the copying was non-infringing. The Court found that the use of the work was infringing.

Purpose and character

The Archbishop argued that his use was non-commercial (purely for devotional purposes), which was not disputed, and that his use was transformative because he placed a portion on the internet. The Court rejected the argument finding that a “simple repackaging” of a work in a new media context is “not transformative when the result is simply a mirror image reflected on a new mirror,” and found that the factor weighed in favor of the Monastery.

Nature of the copyrighted work

The Archbishop argued that the work at issue was factual as part of his religion, and as such, the factor weighed in favor of a finding of fair use. The Court found that the work was more closely akin to a creative work:

As a theological precept, this may ring true to a believer, but from an objective legal perspective, a religious contemplation in the form of a Homily (an admonitory sermon or discourse) falls more appropriately within the category of a work of imagination and creativity. While a translation is by definition derivative, some translations-the King James Version of the Bible comes to mind-are nonetheless thought to be “original in their own right.” This factor, on the whole, weighs in favor of the Monastery.

The amount and substantiality

The Court found that the Archbishop  incorporated the entirety of one of the works on his website for “no apparent purpose other than avoiding the trouble and expense of creating a version of his own.”

Market harm

The Monastery did not allege any specific lost sales or profits as a result of the infringement. The Monastary instead noted that it has had to expend time and resources to enforce its rights in the work. The Court found that, “given Campbell’s emphasis on the deterrence of injurious conduct by others as a consideration separate and apart from a showing of actual market harm, this factor too weighs in favor of the Monastery.”

If you look at the top of the screen and sidebar you will see a new events widget and page. I find that I miss too many speaking events because I am either not informed or the date sneaks up on me. Case in point, today’s presentation on digital media that includes David Oxenford of Broadcast Law Blog fame. 

As a musician before law school, similarly, I was not aware of the services available from the legal community. I thought an events list might be my humble contribution to help remedy the situation. 

Let’s consider this a beta release: I haven’t spent enough time with the page to make it look pretty and this project may ultimately entail too much work. I also haven’t finished collecting all of the dates, especially from local and state intellectual property groups. If you would like to submit an event, please email me at events@senlawoffice.com. The events for the upcoming week are below.  

Very truly yours,

Shourin Sen

The Tennessean is reporting that a suit brought by a music publishing company against A&E over its use of twelve seconds of the song “Rocky Top” has settled. We discussed this case in mid-November when the Middle District of Tennessee found that the use by the network was not fair use, at least without further development of the factual record. No details of the settlement were released.

Victoria Espinel, the U.S. Intellectual Property Enforcement Coordinator or I.P. Czar, announced on the White House blog that she formally requested written submissions from the public on the Joint Strategic Plan for intellectual property enforcement:

To further these goals, we are working to find ways of measuring these threats and their impact on us.  How many jobs depend on the existence of intellectual property?  What are the greatest risks to health and safety?  We need better data on these questions and it is part of my job to figure out what the answers are.  We cannot do that without your help.  So, my office is asking the public to give us information about the costs and the risks – and then give us suggestions for what we could be doing better as a government.   As a first step, we are issuing a notice to the public asking for your input.  Here’s a link to this request (pdf).  You can send your comments to intellectualproperty@omb.eop.gov.  We look forward to hearing from you.

The formal request for written submissions is published in the Federal Register. (H/t Ben Sheffner.)

Eleanor M. Lackman, a Senior Associate in the IP, Media & Technology group at Lovells NY, wrote an article in the New York State Bar Association publication Bright Ideas on the standard for obtaining a preliminary injunction in copyright cases. The article, titled “Factoring in the Public Interest: The Impact of eBay on Injunctive Relief in Copyright Cases,” discusses Salinger v. Colting and Winter v. Natural Resources Defense Council, and contains Ms. Lackman’s predictions about the future of the preliminary injunction standard:

Even in advance of that ruling, however, the debate in Salinger and other cases has awakened courts to the fact that injunctive relief in copyright cases may no longer be so easy to obtain—at least not without an evidentiary proffer on each of the four eBay factors, which were rarely addressed in copyright cases prior to eBay. eBay also may have an impact on the negotiation of licensing fees and money-based settlements.

In light of all the ways eBay might affect copyright law, this article addresses the following four questions: (1) Does the four-factor test enunciated in eBay apply to copyright cases? (2) Does the four-factor test apply to both preliminary and permanent injunctions? (3) How will the four factors be addressed by the courts? and (4) What can a potential copyright licensor, licensee, plaintiff, or defendant expect in the post-eBay world?

We’ve discussed this case previously in May and, on damages, in December. Utopia alleged, inter alia, that Pro-Med infringed its copyright in a series of charts for a physician to use to record a patient’s medical history and symptoms. The district court granted Pro-Med summary judgment on the copyright claim finding that the charts were not copyrightable subject matter. Utopia appealed.

Were the charts copyrightable subject matter

The Court looked to whether the headings on the forms were expected on similar medical templates and, secondly, to whether the terms actually conveyed information to the treating physician. The Court found that the medical forms called for “the same information that any responsible physician would ask a patient with the given ailment.” The Court further found that the “selection and arrangement of the terminology” did not convey information that was sufficiently original. The Court, thus, affirmed the district court’s finding that the medical forms did not constitute copyrightable subject matter.

The real fireworks in this case came in a footnote where the Court appeared to reject the “modicum of originality” standard from Feist in favor of a “conveys information” standard. Utopia argued that Feist modified the Eleventh Circuit standard announced in John H. Harland Co. v. Clarke Checks, Inc., 711 F.2d 966, 971 (11th Cir.1983) by specifying that compilations need only minimal creativity to be copyrightable; that compilations are copyrightable “so long as [choices as to selection and arrangement] are made independently by the compiler and entail a minimal degree of creativity.” Feist Pubs., Inc. v. Rural Tel. Svc. Co., Inc., 499 U.S. 340, 348 (1991). Stated the court:

Utopia ignores, however, that Feist dealt with how to resolve the tension between facts generally not being copyrightable and factual compilations being copyrightable. Feist held that a factual compilation may be copyrightable “if it features an original selection or arrangement of facts, but the copyright is limited to the particular selection or arrangement.” Id. at 350-51, 111 S.Ct. at 1290 (emphasis added). Feist did not imply in any way that the rule concerning the creativity in selection of facts was a standard that applied to anything but factual compilations or impacted the blank forms rule. While we note that the creativity in the selection of terms on the ED Maximus forms bears on whether the forms convey information, the “convey information” standard-not a creativity in selection or arrangement standard-still governs blank forms and was not altered by the Feist decision concerning factual compilations. Utopia’s argument that the selection and arrangement of terms in the ED Maximus templates show “extraordinary degrees of creativity and originality,” therefore, is relevant only to the extent that it shows the forms convey information.

The Court’s opinion also contained an interesting discussion of what it viewed as the Ninth Circuit misreading Eleventh Circuit precedence:

Some courts have adopted a “bright-line” rule regarding blank forms; that is, they hold that blank forms inherently do not convey information and are not copyrightable. The Ninth Circuit took this approach in Bibbero Sys., Inc. v. Colwell Sys., Inc., 893 F.2d 1104 (9th Cir.1990). The court rejected the argument that a blank form could satisfy the “convey information” test by containing possible categories of information, thus indicating which information was important. Id. at 1107. If categories of information were sufficient to “convey information,” according to the court, the copyrightability of blank forms would be “potentially limitless. All forms seek only certain information, and, by their selection, convey that the information sought is important. This cannot be what the Copyright Office intended by the statement ‘convey information’ in 37 C.F.R. 202.1(c).” Id.

The majority of circuits have rejected Bibbero ’s bright-line approach. See, e.g,, Kregos v. Associated Press, 937 F.2d 700, 709 (2d Cir.1991) ( “[A]ll forms need not be denied protection simply because many of them fail to display sufficient creativity.”); Whelan Assocs., Inc. v. Jaslow Dental Lab., Inc., 797 F.2d 1222, 1242-43 (3d Cir.1986) (noting that the Third Circuit, “like the majority of courts that have considered this issue … ha[s] held that blank forms may be copyrighted if they are sufficiently innovative that their arrangement of information is itself informative”). Although the Ninth Circuit characterized the Eleventh Circuit’s approach in Clarke Checks as adopting the “bright-line” approach that blank forms cannot be copyrighted, the Ninth Circuit’s reading of Clarke Checks does not comport with our reading of it. Bibbero, 893 F.2d at 1107. The Clarke Checks court’s statement that “blank forms which do not convey information … are not copyrightable” does not indicate a view that blank forms cannot convey information. 711 F.2d at 971. Moreover, the court’s analysis went beyond identifying the check stub at issue as a blank form; the court analyzed whether it conveyed “information beyond that contained on previously existing check stubs,” indicating that it would be possible for a check stub, although a blank form, to convey information. Id. at 972. We therefore look to the “convey information” test to analyze whether ED Maximus is copyrightable, and do not end the analysis merely by labeling it a blank form.

Plaintiffs brought a copyright infringement suit alleging, inter alia, that Yahoo!’s music subscription service had distributed without permission a total of 308 different versions of 205 of its musical composition. This came about, according to the complaint, because Yahoo!, distributed different versions of some of the songs that were performed by different artists, produced at different times by different people, and were distributed by different record labels. The plaintiff contended that it was entitled to a $150k in statutory damages for each of the 308 versions.

Yahoo! filed a motion 12(c) judgment on the pleadings arguing that the Plaintiffs were only allowed to seek one award of statutory damages per work infringed. The Middle District of Tennessee (Campbell, C.J.)  granted Yahoo!’s motion and found that the statutory damages available to the plaintiffs, if any, were recoverable only on the 215 musical compositions alleged in the Complaint, rather than the 308 total recorded versions of the 215 musical compositions. Stated the Court, “Plaintiffs may only recover one award of statutory damages per musical composition per Defendant.”

Last Friday, the High Court (Arnold, J.) denied an appeal of a decision by the Copyright Tribunal brought by the performance rights society, Phonographic Performance Limited. The Copyright Tribunal had found that the tariffs PPL accessed for the public performance of sound recordings in (i) public houses, bars, restaurants ad cafes, (ii) shops and stores, and (iii) factories and offices were unreasonable.

To briefly review, the Copyright, Designs and Patents Act 1998 provided that the public performance of a broadcast to an audience who had not paid for admission did not infringe any sound recording. PPL had previously claimed that the exception violated violated Article 8(2) of Council Directive 92/100/EC of 19 November 1992. Phonographic Performance Ltd v Department of Trade and Industry [2004] EWHC 1795 (Ch), [2004] EMLR 30).

The Government exercised its powers under section 2 of the European Communities Act 1972 to implement Article 11(1)(b) of European Parliament and Council Directive 2001/29/EC of 22 May 2001, by means of regulation 21(1) of the Copyright and Related Rights Regulations 2003, SI 2003/2498. The practical effect of the amendment was that many establishments needed to obtain a license to publicly perform sound recordings that they had previously played for free.

In December 2004, PPL noted its new tariffs, which came into full effect in 2006, to the Department of State. The new tariffs, in addition to creating a “delivery system neutral fee” also changed the rates accessed to performers of sound recordings under the existing structures. The changes in tariffs were referred to the Copyright Tribunal by the Secretary of State in October 2005 for a determination as to whether they were reasonable.

The Copyright Tribunal issued a final decision on October 15, 2009 finding that the tariffs were not reasonable, and made an order under Section 128 B(3)(a) changing the tariffs. The Tribunal reinstated the previous tariffs, extended them to all means of delivery, but with (i) an increase in the tariffs payable by 10% in addition to an adjustment in line with the Retail Price Index and (ii) the imposition of a concessionary discount rate for some small users.

Ground A: the investigatory obligations of the Copyright Tribunal

The argument that Copyright Tribunal was under an obligation to investigate the reasonableness of the tariffs was central to a number of PPL’s arguments on appeal. The Court found that while the Tribunal’s role under 128B was inquisitorial and not adversarial, it did not have an obligation to investigate. The Tribunal, according to the Court, only had to take into account the relevant considerations, and it’s obligations were fulfilled by considering the record and parties’ briefings.

Grounds B & C: the Performance Rights Society tariffs and previous tariffs as best competitor

PPL’s second and third grounds for appeal were that the Tribunal should have used the tariffs used by the Performance Rights Society, the tariff collection society for righsholders of musical works,  and not the previous tariff rates as “best competitor.”  The Court found that the Tribunal did not make an error of law by taking into consideration the PRS tariffs, and only finding that they suggested a modest increase in PLL’s tariffs; and that the Tribunal did not make an error in considering the previous tariff rates as best competitor.

Ground D: market reaction

PPL argued that the Tribunal failed to take into account the increase in numbers of licensees (81,921 in 2005 to 105,981 in 2008), as an indicator of the reasonableness of the tariffs. In opposition, the Interested Parties claimed that the increase was due to the removal of the exceptions under Section 72, which required more users to acquire a license. The Court found that the Tribunal should have directly addressed the argument, but that the reasoning used by the Tribunal showed that it did not consider the increase in numbers to be indicative of reasonableness.

Ground E: measurement of audience

PPL argued that the Tribunal committed material error by not considering that the new tariffs accounted for the size of a venue, where the old tariffs did not.  The Court found that this may show that the new tariffs are more reasonable than the old tariffs, but not that the Tribunal made an error in concluding that the new tariffs were unreasonable.

Ground F: the statutory factors

The statutory factors for which the Tribunal must consider when evaluating a tariff, set forth in section 128A(7), include “(c) [the] commercial benefit a potential licensee is likely to obtain from playing the excepted sound recordings.” PPL contended that the Tribunal did not adequately consider the factor. The Court found that the Tribunal  made the conclusion, which was in its discretion, that the factor did not support an increase, except to the extent that the new tariffs covered PPL’s new rights in the broadcast of sound recordings.

Ground G: the concessionary discount

PPL argued that Tribunal made an error by imposing the concessionary discount. The Court found that the Tribunal was within its discretion in finding that the concessionary discount was reasonable to balance the increase of 10% it granted on top of the old tariffs.

Costs

PPL also appealed the decision of the Tribunal to order it to pay half the costs of the Reference.  PPL contended that the costs order “did not reflect the inquisitorial nature of the Tribunal’s jurisdiction under [S]ection 128B.” The Court affirmed the order, finding that the awarding of costs “was within the ambit of [the Tribunal's] jurisdiction.”