CCIA-Led Coalition, Others Support DOJ Appeal of BMI 100 Percent Licensing Case
Music licensing stakeholders signed on at the 2nd Circuit Court of Appeals in support of DOJ's appeal of Broadcast Music Inc.'s 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 (see 1705190051). DOJ said earlier this month it will continue to pursue an appeal of a September U.S. District Court ruling in New York. Louis Stanton ruled the Antitrust Division erred in continuing to believe existing decrees mandate 100 percent licensing (see 1611140065 and 1609190062). Stanton is the rate court judge for the BMI consent decree.
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The Computer & Communications Industry Association joined with Google, NAB, several music license committees and others in arguing Stanton either misinterpreted or ignored the “plain language of the BMI consent decree and, equally plainly, the antitrust balance struck by the” ASCAP and BMI consent decrees. “Nothing” in the consent decrees' language “supports the notion that” the two performing rights organizations can be legally allowed to pursue fractional licensing, the CCIA-led coalition said in an amicus brief. “A license cannot grant the right to perform a work if it covers only a fractional interest in the work,” the brief said. “Under basic copyright principles, it makes no sense to speak of licensing the performance right in a 'fractional' interest in a joint work.” Fractional licensing “threatens widespread and devastating consequences in the marketplace,” giving every co-owner of music partially under BMI's repertory potential “hold-up power” that would “artificially increase its bargaining leverage,” the brief said.
The Television Music License Committee argued the BMI consent decree's language supports DOJ's 100 percent licensing interpretation. BMI's own user agreements with composers, music publishers, broadcasters and others, along with the PRO's arguments in previous court cases “confirm the plain reading” of the decree in favor of 100 percent licensing, the committee said (in Pacer). Stanton's ruling contrasts with established precedent that “any single contributor may issue a license ... to publicly perform the entire work" while only being subject "to an accounting obligation for the royalties earned," the brief said. “Allowing BMI, at the urging of its largest rightsholders” to offer fractional licensing of “potentially millions of copyrighted 'split' works would vitiate the very procompetitive justification for BMI’s existence: affording users instantaneous, unfettered, indemnified access to all works in its repertory without need to engage in additional licensing transactions.”
Consumer Action and Public Knowledge argued if the ruling stands, it "not only creates new market power, it also enables market power to move out of the hands of PROs regulated by consent decrees and into the hands of powerful and unregulated music publishers.” The ruling would also mean “some songs might not be able to be used for the simple reason that the music user, whether it’s Spotify, Pandora, Apple, or Google, cannot find all the fractional rights holders in order to license 100% of the song,” CA and PK said. “This greatly increases the search and transaction costs for music users that consumers rely on to provide them with music services.”
BMI said it continues to believe DOJ's 100 percent licensing position “unfairly advantages music users at the expense of the American songwriter and upends a longstanding industry practice.” The 2nd Circuit set Friday an Aug. 17 deadline for BMI to respond.