DMX Cases Force ASCAP and BMI to Adjust Rates to Account for DMX’s Direct Licenses with Composers and Publishers

DMX, Inc. (DMX) provides background/foreground music to thousands of locations, such as retail stores, hotels, shopping centers, restaurants and other places open to the public.  This is not music transmitted over the radio, television or other public broadcast, but is a music service provided by DMX either by satellite or an on-location proprietary device.  DMX is a prominent provider for these services.  The American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI) are performing rights organizations.  Most domestic copyrighted music in the U.S. is licensed through either ASCAP or BMI.  Both ASCAP and BMI are subject to consent decrees to prevent them from unlawfully monopolizing performing rights licensing.

In 2006, DMX introduced a direct licensing program to contract directly with individual composers and their publishers, bypassing ASCAP and BMI.  DMX sought to “break through the powerful status quo and pioneer a new licensing paradigm.”  (Opinion pdf page 13).  DMX requested licenses from both ASCAP and BMI that “carved-out,” or excluded, the direct license fees paid by DMX.  In separate cases with different judges, the district court sided with DMX and adopted DMX’s fee proposal.  Both ASCAP and BMI appealed.  Their cases were combined at the appellate level and the Second Circuit affirmed the district court opinions adopting DMX’s fee proposal.

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South Park WWITB Video Fair Use, Rules Seventh Circuit

Was South Park’s video version of What What (In The Butt) a fair use of Brownmark’s original viral video version of What What (In The Butt)?  The district court thought so.  It made its decision based on South Park Digital Studios’ (SPDS) Fed.R.Civ.P. 12(b)(6) motion, comparing the two videos without considering other evidence.  Brownmark appealed to the Seventh Circuit Court of Appeals, arguing that the district court could not base its decision in a Rule 12(b)(6) motion on an affirmative defense. 

In a Rule 12(b)(6) motion, the defendant argues that the plaintiff failed to state a claim upon which relief can be granted.  Fair use (17 U.S.C. §107) is an affirmative defense, meaning that establishing the defense nullifies a claim of copyright infringement.  Brownmark argued that it is improper procedure for a district court to consider the defendant’s affirmative defense in a motion addressing the sufficiency of the plaintiff’s complaint.  The Seventh Circuit affirmed the district court’s ruling on both the procedural issue and the fair use issue, stating that the South Park video “is clearly a parody of the original WWITB video, providing commentary on the ridiculousness of the original video and the viral nature of certain YouTube videos.”  (Opinion pdf page 10).

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U.S. Postal Service Forced to Pay Royalty Reflecting Market Value for Infringing The Column Copyright

When the U.S. Postal Service decided to issue a stamp depicting The Column, the focal point of the Korean War Veterans’ Memorial in Washington, D.C., it licensed the photograph from the photographer, but neglected to obtain a license from the creator of The Column, sculptor Frank Gaylord.  The Column is comprised of nineteen stainless steel sculptures, symbolizing a platoon of soldiers.  Gaylord sued the Postal Service for copyright infringement in 2006.  In 2010, the Federal Circuit Court of Appeals ruled that Gaylord owned the copyright to The Column, that the Postal Service was liable for infringement and remanded the case to the Court of Federal Claims to determine the damages. 

On remand, the Court of Federal Claims awarded Gaylord a one-time royalty of $5,000, rejecting both Gaylord’s claim of a 10% royalty on revenues of $30.2 million allegedly produced by the Postal Service’s infringing use and Gaylord’s claim for prejudgment interest.  The Court of Federal Claims used a “zone of reasonableness” analysis in reaching its decision.  It determined that since the Postal Service paid the photographer a $1,500 royalty and since the Postal Service’s evidence showed that the Postal Service had never paid more for a license of an existing image to put on a stamp than $5,000, the zone of reasonableness was between $1,500 and $5,000.  The Federal Circuit Court of Appeals again reversed and remanded.

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Fourth Amendment’s Interplay with Privacy in Today’s Digital World Generates Debate

This week’s post concerns a panel discussion at the 2012 Western District of Washington Annual CLE and District Meeting for Judges and Lawyers, held at the U.S. Courthouse in Seattle, Washington.  The panel discussed the Fourth Amendment and privacy issues in the digital age. 

The title of Professor Dorothy Glancy’s segment was Keeping Up with the Jones Decisions and What May Lie Beyond.  Professor Glancy teaches at Santa Clara University School of Law.  The U.S. Supreme Court recently issued its decision in U.S. v. Jones.  The justices agreed that the warrantless GPS tracking of vehicles is unconstitutional, but disagreed on why it’s unconstitutional. 

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