Stakeholders Eye CO Future After Pallante Ouster

Executives and lobbyists from multiple copyright policy camps referred to Hayden's decision to move Pallante to an advisory role as either a demotion or a firing in all but name. The LOC is framing Pallante’s move “as a promotion when I think it’s apparent to most that it’s not,” said Copyright Alliance CEO Keith Kupferschmid. “It’s a very thinly veiled firing, since [Hayden] couldn’t outright fire” Pallante, an IP-focused tech sector lobbyist told us. Pallante was locked out of the LOC’s computer system after being informed of the ouster, several lobbyists told us. Hayden reportedly informed key members of Congress and industry executives Friday about the move ahead of an official LOC announcement, several lobbyists said. The move was Hayden's first major personnel change since she was sworn in as librarian of Congress last month (see 1609140053).

There was no consensus among the industry officials and lobbyists we talked to about the reasoning behind Hayden’s decision. “We frankly don’t know what the motivation behind this is,” Kupferschmid said. “All we have to go with is [the LOC’s statement] … so it would be very helpful to know more about why this action took place and what the next steps are.” A CO spokeswoman referred us to the LOC’s initial statement on Pallante’s ouster, in which the LOC didn’t comment on the reasoning behind the move.

Pallante's vocal support for making the office an independent agency appears to have been a significant factor in the removal, several executives and lobbyists on all sides of the copyright policy told us. Pallante urged the House Judiciary Committee in 2015 to make the CO independent of LOC, saying a break would allow the office to become more “innovative” in its IT approach (see 1504290058). The CO proposed this year to separate its systems from the overall LOC IT infrastructure (see 1603020055). Reps. Tom Marino, R-Pa., Judy Chu, D-Calif., and Barbara Comstock, R-Va., bowed the Copyright Office for the Digital Economy (Code) Act (HR-4241) in December. The bill would separate the CO from the LOC but keep it within the legislative branch (see 1506050057 and 1512140029).

Pallante’s backing of independence ultimately was seen as advocating for “taking the office out of the jurisdiction of the librarian of Congress,” so it’s not surprising Hayden “decided she didn’t want [Pallante] running that office anymore,” said Re:Create Executive Director Joshua Lamel. It’s “surprising” Pallante remained as register for as long as she did after advocating for CO independence, particularly since that position rankled her LOC superiors long before Hayden took the helm, a tech sector lobbyist told us. Supporting CO independence “without having the executive branch on board is probably not the greatest idea” for the register of copyrights to back, a music industry lobbyist told us.

Pallante's permanent successor is unlikely to publicly support independence as a result of Pallante’s ouster, several lobbyists told us. “My guess is that Hayden won’t want to appoint someone who would want to take [CO] jurisdiction away from” the LOC, Lamel said. “It shouldn’t be surprising that Hayden might want a register who views the CO as a part of the library,” a tech sector lobbyist said. The future register’s possible lack of support for CO independence -- or even a neutral stance on the issue -- may sway House Judiciary’s opinion on the issue, said Computer & Communications Industry Association Vice President-Law and Policy Matthew Schruers. “I think it would be a bad idea as soon as a new librarian of Congress and a new register come on board for [House Judiciary] to completely reorganize [the CO’s] structure without letting them first try to right the ship.”

The independence issue ultimately was a factor in a larger perception that Hayden had “trust issues” with Pallante, two lobbyists separately said. They said Pallante opposed President Barack Obama’s nomination of Hayden and this apparently circulated among Hayden and others at LOC. A content-centric executive called assertions that Pallante opposed Hayden’s nomination “shocking and wholly false.” If Hayden felt she needed to remove Pallante as register to lead the LOC effectively, “that’s unfortunate, but it would be even more unfortunate if” Pallante’s tenure “was tainted because of it,” the executive said.

Pallante’s support for CO independence was one of multiple controversial decisions she made as register, though it’s unclear if other decisions played a role in her ouster, lobbyists said. The CO in February opposed the DOJ Antitrust Division's inclusion of language in its closing statement on its review of the American Society of Composers, Authors and Publishers and Broadcast Music Inc. consent decrees clarifying the agency's stance in favor of 100 percent licensing rules (see 1602260034). The CO more recently criticized the FCC set-top rulemaking amid concerns the proposal would interfere with copyright owners' ability to license and control dissemination of their works in the marketplace. Opponents of the set-top rulemaking heavily cited the CO's opinion, while Public Knowledge criticized the office for what the group viewed as a pro-rightsholder bias (see 1608040062 and 1609080084).

The Copyright Alliance hasn’t agreed with all CO policy recommendations in recent years, but if those policy stances played a role in Pallante’s ouster “we’d be concerned,” Kupferschmid said. “Historically, the librarian has given deference to the register of copyrights on copyright policy issues, and if that were to change, we’d be concerned.” Pallante always appeared to be “pretty even-handed and looking out for both the consumer and the copyright holder,” a music industry lobbyist told us. The lobbyist pointed to the office's 100 percent licensing opposition as a possible flashpoint for criticism of Pallante. Another content-side lobbyist said that the tech sector had increased pressure against Pallante following the FCC set-top opinion. The tech sector hadn't sought Pallante's dismissal despite its criticisms of the CO's recent decisions, a tech lobbyist said.

House Judiciary Chairman Bob Goodlatte, R-Va., and ranking member John Conyers, D-Mich., said they believe Pallante’s departure is “a tremendous loss for the Copyright Office and for America’s creators, innovators, and users of copyrighted works.” Pallante’s departure “is the perfect opportunity to examine the selection process for the new Register,” Goodlatte and Conyers said in a joint statement. “We must ensure that any new Register is fully qualified to lead this important office as it continues to directly advise Congress on copyright policy and law. The new Register of Copyrights should be dedicated to protecting creative rights and modernizing the Copyright Office.”