DOJ Could Still Reverse Course on BMI Consent Decree Case Appeal Post-Brief, Stakeholders Say
DOJ’s decision Thursday to continue pursuing its appeal of the Broadcast Music Inc. legal challenge against a portion of the department's concluding statement on its review of the BMI and American Society of Composers, Authors and Publishers consent decrees doesn't forestall a course reversal later, music industry lawyers and lobbyists told us. DOJ said in an opening brief to the 2nd Circuit Court of Appeals that it planned to continue to pursue the appeal of a September U.S. District Court ruling in New York, in which Judge Louis Stanton ruled the Antitrust Division erred in its concluding statement that the department continues to believe existing decrees mandate 100 percent licensing (see 1611140065 and 1609190062). Stanton is the rate court judge for the BMI consent decree. Stakeholders indicated before DOJ’s filing that it was possible the department could decide to move forward with the case (see 1705120040).
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“In the government’s view, BMI’s repertory includes every song, and only those songs for which BMI has the right to license or sublicense on a full-work basis, meaning it has the right to authorize a licensee to publicly perform the song with the need for additional licenses,” DOJ said in its opening brief (in Pacer). “And if BMI has the right to grant a full-work license for a song, the decree requires it to offer a full-work license for that song.” BMI’s challenge is effectively a bid to “rewrite this requirement to include a special exception for ‘split works,’” DOJ said.
BMI’s “special exception conflicts with the plain language of the decree that requires BMI to grant licenses for ‘the right of public performance of any, some or all of the compositions in defendant’s repertory,’” DOJ said. BMI’s argument isn't “consistent with the consent decree’s purpose because it stands to diminish what the Supreme Court has described as the core benefit justifying BMI’s collective licensing despite its anticompetitive effects; namely, the blanket license’s grant to users of ‘immediate use of covered compositions, without the delay of prior individual negotiations, and great flexibility in the choice of musical material.’”
BMI is “not surprised” by DOJ’s move to press forward with its appeal but “we still hope for the opportunity to sit down with the new administration and educate it about the chaos that would result in the marketplace if the DOJ’s interpretation of BMI’s consent decree were implemented,” said CEO Mike O’Neill in a statement. The DOJ’s 100 percent licensing language “unfairly advantages music users at the expense of the American songwriter and upends a longstanding industry practice that has worked effectively for decades.”
The 2nd Circuit’s ruling on the case “will affect the rights of more than a million American songwriters and composers, thousands of whom have expressed strong opposition to the DOJ’s position and we are hopeful the Court will affirm” Stanton’s ruling, said ASCAP CEO Elizabeth Matthews in a statement. ASCAP spearheaded a lobbying challenge to the 100 percent licensing language on Capitol Hill in coordination with BMI’s legal challenge. NMPA also said it was disappointed by DOJ’s action but is “confident in BMI’s ability to defend their position.” The Music. Innovation. Consumers. (MIC) Coalition praised the move as needed to prevent Stanton’s ruling from undermining “the value and purpose of the BMI blanket license.”
Nashville Songwriters Association International Executive Director Bart Herbison and others said they believe the DOJ may have chosen to say it was moving ahead with the BMI case appeal simply as a stopgap measure given the ongoing lack of permanent DOJ appointees who would be responsible for formulating the department’s policy on the consent decrees. A tech sector lobbyist said DOJ faced pressure from a group of music licensing-focused members of Congress to not file an opening brief on its appeal by the Thursday deadline, which effectively would have ended the case.
“There hasn’t been an opportunity to hash out these issues within DOJ” because of the Antitrust vacancies, Herbison told us. “It’s hard to do that until the people are all there.” No one “knows for sure” what Antitrust’s position on the BMI case will be once Delrahim takes control of the division and fills other still-vacant positions there, Herbison said. “They can back out of this [appeal] at any time.” Antitrust Division head nominee Makan Delrahim awaits approval by both the Senate Judiciary Committee and the full Senate before he can take charge. Senate Judiciary held its confirmation hearing earlier this month (see 1705100024). Acting Assistant Attorney General Andrew Finch is temporarily leading Antitrust.
The DOJ’s brief is notable for not breaking any new ground in arguing its position in favor of 100 percent licensing, so it “doesn’t really change” the case’s state of play, said music industry attorney Chris Castle. He said he will also be watching to see if the DOJ chooses to revise its position after Delrahim takes over at Antitrust. DOJ’s appeal could also be an opportunity for BMI to forestall any opportunity for New York-based District Court Judge Denise Cote, the rate court judge for the ASCAP consent decree, to issue a counter ruling in favor of DOJ, a music industry executive said. Cote is seen as being less friendly to the performing rights organizations’ position than Stanton. “If [Cote] is given an opportunity to issue a conflicting ruling, she’ll take it,” the executive said.