Royalty and Rate-Setting Litigation
Our Content, Media & Entertainment lawyers also provide clients with litigation and counseling services in royalty rate-setting and related matters.
A centerpiece of this practice is Jenner & Block’s unparalleled experience in litigation before the Copyright Royalty Board (CRB), a federal administrative court that presides over rate-setting and distribution of royalties under compulsory licenses established by federal law. These proceedings determine the rates to be paid to copyright owners and artists for various uses of their works that are statutorily prescribed. For example, one federal statute addresses certain types of digital performances of sound recordings in defined technologies (internet webcasts, satellite radio); another governs the “mechanical” licenses between the owners of sound recording copyrights and the owners of musical compositions. Other proceedings concern allocation of royalties paid by cable and satellite television providers. With hundreds of millions of dollars at stake over the rate periods, these cases are critically important to the affected industries and parties. Jenner & Block has served as lead counsel for the recording industry and recording artists in all but one major litigated rate-setting proceedings before the CRB, and obtained significant gains on their behalf in each proceeding we’ve handled.
Representative matters handled by our Royalty and Rate-Setting Litigation team include:
In re Determination of Rates and Terms for Preexisting Subscription and Satellite Digital Audio Radio Services (Satellite Radio Royalties for 2013-2017): Jenner & Block represents SoundExchange (a performance rights collection society that represents the interests of all record companies and recording artists in the country) against SiriusXM Satellite Radio in rate-setting litigation over the royalties that SiriusXM will owe to SoundExchange for satellite transmissions of sound recordings for the years 2013-2017. The proceeding also will set the rates that Music Choice and Muzak pay for their noninteractive audio streaming of sound recordings received over television services.
In re Digital Performance in Sound Recordings and Ephemeral Recordings (Webcasting Royalties for 2011-2015): In 2010, Jenner & Block represented SoundExchange in rate-setting litigation before the Copyright Royalty Board to determine the royalty rates that noninteractive internet radio services must pay for their transmission of sound recordings. Jenner & Block successfully advocated for a significant increase in rates that will result in payment of hundreds of millions of dollars in royalties. Our team also represented SoundExchange in negotiating settlements with certain major webcasters, including helping SoundExchange secure federal legislation to facilitate such settlements.
In re Preexisting Services and Satellite Digital Audio Radio Services (Satellite Radio Royalties for 2007-2012): Jenner & Block represented SoundExchange against the satellite radio services XM and Sirius Satellite Radio. The litigation concerned the royalty that XM and Sirius would owe to SoundExchange for their performances of sound recordings. In 2008, after 25 days of trial and thousands of pages of written submissions, the court ordered a substantial increase in the rates for the rate period of 2007-2012, which has ensured payments of hundreds of millions of dollars to record companies and performers.
In re Mechanical and Digital Phonorecord Delivery Proceeding (Mechanical Royalties): Jenner & Block represented the Recording Industry Association of America against music publishers in litigation setting rates and terms for musical compositions used in CDs, digital downloads, and other products. The Firm successfully defeated the publishers’ arguments that rates should be increased dramatically, and was counsel to the recording industry in the landmark settlement of the portion of this case relating to interactive streaming and limited downloads.
In re Digital Performance in Sound Recordings and Ephemeral Recordings (Webcasting Royalties for 2006-2010): Jenner & Block represented SoundExchange in the very first CRB proceeding to set rates and terms for noninteractive webcasting. In litigation against internet portals such as AOL, Yahoo! and Microsoft, as well as radio stations such as Clear Channel, the Firm helped achieve a significant increase over the pre-existing royalty rates, ensuring that record companies and recording artists received fair compensation for their creative endeavors. The team also successfully represented SoundExchange in the appeal of the case in the U.S. Court of Appeals for the D.C. Circuit.
As the need to bring entertainment products to market quickly has increased, so-called “rateless” agreements have become more common. These are agreements to bring products to market with an “agreement to agree” on the royalty rate at a later time backed by private arbitration. Our attorneys represent clients in negotiating and drafting “rateless” agreements and in the ensuing arbitrations, bringing to bear the Firm’s significant experience in the economic complexities of rate-setting for intellectual property.