2nd Circuit Affirms Fractional Licensing for BMI; Tells DOJ To Move To Amend Consent Decree

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U.S. v. BMI, No. 16-3830 (2d Cir. Dec. 19, 2017).

The Second Circuit affirmed the District Court's judgment interpreting the consent decree between the Department of Justice and Broadcast Music, Inc. (“BMI”), in which the court ruled that the consent decree neither requires full-work licensing nor prohibits fractional licensing of BMI’s affiliates' compositions.  The DOJ had concluded that the consent decrees require ASCAP and BMI to offer full-work licenses to the exclusion of fractional licenses, which led to the lower court's decision subject to the appeal.

The Second Circuit focused on the plain language of the consent decree.  "This appeal begins and ends with the language of the consent decree."

BMI Consent Decree Does Not Bar Fractional Licensing, Despite DOJ's Views

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U.S. v. BMI, No. 64-3787 (S.D.N.Y. Sep. 16, 2016) [Doc. 100].

Judge Stanton of the Southern District of New York holds that the BMI Consent Decree neither bars fractional licensing nor requires full-work licensing, contrary to the Justice Department's recent statement that the PROs are required to offer full-work licenses.  BMI brought its application for construction of its Consent Decree based upon 8/4/16 of the Justice Department's statement, and the Court held that nothing in the Consent Decree supports the Justice Department's view that full-work licensing is required.  The Consent Decree "does not address the possibilities that BMI might license performances of a composition without sufficient legal right to do so, or under a worthless or invalid copyright, or users might perform a music composition licensed by fewer than all of its creators."  Continuing, Judge Stanton stated "The Consent Decree does not regulate the elements of the right to perform compositions. Performance of a composition under an ineffective license may infringe an author's rights under copyright, contract or other law, but it does not infringe the Consent Decree, which does not extend to matters such as the invalidity or value of copyrights of any of the compositions in BMI's repertory"

ASCAP & BMI Consent Decrees Will Not Be Modified; DOJ Antitrust Div.

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Here is a copy of the Statement of the Department of Justice on the Closing of the Antitrust Division’s Review of the ASCAP and BMI Consent Decrees (Aug. 4, 2016).  In short:

... the consent decrees, which describe the PROs’ licenses as providing the ability to perform “works” or “compositions,” require ASCAP and BMI to offer full-work licenses. The Division reaches this determination based not only on the language of the consent decrees and its assessment of historical practices, but also because only full-work licensing can yield the substantial procompetitive benefits associated with blanket licenses that distinguish ASCAP’s and BMI’s activities from other agreements among competitors that present serious issues under the antitrust laws. Moreover, the Division has determined not to support modifying the consent decrees to allow ASCAP and BMI to offer “fractional” licenses that convey only rights to fractional shares and require additional licenses to perform works. Although stakeholders on all sides have raised some concerns with the status quo, the Division’s investigation confirmed that the current system has well served music creators and music users for decades and should remain intact. The Division’s confirmation that the consent decrees require full-work licensing is fully consistent with preserving the significant licensing and payment benefits that the PROs have provided music creators and music users for decades. 

First, the DOJ described the background of the consent decrees.  Thereafter, the DOJ found that there is broad consensus that ASCAP and BMI as currently constituted fill important and procompetitive roles in the music licensing industry; the consent decrees require full-work licensing; modification of the consent decrees to permit fractional licensing by ASCAP and BMI would not be in the public interest; and other modifications to the consent decrees would not be appropriate at this time (e.g., modified to allow PRO members to “partially withdraw” rights and thereby prevent the PROs from granting licenses that include those rights to certain users (in particular, digital music services) but not to other music users).  Further,  the DOJ stated that assuming ASCAP and BMI proceed in good faith, the Division will forbear for one year from any enforcement action based on any purported fractional licensing by ASCAP or BMI.  Also, the DOJ identified certain guidelines and practices that may be useful as the industry moves towards such a shared understanding on fullwork licensing.  Lastly, the DOJ concluded that the consent decrees remain vital to an industry that has grown up in reliance on them.  But the consent decrees are inherently limited in scope, and a more comprehensive legislative solution may be possible and preferable.

BMI May Recover More Than Minimum Statutory Damages After Nightclub's Default

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BMI v. Crocodile Rock Corp., No. 14-3891 (3d Cir. Oct. 30, 2015) (non-precedential opinion).

The Third Circuit held that performance rights organization BMI could recover a default judgment for more than the minimum statutory damages available under the Copyright Act.  The Court found that so long as the award falls within the limits set by statute, the trial court's discretion and sense of justice were controlling in setting the amount of the award, even in the case of a default judgment and where the defendant's alleged profits are less than the amount awarded.  Accordingly, the $35,000 award of statutory damages was affirmed.

11th Cir. Finds Summary Judgment Properly Granted In Favor of BMI And Against Tavern; Adopts 2nd Cir. Davis v. Blige

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BMI v. Evie's Tavern Ellenton, Inc., No. 13-15871, 2014 BL 329074 (11th Cir. Nov. 21, 2014).

The 11th Circuit affirmed summary judgment in favor of the performing rights society BMI, rejecting the defendant-tavern's argument that there were questions of material fact as to the copyright ownership of the musical compositions at issue and as to whether defendants were innocent infringers.  With respect to the chain-of-title for the five songs at issue, the court examined each chain of title, and further found that the district court properly found that BMI could be awarded judgment on each song in addition to the copyright holder (generally, the music publisher who owned the copyright).  As BMI agreed to be responsible for all costs and expenses pursuing infringement actions based on the titles that BMI licenses from copyright owners, the number of them to whom summary judgment is granted made no difference in the award of damages, attorneys' fees and costs.  Thus, there was no error in granting summary judgment to the other plaintiffs (the copyright owners) under Fed. R. Civ. P. 61.

As to innocent infringement, the Court affirmed that is not a defense to summary judgment liability, and instead is only a consideration as to the amount of statutory damages to award.  The court also found that an award of attorney's fees was appropriate.  Notably, the 11th Circuit joined the rule adopted by the Second Circuit in Davis v. Blige, 505 F.3d 90, 99 (2d Cir. 2007) that a copyright co-owner may maintain and recover in a copyright infringement action without joining other co-owners.  See fn. 2.

6th Circuit: Bar Owner Liable For Vicarious Copyright Infringement

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Broadcast Music, Inc. v. Meadowlake, Ltd. et al., No. 13-3933 (6th Cir. June 6, 2014) [decision].

The Sixth Circuit holds that an individual, who owned 95% a limited liability company that owned a restaurant that offered dancing and live music, was liable for vicarious copyright infringement (public performance right).  As the company’s chief (95%) owner and the restaurant’s ultimate decision maker, the individual defendant had the right and ability to supervise the infringing performances.  According to the 6th Circuit, "This case indeed falls within the heartland of vicarious liability."  The Court rejected the defendant's argument that his son was the day-to-day manager of the restaurant, that he claimed ignorance of the infringement, and that ownership via a limited liability company shielded liability.  "Either way, Roy profited from infringement at his restaurant while refusing to exercise his right to stop it. And so either way, Roy remains vicariously liable."

BMI Rate Court Holds Withdrawals Of Digital Rights Ok

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BMI v. Pandora Media, Inc., 2013 ILRC 3301, No. 13-cv-4037 (S.D.N.Y. Dec. 19, 2013).

The BMI rate court (District Court Judge Louis Stanton) holds that when BMI no longer is authorized by music publisher copyright holders to license their compositions to Pandora (and other New Media Services), those compositions are no longer in BMI's "repertory" and BMI can no longer license them to Pandora or any other applicant.  Accordingly, the Court denied Pandora's motion for partial summary judgment.  The holding is contrary to the ASCAP rate court's finding.

The BMI court focused on section 106 of the Copyright Act and a copyright owners right to "license, or not license, the performance of their compositions as they see fit.  In the exercise of that right the publishers have agreed with BMI to withdraw their New Media performance licensing rights from Pandora and New Media Services.  That is well within their power as copyright holders."  The Court held that songs that publishers have withdrawn New Media licensing rights are not in BMI's new media repertory and therefore BMI cannot deal in or license those compositions to anyone.  "BMI's repertory consists of compositions whose performance BMI 'has the right to license or sublicense.'"

Notably (in fn. 4), the BMI rate court acknowledged that its finding is contrary to that of the ASCAP rate court (Judge Cote).  The BMI court stated: "The inconsistency is just a difference of view of the power of the application of Section 106 and the copyright holders' rights under the Copyright Law, and will be resolved by the Court of Appeals for the Second Circuit or decree amendment procedures, or managed commercially."

2d Cir Affirms Adjustable Carve Out Rates For Performance Rights Licenses

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BMI v. DMX, Inc., Docket Nos. 10-3429-cv and 11-127-cv (2d Cir. decided June 13, 2012) (decision).

The 2d Circuit holds that the consent decrees with the performing rights organizations permits blanket licenses subject to carve-outs to account for direct licensing by the music user.  Then, the 2d Circuit held that the rate-court (SDNY) set reasonable rates.

BMI Public Performance Suit

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Not to be outdone by the competition (i.e., ASCAP), BMI and various publishing companies has filed suit in the Western District of New York against a Rochester nightclub for copyright infringement arising out of the defendants' allegedly unauthorized public performance of musical compositions. Does this look familiar?

[Broadcast Music Inc. v. Pittsford Cafe and Bistro, Ltd.; case 6:08-cv-06047-MAT; filed 1/31/2008]

Well Its All Right - It's Okay - You Can Look the Other Way

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...and another cookie-cutter alleged infringement of publisher's copyright in public performance. Notable parties include the collection society BMI and the Gibbs brothers, i.e., The BeeGees.

[Broadcast Music Inc.; Michael Joe Jackson; Janice Vercher; Spirit One Music; Miran Publishing Inc.; Two Knight Music; Couch & Madison Partnership; The Estate of Maurice Gibb; Robin Gibb; Barry Gibb v. Queen of Hearts Cruises Inc. dba The Queen of Hearts; Steven Salsberg; Ira Barocas; filed 12/13/2007; S.D.N.Y.; case CV-11222]

Sit Here Counting Crows

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Another day, another BMI lawsuit for copyright infringement based on the public performance right.

The only thing of interest here is a named plaintiff: OTCS fav - Counting Crows. OTCS's can't help but wonder whether there is a a piece of Maria in every complaint that they sing?

[Broadcast Music Inc.; Songs of Universal Inc.; EMI Virgin Songs Inc.; Ken Adamay; Rick Nielson; Brad Carlson; Robin Zander; Tom Peterson; Screen Gems-EMI Music Inc.; Jonathan Siebles; Tony Fagenson; James Collins; Paul Simon; EMI Blackwood Music Inc.; Counting Crows LLC; Robert Kuykendall; Richard Ream Bruce Johannesson; Bret Sychak v. Gotham Yard Corp. d.b.a. Session 73; Peter Thomas; Hunter Hulshizer; Joseph Grillo. 11/16/2007; 07 CV-10373]