Federal Appeals Court Upholds Webcasting License for Broadcasters
A federal appeals court in Pennsylvania has upheld the Copyright Office’s interpretation of the statutory webcasting license, affirming that AM and FM radio station licensees must pay the statutory webcasting royalty fee, even when they are simulcasting over-the-air transmissions on the Internet. Bonneville Int'l v. Peters, No. 01-3720 (3d Cir., Oct. 17, 2003).
Prior to 1995, the only copyright fees paid for the performance of music went to songwriters and composers, generally through associations like ASCAP and BMI. There was no copyright fee paid to the performer or record company for the performance of a particular recording of a song, under the assumption that they were compensated through record sales. It was also assumed that radio stations promoted sales by playing those recordings.
In 1995, Congress passed the Digital Performance Right in Sound Recordings Act (“DPRA”), which established a new copyright in the performance of digital sound recordings. Nonsubscription broadcast transmissions, defined as traditional over-the-air broadcasts of digital music, were exempted from the license.
Following the advent of Internet streaming and webcasting, Congress, in the Digital Millennium Copyright Act (“DMCA”), amended the DPRA to provide for a statutory webcasting license for nonsubscription digital transmissions, leaving intact the exemption for “nonsubscription broadcast transmissions.”
In a rulemaking proceeding concluded in 2000, the Librarian of Congress (acting on behalf of the U.S. Copyright Office) rejected the argument of broadcasters that simultaneous Internet transmissions of radio broadcasts were exempt from the license.1
The broadcasters appealed to a federal district court in Pennsylvania, which upheld the Copyright Office decision in August 2001. Bonneville Int’l v. Peters, 153 F. Supp. 2d 763 (E.D. Pa. 2001). Bonneville Int'l v. Peters, 153 F. Supp. 2d 763 (E.D. Pa. 2001). That decision was appealed to the U. S. Court of Appeals for the Third Circuit which, last Friday, affirmed both the district court and the Copyright Office, and rejected the claims of broadcasters that their Internet transmissions are exempt from the statutory license fee.
The court determined that AM/FM webcasting is not a “broadcast transmission,” finding that Congress could not have intended the broadcast exemption to apply to webcasting, since it would give every FCC licensee the ability to webcast freely without limitation. Although the broadcasters countered that the exemption applied only to simulcasting, the court could find no statutory language or legislative history to support that limitation. The court stated that “appellants must show something more than congressional silence to argue convincingly that Congress intended to lump AM/FM webcasting with over-the-air broadcasting” in the exemption. Rather, the court found that the copyright law exemption for broadcast transmissions made by a “terrestrial broadcast station” licensed by the FCC was intended to exempt only traditional over-the-air broadcasts made by those stations.
The court also noted that the copyright law exemption limiting nonsubscription broadcast transmissions to a 150-mile radius would make no sense if applied to webcasting, and that the legislative history confirms that the exemption is meant simply to protect the broadcaster/recording industry relationship in which “the sale of sound recordings has been promoted by the airplay decisions of radio broadcasters.”
The broadcast appellants have not yet determined whether to seek either a rehearing en banc (by the full appellate court) or Supreme Court review of this decision, although a substantive review by the Supreme Court is considered unlikely.
Please contact us if you have any questions regarding the webcasting license.2
1 Last year, the Librarian established a webcasting fee of 7/100 ¢ ($.0007) per performance for Internet transmissions.
2 The statutory webcasting rates previously set by the Copyright Office were valid through December 31, 2002. New rates have not yet been set, but the Copyright Office is requiring webcasters to pay under the old rates until a new rate is set. Furthermore, “small” webcasters may qualify for a lower rate.