By law, the Copyright Royalty Board sets the terms and rates for copyright royalties when copyright owners and licensees fail to negotiate terms and rates themselves. As part of its statutory mandate, the Board sets royalty terms and rates for what is known as the § 115 statutory license. That license allows individuals to make their own recordings of copyrighted musical works for distribution to the public without the consent of the copyright owner.
In carrying out its statutory responsibilities under 17 U.S.C. § 115, the Board instituted a 1.5 percent per month late fee for late royalty payments. It also implemented a pennyrate royalty structure for cell phone ringtones, under which copyright owners receive 24 cents for every ringtone sold using their copyrighted work.
The Recording Industry Association of America challenges those two aspects of the Board’s decision, arguing that they were arbitrary and capricious for purposes of the Administrative Procedure Act. We conclude that the Board’s decision was reasonable and reasonably explained. We therefore affirm the Board’s determination.