judges pursuant to 17 U.S.C. § 801(b)(7)(A). On Oct. 31, 2008, the CRB published a Notice of
Proposed Rulemaking requesting comment on the proposed rates and terms submitted to the
CRB. Having received no objections from a party that would be bound by the proposed rates
and terms, the CRB adopted them in its final regulations on Dec. 19, 2007, effective Jan. 1,
2008.^3149 The rates stipulated that from 2008 through 2011, the royalty fees would be 7.25% of
the licensee's monthly gross revenues resulting from residential services in the United States, and
for 2012 the fee would be 7.25% of monthly gross revenues. These rates also include a
minimum, non-refundable, annual fee of $100,000, credited against royalties due in that year.^3150
The CRB ruled that these rates were inclusive of the Section 112 ephemeral license, but declined
to ascribe any particular percentage of the Section 114 royalty as representative of the value of
the Section 112 license.^3151
On Jan. 10, 2008, the CRB issued its decision setting the statutory royalty rate that XM
and Sirius must pay to artists and record labels through 2012 as follows: 6.0% for 2007 and
2008; 6.5% for 2009; 7.0% for 2010; 7.5% for 2011; and 8.0% for 2012. The CRB ruled that
these rates were inclusive of the Section 112 ephemeral license, but again declined to ascribe any
particular percentage of the Section 114 royalty as representative of the value of the Section 112
license.^3152
These decisions were cast in doubt, however, when the Register of Copyrights issued a
determination on Feb. 19, 2008 stating that the CRB had committed clear legal error by failing to
set separate values for the Section 112 and Section 114 licenses, and failing to include a
minimum fee for the Section 112 license. The Register found the failure to set separate values to
be problematic because the beneficiaries of each license may not be identical, as the Section 112
statutory license applies to reproductions and the Section 114 statutory license applies to public
performances.^3153
The impact of the Register’s determination was initially unclear. Although Section
802(f)(1)(D) allows the Register to issue a decision correcting legal errors made by the CRB
after a final determination has issued, the CRB may revise final determinations only to correct
“technical or clerical errors,” or to modify the “terms but not the rates... in response to
unforeseen circumstances that would frustrate the proper implementation of such
(^3149) 72 Fed. Reg. 71795 (Dec. 19, 2007); “Fees, Terms Set for Transmission Of Sound Recordings by Preexisting
Services,” BNA’s Patent, Trademark & Copyright Journal (Jan. 04, 2008) at 222.
(^3150) 72 Fed. Reg. 71795, 71796 (Dec. 19, 2007).
(^3151) Id.
(^3152) 73 Fed. Reg. 4080, 4102 (Jan. 24, 2008).
(^3153) 73 Fed. Reg. 9143, 9146 (Feb. 19, 2008) (“Royalties collected under section 114 are paid to the performers and
the copyright owners of the sound recordings, i.e., usually the record companies; whereas, the royalties
collected pursuant to the section 112 license are not paid to performers.”); “Copyright Office Declares Judges’
Ruling on Ephemeral Rates Was Legal Error,” BNA’s Patent, Trademark & Copyright Journal (Feb. 29, 2008)
at 446.