Technology Law and Electronic Media Update

December 19, 2017.  Public Performance Rights Organizations for songwriters, like ASCAP and BMI (PRO) beat back an effort from the U.S. Department of Justice to forbid a long-standing song licensing practice that lets the music flow from collaborative songwriting teams.  In the case United States v. Broadcast Music, Inc. 16-3830-cv, 2d. Cir. (Dec. 19, 2017), the court ruled against the U.S. DOJ Antitrust Division who had recently asserted that contrary to decades of industry practice, the anti-trust consent decree under which the PROs operate did not permit them to include in their blanket licenses any songs which they did not control 100%.   This created a nightmare for joint songwriters whose collaborations spanned different PROs due to disparate PRO membership by the songwriters.  The court concluded that if the DOJ wished to address the issue of “fractional licensing”, their recourse was limited to either amending the consent decree or suing under the Sherman Act.

December 29. 2017Wixen Music Publishing, Inc. sued Spotify in the Central District of California, (C.A.C.D. Case. No. 2:17-cv-09288-GW-GJS) alleging willful infringement of Wixen’s copyrights in its song catalog, which includes Tom Petty’s “Free Falling” and Survivor’s “Eye of the Tiger.” The complaint alleges that as a result of Spotify “outsourc[ing] its [licensing] responsibility” to the Harry Fox Agency, (HFA), it ended up using the compositions without a license because HFA was “ill-equipped to obtain all the necessary licenses.”  Ironically, HFA is a long-time, music licensing agency for music publishers that manages compulsory licensing of “mechanical” (reproduction) rights in songs. It was owned by the National Music Publishers Association, sold to SESAC, another long-standing music rights organization, which itself was recently purchased by the Blackstone investment group.  Wixen seeks $1.6 Billion in damages for willful infringement.

Addendum to the prior newsletter:  In response to feedback from a very knowledgeable friend of mine (thank you), let me clarify that the reference to Donald Trump’s Twitter account was supposed to be a humorous aside regarding notices in click-through customer agreements, and not a suggestion that Twitter is in fact governed by the same laws as a “title II” telecommunications carrier.  Further, in the ensuing e-conversation, it was noted that the big, established internet companies like Facebook, Netflix and Google likely have volume deals for data traffic such that their direct network traffic costs are unlikely to be affected by the FCC deregulatory decision.  But up-and-comers challenging the incumbents may yet face higher costs.