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04/09/82 National Association of v. Copyright Royalty Tribunal

April 9, 1982

NATIONAL ASSOCIATION OF BROADCASTERS, PETITIONER

v.

COPYRIGHT ROYALTY TRIBUNAL, RESPONDENT MAJOR LEAGUE BASEBALL, ET AL., MOTION PICTURE ASSOCIATION OF AMERICA, INC., CHRISTIAN BROADCASTING NETWORK, INC., BROADCAST

ASSOCIATION, INTERVENORS; NATIONAL PUBLIC RADIO, PETITIONER

v.

COPYRIGHT ROYALTY TRIBUNAL, RESPONDENT MAJOR LEAGUE BASEBALL, ET AL., MOTION PICTURE ASSOCIATION OF AMERICA, INC., CHRISTIAN BROADCASTING NETWORK, INC., BROADCAST

LEAGUE, AND NORTH AMERICAN SOCCER LEAGUE, PETITIONERS

v.

COPYRIGHT ROYALTY TRIBUNAL AND THE UNITED STATES OF AMERICA, RESPONDENTS MOTION PICTURE ASSOCIATION OF AMERICA, INC., CHRISTIAN BROADCASTING NETWORK, INC., BROADCAST



Before J. EDWARD LUMBARD,* Senior Circuit Judge, MacKINNON and MIKVA, Circuit Judges.

UNITED STATES COURT OF APPEALS, DISTRICT OF COLUMBIA CIRCUIT

MUSIC, INC., SUPERSTATION, INC., NATIONAL PUBLIC RADIO,

PUBLIC BROADCASTING SERVICE, NATIONAL COLLEGIATE ATHLETIC

MUSIC, INC., NATIONAL ASSOCIATION OF BROADCASTERS,

SUPERSTATION, INC., PUBLIC BROADCASTING SERVICE, NATIONAL

COLLEGIATE ATHLETIC ASSOCIATION, INTERVENORS; MAJOR LEAGUE

BASEBALL, NATIONAL BASKETBALL ASSOCIATION, NATIONAL HOCKEY

MUSIC, INC., NATIONAL ASSOCIATION OF BROADCASTERS,

SUPERSTATION, INC., NATIONAL PUBLIC RADIO, PUBLIC

BROADCASTING SERVICE, NATIONAL COLLEGIATE ATHLETIC

ASSOCIATION, INTERVENORS; CANADIAN BROADCASTING

CORPORATION, PETITIONER v. COPYRIGHT ROYALTY TRIBUNAL, RESPONDENT CHRISTIAN BROADCASTING NETWORK, INC., MAJOR

LEAGUE BASEBALL, ET AL., BROADCAST MUSIC, INC., NATIONAL

ASSOCIATION OF BROADCASTERS, SUPERSTATION, INC., NATIONAL

PUBLIC RADIO, PUBLIC BROADCASTING SERVICE, NATIONAL

COLLEGIATE ATHLETIC ASSOCIATION, INTERVENORS; AMERICAN

SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, PETITIONER v.

COPYRIGHT ROYALTY TRIBUNAL, RESPONDENT CHRISTIAN

BROADCASTING NETWORK, INC., MAJOR LEAGUE BASEBALL, NATIONAL

ASSOCIATION OF BROADCASTERS, BROADCAST MUSIC, INC.,

SUPERSTATION, INC., NATIONAL PUBLIC RADIO, PUBLIC

BROADCASTING SERVICE, ET AL., NATIONAL COLLEGIATE ATHLETIC

ASSOCIATION, INTERVENORS

Nos. 80-2273, 80-2281, 80-2284, 80-2290, 80-2298 1982.CDC.93

Petitions for Review of Orders of the Copyright Royalty tribunal.

APPELLATE PANEL:

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MIKVA

These consolidated cases present various challenges to the first distribution of cable royalty fees under the 1976 Copyright Act, 17 U.S.C. § 101 et seq. (Supp. III 1979) (the Act). Respondent is a governmental agency, the Copyright Royalty Tribunal (Tribunal), whose function is to make an annual distribution of royalty fees paid by cable television operators for their retransmission of certain copyrighted programming. The Act invests the Tribunal with broad discretion in apportioning these royalty fees. Specific awards are reversible only if the agency's decision is not supported by "substantial evidence" or is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law" as defined by the Administrative Procedure Act, 5 U.S.C. § 706 (1976). Judged by these standards, the Tribunal's decision adequately supports and explains almost all of its royalty allocations, and these we affirm.

In conducting its first distribution under the Act, however, the Tribunal's treatment of one of the many claimants before it may have violated the procedural requirements of the Government in the Sunshine Act, 5 U.S.C. § 552b (1976), and the Tribunal's own regulations. We therefore remand a small portion of the decision before us-a $50,000 award initially allocated to National Public Radio-for further Tribunal proceedings. I. BACKGROUND

Cable television is one of a number of technological changes that have recently revolutionized the communications industry in America. Operation of cable systems typically involves the reception of broadcast beams by means of special antennae and transmission of these electronic signals by cable or other methods to the homes of subscribers. In Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390, 88 S. Ct. 2084, 20 L. Ed. 2d 1176 (1968), and Teleprompter Corp. v. CBS, Inc., 415 U.S. 394, 94 S. Ct. 1129, 39 L. Ed. 2d 415 (1974), the Supreme Court held that such reception and distribution of television broadcasts did not constitute a "performance" within the meaning of the Copyright Act of 1909. The Court recognized the commercial impact of its decisions, but concluded that "any ultimate resolution of the many sensitive and important problems in this field ... must be left to Congress." Teleprompter Corp. v. CBS, Inc., 415 U.S. at 414, 94 S. Ct. at 1141.

Congress responded to these decisions by enacting Section 111 of the Copyright Act of 1976, 17 U.S.C. § 111 (Supp. III 1979), which requires cable operators to pay royalties to the creators of copyrighted program material that is used by the cable systems. Congress recognized, however, that it would be impractical to require every cable operator to negotiate directly with every copyright owner. See H.R.Rep.No. 1467, 94th Cong., 2d Sess. 89 (1976) (hereinafter cited as House Report). Accordingly, the Act mandates two steps in this process. First, cable operators are required to obtain a copyright license and periodically pay royalty fees into a central fund (the Fund). *fn1 17 U.S.C. § 111(c), (d). Second, the Tribunal is then required to

distribute royalty fees deposited ... under section 111 and ... determine, in cases where controversy exists, the distribution of such fees.

17 U.S.C. § 801(b)(3). The Act requires that the Tribunal render its final distribution decision within one year of the start of these proceedings, and that it state the relevant criteria and facts relied on as well as the reasons for its decision. 17 U.S.C. § 803(b).

The Tribunal initiated the first royalty distribution under this scheme in August 1979, concerning cable royalties paid for the 1978 calendar year. *fn2 The Tribunal divided its proceeding into two "phases," based on the fact that the claimants to the Fund could easily be broken down into specific groups. "Phase I would determine the allocation of cable royalties to specific groups of claimants. Phase II would allocate royalties to individual claimants within ...


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