Fledgling Copyright Royalty Board Blasted By Critics

The judges -- Stanley Wisniewski, James Sledge and William Roberts -- have a skeleton staff and essentially no space for reporters or members of the public to look at transcripts and exhibits, which are voluminous, sources told us. “It appears to me that we're faced with an orphan agency. The statute directs the Librarian [of Congress] to support the Board, but it’s not obvious that that is happening,” said an attorney for one of the parties involved.

Copyright owners kicked off CRB’s maiden trial in May by presenting their case, and then royalty collector SoundExchange offered its evidence. Webcasters presented their direct case in June, and rebuttals are coming up next. The trial is open to the public, but no detailed scheduling information is publicized and the old space was cramped. During the trial, transcripts of the proceeding are available for inspection on-site at CRB. Little documentation is made available online. After the trial, an official written record will be available for inspection, but by appointment only, CRB said. Parties include the RIAA, licensing entity Royalty Logic, the Digital Media Assn. (DiMA) representing members like Yahoo and Live365, broadcasters like Clear Channel, NPR, National Religious Broadcasters, SBR Creative Media, small webcasters and college broadcasters.

The intent of the Copyright Royalty and Distribution Reform Act was to streamline such proceedings and bring greater certainty by having a permanent board, said a person familiar with the proceeding: “I'm not sure those goals have been achieved.” Everyone involved was nervous from the start “because you're dealing with 3 new judges, only one of whom has any substantial copyright experience,” another source close to the case told us. To add to the parties’ frustration, the CRB operates under a different set of rules from its predecessor’s and it has been hard to get the new judges “nailed down on things” including trial scheduling, the official said. Sometimes the judges haven’t explained their orders fully, adding to parties’ frustration, sources agreed. “We're all cutting our teeth together. We're the guinea pigs here,” one source said.

The law that changed CARP to CRB instituted “a whole bunch of changes, [and] in reality those procedures are turning out to be problematic,” an official said. The judges have taken an expansive view of evidence discovery -- more so than the parties had hoped, some told us. Expanded discovery -- now including the opportunity to take depositions - and broad document requests have meant more work for everyone involved. “It’s jam-packed into 60 days, which is virtually no time. In some ways, they try to do way too much in too little time,” a source said. The hearing is taking “way, way longer than anyone expected” and has become more costly, the source said. The board’s ruling is required by March 2007.

The judges haven’t pushed the proceeding along fast enough, some frustrated participants told us. They have permitted attorneys to engage in excessive examination of witnesses and have allowed multiple parties to cross-examine them, sources said. They have allowed lawyers to cover the same ground repeatedly and conduct examinations that “have gotten nowhere and not addressed information relative to the proceeding.” In a typical federal courtroom, the judge would put parties’ counsel on a tighter leash: “This court is being very permissive and it’s leading to much more extended hearings,” a source said. CRB watchers initially estimated the webcasting proceedings would take 5-6 weeks, but that could easily turn into 10-12 weeks, one source said. The financial burden for those involved is “million of dollars for sure.”

CRB has shown worrisome disregard for decisions made by CARP and its predecessor, the Copyright Royalty Tribunal, which existed from 1976-1993, some sources said. That has resulted in more uncertainty for participants because, as one said, “things you thought were decided and established precedent may no longer be viewed as precedent.” Those issues may end up being relitigated. The guidance that has been issued hasn’t had the clarity to “truly enable lawyers to decide in future what the rules of the road are for purposes of discovery,” a source said. The CRB has also been “more shrouded in mystery” than its forerunners, especially early on in the proceeding when parties were trying to get rulings on how the trial would play out, a source said.

The judges have varying backgrounds. Sledge, the chief copyright royalty judge, has a 6-year term and can be reappointed. He recently retired as a bankruptcy judge in U.S. Dist. Court, Birmingham, where he had been since 1991. Wisniewski, appointed for 4 years, came to the CRB with expertise in economics. He was an expert economic witness in federal courts and testified before several committees in the House and Senate. Roberts, with a 2-year term, brought a copyright law background to the bench. He was a CARP attorney for its 12-year history and since CRB’s inception was its senior attorney. CRB judges and other CRB officials weren’t made available for interviews for this story.

But the criticism of CRB hasn’t come without praise. The judges have been described as being “very formal” and they obviously take their jobs seriously, one official said: “They view themselves as a very real court with very serious business they're doing.” But that business has come to a standstill since renovations began in the room CRB was using. A new hearing room hasn’t been found, despite parties’ offers to find private space for the deliberations to continue. CRB declined the offers, a source said. “They feel it’s their duty” to find a new place to hold the trial on Copyright Office turf, one said. The old hearing room, described as “dreary” by several people close to the CRB, was in sore need of a facelift. The small interior space had no windows or high-tech amenities, they said.

The attorney representing DiMA members Yahoo, AOL and Microsoft told us “everyone is feeling their way through a new system” and he expects that as the board and the lawyers litigating before it “become more familiar with the lay of the land,” criticisms will subside. “Things will probably run more efficiently and smoothly the second and third time around,” Kenneth Steinthal said: “Over time some of [the kinks] will work themselves out. It’s unfortunate that the initial litigants have to absorb that initiation process.”

The way the webcasting trial pans out will impact how CRB handles pending cases. Two other issues are expected to be taken up by the board this year. One involves performance rights and satellite services, and another pertains to Sec. 115 of the Copyright Act, which covers digital uses of content subject to compulsory licensing. “Maybe they'll take a different approach next time around,” one source said: “That will make it easier on everybody.” Official proceedings on those have begun, and a source said the case involving XM and Sirius is probably up next. Summer and fall 2007 will likely see hearings on the satellite issue, the official said.