Copyright Royalty Board Unconstitutional

July 12, 2012 · · Comments Off

On July 6, the DC Circuit Court of Appeals issued its decision in Intercollegiate Broadcasting v. Copyright Royalty Board. I had written about the case before — check out my article Is the Copyright Royalty Board Unconstitutional? for more background — but basically, this litigation arose out of rate determinations in front of the Copyright Royalty Board, an agency in the Library of Congress that sets royalty rates for a number of statutory licenses. Here, the statutory licenses regarded the use of sound recordings by “webcasters”, such as the Intercollegiate Broadcasting System. During an appeal of the Royalty Board’s determination to a federal court, Intercollegiate raised the argument that the rates were void because Copyright Royalty Judges are unconstitutionally appointed.

Though a headline declaring the Board unconstitutional is dramatic, the actual holding is quite narrow. The Circuit Court’s decision leaves the Board entirely intact, except for restrictions on the Librarian of Congress’s ability to fire Board Judges, which Congress included when it created the Board. The Court stated, “Specifically, we find unconstitutional all of the language in 17 U.S.C. § 802(i) following ‘The Librarian of Congress may sanction or remove a Copyright Royalty Judge . . . .’”1

The court reasoned that absent this ability to remove Copyright Royalty Judges, the Board’s authority and discretion to set royalty rates was so broad as to make them “principal officers” — and under the Constitution, only the President may appoint “principal officers.” However, the court concludes, “Once the limitations on the Librarian’s removal authority are nullified, they would become validly appointed inferior officers,” and the Constitution allows Congress the ability to vest appointment power of inferior officers “in the President alone, in the Courts of Law, or in the Heads of Departments” — the last of which includes the Librarian of Congress.

This last point, that the Librarian of Congress is a Head of a Department, had been contested by Intercollegiate Broadcasting in the same case. The Circuit Court rejected the claim.

The Library of Congress is an Executive Department

As I noted in my previous post on this subject, the Constitution doesn’t define “Department”, and current Supreme Court precedent on what constitutes a Department is “not … entirely clear.” Specifically, in Free Enterprise Fund v. PCAOB,2 the Court seemingly ignored the majority’s convulted definition of a Department from Freytag v. Commissioner3 and adopted the concurrence’s simpler definition.

The court here did the same. Under this definition, a Department is any “freestanding component of the Executive Branch, not subordinate to or contained within any other such component.” And the Library of Congress “clearly meets” this definition. Said the court:

To be sure, it performs a range of different functions, including some, such as the Congressional Research Service, that are exercised primarily for legislative purposes. But as we have mentioned, the Librarian is appointed by the President with advice and consent of the Senate, and is subject to unrestricted removal by the President. Further, the powers in the Library and the Board to promulgate copyright regulations, to apply the statute to affected parties, and to set rates and terms case by case are ones generally associated in modern times with executive agencies rather than legislators. In this role the Library is undoubtedly a “component of the Executive Branch.”

This means that both Circuits that have been faced with this question have held that the Library is an executive department under the Appointments Clause.4 This part of the decision I believe is fully correct, and hopefully should resolve any lingering doubts over the Librarian as a Head of a Department — relevant since the Librarian also appoints the Register of Copyrights, who engages in some executive functions.

The Impact of the Decision

The effect of this decision is limited to a vacation of the rate determination proceeding involving Intercollegiate Broadcasting and the other parties in this case — the proceeding starts over from square one, with the slight change that Copyright Royalty Judges can be removed without cause. It is uncertain whether parties in previous proceedings will launch their own constitutional challenges based on this decision, but it would seem that any future proceedings would be immune from Appointments Clause challenges now that the Circuit Court has struck down what it considers the unconstitutional removal provisions.

What does this mean constitutionally? It’s difficult to say. One can search in vain through the Constitution, the Convention Debates, or Ratification sources (like the Federalist Papers) to find Constitutional principles that were furthered by this decision. As I noted in my earlier piece, the Appointments Clause came about largely from discussion over the best way to ensure quality officers while minimizing cronyism and encroachment of one branch of government over another. The distinction between principal and inferior officers was added later as a nod to pragmatism — it would be inefficient for the President to have a hand in every single official appointment. The Heads of Departments and courts of law were seen as qualified enough to make those appointments — the only branch prohibited from appointing executive officers was Congress, based on separation of powers concerns.

So the strict formalist line of thought, unbounded by any principles, that the Circuit Court followed makes little sense. Limiting the Librarian of Congress’s ability to remove Copyright Royalty Judges doesn’t result in Congress encroaching on the Executive Branch’s authority; if anything, it minimizes the chances Judges would consider politics when making decisions. And it is odd that the current setup is more open to challenges under a clause designed to foster quality officers than the previous Copyright Royalty Tribunal, where members were appointed directly by the President. As William Patry noted, one Senator had said privately “the CRT was a dumping ground for unqualified people to whom the President owed a small favor.”

The only principle here would seem to be that Intercollegiate Broadcasting was unhappy with the rate determination made by the Copyright Royalty Judges and found a successful way to make a collateral challenge on constitutional grounds. No word yet on whether this decision will be appealed.

Footnotes

  1. 17 U.S.C. 802(i) in full reads (with the now unconstitutional language in italics):

    (i) Removal or Sanction.— The Librarian of Congress may sanction or remove a Copyright Royalty Judge for violation of the standards of conduct adopted under subsection (h), misconduct, neglect of duty, or any disqualifying physical or mental disability. Any such sanction or removal may be made only after notice and opportunity for a hearing, but the Librarian of Congress may suspend the Copyright Royalty Judge during the pendency of such hearing. The Librarian shall appoint an interim Copyright Royalty Judge during the period of any such suspension. [↩]

  2. 561 US ___ (2010). [↩]
  3. 501 U.S. 868 (1991). [↩]
  4. The other is the Fourth Circuit, in Eltra v. Ringer, 579 F.2d 294, 300-301 (1978). [↩]
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OPEN Act: Some Opening Thoughts

December 12, 2011 · · 15 comments

Senator Wyden, a vocal opponent of the PROTECT IP Act in the Senate and Stop Online Piracy Act in the House, has criticized the bills by saying that online piracy “is not an issue where we should use a bunker-buster bomb when a laser beam would do.”

But does the OPEN Act, draft language of which was unveiled last week by Wyden and other opponents of the existing bills, resemble the metaphorical laser beam, or is it more like a World War I dreadnought — expensive, unwieldy, and not very suited to today’s world?1

Though I’m encouraged that opponents of the existing bills recognize the harm that online commercial piracy causes creators, I think the OPEN Act resembles too much the latter. The definitions are far too narrow — it’s difficult to conceive of any site, even the most egregiously infringing site — that would fall within their scope. Its shift to the International Trade Commission would require a questionable expansion of federal bureaucracy. The resources required to bring a case in front of the ITC would place the bill’s remedies out of the hands of all but the largest copyright holders. All of this for what would amount to little more than a cease and desist letter to ad and payment service providers.

Some more detailed thoughts and questions about the bill:

Comparison to SOPA and PROTECT IP

SOPA and PROTECT IP provide for both actions by the Attorney General and actions by copyright holders, the OPEN Act provides only for actions by copyright holders. One of the major differences between the bills is venue: while SOPA and PROTECT IP actions would take place in federal courts, the OPEN Act specifically provides for such actions to occur in the International Trade Commission, a quasi-judicial, independent federal agency that specializes in unfair trade practices.

Like the private rights of action in SOPA and PROTECT IP, the right of action in the OPEN Act is limited to remedies against advertising providers and payment service providers.

I find some of the support of this change of venue interesting. For example, the EFF writes:

The International Trade Commission (ITC), an independent agency, would be tasked with investigating complaints from content owners. The ITC’s process, one which is currently used in the patent context, is transparent, quick, and effective. Both parties would have the opportunity to participate and the record would be public. The process would include many important due process protections, such as effective notice to the site of the complaint and ensuing investigation as well as the ability to challenge any final permanent injunction in a federal court.

This is interesting because there is little difference in theory between this and a federal court. Court proceedings are transparent and effective and provide due process protections. These kinds of statements are overly simplistic, since they gloss over the differences in practice between the ITC and a federal court proceeding.

I have yet to dive into the differences, but it strikes me as premature to declare an action through the ITC as inherently better or more fair than a court action. Federal courts are governed by the Federal Rules of Civil Procedure, administrative agencies have different procedural rules. Both venues have different rules of evidence. Both have different standards for keeping confidential business information accessible by the public.

And is it true that an action through the ITC would be quicker and cheaper than a court action?  According to one article, the average cost of an action through trial at the ITC is $2-3.75 million and takes 15-18 months, while the verge cost of a patent lawsuit through trial in federal court is $3-5 million and takes 2-3 years. It would seem that the ITC is quicker and cheaper, but as the article points out, 95% of patent lawsuits settle or are disposed before reaching trial, bringing the cost and time involved down significantly. Compare that to the ITC, where 40-50% of cases reach trial.

OPEN Act and DMCA

Some critics of SOPA warned that the bill would damage DMCA safe harbors2  — which immunize service providers engaged in certain, specific functions from liability for copyright infringement if they adhere to the provisions of the DMCA.

The OPEN Act looks to address this criticism. It states that a site is not subject to action under the bill if it “engages in an activity that would not make the operator liable for monetary relief for infringing the copyright under section 512 of title 17, United States Code.” This is a roundabout way of saying that if a site qualifies for one of the four DMCA safe harbors cannot be held liable in the ITC.

But what does that mean? The provisions for DMCA safe harbors are complex, and their interpretation has been subject of many court cases since their introduction in 1998. Appeals  dealing primarily with the meaning of 17 USC § 512(c)(1)(A)(ii) — so-called “red flag” knowledge — are currently pending in the Second and Ninth Circuits, for example, and may impact how sites like YouTube must operate in order to remain protected under the safe harbor.

The ITC (as far as I can tell)3  is bound to follow precedent from the Supreme Court — which hasn’t weighed in on the language of § 512 — and the Federal Circuit — which hasn’t either. The ITC would approach the DMCA from a blank slate. Far from being predictable, this means that guessing how the ITC interprets the DMCA is pure speculation.

But this point may be moot, as the OPEN Act also excludes action against sites that have “a practice of expeditiously removing, or disabling access to, material that is claimed to be infringing or to be the subject of infringing activity after notification by the owner of the copyright or trademark alleged to be infringed or its authorized representative.”

This is like a dystopian version of the DMCA safe harbors. A site can be protected under the OPEN Act even if it directly infringes and directly profits off infringement, so long as it “expeditiously” removes material when it is notified. There are also none of the protections of the DMCA — no counter-notification requirement, no provisions for misrepresenting the contents of a notification.

How Different are the Definitions?

The OPEN Act defines an “Internet site dedicated to infringing activity” as one that “has only limited purpose or use other than engaging in infringing activity and whose owner or operator primarily uses the site to willfully engage in infringing activity.”

Compare this to the definition of an “Internet site dedicated to theft of U.S. property” in SOPA, which would include a site that “is primarily designed or operated for the purpose of, has only limited purpose or use other than, or is marketed by its operator or another acting in concert with that operator for use in, offering goods or services in a manner that engages in, enables, or facilitates” copyright infringement; or a site where the operator “is taking, or has taken, deliberate actions to avoid confirming a high probability of the use of the . . . site to carry out acts that constitute” copyright infringement, or “operates the . . . site with the object of promoting, or has promoted, its use to carry out acts that constitute” copyright infringement “as shown by clear expression or other affirmative steps taken to foster infringement.”

SOPA’s definitions have been criticized as being too vague and broad.4 But are the two definitions, though worded differently, really that different?

I wrote earlier how SOPA’s definitions don’t create new liability, only new remedies. Websites that are engaged in the actions described in SOPA would largely be liable for copyright infringment under existing law. SOPA’s definitions explicitly incorporate these principles. The Open Act’s definitions don’t make reference to these principles — but that doesn’t mean they no longer exist.

Here’s one example: under the OPEN Act, action can be brought against a site where the operator “uses the site to willfully engage in infringing activity.” Willful infringement includes both direct and indirect infringement — vicarious and contributory infringement.5 Contributory infringement generally requires that someone has knowledge of direct infringement and materially contributes to the infringement.6 “Knowledge” can mean actual knowledge, but it can also mean willful blindness.7

The Supreme Court has defined “willful blindness” as taking “deliberate actions to avoid confirming a high probability of wrongdoing.”8 In other words, a site operator who “uses the site to willfully engage in infringing activity” can include, by definition, a site operator who is “taking, or has taken, deliberate actions to avoid confirming a high probability of the use of the . . . site to carry out acts that constitute” copyright infringement.”

Speculation? Consider this: less than two weeks ago, the ITC reversed an ALJ’s finding that a manufacturer had induced patent infringement based on the Supreme Court’s formulation of willful blindness.9

Another example of where a site operator can willfully engage in infringing activity is by inducing copyright infringement. DMCA safe harbors don’t protect such service providers.10 Inducement, as described by the Supreme Court in MGM v. Grokster, is promoting the use of a product or service to infringe, “as shown by clear expression or other affirmative steps taken to foster infringement.”

Again, this means that the difference in definitions between the two bills is one of wording: SOPA explicitly incorporates existing principles of liability, the OPEN Act incorporates existing principles implicitly.

More US Control over the Internet?

The following portion of the OPEN Act jumped out at me:

(5) LIMITATION ON INVESTIGATIONS OF DOMAIN NAMES; CONSENT TO JURISDICTION. Notwithstanding any other provision of this section, the Commission may not initiate an investigation under paragraph (1) with respect to a domain name if the operator of the Internet site associated with the domain name

(A) provides in a legal notice on the site accurate information consisting of

(i) the name of an individual authorized to receive process on behalf of the site;

(ii) an address at which process may be served;

(iii) a telephone number at which the individual described in clause (i) may be contacted; and

(iv) a statement that the operator of the site

(I) consents to the jurisdiction and venue of the United States district courts with respect to a violation under section 506 of title 17, United States Code, a criminal offense under section 1204 of title 17, United States Code, for a violation of section 1201 of such title, or a violation of section 2320 of title 18 of such Code; and

(II) will accept service of process from the Attorney General with respect to those violations and the offense set forth in subclause (I); and

(B) upon the filing of any civil action in the appropriate United States district court

(i) for infringement of copyright under section 501 of title 17, United States Code,

(ii) under section 1203 of title 17, United States Code, for a violation of section 1201 of such title, or

(iii) under section 32(1) of the Lanham Act, accepts service and waives, in a timely manner, any objections to jurisdiction as set forth in the statement described in subparagraph (A)(iv).

In short, this portion says that an action can’t be brought against a foreign website if the website owner consents to being sued in the US for copyright infringement. Foreign websites who don’t consent can be sued in the ITC, those who do can be sued in a US court. That means, if the bill passes, a US copyright owner would have the ability to bring legal action against every website in the world.

While I agree that the US and its residents should have some recourse against sites tht engage in US commerce and infringe against US rights, this part of the OPEN Act seems to go overboard in that regard.

Is the OPEN Act Constitutional?

Administrative agencies like the ITC exercise a mix of government functions — executive, legislative, and judicial — but (most) nominally reside in the executive branch. Very few people seriously argue that agencies in general are unconstitutional, but whenever an agency is granted new powers, it’s important to make sure that such a grant is constitutional.

“Separation of powers” and “checks and balances” should be familiar concepts to anyone in the US. Article III of the Constitution establishes an independent judiciary, providing that any judge is appointed for life, keeping judges free from undue influence by the executive or legislative branches.

But the Supreme Court has recognized three exceptions to this rule, where Congress can delegate judicial functions to agencies and courts that don’t provide for life tenure or otherwise aren’t a part of an independent judiciary. Congress can create non-Article III courts to govern U.S. territories, to administer courts-martial, and to adjudicate “public rights.”11

As is often the case, the Court didn’t nail down a precise definition of “public rights.” It merely noted:

The distinction between public rights and private rights has not been definitively explained in our precedents. Nor is it necessary to do so in the present cases, for it suffices to observe that a matter of public rights must at a minimum arise “between the government and others.” In contrast, “the liability of one individual to another under the law as defined,” is a matter of private rights. Our precedents clearly establish that only controversies in the former category may be removed from Art. III courts and delegated to legislative courts or administrative agencies for their determination. Private-rights disputes, on the other hand, lie at the core of the historically recognized judicial power.

A much earlier Court provided some examples of cases involving “public rights”:

Familiar illustrations of administrative agencies created for the determination of such matters are found in connection with the exercise of the congressional power as to interstate and foreign commerce, taxation, immigration, the public lands, public health, the facilities of the post office, pensions and payments to veterans.12

Administrative law judges in the ITC, who would preside over cases arising from this bill, are not Article III judges. The agency doesn’t preside over a U.S. territory or hear cases involving military regulations, so the question is whether cases under OPA involve “public rights.”

The Federal Circuit has heard a constitutional challenge to the ITC involving this question. It upheld the ITC’s authority to adjudicate international patent disputes, saying, “§ 337 and its predecessor provisions represent a valid delegation of this broad Congressional power [the power to regulate commerce with foreign nations] for the public purpose of providing an adequate remedy for domestic industries against unfair practices beginning abroad and culminating in importation.”13

Assuming the Federal Circuit’s reasoning is correct, I still wonder whether it extends to the new powers the ITC would have. For starters, a website engaging in digital piracy is quite different from a manufacturer importing infringing goods into the US. Online infringement involves unauthorized exercise of the exclusive rights of copyright, not commerce — and copyright has historically been adjudicated in Article III courts, not specialized legislative courts.

In addition, there’s less of a case to be made for copyright as involving “public rights” as there is for patent. A patent grant is a quid pro quo with the public: an inventor is given an exclusive monopoly on an invention in exchange for disclosing to the public the methods of the patent. Copyright includes no such quid pro quo — protection is automatically vested upon creation of a work.14

Even if constitutional, at the very least, this expansion of agency powers should raise concerns, especially considering the expense that would be involved. Congress should have a little more to go on than speculation about the effectiveness of an agency approach before devoting considerable time and resources to it.

Footnotes

  1. Wyden’s original metaphor makes little sense to me. On the one hand, “bunker-buster” bombs are used against targets that conventional weapons can’t take out and are designed for high accuracy and minimal collateral damage — precisely the type of remedies creators need online. Laser beams, on the other hand, are currently a long way from being useful as weapons. [↩]
  2. For example, David Sohn of the Center for Democracy & Technology has said, “This is a bill that would eviscerate the predictable legal environment created by the DMCA”; Markham Erickson of NetCoalition has said, “Both bills gut the Digital Millennium Copyright Act (DMCA)”; and Corynne McSherry of the Electronic Frontier Foundation has said SOPA ”would also threaten to effectively eliminate the DMCA safe harbors.” [↩]
  3. Generally, courts in common law systems are bound by stare decisis to follow precedent of all courts above them. Since ITC decisions are appealable to the Federal Circuit, I assume the ITC is bound by Federal Circuit decisions, though I haven’t been able to confirm this. [↩]
  4. For example, Ryan Radia of the Competitive Enterprise Institute has said, “The scope of websites encompassed by these provisions appears to be potentially vast”; Parker Higgins of the EFF has said, “the broad definitions and vague language in the bill could place dangerous tools into the hands of IP rightsholders”; Larry Downes of TechFreedom has labelled the definitons as ”a new category broadly defined by the bill.” [↩]
  5. See, for example, Sega Enterprises v. Maphia, 948 F.Supp. 923, 936 (ND Cali 1996), finding willful infringement for contributory copyright infringement. [↩]
  6. Gershwin Publishing v. Columbia Artists Management, 443 F.2d 1159, 1162 (2nd Cir. 1971). [↩]
  7. See In re Aimster Copyright Litigation, 334 F.3d 643, 650 (7th Cir. 2003), “Willful blindness is knowledge, in copyright law… as it is in the law generally.” [↩]
  8. Global-Tech Appliances v. SEB, 131 S.Ct. 2060, 2070 (2011). Coincidentally, Global-Tech was an appeal from a Federal Circuit decision. [↩]
  9. Commission opinion, In the Matter of Certain Ink Jet Cartridges, No. 337-TA-723, pp. 15-16 (ITC, Dec. 1, 2011). [↩]
  10. See Columbia Pictures v. Fung, 2:06-cv-05578-SVW-JC (CD Cali Dec. 21, 2009) “inducement liability and the Digital Millennium Copyright Act safe harbors are inherently contradictory. Inducement liability is based on active bad faith conduct aimed at promoting infringement; the statutory safe harbors are based on passive good faith conduct aimed at operating a legitimate internet business”; Arista v. Usenet, 663 F.Supp.2d 124, 142 (SDNY 2009), “if Defendants … encouraged or fostered such infringement, they would be ineligible for the DMCA’s safe harbor provisions.” [↩]
  11. Northern Pipeline v. Marathon Pipe Line, 458 US 50, 64-67 (1982). [↩]
  12. Crowell v. Benson, 285 US 22, 51 (1932). [↩]
  13. AKZO NV v. US International Trade Commission, 808 F.2d 1471, 1488 (Fed. Cir. 1986). [↩]
  14. See Eldred v. Ashcroft, 537 US 186, 214-17 (2003). [↩]
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Can the Copyright Office Regulate?

November 04, 2010 · · 1 comment

In my previous post about the Copyright Principles Project, I highlighted those proposals that recommend a greater role for the US Copyright Office. Whether or not the Copyright Office should take on a greater role is a subject that undoubtedly can generate plenty of discussion. But today, I want to look at a different issue:

Can the Copyright Office take on a greater role?

Certainly, Congress could easily add new positions to the Copyright Office to bolster its expertise, or the Office can be more active in its advisory role; I’m not talking about that. The question I’m asking relates to those recommendations that contemplate the Office exercising substantive agency powers — creating regulations (rulemaking) and  resolving disputes in a quasi-judicial manner (adjudication). And the question is not whether taking on these powers is practical or worthwhile, but whether taking on these powers is constitutional.1

It’s kind of an odd question; after all, the Office currently does exercise rulemaking powers — creating exceptions to the prohibition against circumventing DRM and technological protections2 — and its sister department within the Library of Congress, the Copyright Royalty Board, exercises adjudicatory powers — determining certain compulsory license rates in a court-like setting. But unlike administrative agencies that were specifically created to exercise these types of powers, the Copyright Office began as a “paper-pushing” department and only over time “grew into” a more robust agency.

This unusual path from ministerial department to something approaching a full-fledged administrative agency has given rise to lingering concerns about the consitutionality of the Copyright Office’s authority to engage in rulemaking and adjudication. To understand these concerns, let’s first take a quick look at how federal agencies in general can exercise these powers in a constitutional manner and then trace the growth of the Copyright Office’s authority since its humble beginnings.

Agencies and Separation of Powers

Today, much of federal law is executed through administrative agencies. Congress passes a law, and then agencies — the EPA, the FCC, the IRS, etc. — create regulations to fill in the details of the law. Agencies might also engage in adjudication, resolving disputes or adjusting regulatory benchmarks within their purview through judicial-esque proceedings. The basic idea behind this system is that agencies have greater expertise and flexibility than Congress to address these details.

In one sense, administrative agencies act like mini-versions of a three-branch government: combining legislative (creating regulations), judicial (adjudication), and executive (enforcing regulations) functions. The Constitution, however, establishes a federal government based on separation of powers. Since the New Deal, Congress and Presidents have increasingly relied on administrative agencies to carry out many government functions, so the courts have had to figure out ways to fit this “fourth branch” of government within the constitutional framework while maintaining checks and balances.

The Constitution prohibits Congress from delegating legislative power to another body. But since 1825, courts have recognized a distinction between general, “important” legislative provisions and mere details.3 Today, agencies can create regulations to “fill up the details” when “Congress clearly delineates the general policy, the public agency which is to apply it, and the boundaries of this delegated authority.”4

A second requirement to maintain constitutionally sufficient delegation is that the authority must go to an independent or executive branch agency; Congress cannot delegate quasi-legislative authority to a legislative agency.5 True legislation requires passage by both houses of Congress (bicameralism) and the President’s signature (presentment).6 If Congress retains any sort of control over the agency it delegates quasi-legislative authority to, courts view the delegation as a constitutionally improper circumvention of those two requirements. By control, I don’t mean mere influence. The control must be meaningful, like the ability to appoint or remove agency officers7 or the power to veto agency decisions.8

Growing into a Regulatory Agency

Many of the federal agencies today began during the New Deal, and were expressly authorized by Congress to regulate specific areas of the law. The Copyright Office, however, began a few decades earlier, without any substantive regulatory purpose as the goal. Under the first Copyright Act of 1790, copyright registrations were handled by district courts. This continued until 1870, when copyright administration was centralized in the Library of Congress. Congress created the Copyright Office in 1897 as a department within the Library dedicated to copyright administration. For most of the Copyright Office’s history, its duties were limited to processing registrations and other “ministerial” tasks.

The Copyright Office has had the authority to issue regulations since its creation, but it has historically exercised that authority in a limited manner — rules governing interest on late payments to the Office, for example.9 The triennial DRM exception rulemaking procedures set out in the DMCA in 1998 — 101 years after the Office was established — represents the first time the Copyright Office took on substantive rulemaking authority.

Perhaps because of the Copyright Office’s limited exercise of regulatory authority, little attention has been paid to whether that authority is constitutional. The notable exception is E. Fulton Brylawski’s 1976 article The Copyright Office: A Constitutional Confrontation,10 written during the build up to the passage of the Copyright Act of 1976. Brylawski argued that the Copyright Office was a legislative agency and the Act would give the Copyright Office rulemaking authority that exceeds what the Constitution allows. As discussed earlier, Brylawski is right on the latter point: a legislative agency can’t make regulations. But is he right on his first point? Is the Copyright Office indeed a legislative agency?

Legislative or Executive?

At first glance, it might be difficult to see how anyone could say the Copyright Office is not a legislative agency. The Copyright Office is a department within the Library of Congress. The Library of Congress is, well, of Congress. Not surprisingly, then, the US government places the Library of Congress in the legislative branch.11 Courts, too, have characterized the Library of Congress as legislative.12 The Copyright Office’s own website states that it is “part of the legislative branch of government.” And if you look through the US Code, you’ll find repeated references to the Library of Congress being in the legislative branch13 — the Library itself is codified under Title 2, which governs the legislative branch.

Noted copyright expert William Patry considers the above conclusive evidence that the Library of Congress, and by extension the Copyright Office, is a legislative agency. Other scholars have found the need to address the characterization of the Copyright Office when discussing proposals to increase rulemaking or adjudicatory authority. Michael Carroll notes lingering concerns about this subject in Fixing Fair Use.14 Edward Lee cites the fact that the Copyright Office is a legislative agency as one of the reasons why it cannot be relied upon to fill in gaps in the law through rulemaking.15

So … case closed, right? Not quite. When it comes to separation of powers, labels are irrelevant. After all, if the Library of Congress was renamed the National Library, it would be silly to think the constitutional analysis would change. What matters is what branch of government the Copyright Office is an agency of, and agency is determined by control.

Let’s take a look at the two most popular indicators of control: appointment (and removal) power and veto authority over regulations. The legislature has neither when it comes to the Copyright Office. The Register of Copyrights is appointed by (and can be removed by) the Librarian of Congress, who in turn is appointed by the President. Congress does not retain any power to approve or veto Copyright Office rules. Brylawski’s assertion that the Library of Congress is under the control of the Joint Committee of Congress on the Library? — simply not true.16

Most strikingly, Congress debated at some length about what branch of government held sway over the Library of Congress when the Copyright Office was being created and if the Office would constitutionally have authority to issue regulations. The final bill gave the Copyright Office rulemaking authority, reflecting the fact that Congress was satisfied that the setup they settled on was constitutionally sound.17

Settle it in the Courts

Brylawski got an opportunity to take his arguments to the courts. In 1978, he was the attorney for the plaintiff in Eltra v. Ringer, one of the few times the constitutionality of the Register of Copyright’s rulemaking authority was raised. The Fourth Circuit rejected the “label” argument, stating:

It is irrelevant that the Office of the Librarian of Congress is codified under the legislative branch or that it receives its appropriation as a part of the legislative appropriation. The Librarian performs certain functions which may be regarded as legislative (i. e., Congressional Research Service) and other functions (such as the Copyright Office) which are executive or administrative. Because of its hybrid character, it could have been grouped code-wise under either the legislative or executive department. But such code-grouping cannot determine whether a given function is executive or legislative.

The court noted that other courts, including the Supreme Court, had given weight to Copyright Office regulations for decades. “It seems incredible,” said the court, “that, if there were a constitutional infirmity” for that long, no one ever noticed it. In the end, the court concluded that the Copyright Office was an executive office, operating under an officer appointed by the President, not Congress.

The characterization of the Copyright Office as an executive office was reaffirmed in a March 2010 DC Circuit memorandum order. In Live365 v. Copyright Royalty Board, Live365 challenged the constitutionality of the appointment of Copyright Royalty Board Judges.

Wait, what? What does the appointment of Copyright Royalty Board Judges have to do with the rulemaking authority of the Copyright Office?

As it turns out, quite a bit. The question in Live365 boils down to: “is the Library of Congress an executive or legislative agency”: the same question involved in determining whether the Copyright Office has rulemaking authority.

The DC Circuit rejected the argument that the Library of Congress is a legislative agency. The President, not Congress, appoints the head of the department, so it is an executive agency.18

That, along with the fact that Congress doesn’t retain any veto authority over the Library’s (and Copyright Office’s) regulations, leads to the conclusion that the Copyright Office does have authority to issue substantive regulations. So yes, the Copyright Office can take on a greater role in the administration of copyright law. The Copyright Principles Project and other proposals have advanced various recommendations embracing a greater role for the Office, whether through Congress delegating additional regulatory arenas or through the creation of new adjudicatory bodies. The question remains whether the Office should be given a greater role. Given the benefits an agency may provide — flexibility and expertise — I think this question merits further exploration.

Footnotes

  1. This article is largely adapted from a section I wrote in Copyright Reform Step Zero. [↩]
  2. Technically, it is the Library of Congress which creates these regulations, after consulting with the Copyright Office, but for this article, I will be referring to the rulemaking authority of the Copyright Office regardless of which department ultimately promulgates the regulations. [↩]
  3. Wayman v. Southard (1825): “The line has not been exactly drawn which separates those important subjects, which must be entirely regulated by the legislature itself, from those of less interest, in which a general provision may be made, and power given to those who are to act under such general provisions to fill up the details.” [↩]
  4. Mistretta v. US, 488 US 361 (1989). [↩]
  5. Buckley v. Valeo, 424 U.S. 1, 138-41 (1976). [↩]
  6. INS v. Chadha, 462 U.S. 919, 946 (1983). [↩]
  7. Bowsher v. Synar, 478 U.S. 714, 726 (1986). [↩]
  8. INS v. Chadha at 954-59. [↩]
  9. MPAA v. Oman, 969 F.2d 1154, 1156 (DC Circ 1992). [↩]
  10. 44 George Washington Law Review 12. [↩]
  11. United States Government Manual, 2009-2010 p. v. [↩]
  12. See Harry Fox Agency v. Mills Music, 720 F.2d 733 (2d Cir. 1983) (“The Library of Congress … is a part of the legislative branch itself”); Barger v. Mumford, 265 F.2d 380, 382 (DC Cir. 1959) (“Library of Congress has long been treated as being in or under the jurisdiction of the legislative branch of the Government”). [↩]
  13. Check out 5 USC § 5531(4), for example. [↩]
  14. Pp. 1131-32. I noted previously that the proposal he makes inspired one of the possibilities for advancing recommendation #4 in the Copyright Principles Project. [↩]
  15. Warming up to User-Generated Content, 2008 University of Illinois Law Review 1459, 1475 (2008). [↩]
  16. 29 Cong. Rec. 1947 (1896) (Rep. Dockery). [↩]
  17. For a comprehensive list of citations to those debates, check out 1 William Patry, Patry on Copyright § 1:41 n.4, especially , e.g., 29 Cong. Rec. 318-19 (1896) (Rep. Dockery): “This Library of Congress is a department of the Government. It is an executive department and should be under the control of the executive branch”. [↩]
  18. For a detailed look at this and the other issues raised in Live365 v. CRB, check out Department of the Inferiors? posted at CommLawBlog. [↩]
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EMI Records v. UPC

October 18, 2010 · · Comments Off

On October 11, The Irish High Court ruled that it did not have the authority to order Irish internet service provider UPC to implement a graduated response solution – a so-called “three strikes” approach – to reduce online piracy. The four major record labels – Warner Music, Universal Music Group, Sony BMG, and EMI – had sought the injunction after successfully getting Irish ISP Eircom to adopt a similar solution in a settlement agreement earlier this year.

Canadian attorney and blogger Barry Sookman has a thorough write-up on the case that I highly recommend, EMI Records v UPC – the case for legislative solutions to illegal file sharing, which includes links exploring the issue of graduated response solutions to online piracy in more detail.

Since I’m in the US, my familiarity lies with US copyright law. However, this case does highlight some issues relevant to the distinction I made previously on this site between creative and consumptive infringement. Copyright critics frequently lump their concerns with both types of infringement together to create one big copyright bogeyman. But this conflation only hinders discussion of copyright policy.

Discussion of creative infringement centers upon internally substantive aspects of copyright law – for example, how do you draw a line between acceptable transformative use of a copyright work and infringing transformative use. When you talk about consumptive infringement – verbatim, substitutive use of a work – there’s very few substantive copyright issues to consider. Instead, the discussion centers around procedural and enforcement issues.

Case in point is the opinion from this case. While the case concerns the enforcement of copyrights, it isn’t so much a copyright case as it is a separation of powers case.

Reading the case, and paying attention to the language used, you can see that the Court fully accepts the positive value of copyrighted works and the damage online piracy causes. Justice Charleton seems highly sympathetic to the record label’s struggle against “Internet piracy.” He noted that piracy is not only a “grave economic wrong against copyright holders” but that copyright is a constitutionally protected right for creators under Irish law.

In the end, however, as much as Justice Charleton wants to help the record labels, he simply can’t. To see how he reached that conclusion,1 let’s take a quick trip down remedy lane to injunction junction.

Injunctive Relief and its Limitations

An injunction is simply a “court order commanding or preventing an action.”2 The modern remedy of injunctions developed in the equity courts of medieval England. Back then, the court system was divided between two separate court systems: courts of law and courts of equity. Courts of law were rigid and formal; plaintiffs were typically limited to receiving money to compensate for damages or injuries. Courts of equity, however, were more flexible and afforded a broader array of remedies to plaintiffs.3

The reasoning behind equitable remedies is that there are certain situations where monetary compensation is thought to be inadequate – inadequate in the sense that a money award is incommensurate with the injury. An example of such a situation is a neighbor who cuts across your lawn to get to his property. If you don’t like him doing this, and take him to court, money damages will probably be inadequate. The trespass results in only a nominal injury – a court will likely only award nominal damages, if it awards any damages at all. Even if it does, the neighbor can continue to trespass, forcing you to continue to sue. An injunction – a court order prohibiting your neighbor from further trespass – is a more adequate remedy, as it more directly addresses the result you want.

The separate courts of law and courts of equity have largely merged in common law countries, though the distinction between legal and equitable remedies remains.

As you might imagine, injunctions are a powerful remedy – and with great power comes great responsibility. Common law countries like the US and Ireland – both of which count English common law as an ancestor – generally recognize a legislature’s power to place limits on equitable remedies through statutes. In the US, Congress has limited the availability of injunctions in labor disputes and rate orders of state public utility commissions, for example.4

Leading the Court Beyond the Threshold of the Judicial Arm

Justice Charleton appears to have been willing to grant an injunction against UPC. He states that the “evidence convinces me that there is no just or convenient solution open to the record labels other than seeking injunctive relief against the service provider.” This evidence also convinced him that the injunctive relief sought by the labels – “detection, warning, and discontinuance” – is “proportionate to the vast scale of the problem.”

However, “courts must defer” to the legislature when the legislature has set out what remedies are available in a specific cause of action. Justice Charleton examines the legislative framework of Ireland relating to copyright thoroughly: examining both the text of the Copyright and Related Rights Act 2000 itself and construing it in light of European law, as well as comparing it to related legislation in other countries. This examination leads to his ultimate conclusion that the court is precluded from ordering the injunction sought by the record labels in this case.

Respecting, as it does, the doctrine of separation of powers and the rule of law, the Court cannot move to grant injunctive relief to the recording companies against Internet piracy, even though that relief is merited on the facts.

The Future of Graduated Response in Ireland

The decision appears to be only a setback for the music industry in Ireland. The Irish Times reports that “representatives of the music industry, internet service providers and the Government will now meet” to discuss new approaches to combating online piracy in light of the ruling.

An interesting twist in this case is that Justice Charleton was the same judge who presided over the record labels’ earlier lawsuit against Eircom. In that case, Eircom agreed to implement a graduated response procedure as part of a settlement agreement with the labels, so it is a bit unclear how the UPC decision will affect that agreement.

Charleton addresses the issue in the UPC ruling, stating that the previous judgment is both “correct” and “unaffected” by this case. However, there are suggestions that Eircom is exploring its options regarding its settlement agreement in response to this decision.

Aside from that, this decision is unlikely to have too much effect in the near future. Content industries in other countries continue to favor some sort of graduated response solution. But those efforts are largely being pursued through legislation – as has already happened in France – or through voluntary agreements with ISPs.

Footnotes

  1. And because I want to share my fascination with what many feel are the boring parts of law. [↩]
  2. Black’s Law Dictionary. [↩]
  3. James B. Stoneking, Injunctions and Equitable Remedies, Oxford Companion to the Supreme Court of the United States (Kermit L. Hall, ed., Oxford University Press, 2005). [↩]
  4. Congressional Limitation of the Injunctive Power, OneCLE. [↩]
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