ORAL ARGUMENT SCHEDULED FOR FEBRUARY 7, 2012 No. 11-1083 IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT INTERCOLLEGIATE BROADCASTING SYSTEM, INC., A RHODE ISLAND NON-PROFIT CORPORATION, Appellant, v. COPYRIGHT ROYALTY BOARD; LIBRARY OF CONGRESS, Appellees. COLLEGE BROADCASTERS, INC.; SOUNDEXCHANGE, INC., Intervenors for Appellees. ON APPEAL FROM A FINAL DETERMINATION OF THE COPYRIGHT ROYALTY BOARD FINAL BRIEF FOR APPELLEES TONY WEST Assistant Attorney General SCOTT R. MCINTOSH (202) 514-4052 KELSI BROWN CORKRAN (202) 514-3159 Attorneys, Appellate Staff Civil Division, Room 7216 U.S. Department of Justice 950 Pennsylvania Ave. NW Washington, DC 20530-0001 USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 1 of 58
58
Embed
Intercollegiate Broadcasting System v. Copyright Royalty Board - Final Brief for Appellees
No. 11-1083 IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT INTERCOLLEGIATE BROADCASTING SYSTEM, INC., A RHODE ISLAND NON-PROFIT CORPORATION, Appellant, v. COPYRIGHT ROYALTY BOARD; LIBRARY OF CONGRESS, Appellees. COLLEGE BROADCASTERS, INC.; SOUNDEXCHANGE, INC., Intervenors for Appellees. ON APPEAL FROM A FINAL DETERMINATION OF THE COPYRIGHT ROYALTY BOARD FINAL BRIEF FOR APPELLEES
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
ORAL ARGUMENT SCHEDULED FOR FEBRUARY 7, 2012
No. 11-1083
IN THE UNITED STATES COURT OF APPEALSFOR THE DISTRICT OF COLUMBIA CIRCUIT
INTERCOLLEGIATE BROADCASTING SYSTEM, INC.,A RHODE ISLAND NON-PROFIT CORPORATION,
Appellant,
v.
COPYRIGHT ROYALTY BOARD; LIBRARY OF CONGRESS,
Appellees.
COLLEGE BROADCASTERS, INC.; SOUNDEXCHANGE, INC.,
Intervenors for Appellees.
ON APPEAL FROM A FINAL DETERMINATION OF THE COPYRIGHT ROYALTY BOARD
FINAL BRIEF FOR APPELLEES
TONY WEST
Assistant Attorney General
SCOTT R. MCINTOSH (202) 514-4052KELSI BROWN CORKRAN (202) 514-3159
I. IBS’s Attack On The Merits Of The Royalty Rate Determination Is Baseless. ................................................................. 13
II. This Court Has Jurisdiction To Review Challenges To The Copyright Royalty Judges’ Rate Determinations........................ 14
III. Congress Constitutionally Vested The Power To Appoint The Copyright Royalty Judges In The Librarian Of Congress........................................................................................ 21
A. The Copyright Royalty Judges Are Inferior Officers Under The Appointments Clause............................... 21
ii
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 3 of 58
B. The Librarian Of Congress Is The Head Of A Department Within The Meaning Of The Appointments Clause. .............................................................. 29
1. The Librarian Of Congress Is Accountable To The President............................................................ 30
2. The Library Of Congress Is A “Department” Within The Meaning Of The Appointments Clause. ........................................................................... 33
3. IBS Mistakes Statutory Labels For Constitutional Authority. ............................................... 37
Federal Radio Commission v. General Electric Co.,281 U.S. 464 (1930)............................................................................... 16, 17, 19
Federal Radio Commission v. Nelson Bros. Bond & Mortgage, Co.,289 U.S. 266 (1933)........................................................................................... 18
Free Enterprise Fund v. Public Company Accounting Oversight Board, et al.,130 S. Ct. 3138 (2010)................................................. 12, 19, 25, 29, 33, 35, 42*
* Authorities on which the government chiefly relies.
iv
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 5 of 58
Freytag v. Commissioner of Internal Revenue,501 U.S. 868 (1991)................................................................. 26, 28, 34, 35, 41*
Ex parte Hennen,38 U.S. (13 Pet.) 230 (1839). ............................................................................. 30
Kalaris v. Donovan,697 F.2d 376 (D.C. Cir. 1983). .......................................................................... 30
Keeffe v. Library of Congress,777 F.2d 1573 (D.C. Cir. 1985). ........................................................................ 40
Lebron v. Nat’l R.R. Passenger Corp.,513 U.S. 374 (1995)........................................................................................... 41
Live365, Inc. v. Copyright Royalty Board,698 F. Supp. 2d 25 (D.D.C. 2010). ............................................ 25, 26, 28, 29, 37
Mazer v. Stein,347 U.S. 201 (1954)........................................................................................... 34
Mistretta v. United States,488 U.S. 361 (1989)..................................................................................... 42, 43
Morrison v. Olson,487 U.S. 654 (1988)..................................................................................... 25, 28
Program Suppliers v. Librarian of Congress,409 F.3d 395 (D.C. Cir. 2005). ............................................................................ 4
Recording Industry Ass’n of America v. Copyright Royalty Tribunal,662 F.2d 1 (D.C. Cir. 1981). ................................................................................ 4
v
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 6 of 58
Reno v. Flores,507 U.S. 292 (1993)........................................................................................... 16
SoundExchange, Inc. v. Librarian of Congress,571 F.3d 1220 (D.C. Cir. 2009). ........................................................................ 18
United States v. Booker,543 U.S. 220 (2005)........................................................................................... 20
United States v. First City National Bank of Houston, et al.,386 U.S. 361 (1967)........................................................................................... 19
United States v. Germaine,99 U.S. 508 (1878)................................................................................. 21, 22, 33
United States v. Salerno,481 U.S. 739 (1987)........................................................................................... 16
Washington Legal Foundation v. U.S. Sentencing Comm’n,17 F.3d 1446 (D.C. Cir. 1994). .......................................................................... 41
Wisconsin Public Power, Inc. v. FERC,493 F.3d 239 (D.C. Cir. 2007). .......................................................................... 13
Constitution:
U.S. Const., art. II, § 2, cl. 2. ...................................................................... 12, 21, 22
Act of January 26, 1802, 2 Stat. 128........................................................... 31, 37, 38
Copyright Act of 1870, 16 Stat. 212. ................................................................ 31, 39
Act of February 19, 1897, 29 Stat. 544............................................................. 31, 32
Copyright Act of 1976, Pub. L. No. 94-553, 90 Stat. 2541. ..................................... 4
Copyright Royalty and Distribution Reform Act of 2004,Pub. L. No. 108-419, 118 Stat. 2341. ....................................................................... 4
ix
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 10 of 58
1 N. Webster, American Dictionary of the English Language(1828) (def. 2) (1995 facsimile ed.). .................................................................. 33
20 Charles Alan Wright & Mary Kay Kane, Federal Practiceand Procedure (2009)........................................................................................ 19
About the Librarian, Previous Librarians of Congress,John Silva Meehan, http://www.loc.gov/about/librarianoffice/meehan.html (last visited Nov. 2, 2011). ........................................................... 31
Ben Perley Poore, The Library of Congress,46 Harper’s New Monthly Mag. 41 (1873). ...................................................... 38
Glover Cleveland, First Annual Message (First Term) to the Congressof the United States (Dec. 8, 1885), available at http://www.presidency.ucsb.edu/ws/?pid=29526#axzz1ca1unU5r. .................. 39
John Y. Cole, For Congress and the Nation: A ChronologicalHistory of the Library of Congress (1979)......................................................... 38
Library of Congress, Librarians of Congress: 1802-1974 (1975).......................... 38
R.R. Bowker, The American National Library,21 Lib. J. 357 (1896).......................................................................................... 39
Theodore Roosevelt, Message to the Senate and the House ofRepresentatives (Dec. 3, 1901), available athttp://www.presidency.ucsb.edu/ws/?pid=29542#axzz1ca1unU5r. .................. 40
William Dawson Johnston, 1 History of the Libraryof Congress:1800-1864 (1904).......................................................................... 38
xi
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 12 of 58
GLOSSARY
ALJ Administrative Law Judge
APA Administrative Procedure Act
CBI College Broadcasters, Inc.
CRS Congressional Research Service
IBS Intercollegiate Broadcast System, Inc.
JA Joint Appendix
xii
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 13 of 58
No. 11-1083
IN THE UNITED STATES COURT OF APPEALSFOR THE DISTRICT OF COLUMBIA CIRCUIT
INTERCOLLEGIATE BROADCASTING SYSTEM, INC.,A RHODE ISLAND NON-PROFIT CORPORATION,
Appellant,
v.
COPYRIGHT ROYALTY BOARD; LIBRARY OF CONGRESS,
Appellees.
COLLEGEBROADCASTERS, INC.; SOUNDEXCHANGE, INC.,
Intervenors for Appellees.
ON APPEAL FROM A FINAL DETERMINATION OF THE COPYRIGHT ROYALTY BOARD
FINAL BRIEF FOR APPELLEES
STATEMENT OF JURISDICTION
Appellant Intercollegiate Broadcasting, Inc. (“IBS”) challenges a final
determination of the Copyright Royalty Judges. The final determination was1
published in the Federal Register on March 9, 2011. See 76 Fed. Reg. 13026 (March
IBS refers to the agency as the “Copyright Royalty Board,” a term drawn1
from the regulations. See 37 C.F.R. § 301.1. This brief uses the statutory term“Copyright Royalty Judges,” see 17 U.S.C. § 801 et seq., following the Judges’ ownpractice in the final determination below.
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 14 of 58
9, 2011) (JA 1-33). IBS filed a notice of appeal in this Court on March 17, 2011,
within the time provided by 17 U.S.C. § 803(d)(1). This Court has jurisdiction under
17 U.S.C. § 803(d)(1).
STATEMENT OF THE ISSUES
(1) Whether appellant has failed to offer any ground for vacating or reversing
the Copyright Royalty Judges’ rate determination for noncommercial webcasting.
(2) Whether the judicial review scheme set forth in section 803(d)(3) of the
Copyright Act comports with Article III.
(3) Whether the appointment of the Copyright Royalty Judges by the Librarian
of Congress comports with the Appointments Clause.
PERTINENT STATUTES AND REGULATIONS
The pertinent statutes and regulations are set forth in the addendum to
appellant’s brief.
STATEMENT OF THE CASE
This is an appeal from a final determination of the Copyright Royalty Judges,
a three-judge regulatory body in the Library of Congress responsible for establishing
the default rates and terms for statutory licenses under the Copyright Act. See 17
U.S.C. § 801. The determination sets the rates and terms for royalty payments
relating to “webcasting” — that is, the transmission of copyrighted sound recordings
2
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 15 of 58
over the internet. Since 1998, the Copyright Act has provided a statutory license for
webcasting, as well as a related statutory license for the creation of ephemeral copies
in the process of webcasting. See 17 U.S.C. §§ 114(d)(2) & (f)(2); id. § 112(e)(4)
(collectively, the “webcasting statutory license”). Under these provisions, the rates
and terms of the statutory license are to be settled through voluntary negotiation
among the interested parties or, if the parties cannot agree, through ratemaking
proceedings before the Copyright Royalty Judges.
The Judges commenced the proceeding below to determine the rates and terms
of the statutory webcasting license for the period beginning January 1, 2011 and
ending December 31, 2015. The Judges issued their determination on March 9, 2011,
and this appeal followed.
STATEMENT OF THE FACTS
I. Statutory and Regulatory Background
The Copyright Act confers on the owner of a copyright a set of exclusive rights
in the copyrighted work. See generally 17 U.S.C. § 106. In certain cases, however,
the Act limits the exclusivity of those rights by granting access to the copyrighted
work to any person who satisfies conditions set by law, including payment of a
royalty to the copyright owner. Congress enacted the first such “statutory licensing”
3
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 16 of 58
scheme in 1909. See Recording Industry Ass’n of America v. Copyright Royalty
Tribunal, 662 F.2d 1, 3 (D.C. Cir. 1981).
The royalty rates for statutory licenses were once fixed by statute. Since 1976,
however, Congress has vested responsibility for setting and adjusting such rates in
a series of administrative bodies. See generally 70 Fed. Reg. 30901 (May 31, 2005).
The first such agency was the Copyright Royalty Tribunal, which operated for more
than fifteen years. See Copyright Act of 1976, Pub. L. No. 94-553, § 801, 90 Stat.
2541, 2594. In 1993, Congress dismantled the Copyright Royalty Tribunal and
transferred its functions to the Librarian of Congress, who established the royalty
rates for statutory licenses with assistance from ad hoc Copyright Arbitration Royalty
Panels. See, e.g., Program Suppliers v. Librarian of Congress, 409 F.3d 395, 397
(D.C. Cir. 2005).
In 2004, Congress established a new and permanent panel of three Copyright
Royalty Judges. See Copyright Royalty and Distribution Reform Act of 2004, Pub.
L. No. 108-419, 118 Stat. 2341 (codified at 17 U.S.C. § 801 et seq.). “The
expectation [was] that the Copyright Royalty Judges, appointed to staggered, six-year
terms, [would] provide greater decisional stability, yielding the advantages of the
former Copyright Royalty Tribunal, but with greater efficiency and expertise.” 70
Fed. Reg. at 30901. In contrast to the Copyright Royalty Tribunal, which functioned
4
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 17 of 58
as a free-standing administrative agency, Congress placed the Copyright Royalty
Judges within the Library of Congress and made them subordinate to the Librarian
of Congress. See 17 U.S.C. § 801 et seq.
A primary responsibility of the Judges is to “make determinations and
adjustments of reasonable terms and rates of royalty payments” under the statutory
license provisions of the Copyright Act. Id. § 801(b)(1). Ratemaking proceedings
for the royalty payments for statutory licenses take place at regular intervals, and the
timing of these proceedings is set by statute. See id. § 804.
This case involves non-interactive “webcasting,” also known as “internet
radio” — i.e., the transmission over the internet of copyrighted sound recordings
without selection by the listener, like a traditional radio station. Webcasting requires
a license under the Copyright Act because it involves the “performance” of
copyrighted sound recordings by digital audio transmission. See id. § 106(6). Under
the webcasting statutory license, the Copyright Royalty Judges have the responsibility
to establish “reasonable rates and terms” for royalty payments that “most clearly
represent the rates and terms that would have been negotiated in the marketplace
between a willing buyer and a willing seller.” Id. § 114(f)(2); see also id. § 112(e)(4).
In determining such rates and terms, the Judges must distinguish among different
types of webcasting services and “base their decision on economic, competitive and
5
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 18 of 58
programming information presented by the parties.” Id. § 114(f)(2)(B). The royalty
rates must also include “a minimum fee for each type of service.” Id. §§ 114(f)(2)(A),
112(e)(4).
The Act encourages parties to reach agreement regarding royalty rates and
terms through voluntary negotiation. See id. § 803(b); id. § 114(f)(3); id. § 112(e)(5).
Absent a settlement, however, the Copyright Royalty Judges will hold ratemaking
proceedings to establish the rates and terms of the royalty payments under the
statutory license. Pursuant to detailed procedures set forth in the Act, these
proceedings take the form of a multi-party administrative trial. Participating parties
must file written direct evidentiary statements, including witness testimony and
supporting exhibits, in which they specifically request a particular royalty rate. See
id. § 803(b)(6)(C)(i); 37 C.F.R. § 351.4. After written direct statements are filed,
discovery commences. See 17 U.S.C. §§ 803(b)(6)(C)(v), (vi), (ix). If, after an
additional settlement period, the parties still have failed to negotiate a settlement, see
id. § 803(b)(6)(C)(x), the Judges will schedule a hearing for the presentation of the
parties’ direct cases through live witness testimony, including cross-examination and
the introduction of evidence. 37 C.F.R. §§ 351.8, 351.10. After any further
necessary discovery, the parties prepare and submit written rebuttal statements (when
6
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 19 of 58
directed by the Judges), id. § 351.11, followed by proposed findings of fact and
conclusions of law, id. § 351.14.
The Act directs the Judges to issue their determination within 11 months of the
post-discovery settlement conference or 15 days before the expiration of the prior
royalty rates and terms, whichever is earlier. 17 U.S.C. § 803(c)(1); 37 C.F.R. §
352.2. The Judges’ determination “shall be supported by the written record and shall
set forth the findings of fact relied on.” 17 U.S.C. § 803(c)(3). If the Judges are
confronted with a novel and material question of copyright law, they must obtain a
written opinion on the question from the Register of Copyrights, and then apply the
Register’s conclusions in their determination. Id. § 802(f)(1)(B). The Register also
reviews the Judges’ determination and issues corrections of any material legal errors.
Id. § 802(f)(1)(D). The Register, like the Judges, acts under the direction of the
Librarian. See id. § 701(a).
A final determination of the Copyright Royalty Judges is subject to direct
appeal to this Court by “any aggrieved participant . . . who fully participated in the
proceeding and who would be bound by the determination.” Id. § 803(d)(1). The Act
incorporates by cross-reference the standard of judicial review set forth in section 706
of the Administrative Procedure Act, which provides that the reviewing court shall
“decide all relevant questions of law,” and hold unlawful and set aside agency action
7
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 20 of 58
found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law,” “without observance of procedure required by law,” or
IBS’s challenge rests entirely on an 80-year-old case, Federal Radio
Commission v. General Electric Co., 281 U.S. 464 (1930) (“Federal Radio I”), in
which the Supreme Court held that it lacked jurisdiction to review a decision by the
Court of Appeals of the District of Columbia because that court was a “legislative
16
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 29 of 58
court” created pursuant to Article I and had entered the challenged decision in its
administrative, rather than judicial, capacity. See id. at 467-68. IBS’s argument
appears to be that section 803(d)(3) is unconstitutional because it confers
responsibilities on this Court that are akin to the administrative review exercised by
the Court of Appeals of the District of Columbia in issuing the determination
challenged in Federal Radio I. Appellant’s Br. 11. The Radio Act provided at the
time that the Federal Radio Commission’s licensing decision could be appealed to the
Court of Appeals of the District of Columbia, which would not only review “all
papers and evidence presented upon the [licensing] application,” but could also “take
additional evidence upon such terms and conditions as it may deem proper,” and then
“alter or revise the decision appealed from and enter such judgment as to it may seem
just.” Federal Radio I, 281 U.S. at 467. In other words, the Court of Appeals’ review
was de novo in every respect — the provision for appeal did “no more than make
[the] court a superior and revising agency in the same field.” Id.
Section 803(d)(3) is not comparable in any meaningful sense. Section
803(d)(3) authorizes this Court to enter its own determination only after finding the
Copyright Royalty Judges’ determination to be unlawful pursuant to the highly
deferential standard of review set forth in the APA. Unless the Judges’ decision is,
for example, arbitrary and capricious, or unsupported by substantial evidence, this
17
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 30 of 58
Court will affirm their judgment. See 5 U.S.C. § 706; see also SoundExchange, Inc.
v. Librarian of Congress, 571 F.3d 1220, 1225 (D.C. Cir. 2009) (observing that the
Court “owe[s] substantial deference” to the decisions of the Copyright Royalty
Judges). This is the same standard of judicial review that the Supreme Court
subsequently upheld in Federal Radio Commission v. Nelson Bros. Bond &
Mortgage, Co., 289 U.S. 266 (1933) (“Federal Radio II”). Following Federal Radio
I, Congress amended the Radio Act so as to limit the Court of Appeals’ review to
“questions of law,” providing that “findings of fact by the commission, if supported
by substantial evidence, shall be conclusive unless it shall clearly appear that the
findings of the commission are arbitrary or capricious.” Id. at 275-76. Relying on
Federal Radio I, the respondents in Federal Radio II argued that the Supreme Court
lacked jurisdiction to review the Court of Appeals’ decision reversing the challenged
Federal Radio Commission determination. The Supreme Court rejected that
argument, explaining that “in sharp contrast with the previous grant of authority,” the
amended standard of review “manifestly demand[ed] judicial, as distinguished from
administrative, review.” Id. at 276.
Section 803(d)(3) is also distinguishable from the judicial review provision in
Federal Radio I because, if this Court were to decide to enter its own determination
regarding royalty rates in a particular case, it would do so based on the record
18
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 31 of 58
amassed by the Copyright Royalty Judges. Nothing in section 803(d)(3) suggests that
this Court should or could “take additional evidence,” Federal Radio I, 281 U.S. at
467, or engage in any other inquiries resembling administrative proceedings.2
In short, IBS has failed to provide any basis for questioning the
constitutionality of the standard for judicial review set forth in section 803(d)(3). But
even assuming for argument’s sake that Article III prohibits this Court from entering
its own determination pursuant to section 803(d)(3), the offending sentence in the
statute would not require this Court to strike down the entire scheme established by
Congress for determining royalty rates under the Copyright Act. The Supreme Court
has observed that, “[g]enerally speaking, when confronting a constitutional flaw in
a statute, we try to limit the solution to the problem, severing any problematic
portions while leaving the remainder intact.” Free Enterprise Fund, et al. v. Public
Co. Accounting Oversight Board, et al., 130 S. Ct. 3138, 3161 (2010) (internal
quotation omitted). Likewise, this Court has recognized that “in order to avoid
invalidating more of a statute than necessary, we are to start with a presumption in
Although, as explained, Federal Radio I is easily distinguishable from the2
present case, we note that commentators have questioned Federal Radio I’sprecedential value following the Supreme Court’s decision in United States v. FirstCity National Bank of Houston, et al., 386 U.S. 361 (1967), which upheld a 1966statute providing for de novo judicial review of administrative decisions to permitcertain bank mergers. See 20 Charles Alan Wright & Mary Kay Kane, FederalPractice and Procedure § 16 (2009) (“After this decision, it is hard to see whatvitality, if any, is left in the first Federal Radio Commission case.”).
19
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 32 of 58
favor of severability.” Bismullah v. Gates, 551 F.3d 1068, 1071 (D.C. Cir. 2009)
(internal quotation and alteration omitted). Accordingly, “[u]nless it is evident that
the legislature would not have enacted those provisions which are within its power,
independently of that which is not, the invalid part may be dropped if what is left is
fully operative as a law.” Buckley v. Valeo, 424 U.S. 1, 108 (1976) (internal
quotation omitted); see also, e.g., United States v. Booker, 543 U.S. 220, 246 (2005);
Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 685 (1987).
IBS cannot dispute that the Copyright Act would be fully operative as a law
even if this Court were to excise the portion of section 803(d)(3) empowering it to
enter its own rate determination. This Court would still have authority to fully review
the Copyright Royalty Judges’ determinations in accordance with section 803(d)(3)’s
incorporation of the standard of review set forth in the APA. And this Court would
still have authority to affirm, reverse, or vacate the Judges’ determination, and to
remand the case to the Judges for further proceedings consistent with the Court’s
holdings. IBS has failed to point to any evidence that Congress would have declined
to enact the Copyright Act’s entire scheme for determining royalty rates if it lacked
authority to empower this Court to enter its own determination rather than reversing
or remanding for further proceedings. Accordingly, the determination below is valid
regardless of IBS’s Article III challenge to section 803(d)(3).
20
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 33 of 58
III. Congress Constitutionally Vested The Power To Appoint The CopyrightRoyalty Judges In The Librarian Of Congress.
The Appointments Clause provides that the President “shall nominate, and by
and with the Advice and Consent of the Senate, shall appoint . . . Officers of the
United States.” U.S. Const., art. II, § 2, cl. 2. Congress may, however, “vest the
Appointment of such inferior Officers, as they think proper, in the President alone,
in the Courts of Law, or in the Heads of Departments.” Id. IBS cannot demonstrate
that Congress exceeded its power under this provision by vesting the right to appoint
the Copyright Royalty Judges in the Librarian of Congress. The Copyright Royalty
Judges are inferior officers who are constitutionally appointed by the “Head” of a
“Department.”
A. The Copyright Royalty Judges Are Inferior Officers Under The Appointments Clause.
Not all federal appointees are “Officers of the United States” in the
constitutional sense, but those who are must be appointed in conformance with the
Appointments Clause. See U.S. Const., art. II, § 2, cl. 2; Buckley v. Valeo, 424 U.S.
1, 125-26 (1976) (per curiam). An “officer” is a federal official who exercises
“significant authority pursuant to the laws of the United States.” Buckley, 424 U.S.
at 126. The Appointments Clause divides all “officers ” into two categories: principal
officers and inferior officers. See U.S. Const., art. II, § 2, cl. 2; United States v.
21
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 34 of 58
Germaine, 99 U.S. 508, 509-10 (1878). Principal officers must be appointed through
nomination by the President with the advice and consent of the Senate. U.S. Const.,
art. II, § 2, cl. 2; Buckley, 424 U.S. at 132. Congress is permitted, however, to make
inferior officers appointable by the President alone, the Courts of Law, or Heads of
Departments. U.S. Const., art. II, § 2, cl. 2; Buckley, 424 U.S. at 132. Although IBS
asserts that the Copyright Royalty Judges are principal officers, the precedent of the
Supreme Court and this Court establish that the Copyright Royalty Judges are inferior
officers.
Both principal and inferior officers “exercise . . . significant authority” on
behalf of the United States. Edmond v. United States, 520 U.S. 651, 662 (1997).
Although there is no “exclusive criterion” for distinguishing between the two,
“[g]enerally speaking, the term ‘inferior officer’ connotes a relationship with some
higher ranking officer or officers below the President: Whether one is an ‘inferior’
officer depends on whether he has a superior.” Id. The Supreme Court has
accordingly explained that an inferior officer is an officer “whose work is directed
and supervised at some level by others who were appointed by Presidential
nomination with the advice and consent of the Senate.” Id. at 663.
This analysis easily encompasses the Copyright Royalty Judges. The Judges
are limited to six-year terms,17 U.S.C. § 802(c), during which they are subordinate
22
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 35 of 58
to the Librarian of Congress, a principal officer of the United States appointed by the
President with the advice and consent of the Senate, 2 U.S.C. § 136. The Judges’3
authority is limited to matters relating to the establishment of royalty rates for a small
number of compulsory licenses enumerated in the Copyright Act. See 17 U.S.C. §
801(b). The Judges are expressly required to “act in accordance with regulations
issued by . . . the Librarian of Congress.” Id. § 803(a)(1). Any procedural regulations
issued by the Judges themselves, including rules governing royalty ratemaking
proceedings, must be approved by the Librarian. Id. § 803(b)(6). The Librarian is
authorized to promulgate binding ethical rules and to enforce those rules against the
Judges. Id. §§ 802(h), (i). The Librarian also causes the Judges’ decisions to be
published. Id. § 803(c)(6). The Judges lack space or administrative resources, and
are wholly reliant on the Librarian for support. Id. §§ 801(d), (e). And if the Judges
find themselves idle between ratemaking proceedings, they may be assigned other
Prior to Congress’s establishment of the Copyright Royalty Judges in 2004,3
royalty rates for statutory licenses were set by the now-defunct Copyright RoyaltyTribunal. See generally 70 Fed. Reg. 30901 (May 31, 2005). Because the Tribunalwas a free-standing agency, not contained within any executive department and notsupervised by any executive officer, Congress provided that the Tribunal’s membersbe appointed by the President with the advice and consent of the Senate. Congresscould have established the Copyright Royalty Judges on the same model, but insteadopted to make the Judges inferior officers appointed by the Librarian, the “Head” ofthe Library, who in turn is subject to plenary oversight by the President. TheConstitution permits Congress to choose either of these routes in complying with theAppointments Clause.
23
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 36 of 58
duties at the discretion of the Register of Copyrights, who likewise acts under the
direction of the Librarian. Id. § 801(b)(8); id. § 701(a).
Through the Register, the Librarian also has authority to review and correct the
legal determinations of the Copyright Royalty Judges. In creating the Judges,
Congress reserved to the Register — who acts under the Librarian’s general direction
and supervision — the authority to interpret the copyright laws. The Copyright Act
accordingly directs the Judges to obtain a written opinion from the Register on all
“novel material questions” of copyright law, and stipulates that the Judges “shall
apply” the Register’s conclusions in their ratemaking determinations Id. §
802(f)(1)(B). Moreover, the Register has the power to “review for legal error” all
determinations by the Copyright Royalty Judges and to “correct[]” any such errors in
the Judges’ reasoning or conclusions. Id. § 802(f)(1)(D). Such “correct[ions]” are
not only expressly made part of the record in the cases in which they arise, but are
also “binding as precedent” on the Judges in future cases. Id. Thus, the Copyright
Royalty Judges “are officers whose work is directed and supervised at some level by
others who were appointed by Presidential nomination with the advice and consent
of the Senate.” Edmond, 520 U.S. at 663.
Finally, the Librarian enjoys the authority to remove the Copyright Royalty
Judges for misconduct or neglect of duty. 17 U.S.C. § 802(i). The Supreme Court
24
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 37 of 58
has held that “[t]he power to remove officers . . . is a powerful tool for control,”
Edmond, 520 U.S. at 664, and indicated that officers are inferior even if they may be
removed only for cause, see Morrison v. Olson, 487 U.S. 654, 663, 671 (1988)
(“[T]he fact that [the officer] can be removed by the Attorney General indicates that
she is to some degree ‘inferior’ in rank and authority.”); see also Free Enterprise
Fund, et al. v. Public Co. Accounting Oversight Board, et al., 130 S. Ct. 3138, 3153
(2010) (discussing Morrison with approval).4
Indeed, the Copyright Royalty Judges’s status as inferior officers was recently
affirmed by the United States District Court for the District of Columbia. See
Live365, Inc. v. Copyright Royalty Board, 698 F. Supp. 2d 25 (D.D.C. 2010). The
plaintiff, Live365, sought to enjoin the proceedings below here on the ground that the
Copyright Royalty Judges were appointed in violation of the Appointments Clause.
Denying Live365’s motion for a preliminary injunction, the district court concluded:
“Upon careful examination . . . it appears that the CR Board judges are in fact
sufficiently subordinate to both the Librarian of Congress and the Register of
In Free Enterprise Fund, the Court struck down a statutory scheme that4
provided two layers of tenure protection: the inferior officer could be removed by theprincipal officer only for cause, and the principal officer could be removed by thePresident only for cause. 130 S. Ct. 3153-54. Because the Librarian may be removedat will by the President, see infra pp. 30-33, the statutory scheme at issue here fallssquarely under Morrison, which upheld “one level of protected tenure separat[ing]the President from an officer exercising executive power.” Id. at 3153.
25
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 38 of 58
Copyrights to qualify as inferior officers, and thus, their appointments by the
Librarian do not offend the Appointments Clause.” Id. at 39.
IBS nonetheless asserts that the Judges are principal officers “[b]ecause their
statutory duties include, but are not limited to, presiding over hearings, commanding
testimony, [and] compelling discovery . . . without supervision of the Librarian.”
Appellant’s Br. 14. This argument fails for several reasons. First, this Court has held
that not everyone who “take[s] testimony, conduct[s] trials, rule[s] on the
admissibility of evidence, and ha[s] the power to enforce compliance with discovery
orders” is even an “officer” within the meaning of the Appointments Clause, let alone
a principal officer. Landry v. Fed. Deposit Ins. Corp., 204 F.3d 1125, 1134 (D.C.
Cir. 2000) (internal quotation omitted). At least some Administrative Law Judges
(“ALJs”), for example, are “employees,” not “officers.” Id. Although the Copyright
Royalty Judges, unlike the ALJs in Landry, issue decisions that are final, this was
equally true of the special tax trial judges whom the Supreme Court determined to be
inferior officers in Freytag v. Commissioner of Internal Revenue, 501 U.S. 868, 881-
82 (1991).
Second, IBS misunderstands what it means to be “under supervision” for the
purpose of determining whether a federal appointee is an inferior officer. Although
the Copyright Royalty Judges enjoy independence in the conduct of their
26
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 39 of 58
proceedings, they expressly remain “[s]ubject to” the Register’s interpretation of
applicable law. See 17 U.S.C. § 802(f)(1)(A)(I). The Register’s power to “review”
and “correct[]” any legal errors in the Judges’ determinations, id. § 802(f)(1)(D),
along with the host of other restrictions described above, see supra pp. 22-25, more
than satisfy the requirement that the Judges’ work be “directed and supervised at
some level.” Edmond, 520 U.S. at 663.
Indeed, the Supreme Court has flatly rejected the notion that inferior officers
must be subject to interference with their procedural and factual determinations in
particular cases. In Edmond, for example, the Court held that civilian judges
appointed to the Coast Guard Court of Appeals by the Secretary of Transportation
were inferior officers, despite the fact that they (i) cannot be directed to decide
particular cases in particular ways in the first instance, (ii) cannot be removed based
on their rulings in individual cases, and (iii) enjoy highly deferential review from the
Court of Appeals for the Armed Forces. See id. at 664-65. Indeed, the civilian Coast
Guard judges not only weigh evidence and make findings of law and fact, including
credibility determinations, but also wield other, more significant powers, including
review of “court-martial proceedings that result in the most serious sentences,
including . . . death, dismissal . . ., dishonorable or bad-conduct discharge, or
confinement for one year or more.” Id. at 662 (internal quotation omitted). The
27
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 40 of 58
Copyright Royalty Judges’ authority to set royalty payment rates for statutory licenses
cannot possibly be more “principal” than the authority of Coast Guard judges to
review death sentences.
Likewise, the Supreme Court concluded that the independent counsel in
Morrison were inferior officers even though they enjoyed “full power and
independent authority to exercise all investigative and prosecutorial functions and
powers of the Department of Justice, the Attorney General, and any other officer or
employee of the Department of Justice,” 487 U.S. at 662, 671-72 (internal quotation
omitted). So, too, did the Court conclude that the special tax trial judges in Freytag
were inferior officers despite issuing final decisions and “exercis[ing] independent
authority.” 501 U.S. at 882; see also Live365, 698 F. Supp. 2d at 39-40 (observing
that “[i]n 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.”). The district court in Live365
thus correctly concluded that “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
28
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 41 of 58
and the Register renders them inferior rather than principal officers.” Live365, 698
F. Supp. 2d at 40.
B. The Librarian Of Congress Is The Head Of A Department WithinThe Meaning Of The Appointments Clause.
IBS argues in the alternative that the Copyright Royalty Judges are inferior
officers but that their appointment by the Librarian of Congress is unconstitutional
because the Librarian is not a “Head[] of Department” in whom Congress may vest
appointment authority. Appellant’s Br. 15-17. This argument is also wrong.
For the purposes of the Appointments Clause, a “Department” is any principal
agency “in the Executive Branch or at least [with] some connection [to] that branch.”
Buckley, 424 U.S. at 127; see also Free Enterprise Fund, 130 S. Ct. at 3162-63. The
Library of Congress readily qualifies as a “Department” under this standard. The
President’s power to appoint and remove the Librarian reflects Congress’s purposeful
and explicit decision to place the Library within the Executive Branch for
Appointments Clause purposes. The Library’s executive nature in this respect is
further confirmed by many of the functions it performs, including the particular
function at issue in this case — the administration of copyright law. While certain
components of the Library, particularly the Congressional Research Service, are
directly charged with serving Congress, it is neither unusual nor constitutionally
problematic for a Department under the Appointments Clause to include components
29
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 42 of 58
charged with providing assistance to other branches. For the purposes of
constitutional separation of powers, all that matters is that the Head of the Library is
accountable to the President and is appointed in conformity with the Appointments
Clause.
1. The Librarian Of Congress Is Accountable To The President.
The Librarian of Congress is “appointed by the President, by and with the
advice and consent of the Senate.” 2 U.S.C. § 136. No statute limits the President’s
oversight of the Librarian, nor has Congress reserved to itself the power to review or
influence the Librarian’s conduct in office. Cf. Bowsher v. Synar, 478 U.S. 714, 730-
31 (1986) (holding that the Comptroller General is a congressional agent because
Congress retained removal authority). The Librarian “make[s] rules and regulations
for the government of the Library,” 2 U.S.C. § 136, and in discharging that
responsibility, he is accountable to the President alone.
An incident of the President’s appointment power is that there are no
limitations on the President’s power to remove the Librarian. See Ex parte Hennen,
38 U.S. (13 Pet.) 230, 259 (1839); Kalaris v. Donovan, 697 F.2d 376, 389 (D.C. Cir.
1983). It has long been recognized that the Librarian is removable by the President
at will. See, e.g., 29 Cong. Rec. 378 (1896) (Rep. Bingham) (“President Cleveland
to-day can by a mere stroke of his pen change or remove the Librarian of Congress
30
USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 Page 43 of 58
for any cause or reason good to himself, or for a more efficient administration of the
Library.”). President Jackson in fact removed the Librarian of Congress after the
Librarian publicly criticized President Jackson and his family. Id. In turn, President
Lincoln later removed the Librarian whom Jackson had appointed and replaced him
with a Republican. See About the Librarian, Previous Librarians of Congress, John