stories filed under: "appointments clause"

Thu, Sep 3rd 2009 2:22am

Filed Under:
appointments clause, constitutionality, copyright royalty board

Constitutionality Of The Copyright Royalty Board To Finally Get Tested In Court

from the will-it-matter? dept

Last year, we noted that, it seemed clear that the Copyright Royalty Board was unconstitutional. This was due to a technical legal process change a few years ago (which also impacted the patent appeals board). Still, I noted that this probably wasn't a huge deal, because even if the CRB were found to be directed by improperly chosen judges, it would likely be "corrected" quickly by having the President (or a dept head) "reappoint" those same judges. Still, it's been odd that courts have been wary of addressing this issue. Earlier this summer two separate court rulings punted on the issue and refused to address it, instead focusing on other issues.

However, Live365 has now filed a lawsuit where this is the key issue, so hopefully a court will finally address it. Live365, of course, is at the mercy of the Copyright Royalty Board, and its ridiculous royalty rates, which make it nearly impossible to build a webstreaming business. Still, I'm not sure how much of an impact such a lawsuit can really have in the long run. As mentioned, even if it is found that the board is unconstitutional (which, a pretty plain reading of the Constitution suggests it is), it's not clear if anything really changes. The board will just get reappointed. At best this could throw out old CRB rulings. So it could be helpful to buy some time, but it's not clear if it addresses the underlying problem of why three old judges get to decide the business model of a bunch of companies.

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Legal Issues

by Mike Masnick

Tue, Jul 14th 2009 10:35pm

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Filed Under:
appointments clause, constitution, copyright, copyright royalty board, webcasting

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Not That It Matters... But Appeals Court Rejects Webcasters' Challenge Over Copyright Royalties

from the and-ignores-constitutionality-issue dept

Last week, we noted that the DC Appeals court had rejected a challenge to the Copyright Royalty Board's rates set for satellite radio. Michael Scott notes that the same court has also rejected the challenge to webcasting rates. Of course, this is mostly a moot discussion, because just days before the decision, SoundExchange and some big webcasters worked out a deal -- though there are serious questions about how reasonable these rates really are to webcasters. Still, this latest ruling once again highlights just how out of touch the Copyright Royalty Board is with reality. If the current negotiated rates threaten to put a lot of webcasters out of business, and the CRB's original rates were even higher, doesn't that suggest a pretty serious problem both with the CRB and with the appeals process? Separately, it looks like the court had no problem at all ignoring the constitutional questions about the Copyright Royalty Board for a second time. It's as if no one wants to actually follow what the Constitution says...

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Legal Issues

by Mike Masnick

Tue, Jul 7th 2009 9:02pm

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Filed Under:
appointments clause, constitution, copyright, copyright royalty board

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Appeals Court Punts On The Constitutionality Of Copyright Royalty Board

from the another-issue-for-another-time dept

While much of the focus on royalty rates has focused on the settlement between webcasters and SoundExchange, in a separate issue, an appeals court has sided with the Copyright Royalty Board in the rates it set for satellite radio (SoundExchange wanted the rates to be even higher, of course). The court found no reason to rule against the CRB, finding no evidence that the rates were "arbitrary, capricious, or unsupported by substantial evidence." But, perhaps drawing more focus was that, in this case, there were some side questions about the very legitimacy of the Copyright Royalty Board itself. This is due to a recognition (first in the patent space) that some of these appointments appear to violate the appointments clause of the Constitution.

While I do have serious questions about the legitimacy of the CRB, it's got a lot less to do with the appointments clause, and a lot more to do with the question of why judges are setting universal royalty rates in an industry, rather than letting the market set the rate -- especially when the CRB judges often do not appear to be particularly internet literate. So the whole appointments issue seems like a side show. Even if a court were to find that the CRB violates the appointments clause, I'm sure a hasty solution would be worked out, whereby those allowed to make appointments (the president or heads of cabinet-level departments) would simply rubber stamp the appointments.

Either way... it doesn't seem to matter just yet. In ruling on the latest case, basically the issue was punted, saying that the matter wasn't raised in a timely manner, and therefore the question will be ignored for now.

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Filed Under:
appointments clause, sarbanes-oxley

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Supreme Court To Review One Small Aspect Of Sarbanes-Oxley

from the this-doesn't-seem-like-a-big-deal... dept

I'm no fan at all of Sarbanes-Oxley, the overly draconian corporate governance law that was passed in the wake of the Enron scandal. Obviously, given the financial messes that we're going through today, it did little to stop financial shenanigans. The reality is that the law did lots of superficial (but extremely expensive) things to basically have someone to pin the blame on, should anything go wrong -- but did little to actually prevent fraud. I'm all for good corporate governance, and efforts to root out fraud -- but Sarbanes-Oxley did no such thing. And, worse, it had pretty massive unintended consequences, such as adding millions to the cost (in pure economic waste) of going public, making it a lot trickier for startups to go public, even if they were completely ready under every other condition. Sure, we had too many IPOs during the dot com boom, but Sarbanes-Oxley made the barrier to going public much greater than it ever should be.

So, I was happy to see headlines suggesting that the Supreme Court is reviewing the law and could possibly throw it out. However, the details are a lot more mundane. Basically, some lawyers are challenging a very narrow part of the law, questioning whether or not it violates the "appointments clause" of the Constitution, which requires that certain officials be appointed by the President or a Cabinet member. So, in this case, officials to a board overseeing Sarbanes-Oxley were appointed by the SEC, rather than a cabinet level representative.

This is nothing to get worked up about.

You may recall, challenging various laws or appointments under this clause has suddenly become popular. We covered a very similar challenge to appointments to the Patent Appeals Board, as well as a similar claim about appointments to the Copyright Royalty Board (and it also came up as an issue during the debate over the TARP program. Of course, with the Patent Appeals Board, all it took was for Congress to make a quick fix to the law, making it so that the law required the Cabinet level member to make the appointment with the "help" of the lower level director who did the original appointments. In other words, nothing really changed other than who signed the appointments.

The only potential "difference" here is that if the Supreme Court sides with those saying this rule is unconstitutional, the entire Sarbanes-Oxley would need to be put back to a vote with any changes, and the thought is that this could open up the law to be fixed. Of course, that may be wishful thinking, as it would also open up the law to be made much, much worse -- and given the populist attacks on corporate governance and corporate malfeasance these days, it seems quite likely that what comes out would be much, much worse in terms of impact... but any oversight board would be appointed at the cabinet level.

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Constitutionality Of The Copyright Royalty Board To Finally Get Tested In Court

from the will-it-matter? dept

Not That It Matters... But Appeals Court Rejects Webcasters' Challenge Over Copyright Royalties

from the and-ignores-constitutionality-issue dept

Appeals Court Punts On The Constitutionality Of Copyright Royalty Board

from the another-issue-for-another-time dept

Supreme Court To Review One Small Aspect Of Sarbanes-Oxley

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