Music Choice, a company that transmits copyrighted sound recordings to businesses for background music, was accused by SoundExchange, Inc. of underpaying required royalties. The dispute centered on the proper interpretation of a federal regulation defining “gross proceeds,” which dictates the revenue base on which Music Choice must pay royalties for its business services. SoundExchange believed all revenues from business transmissions should be included, while Music Choice argued that only revenues derived solely from business services should count, excluding those also attributable to subscription services.

The United States District Court for the District of Columbia, using the doctrine of primary jurisdiction, stayed the ongoing litigation and allowed the parties to seek an interpretive ruling from the Copyright Royalty Board (the “Royalty Board”). The Royalty Board, after reopening the relevant regulatory dockets, issued a ruling adopting SoundExchange’s interpretation of the regulation. Rather than returning to district court, Music Choice directly petitioned the United States Court of Appeals for the District of Columbia Circuit for review and vacatur of the Royalty Board’s decision.

The United States Court of Appeals for the District of Columbia Circuit held that it lacked jurisdiction to review the Royalty Board’s interpretive ruling. The court reasoned that such a ruling was not a judicially reviewable “determination” under 17 U.S.C. § 803(c) and did not result from a proceeding in which Music Choice was a participant as required by statute. Additionally, the court found that the ruling did not bind Music Choice or any other party. As a result, the court dismissed Music Choice’s petition for review, leaving the parties to pursue their dispute in the district court. View “Music Choice v. COPYRIGHT ROYALTY BOARD” on Justia Law