The Royalty Logic motion filed almost a year ago questioning whether the Copyright Royalty Board Judges are constitutionally appointed had its day in court yesterday, as the U.S. Court of Appeals for the D.C. Circuit considered the issue as part of webcasters' appeal over digital performance royalty payments.

Royalty Logic was set up by Music Reports Inc. to compete with Sound Exchange, but the CopyRight Royalty Board rejected that initiative and designated SoundExchange as the agent in charge of collecting performance royalties from the digital music service providers and paying it out to performers and master rights owners.

When that happened, Royalty Logic filed a motion pointing out that in order to meet constitutional requirements, the Copyright Royalty Board judges should have been appointed by the President, a head of an executive branch department, or a federal judge. It argued that the CRB does not fall under any executive agency, and that it was created in 2005 as part of the Library of Congress, which is part of the legislative branch (Billboard, May 31, 2008).

The Copyright Royalty Board ruling left Royalty Logic "in a secondary position," says Music Reports Inc. senior VP of business affairs and business development Les Watkins. In other words, Royalty Logic wouldn't get reports and money directly from the webcasters -- it would be dependent on Sound Exchange. "Who will affiliate with us if we aren't in a first Position?" Watkins asks.

According to a Legal Times report, the appeal judges were intrigued by the issue.

"[Judge Thomas] Griffith said he was 'disappointed' with supplemental briefing on the constitutional issue and asked whether Congress should be given a chance to weigh in," Legal Times reported. "[Chief Judge David] Sentelle noted the court can order additional briefing, but he did not make this order by the end of the hearing. [Judge Judith] Rogers called the issue 'fascinating' and said the D.C. Circuit has long assumed that the Library of Congress was a legislative entity."

Watkins says a ruling on the constitutional issue could occur within 90 days.