Second Circuit Affirms ASCAP Rate Court In Pandora Dispute Over Partial Withdrawals And License Rate

Pandora Media, Inc. v. ASCAP, 14-1158-cv(L) (2d Cir. May 6, 2015).

The Second Circuit Court of Appeals affirmed the ASCAP "rate court's" decision: (1) granting Pandora summary judgment that the ASCAP consent decree unambiguously precludes partial withdrawals of public performance licensing rights; and (2) setting the rate for the Pandora‐ASCAP license for the period of January 1, 2011 through December 31, 2015 at 1.85% of revenue.

ASCAP contended that publishers may withdraw from ASCAP its right to license their works to certain new media music users (including Pandora) while continuing to license the same works to ASCAP for licensing to other users.  The appellate court agreed with the district court’s determination that the plain language of the consent decree unambiguously precludes ASCAP from accepting such partial withdrawals. Also, the Court found that under the circumstances, it was not clearly erroneous for the district court to conclude, given the 6evidence before it, that a rate of 1.85% was reasonable for the years  in question.

BMI Rate Court Holds Withdrawals Of Digital Rights Ok

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  The Court held that songs that publishers have withdrawn New Media licensing rights are not in BMI's new media repertory and therefore BMI cannot deal in or license those compositions to anyone.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."