September 20, 2018
On September 18, 2018, Weil obtained a significant appellate victory on behalf of Pandora Media upholding a favorable determination by the Copyright Royalty Board (CRB) of sound recording royalty rates for “non-interactive” webcasters, such as Pandora, for the 2016-2020 license period. The U.S. Court of Appeals for the D.C. Circuit issued a 35-page opinion sustaining in full the CRB’s determination, which followed six weeks of trial that Weil led on behalf of Pandora in 2015.
Before the CRB, the recorded music industry, through its industry organization, SoundExchange, had sought, among other things, fees that would have increased the webcasters’ royalty rate by nearly 80% in the first year and escalate it even further thereafter. In December 2015, following trial proceedings, the CRB instead awarded only a very modest increase over the webcasters’ then-present royalty levels, closer to the webcasters’ proposed rate structure. The difference between the award and the royalties sought by the record labels will be billions of dollars over the term of the license for Pandora alone. For more information on the CRB trial win, please visit Weil’s earlier announcement.
Following the CRB’s determination, SoundExchange moved for a rehearing, which the CRB denied in March 2016, prior to issuing its final determination, which the Librarian of Congress published in the Federal Register in May 2016. SoundExchange then appealed to the D.C. Circuit.
On appeal, SoundExchange challenged four different aspects of the CRB’s determination, including the CRB’s adoption of benchmark royalty agreements – submitted by Pandora and another webcaster – in setting the “zone of reasonableness” for ad-based commercial non-interactive webcasters. Overruling SoundExchange’s arguments that, among other things, the use of these benchmarks was arbitrary and capricious, the court reaffirmed the broad discretion the CRB has to select, reject, and adjust proposed benchmarks in setting royalty rates.
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