This case pits SoundExchange, a nonprofit entity, charged with the responsibility of collecting royalties for performing artists and copyright owners of music, against Muzak, a company that supplies digital music channels to satellite television networks who, in turn, sell to subscribers. SoundExchange sued Muzak under the Copyright Act in district court, claiming that Muzak underpaid royalties owed. The district court dismissed SoundExchange’s complaint. (From the point of view of classic administrative law, the Register of Copyrights, to which we normally are obliged to defer, plays a rather unusual role.) Although the case is close – the controlling statute is dreadfully ambiguous – we conclude that SoundExchange has the better position, and therefore reverse the district court.
Luis Adrián Cortés Ramos ("Cortés") appeals from the dismissal of his contract and intellectual property claims against a variety of companies affiliated with Sony Music Entertainment ("Sony"). The dispute concerns an original song and music video that Cortés submitted to Sony as part of a songwriting contest sponsored by Sony. The District Court dismissed all of Cortés's claims. It did so on two grounds: that the claims were subject to mandatory arbitration under the Federal Arbitration Act, and that Cortés failed to allege facts sufficient to support his claims under Fed. R. Civ. P. 12(b)(6). Because Cortés has not appealed the ruling that his claims must be arbitrated, we affirm the order compelling arbitration.
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.