Bonneville Intl Corp v. Peters ( 2003 )

Opinions of the United
2003 Decisions States Court of Appeals
for the Third Circuit
10-17-2003
Bonneville Intl Corp v. Peters
Precedential or Non-Precedential: Precedential
Docket No. 01-3720
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PRECEDENTIAL
Filed October 17, 2003
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 01-3720
BONNEVILLE INTERNATIONAL CORPORATION; COX
RADIO, INC.; EMMIS COMMUNICATIONS CORPORATION;
ENTERCOM COMMUNICATIONS CORP.; INFINITY
BROADCASTING CORPORATION; SUSQUEHANA RADIO
CORP.; NATIONAL ASSOCIATION OF BROADCASTERS;
CLEAR CHANNEL COMMUNICATIONS, INC.
v.
MARYBETH PETERS, In Her Official Capacity As Register
of Copyrights for The United States Copyright Office At
The Library of Congress
RECORDING INDUSTRY ASSOCIATION OF
AMERICA, INC.,
Intervenor in D.C.
Bonneville International Corporation, Clear Channel
Communications, Inc., Cox Radio, Inc., Emmis
Communications Corporation, Entercom Communications
Corp., Susquehanna Radio Corp., and National
Association of Broadcasters,
Appellants
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil Action No. 01-cv-00408)
District Judge: Honorable Berle M. Schiller
2
Argued on December 2, 2002
Before: ROTH, SMITH, and CUDAHY,* Circuit Judges
(Opinion filed: October 17, 2003)
COUNSEL FOR APPELLANTS
Mark A. Jacoby, Esquire
R. Bruce Rich, Esquire (Argued)
Caroline R. Clark, Esquire
Weil, Gotshal & Manges
767 Fifth Avenue
27th Floor
New York, NY 10153
Marguerite S. Walsh, Esquire
Andrew W. Allison, Esquire
Littler, Mendelson Law Office
1601 Cherry Street
Three Parkway, Suite 1400
Philadelphia, PA 19102
COUNSEL FOR APPELLEES
David O. Carson
General Counsel
Tanya M. Sandros
Senior Attorney
United States Copyright Office
Library of Congress
101 Independence Avenue, S.S.
Washington, DC 20559-6000
* The Honorable Richard D. Cudahy, Circuit Court Judge for the United
States Court of Appeals for the Seventh Circuit, sitting by designation.
3
Scott R. McIntosh (Argued)
Mark B. Stern
Attorney, Appellate Staff
Robert D. McCallum, Jr.
Assistant Attorney General
Patrick L. Meehan
United States Attorney
United States Department of Justice
Civil Division,
601 D. Street, N.W.
Washington, DC 20530
Cary H. Sherman, Esquire
Steven M. Marks, Esquire
Gary R. Greenstein, Esquire
Susan C. Munsat, Esquire
Recording Industry
Association of America, Inc.
1330 Connecticut Ave., N.W.
Washington, DE
Robert A. Garrett, Esquire
Ronald A. Schechter, Esquire
(Argued)
Jule L. Sigall, Esquire
Ellen Wasilausky, Esquire
Arnold & Porter
555 12th Street, N.W.
Washington, DC 20004
Vincent V. Carissimi, Esquire
Pepper Hamilton
18th & Arch Streets
3000 Two Logan Square
Philadelphia, PA 19103
OPINION OF THE COURT
CUDAHY, Circuit Judge:
Plaintiffs appeal from a grant of summary judgment. The
district court found that the Copyright Office’s rulemaking
4
with respect to the Internet “streaming” of AM/FM radio
broadcast programming was entitled to deference. The
plaintiffs argue that the exclusion from copyright protection
for “nonsubscription broadcast transmissions” of recorded
music is unambiguously intended to apply to their
simultaneous webcasting of their radio broadcast signal.
We conclude that, whether or not the Copyright Office’s
interpretation of § 114(d)(1)(A) is to be accorded deference
under Chevron U.S.A., Inc. v. National Resources Defense
Counsel, Inc., 467 U.S. 837 (1984) (“Chevron”), the
Copyright Office’s arguments in support of its position are
persuasive, see Skidmore v. Swift & Co., 323 U.S. 134(1944), and our own independent interpretation of the
statute accords with that of the Copyright Office. We
therefore affirm.
I.
This case deals with copyright protection for sound
recordings. The creator of a musical composition has long
had a right of exclusive public performance of that musical
piece. 17 U.S.C. § 106(4). Therefore, every time you hear the
ubiquitous refrain from “Happy Birthday” in a public
performance, a subsidiary of AOL/TimeWarner cashes a
royalty check.1 However, the owner of a copyright in a
sound recording of a musical composition has long had very
little copyright protection. Until 1971 there was no
copyright protection at all. With the Sound Recording
Amendment of 1971, Pub. L. No. 92-140, 85 Stat. 391, a
limited copyright in the reproduction of sound recordings
was established in an effort to combat recording piracy.
However, there was still no right to public performance of
that sound recording. Therefore, while playing a compact
disc recording of “Happy Birthday” in a concert hall for the
1. Happy Birthday, originally penned by two Kentucky kindergarten
teachers in the late 19th century, remains a protected and highly
profitable copyright in the intellectual property portfolio of
AOL/TimeWarner. Purchased by the company in 1988 for an estimated
$25 million, it produces revenues estimated at $2 million per year.
Under the Copyright Term Extension Act of 1998, Pub. L. No. 105-298,
112 Stat. 2827, for better or for worse, the song will not enter the public
domain until at least the year 2030.
5
paying public would still enrich AOL/TimeWarner, the
person or company that owned the copyright on the CD
recording of the music would earn no remuneration beyond
the proceeds from the original sale of the recording. This
dichotomy of copyright protection has a significant impact
in the radio broadcasting industry. While radio stations
routinely pay copyright royalties to songwriters and
composers (through associations like the American Society
of Composers, Authors, and Publishers and Broadcast
Music, Inc. (“ASCAP”) and Broadcast Music, Inc. (“BMI”))2
for the privilege of broadcasting recorded performances of
popular music, they do not pay the recording industry
royalties for that same privilege. Perhaps surprisingly, this
state of affairs, until about ten years ago, produced
relatively high levels of contentment for all parties. The
recording industry and broadcasters existed in a sort of
symbiotic relationship wherein the recording industry
recognized that radio airplay was free advertising that lured
consumers to retail stores where they would purchase
recordings.3 And in return, the broadcasters paid no fees,
licensing or otherwise, to the recording industry for the
performance of those recordings. The recording industry
had repeatedly sought, however, additional copyright
protection in the form of a performance copyright. Until
1995, those efforts were rejected by Congress.
The 1990’s brought significant technological change. The
advance of digital recording technology and the prospect of
digital transmission capabilities created the possibility that
consumers would soon have access to services whereby
they could pay for high quality digital audio transmissions
(subscription services) or even pay for specific songs to be
2. Performing rights organizations such as ASCAP and BMI facilitate the
licensing and payment of royalties for composition copyrights by
centralizing the process for songwriters, composers, lyricists and
publishers.
3. We recognize that, in reality, the model is significantly more nuanced
than our “symbiosis” reference allows. As merely one example, the
possibility that radio broadcasters may be paid to play certain songs
(“payola”) complicates the characterization considerably. See, e.g., Clear
Channel to Eliminate Ties With Paid Promoters of Music, N.Y. Times, April
10, 2003, at C3.
6
played on demand (interactive services).4 The recording
industry was concerned that the traditional balance that
had existed with the broadcasters would be disturbed and
that new, alternative paths for consumers to purchase
recorded music (in ways that cut out the recording
industry’s products) would erode sales of recorded music.
Congress responded to these concerns with the Digital
Performance Right in Sound Recordings Act of 1995, Pub.
L. No. 104-39, 109 Stat. 336 (“DPRA”). The DPRA added to
the list of protectable rights a digital audio transmission
performance right.
[T]he owner of copyright under this title has the
exclusive rights to do and to authorize any of the
following:
* * *
(6) in the case of sound recordings, to perform the
copyrighted work publicly by means of a digital audio
transmission.
17 U.S.C. § 106(6). When creating this new right, however,
Congress also created exemptions from it. Of specific
application to the present case was the exemption added to
17 U.S.C. § 114(d)(1)(A)(iii) (Supp. I 1995) for a
noninteractive, “nonsubscription broadcast transmission.”5
4. At that time, however, the possible role of the still commercially-
nascent Internet in the transmission of music was not yet significant
enough to be considered.
5. The DPRA’s § 114(d) (Supp. I 1995) provided in part:
(1) Exempt transmissions and retransmissions.— The performance
of a sound recording publicly by means of a digital audio
transmission, other than as a part of an interactive service, is not
an infringement of section 106(6) if the performance is part of—
(A)(i) a nonsubscription transmission other than a
retransmission;
(ii) an initial nonsubscription retransmission made for direct
reception by members of the public of a prior or simultaneous
incidental transmission that is not made for direct reception by
members of the public; or
(iii) a nonsubscription broadcast transmission;
7
The paradigmatic “nonsubscription broadcast transmission”
was a traditional over-the-air radio broadcast. This
exemption was founded in Congress’s desire not to impose
“new and unreasonable burdens on radio and television
broadcasters, which often promote, and appear to pose no
threat to, the distribution of sound recordings.” H.R. Rep.
No. 104-274, at 14 (1995) (“1995 House Report”) (App. at
A779).6
Additionally, the DPRA, in section 3, codified at 17 U.S.C.
§§ 114(d)(2) (Supp. I 1995) and 114(f) (Supp. I 1995),
created a statutory licensing regime for noninteractive,
subscription services.7 Copyright holders were required to
grant licenses to eligible subscription services. In cases
where the copyright holder and the transmitter could not
agree on the royalty rate for the license, the DPRA outlined
an arbitration mechanism for determining a reasonable rate
—§ 114(f) authorized the Copyright Office to convene a
copyright arbitration royalty panel (“CARP”) to arbitrate
licensing rates.
But technology continued to advance, and the Internet
soon became a viable medium over which to transmit, in
real time, sound recordings. This real-time transmission of
sound recordings over the Internet is known as “streaming”8
6. Much of the legislative history relevant to the present case is collected
in the appendices to the parties’ briefs. When appropriate, the relevant
appendix page number will also be cited as “App. at A###.”
7. Interactive, on-demand services are subject to an almost
unconditional performance right in the copyright holder: the purveyors of
such services are required to negotiate individual, discretionary licenses
with individual copyright holders subject to certain time limitations for
exclusive licenses. See § 114(d)(3). The unconditional public digital
performance right with respect to interactive digital audio transmissions
corresponds to Congress’s perception that interactive digital audio
services pose the greatest threat to recording sales.
8. The subject matter of the present case, Internet streaming, should not
be confused with the use of the Internet to exchange digital copies of
entire songs through centralized or distributed peer-to-peer file exchange
mechanisms like Napster and KaZaA. The legal issues surrounding file
exchange of songs involve the established exclusive right to reproduction
of a sound recording. Similarly, technology exists whereby a sound
8
and “webcasting,” and the transmitter of an Internet stream
of music is known as a “webcaster.” Anyone with a
computer, a reasonably speedy connection to the Internet,
streaming software and the equipment to copy songs from
CDs to a computer in the popular and compressed MP3
format (“rip” the songs) could webcast sound recordings
through streaming. Additionally, established radio
broadcasters began to webcast simultaneously over the
Internet their AM/FM broadcast programming. It is this
AM/FM webcasting that is the principal concern in the
present case.
Again, the recording industry became concerned that
technology would erode recording sales by providing
alternative sources of high quality recorded performances.
In 1998 Congress responded by amending the DPRA’s
amendments to the Copyright Act with the Digital
Millennium Copyright Act, Pub. L. No. 105-304, 112 Stat.
2860 (1998) (“DMCA”). The DMCA expanded the class of
transmissions available for the statutory licensing regime
under the DPRA to include eligible nonsubscription
webcasting, and eliminated from § 114(d) two of the
nonsubscription, noninteractive exemptions to the digital
audio transmission performance right. The exemption for
“nonsubscription broadcast transmissions” was, however,
left intact and moved to its current location at
§ 114(d)(1)(A). “The deletion of [the other] two exemptions
[wa]s not intended to affect the exemption for
nonsubscription broadcast transmissions.” H.R. Conf. Rep.
No. 105-796, at 80 (1998) (“1998 Conference Report”) (App.
at A1197).
In March of 2000, the Recording Industry Association of
America (“RIAA”) petitioned the Copyright Office for a
recording performance streamed over the Internet can be “recorded” by
a listener, duplicated (infinitely, with no drop-off in the original
recording’s quality because of the digital medium of the recording) and
distributed. Again, however, this issue pertains to the exclusive right of
reproduction and not to the interpretation of the digital audio
transmission performance right in § 106(6). Our concern is with the right
of the copyright holder for the sound recording to limit the public digital
audio transmission performance of that sound recording in the first
instance.
9
Rulemaking to clarify whether AM/FM webcasting (the
simultaneous Internet streaming by radio broadcasters of
their AM/FM broadcast programming) was a
“nonsubscription broadcast transmission” that was exempt
from the § 106(6) digital audio transmission performance
right. After a Notice and Comment procedure, in December
of 2000 the Copyright Office promulgated a rule stating
that AM/FM webcasting is not an exempt transmission
under § 114(d)(1)(A). Public Performance of Sound
Recordings: Definition of a Service, Final Rule, 65 Fed. Reg.
77292 (Dec. 11, 2000) (“Streaming Regulation”) (App. at
A69).
The plaintiffs—the National Association of Broadcasters,
along with some of its more prominent members—sued the
Register of Copyrights in the present action seeking judicial
review of the rulemaking. The RIAA joined the case as an
intervenor-defendant. The district court granted summary
judgment for the Copyright Office and the RIAA. The district
court found the scope of the exemption in § 114(d)(1)(A) to
be ambiguous and that the Copyright Office was
empowered by Congress to interpret that ambiguity in order
to administer the statutory licensing scheme of § 114(f).
Therefore, because the Copyright Office’s rule was
reasonable, the court found that the rulemaking was
entitled to deference under Chevron, and, hence, the rule
was enforced. This appeal followed.
II.
Our review of the district court’s grant of summary
judgment is plenary. Sutton v. Rasheed, 323 F.3d 236, 248
(3d Cir. 2003).
A.
We have determined that, in this appeal, we do not need
to decide whether Chevron or Skidmore deference should
apply to our review of the Copyright Office’s interpretation
of § 114(d)(1)(A). We come to this conclusion because,
whichever standard of deference is accorded, we agree with
the Copyright Office.
10
If we had determined under United States v. Mead Corp.,
533 U.S. 218 (2001), that the Copyright Office had been
delegated authority by Congress to regulate the scope of the
digital audio transmission performance copyright, we would
afford Chevron deference to the Copyright Office’s
interpretation of that statute. If, on the other hand, we were
to conclude that the Copyright Office had not been
authorized by Congress to enact rules with the force of law
on the issue whether the exclusion from copyright
protection for “nonsubscription broadcast transmissions”
applies to simultaneous webcasting of radio broadcast
signals, we would, under Mead, afford the Copyright
Office’s interpretation of the statute only Skidmore
deference. See Skidmore, 323 U.S. at 140. Under Skidmore,
the Copyright Office’s determination can be a useful tool for
interpreting the statute as an original matter. Because we
find that the Copyright Office’s interpretation is persuasive
even under the less demanding standard of Skidmore
deference, we need not go on to parse out whether Chevron
deference should, in fact, be accorded the Copyright Office’s
regulation here.9
9. The Supreme Court in Mead altered the judicial landscape of Chevron
deference, limiting previously strong presumptions of deference to formal
agency actions and promoting a more searching threshold inquiry into
the existence of Congressional authorization. See MCI Telecommunication
Corp. v. Bell Atlantic Pennsylvania, 271 F.3d 491, 517 (3d Cir. 2001)
(“[Mead] suggests that not every formal agency act involving
interpretation of a federal statute is entitled to deference.”). After Mead,
the existence of a general delegation of authority and the use of a formal
notice-and-comment procedure is no longer sufficient to trigger Chevron
deference—instead we must look for express or implied indications that
“Congress ever thought of [giving the agency actions] the deference
claimed for them here.” Mead, 533 U.S. at 231; see, e.g., Ebbert v.
Daimler-Chrysler Corp., 319 F.3d 103, 110-11 (3rd Cir. 2003) (finding
that general delegation of authority to EEOC to “carry out the provisions
of [Title 42]” did not impliedly authorize EEOC to interpret “notice” with
respect to the timeliness of court filings in 42 U.S.C. § 2000e-5(f)(1));
Robert Wood Johnson Univ. Hosp. v. Thompson, 297 F.3d 273, 281-82
(3d Cir. 2002) (finding express delegation of authority to Secretary of
Health & Human Services to promulgate guidelines for Medicare
reimbursement reclassification of hospitals was “adequate indication of
congressional intent” supporting Chevron deference).
11
B.
We begin the process of statutory interpretation with the
plain meaning of the statute—we must first consider the
text. New Rock Asset Partners, L.P. v. Preferred Entity
Advancements, Inc., 101 F.3d 1492, 1498 (3d Cir. 1996).
The parties do not dispute that, under § 106(6), AM/FM
webcasting comprises a public digital audio transmission.10
Judges Roth and Cudahy would both have concluded that, under
Mead, the Copyright Office’s interpretation of § 114(d)(1)(A) should be
given Skidmore deference because the only express delegation of
authority in Title 17 that can be construed to cover the Copyright
Office’s Streaming Regulation is the broad general authority under § 702
“to establish regulations not inconsistent with law for the administration
of the functions and duties made the responsibility of the Register under
this title.” They find this language insufficient to shift the responsibility
of interpreting what is copyright-protected from the courts, the
traditional stewards of such property rights, to the Copyright Office,
which has no history of, or significant expertise in, such a role. Judge
Smith, on the other hand, maintains that this approach reads too much
into Mead. He believes that Mead, in considering what was an essentially
adjudicative determination of an agency, merely created a limited
exception to Chevron. He notes that the Supreme Court has continued
to apply the basic framework of Chevron, and has reiterated the
obligation of courts to afford Chevron deference to a vast array of
legislative decisions made by agencies. See Barnhart v. Walton, 122 S.Ct.
1265, 1269-72 (2002)(noting that even where an “[a]gency previously
reached its interpretation through means less formal than ‘notice and
comment’ rulemaking, see 5 U.S.C. Section 553,” this “does not
automatically deprive that interpretation of the judicial deference
otherwise its due.”)(citing Chevron, 467 U.S. at 843). He would conclude
that, even in the wake of Mead, the product of notice and comment
rulemaking pursuant to express statutory authority (even of the general
kind present here) should still be accorded Chevron deference.
10. 17 U.S.C. § 101, which defines terms as used in Title 17, defines
“transmit”: “To ‘transmit’ a performance or display is to communicate it
by any device or process whereby images or sounds are received beyond
the place from which they are sent.” Additionally, legislative history
makes clear that “transmit” is to be interpreted very broadly. See S. Rep.
No. 94-473, at 61 (1975) (“1975 Senate Report”) (App. at A474) (“The
definition of ‘transmit’ . . . is broad enough to include all conceivable
forms and combinations of wired or wireless communication media
. . . .”).
12
Thus, in order for AM/FM webcasting to be exempt under
§ 114(d)(1)(A) from the digital audio transmission
performance copyright, it must be 1) noninteractive, 2)
nonsubscription and 3) broadcast. The parties agree that
AM/FM webcasting is not part of an interactive service.11
There is equally no dispute that AM/FM webcasting is a
nonsubscription transmission.12 Thus, the question
11. 17 U.S.C. § 114(j)(7) provides that:
An “interactive service” is one that enables a member of the public
to receive a transmission of a program specially created for the
recipient, or on request, a transmission of a particular sound
recording, whether or not as part of a program, which is selected by
or on behalf of the recipient. The ability of individuals to request
that particular sound recordings be performed for reception by the
public at large, or in the case of a subscription service, by all
subscribers of the service, does not make a service interactive, if the
programming on each channel of the service does not substantially
consist of sound recordings that are performed within 1 hour of the
request or at a time designated by either the transmitting entity or
the individual making such request. If an entity offers both
interactive and noninteractive services (either concurrently or at
different times), the noninteractive component shall not be treated
as part of an interactive service.
12. 17 U.S.C. § 114(j) provides in relevant part:
(9) A “nonsubscription” transmission is any transmission that is
not a subscription transmission.
* * *
(14) A “subscription” transmission is a transmission that is
controlled and limited to particular recipients, and for which
consideration is required to be paid or otherwise given by or on
behalf of the recipient to receive the transmission or a package of
transmissions including the transmission.
Additionally, the legislative history makes clear that Internet
transmissions can be either subscription or nonsubscription. See S. Rep.
No. 104-128, at 36 (1995) (“1995 Senate Report”) (App. at A735) (“It does
not matter what the mechanism might be for the delivery of the
transmission; thus, a digital transmission, whether delivered by cable,
wire, satellite or terrestrial microwave, video dialtone, the Internet or any
other digital transmission mechanism, could be a subscription
transmission if the requirements cited above are satisfied.”)
13
becomes whether AM/FM webcasting is a “broadcast
transmission.”
For a definition of “broadcast transmission,” we look to
§ 114(j), which defines terms as used in the section. Section
114(j)(3) tells us that a “ ‘broadcast’ transmission is a
transmission made by a terrestrial broadcast station
licensed as such by the Federal Communications
Commission.” This merely moves us to a new inquiry: what
is a “terrestrial broadcast station licensed as such by the
[FCC]”? “Terrestrial” we give its natural and logical meaning
of earthbound. The appellees seek to import a sense of
limitation of a transmission’s geographic range into the
meaning of “terrestrial.” See Peters Opening Br. at 31
(“Thus, the use of the word ‘terrestrial’ suggests that
Congress had in mind transmissions . . . within limited
geographic ranges. . . .”). This reading of “terrestrial” is
unnaturally strained, and we will not distort the plain
meaning so. We believe that the present case deals only
with “terrestrial” broadcast stations (whatever “broadcast
station” may be determined to mean). Therefore, a more
nuanced parsing of the exact parameters of “terrestrial” is
not necessary for the resolution of the present case.
The nub of the interpretive disagreement between the two
sides is whether a “broadcast station” refers to the
broadcaster as a business entity that operates broadcasting
facilities or to the broadcasting facilities themselves (and by
extension the mode of transmission). If the appellants are
correct then a “broadcast station” refers to the broadcasting
entity and not to the physical transmitting facility. As a
result, for example, any transmission (including
webcasting) by any facility operated by Clear Channel
Communications, Inc. (an entity operating a radio
broadcasting facility under an FCC license) would qualify as
a broadcast transmission. So long as the transmission was
noninteractive and nonsubscription (e.g., AM/FM
webcasting), it would be an exempt transmission under
§ 114(d)(1)(A). In comparison, if the Copyright Office’s
interpretation is correct, then § 114(j)(3)’s “broadcast
station” is limited to a radio broadcasting facility, and all
forms of webcasting of recorded music, whether AM/FM
webcasting or webcasting in some other form, are covered
14
by the digital audio transmission performance copyright in
§ 106(6) and are not exempt.
Although not dispositive, we can initially point to some
obvious and irreconcilable consequences of the appellants’
argument that “broadcast station” refers to the entity, not
the facility. One such consequence would be that any entity
that operates at least one FCC-licensed radio station would
have carte blanche to digitally perform recordings via any
conceivable transmission medium (in a noninteractive,
nonsubscription manner) without limitation or copyright
liability under § 106(6). For example, the “sound recording
performance complement,” which limits statutory licensees’
ability to transmit performances of multiple recorded songs
from the same artist or from the same “phonorecord” within
a short time of each other, would not apply to any
transmission by an FCC-licensed broadcaster. See 17
U.S.C. § 114(d)(2)(C)(i), (j)(13). Additionally, the appellants
in the present case could hypothetically expand their
webcasting to include original programming unrelated to
their AM/FM programming, and their interpretation of
“nonsubscription broadcast transmission” would serve to
exempt that webcasting from the digital audio transmission
performance copyright as well. Against that possibility,
appellants argue that the “sole issue before the Copyright
Office for rulemaking, and the sole issue presented in this
declaratory judgment action, is whether the simultaneous
Internet streaming of the same program fare as offered by
broadcasters pursuant to their FCC licenses qualifies for
the Section 114(d)(1)(A) exemption.” Appellants’ Br. at 35
(emphasis in original). But appellants put forward (and we
can find) no limiting principle in their argument with
respect to the definition of “broadcast station” that would
restrict the product of their argument to “simultaneous
Internet streaming” of AM/FM programming.
Another ramification of the broadcasters’ interpretation
about which they are quite pointedly silent, is that the
meaning of the modifier “terrestrial” becomes absurd.
Under the appellants’ argument, a terrestrial broadcast
station means a business entity that is earthbound—in
contrast, we must assume, to one that is space-borne. To
our knowledge, there are not, presently, any broadcasting
15
companies incorporated in outer space—nor can there be.
An interpretation of “terrestrial broadcast station” that
distinguishes between earthbound and orbiting
broadcasting entities is unpersuasive—especially when
there is a far more natural interpretation available. But it
is entirely plausible to postulate entirely earthbound
broadcasting facilities as opposed to broadcasting done
through satellites.
Because the “broadcast station” in question is one that
must be “licensed as such by the [FCC],” our interpretive
quest leads us next to the licensing regime of the FCC. The
Federal Communications Act, 47 U.S.C. §§ 151 et seq.
(“FCA”)13 is the source of such licensing.
For the relevant definitions, we look to 47 U.S.C. § 153:
(5) Broadcast station. The term “broadcast station”,
“broadcasting station”, or “radio broadcast station”
means a radio station equipped to engage in
broadcasting as herein defined.
13. The broadcasters complain that it is inappropriate to cross-reference
to the Federal Communications Act. Other sections of Title 17 refer
expressly to the Federal Communication Act. See, e.g., 17 U.S.C.
§§ 114(b), (d)(1)(B)(iv), (d)(1)(C)(iii) (referring to 47 U.S.C. §§ 397, 396(k)
and 522(12), respectively); 17 U.S.C. § 1202(e)(3)(A) (“As used in this
subsection, the term ‘broadcast station’ has the meaning given that term
in section 3 of the Communications Act of 1934.”). The broadcasters
argue that if Congress had intended to cross-reference to Title 47, it
could have done so explicitly. We believe that Congress in fact did so. By
demanding that the broadcast station of § 114(d)(1)(A) be licensed by the
FCC as a broadcast station, Congress quite clearly incorporated by
reference definitions from the Federal Communications Act. Additionally,
the broadcasters have, in other parts of their argument, acknowledged
that the Federal Communications Act (and other related statutes) are
relevant to our understanding of the copyright provisions at issue. See,
e.g., Appellants’ Br. at 37 n.14, 43 n.17 (using Title 47 to help define
“terrestrial” and “public interest” in Title 17). We have held that a “prior
statute’s definition of [a] term will control if it is natural and reasonable
to think that the members of the legislature, in drafting the new statute,
were influenced by the prior statute.” Liberty Lincoln-Mercury, Inc. v. Ford
Motor Co., 171 F.3d 818, 823-24 (3d Cir. 1999). We believe such is the
case here.
16
(6) Broadcasting. The term “broadcasting” means the
dissemination of radio communications intended to be
received by the public, directly or by the intermediary
of relay stations.
The combination of § 153(5) and § 153(6) of the FCA would
limit a “broadcast station” to a physical facility that
transmits radio communications—appellees’ position
exactly. However, we must consider the entirety of the
relevant phrase—“broadcast station licensed as such by the
[FCC]”—and determine whether the FCA provides any
guidance with respect to what it means by the phrase
“licensed as such.” Appellants seek to have us equate a
“licensee” with the “broadcast station licensed as such by
the [FCC].” A licensee under the FCA is a person (or entity),
not a facility. See, e.g., 47 U.S.C. §§ 153(24) (“The term
‘licensee’ means the holder of a radio station license. . . .”),
301 (“No person” shall transmit radio except “with a
license.”), 307(c)(1) (licenses are “granted for the operation
of a broadcasting station”), 310 (restricting the ownership
and transfer of licenses by and to certain individuals). This
argument affords a superficial appeal, since a common
usage of the term “licensed” often has as its subject a
person seeking to perform a sanctioned act. A person, for
example, is the “licensee” who is “licensed” to drive a car.
However, it is also clear that a “station” that is “licensed”
is something other than a “licensee,” and, in fact, means a
physical broadcasting facility. The acquisition (or
modification or renewal) of a broadcast station license
under the FCA is inextricably linked to the operation of a
specific broadcast facility (referred to, harmoniously, as a
broadcast or broadcasting station), and more specifically to
the location and broadcasting qualities of that facility. 47
U.S.C. §§ 307(c)(1) (“Each license granted for the operation
of a broadcasting station. . . .”), 308(b) (“All applications for
station licenses . . . shall set forth . . . the ownership and
location of the proposed station and of the stations, if any,
with which it is proposed to communicate; the frequencies
and the power desired to be used; . . . the purposes for
which the station is to be used . . . .”), 309(h)(1) (“The
station license shall not vest in the licensee any right to
operate the station . . . . in any other manner than
17
authorized therein . . . .”); 47 C.F.R. § 73.1020(a) (“Initial
licenses for broadcast stations . . . .) (emphasis added); 47
C.F.R. § 73.3538 (implemented by FCC Form 302) (detailing
the types of changes in a broadcasting facility that require
an application for license modification, including a
multitude of technical changes affecting the nature and
quality of the radio transmissions by the broadcasting
facility). In this sense the FCA, when authorizing the
issuance of a license, exercises a licensing power over the
facility that will be operated under the license. The license,
while not literally held by the transmitting facility is
inseparable from that facility—and that connection (and
concomitant regulation) makes the station “licensed.”
Therefore, a “licensee” means something distinct from a
“broadcast station licensed as such.” The licensee is the
person (or entity) holding the license, and the licensed
station is the facility that the licensee is permitted to
operate under the license. Based on this examination of the
FCA, we believe it clear that a “broadcast station licensed
as such by the [FCC],” as the term is used in 17 U.S.C.
§ 114(j)(3), refers to the physical radio station facility that
broadcasts radio signals over the air, and not to the
business entity that operates the radio station. A
“broadcast transmission” under § 114(d)(1)(A) would
therefore be a radio transmission by a radio station facility
operated subject to an FCC license and would not include
a webcast. AM/FM webcasting does not meet the definition
of a “nonsubscription broadcast transmission” and does
not, therefore, qualify under § 114(d)(1)(A) for an exemption
from the digital audio transmission performance copyright
of § 106(6).
C.
Additionally, further examination of the statute using the
remaining tools of statutory interpretation only confirms
what follows from the statute’s language. For example, we
consider other parts of § 114 to see if our interpretation of
§ 114(d)(1)(A) harmonizes with the section as a whole.
United States v. Morton, 467 U.S. 822, 828 (1984) (noting
that, generally, statutes should be read as a whole). Also,
we consider legislative history to gain an indication of
18
unambiguous Congressional intent that may aid our
interpretation. See New Rock Asset Partners, 101 F.3d at
1498.
First, we consider the remainder of 17 U.S.C. § 114. Of
particular interest is § 114(d)(1)(B), which lays out an
exemption from the digital audio transmission performance
right for retransmissions of nonsubscription broadcast
transmissions.14 The appellees argue that the § 114(d)(1)(A)
broadcast exemption as interpreted by the broadcasters is
inconsistent with this retransmission exemption.
Subsection (d)(1)(B)(i)(I) refers to retransmission by “a
terrestrial broadcast station, terrestrial translator, or
terrestrial repeater licensed by the [FCC].” Translators and
repeaters are, first of all, technical equipment—a form of
facilities. See 47 C.F.R. §§ 21.2, 74.1201(a) (definitions).
The inclusion of “broadcast station” as a means of
retransmission in this list together with “translator” and
“repeater” suggests that a broadcast station is also a
physical facility. Plus, interpreting “broadcast station” as an
FCC-licensed business entity would render superfluous the
use of “translator” and “repeater.” Any translators or
repeaters “licensed as such by the [FCC]” would necessarily
be owned by a licensee. Under the appellants’
interpretation, that licensee, as an entity that operates
broadcasting facilities, would be a “broadcast station.”
Therefore, the phrase “broadcast station” would include the
14. The retransmissions listed in 17 U.S.C. § 114(d)(1)(B) as exempt from
the performance right of § 106(6) include:
(B) a retransmission of a nonsubscription broadcast transmission:
Provided, That, in the case of a retransmission of a radio station’s
broadcast transmission—
(i) the radio station’s broadcast transmission is not willfully or
repeatedly retransmitted more than a radius of 150 miles from
the site of the radio broadcast transmitter, however—
(I) the 150 mile limitation under this clause shall not apply when
a nonsubscription broadcast transmission by a radio station
licensed by the Federal Communications Commission is
retransmitted on a nonsubscription basis by a terrestrial
broadcast station, terrestrial translator, or terrestrial repeater
licensed by the Federal Communications Commission;
19
facilities of a repeater or translator, and make their listing
superfluous. See United States v. Menasche, 348 U.S. 528,
538-39 (1955) (listing familiar canon of statutory
interpretation that statutes should be interpreted to give
meaning to each word). Additionally, the words “broadcast
station,” “translator” and “repeater” are all modified by the
phrase “licensed by the [FCC].” That translators and
repeaters (both physical facilities) are described as
licensable by the FCC further supports the textual
conclusion, above, that the broadcast station licensed as
such by the FCC in § 114(j)(3) is the physical transmitting
facility.
Likewise, § 114(d)(1)(B) limits the retransmission of a
nonsubscription broadcast transmission to a radius of 150-
miles. As the district court sagely recognized, it makes little
sense to exempt AM/FM webcasting, which is global in
nature, while simultaneously limiting retransmission to a
150-mile radius. Bonneville Int’l Corp. v. Peters, 153 F.
Supp. 2d 763, 776 (E.D. Pa. 2001). The absurdity of this
construction is apparent when one considers that, under
the appellants’ interpretation, the webcasting of AM/FM
programming by the original broadcaster would be exempt
under § 114(d)(1)(A) and transmissible world wide over the
Internet without any § 106(6) limitations. However, if a
third party webcaster (that did not hold any FCC licenses),
such as Yahoo, were to retransmit via webcast the exact
same AM/FM programming, that third party would
unavoidably be covered by the digital audio transmission
performance right in § 106(6), and not exempt. If, as the
broadcasters protest, congressional intent were simply to
protect the broadcaster-recording industry relationship
wherein “the sale of sound recordings has been promoted
by the airplay decisions of radio broadcasters,” what
possible purpose could be served by distinguishing between
different purveyors of that exact same airplay decision?
Appellants’ Br. at 55. We are not convinced that there is a
coherent principle distinguishing a third party
retransmitter of the same programming and requiring that
the third-party “stand on a different footing.” Id. at 56. A
common-sense reading of § 114(d)(1)(B) in light of
§ 114(d)(1)(A) is that the express geographic limitation on
third party retransmissions in § 114(d)(1)(B) cannot coexist
20
with the unlimited geographic reach of AM/FM webcasting
proposed by the appellants for § 114(d)(1)(A). A far more
harmonious reading of § 114 is achieved if § 114(d)(1)(A) is
limited to over-the-air broadcasting, and all forms of
webcasting are nonexempt from § 106(6). The
retransmission provisions of § 114(d)(1)(B) strongly favor the
Copyright Office’s interpretation of § 114(d)(1)(A).
D.
A consideration of the legislative history of the DPRA and
the DMCA also reinforces our conclusions. Starting with
the DPRA, it is apparent that the public performance right
of § 106(6) was originally intended to be limited in scope.
See 1995 Senate Report, at 19 (App. at A718) (“[U]nder
[§ 114(d)(1)(A)], any transmission to members of the public
that is neither a subscription transmission . . . nor part of
an interactive service is exempt from the new digital
performance right.”). This new right was expressly limited
in knowing opposition to policies preferred by the Copyright
Office at the time:
Notwithstanding the views of the Copyright Office . . .
that it is appropriate to create a comprehensive
performance right for sound recordings, the Committee
has sought to address the concerns of record
producers and performers regarding the effects that
new digital technology and distribution systems might
have on their core business without upsetting the
longstanding business and contractual relationships
among record producers and performers, music
composers and publishers and broadcasters that have
served all of these industries well for decades.
Accordingly, the Committee has chosen to create a
carefully crafted and narrow performance right,
applicable only to certain digital transmissions of
sound recordings.
Id. at 13 (App. at A712) (emphasis added). See also 1995
House Report, at 13-14 (App. at A777). Congress had in
mind the symbiotic relationship between the recording
industry and broadcasters, and did not seek to change the
existing relationship. See 1995 Senate Report, at 15 (App.
21
at A714) (“It is the Committee’s intent to provide copyright
holders of sound recordings with the ability to control the
distribution of their product by digital transmissions,
without hampering the arrival of new technologies, and
without imposing new and unreasonable burdens on radio
and television broadcasters, which often promote, and
appear to pose no threat to, the distribution of sound
recordings.”). To that end, the DPRA, as enacted, contained
a much broader exemption from the § 106(6) performance
right than is presently the case. See note 5, supra. The
legislation did “not affect the interests of broadcasters, as
that industry has traditionally been understood.” 141 Cong.
Rec. 1292 (1995) (Sen. Hatch, introducing the bill that
became the DPRA). “If the technological status quo could be
maintained, it might well be that the current laws could be
tolerated. But, we know that technological developments
such as satellite and digital transmission of recordings
make sound recordings vulnerable to exposure to a vast
audience through the initial sale of only a potential handful
of records.” Id. at 1293
Intervening technological developments did, ultimately,
require further legislation. Section 114(d)(1)(A) was
amended in the DMCA “to delete two exemptions that were
either the cause of confusion as to the application of the
DPRA to certain nonsubscription services (especially
webcasters) or which overlapped with other exemptions
(such as the exemption in subsection (A)(iii) for
nonsubscription broadcast transmissions). The deletion of
these two exemptions is not intended to affect the
exemption for nonsubscription broadcast transmissions.”
1998 Conference Report, at 80 (App. at A1197). Congress
sought to “clarif[y] that the digital sound recording
performance right applies to nonsubscription digital audio
services such as webcasting.” Staff of the House Comm. on
the Judiciary, Section-by-Section Analysis of H.R. 2281 As
Passed by the United States House of Representatives on
August 4, 1998, 105th Cong., 2d Sess., at 50 (Committee
Print, Serial No. 6, 1998) (“1998 House Manager’s Report”)
(App. at 1087).
In 1995, while the DPRA was being crafted, no serious
attention was paid to the specific possibility that radio
22
broadcasters would simultaneously stream their AM/FM
programming over the Internet. The central question then is
somewhat broader: whether, in exempting “nonsubscription
broadcast transmissions,” Congress intended the DPRA to
exempt nontraditional transmissions by broadcasters. The
answer appears to be solidly in the negative. Congress
decided “not to include free over-the-air broadcast services
in this legislation” in part because broadcasters provide
“public interest activities to local communities to fulfill a
condition of the broadcasters’ license.” 1995 Senate Report,
at 15 (App. at 714) (emphasis added); 1995 House Report,
at 13 (App. at A778). Referring to the benefits of “free over-
the-air broadcasting,” the same reports reiterate that the
“legislation should do nothing to change or jeopardize the
mutually beneficial economic relationship between the
recording and traditional broadcasting industries.” Id.
(emphasis added). “The classic example of [an exempt
transmission under section 114(d)(1)(A)] is a transmission
to the general public by a free over-the-air broadcast
station, such as a traditional radio or television station, and
the Committee intends that such transmissions be exempt
regardless of whether they are in a digital or nondigital
format, in whole or in part.” 1995 Senate Report, at 19
(App. at 718) (emphasis added).
The appellants argue, however, that the unambiguous
intent of Congress to exempt AM/FM webcasting is clear in
the 1995 Senate Report, which stated that “[t]he underlying
rationale for creation of this limited [digital audio recorded
performance] right is grounded in the way the market for
prerecorded music has developed, and the potential impact
on that market posed by subscription and interactive
services—but not by broadcasting and related
transmissions.” Id. at 17 (App. at A716) (emphasis added).
This, they argue, favors a broad interpretation of the scope
of Congress’s intended protection of the broadcaster-
recording industry relationship. We believe that this single
sentence, out of context, provides little support for the
broadcasters’ position. An interpretation of this sentence
more in harmony with the remainder of the DPRA is that a
“related transmission” refers to the other types of
transmissions (other than a broadcast transmission)
expressly exempted in § 114(d), such as retransmissions.
23
Appellants argue that this narrow reading of broadcast
transmission makes the word “nonsubscription” in the
phrase “nonsubscription broadcast transmission”
surplusage, since all over-the-air broadcasts are currently
nonsubscription broadcasts. See Bailey v. United States,
516 U.S. 137, 146 (1995) (holding that each term in a
statute should have a “particular, nonsuperfluous
meaning”). We disagree. All over-the-air broadcasts are
currently nonsubscription because they are analog. It is our
understanding that analog radio technology is not capable
of providing a subscription broadcast transmission. In
comparison, §§ 106 and 114 are concerned with digital
transmissions. With digital over-the-air transmission
technology it is possible for transmitters to provide their
transmission services on a subscription basis.15 Inasmuch
as the legislative history indicates that Congress was
anticipating the technology of digital radio when it
formulated § 114(d)(1)(A), 1995 Senate Report, at 19 (App.
at A718) (“[T]he Committee intends that [over-the-air]
transmissions be exempt regardless of whether they are in
a digital or nondigital format, in whole or in part.”), we find
it perfectly reasonable to conclude that Congress was also
anticipating that digital radio potentially could give rise to
subscription radio services and chose expressly to
distinguish such services from nonsubscription digital over-
the-air radio services.
Appellants also make much of the fact that “webcasting,”
as it was generally defined at the time of DMCA, referred to
“public multiple highly-themed genre channels of sound
recordings on a nonsubscription basis.” 1998 House
Manager’s Report, at 50 (App. at A1087). Under the
appellants’ theory, the performance right in § 106(6) must
15. For example, XM Radio, which provides a digital radio signal through
a satellite broadcasting mechanism, charges a monthly subscription fee
for access to its digital radio service. A digital radio over-the-air signal,
unlike traditional analog radio, is not unavoidably free of cost to
consumers. For commercial reasons it appears, however, that non-
satellite digital radio will likely debut in this country in a
nonsubscription format. See Justin Hibbard, Top Ten Trends 2003 —
Broadcasting, Red Herring, Nov. 15, 2002, at 48 (available at 2002 WL
16030972).
24
be construed as narrowly as possible and the exemption in
§ 114(d)(1)(A) as broadly as possible. The changes wrought
by the DMCA to reduce the § 114(d)(1) exemptions to the
digital audio transmission performance right, under the
appellants’ theory, must also be construed narrowly in
order to preserve the intended, narrow scope of the § 106(6)
copyright. Therefore, in interpreting the DMCA, according
to the appellants, the scope of the DMCA’s reductions in
the § 114(d)(1) exemptions (and the corresponding
expansion of the scope of the digital audio transmission
performance copyright) must be narrowly defined to include
only the precise type of webcasting contemplated by
Congress at that time. Under this argument, because
AM/FM webcasting was not exactly what Congress
contemplated when it adopted the DMCA, AM/FM
webcasting was not meant to be included in the § 106(6)
performance right.16 But it is clear to us that Congress did
not intend to tie the scope of the DMCA to such a narrow
definition. “While an impetus for this legislation was the
licensing difficulties and legal issues raised by webcasters
in particular, it is Congress’ intent that this legislation
apply generally to otherwise nonexempt nonsubscription
digital audio services on the Internet and in other media.”
1998 House Manager’s Report, at 50 (App. at A1087).
Additionally, we have already noted that the exemptions
the DPRA afforded to radio broadcasters were specifically
intended to protect only traditional radio broadcasting, and
did not contemplate protecting AM/FM webcasting. The
DMCA’s silence on AM/FM webcasting gives us no
affirmative grounds to believe that Congress intended to
expand the protections contemplated by the DPRA. The
appellants must show something more than congressional
silence to argue convincingly that Congress intended to
lump AM/FM webcasting with over-the-air broadcasting in
§ 114(d)(1)(A)’s exemption.
The legislative history shows that DPRA § 114(d)(1)(A)(iii)
created a nonsubscription broadcast transmission
16. This argument operates in tandem with appellants’ plain language
argument, which gives “nonsubscription broadcast transmission” a
broad scope. See discussion, supra at § II(B).
25
exemption for traditional over-the-air broadcasting in order
to preserve the symbiotic relationship between broadcasters
and the recording industry. And the DMCA’s amendments
to § 114(d) were “not intended to affect the exemption for
nonsubscription broadcast transmissions.” 1998
Conference Report, at 80 (App. at A1197). Therefore, the
purpose of Congress was to limit the exemption for
nonsubscription broadcast transmissions to traditional,
over-the-air broadcasts.
III.
For the reasons stated above, our analysis of
§ 114(d)(1)(A) convinces us that the Copyright Office’s
arguments are persuasive. Section 114(d)(1)(A)’s
nonsubscription broadcast transmission’s exemption
implicates only over-the-air radio broadcast transmissions,
and does not cover the internet streaming of AM/FM
broadcast signals. Therefore, we AFFIRM.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit