ASCAP Consent Decree Prevents Music Publisher User Discrimination

American Society of Composers, Authors and Publishers (“ASCAP”) is a performing rights organization.  ASCAP represents almost 50% of U.S. composers and music publishers in licensing and distributing royalties for the non-dramatic public performances of the composers’ and publishers’ copyrighted works.  Due to its power in the performance-rights market, ASCAP operates under a judicially administered consent decree. 

Some ASCAP members became concerned that new media companies, such as Pandora, were paying below-market rates for public performance licenses.  These ASCAP members forced ASCAP to modify its rules to permit the members to withdraw ASCAP’s right to license their works to new media companies, while retaining ASCAP’s right to license their works to other media companies.  These ASCAP members then directly licensed their works to the new media companies.  Pandora filed a lawsuit challenging ASCAP’s new partial withdrawal practice.

The Second Circuit Court of Appeals addressed the question of whether, under the ASCAP consent decree, publishers may withdraw from ASCAP their rights 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.

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SDARS and PSS Royalty Rate Determinations Upheld

The Copyright Royalty Board sets royalty rates for Satellite Digital Audio Radio Services (SDARS) and Preexisting Subscription Services (PSS).  SoundExchange, a nonprofit performance rights organization, collects and distributes digital performance royalties to copyright owners.  SoundExchange appealed the rates set by the Copyright Royalty Board in 2013, arguing that the Board arbitrarily set SDARS and PSS rates too low.  Music Choice, a PSS, provides music-only television channels to its subscribers.  Music Choice argued that the Board arbitrary set PSS rates too high.  The Court of Appeals, D.C. Circuit, upheld the Board’s royalty rates determinations.

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No Record But Still the Same Old Tune

The district court eloquently described the case’s status and defendants’ post-trial motion following a jury verdict in favor of the plaintiffs.  My favorite sentence in this passage is “Ultimately, the goal is to make a dispute understandable to a lay person.”:

While the world has moved beyond the free-MP3-download craze, the parties in this case have not. This hard-fought litigation spans 7 years and 628 docket entries. Numerous substantive motions were heard. And decisions by this Court did not deter the parties from revisiting the same issues time and again. As trial approached, the parties launched salvos of motions in limine seeking to resurrect discovery disputes, relitigate prior motions, and level an impressive array of claims and defenses. 

A primary function of pre-trial litigation is to distill claims. Ultimately, the goal is to make a dispute understandable to a lay person. Despite this Court’s efforts to winnow the issues, the parties insisted on an 82-page verdict sheet on liability and a 331-page verdict sheet on damages that included dense Excel tables, necessitating at least one juror’s use of a magnifying glass. While the jury did its best, their assignment was beyond all reasonable scale.

To understand how this happened, one must look at the impetus for this litigation. Robertson created a business model designed to operate at the very periphery of copyright law.  While Robertson’s business practices sometimes infringed copyrights, many of the Plaintiffs’ claims were just too big to succeed. Plaintiffs’ evidence on their most significant theories of liability—red flag knowledge and willful blindness—was sparse. And Robertson—by his words, actions, and demeanor—came across as unworthy of belief. That led the jury to rely on something other than the evidence in reaching portions of its verdict. For the following reasons, Robertson’s motions are granted in part and denied in part.

(Opinion pdf pages 1-2).

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Aereo Publicly Performs and Infringes Copyrighted Works

Aereo’s network receives broadcast television programming through thousands of dime-sized antennas. Aereo makes that programming available to subscribers by streaming the programming over the Internet.  Each subscriber is assigned a dedicated antenna that is not available to any other subscriber for the duration of the selected program.  A personal copy of the selected program is made for each subscriber.  Only the subscriber can access her personal copy.  When the broadcast companies sued Aereo for copyright infringement, the district court denied the broadcasters’ motion for a preliminary injunction.  The Second Circuit affirmed, ruling that Aereo does not publicly perform the transmitted works because the stream to the subscriber is a private transmission.  Read more about the Second Circuit’s decision in my post Unauthorized Streaming of Television Broadcasts Not Infringing.

Copyright owners have the exclusive right to publicly perform the works that they own.  The U.S. Supreme Court majority saw this case as reducing down to two questions:  “First, in operating in the manner described above, does Aereo ‘perform’ at all? And second, if so, does Aereo do so ‘publicly’?” (Opinion pdf page 8).  The Court ruled that Aereo’s activities are both a performance and a public performance.  Aereo infringes by violating the copyright owners’ exclusive right of public performance.

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Photos and Videos of Singing Telegram Performer Don’t Infringe Copyright

Catherine Conrad is an entertainer who performs wearing a giant banana costume.  She was hired to perform a singing telegram at a credit union trade association event.  Conrad authorized audience members to take photos or videos for their personal use only.  Conrad sued several credit unions, some credit union employees and the trade association of credit unions for copyright infringement after audience members posted some of the photos on Facebook and other Internet sites.  The district court dismissed the copyright infringement claim as having no merit.  The Seventh Circuit Court of Appeals affirmed.

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Unauthorized Streaming of Television Broadcasts Not Infringing

Aereo, Inc., charges a monthly fee for subscribers to watch broadcast television programs over the Internet.  Aereo’s service is currently available only in New York City.  Aereo picks up the broadcast signals using thousands of small antennas, each about the size of a dime.  Aereo assigns an antenna to an individual user, so that only one user uses a particular antenna at a time.  Users can record a program and/or watch the program, which is delayed just a few seconds compared to the broadcast.  A user’s individual directory is created on a hard drive at Aereo’s facility using the signal received through the antenna assigned to that user.  Each user views her individual copy of a program.  Copies created at the request of one user cannot be shared with other users.

The owners of copyrights for programs broadcast on network television sued Aereo for copyright infringement, alleging infringement of their right of public performance.  The copyright owners sought a preliminary injunction against Aereo.  The district court denied the motion, ruling that the Second Circuit’s opinion in Cartoon Network LP, LLLP v. CSC Holdings, Inc., (Cablevision) precluded a ruling in favor of the copyright owners.  The copyright owners appealed the denial of the preliminary injunction to the Second Circuit.  The Second Circuit affirmed the district court’s decision and agreed that Cablevision’s ruling controls in this case.  “Aereo’s transmissions are not public performances.”  (Opinion pdf page 33).  Infringement of the copyright owners’ other exclusive rights, such as reproduction and distribution, was not before the court because the copyright owners based their motion for a preliminary injunction on only the public performance right.

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Framing Infringing Videos is Not Copyright Infringement, Rules Seventh Circuit

Flava Works, Inc. (Flava) produces and distributes videos of black men performing erotic homosexual acts.  People must pay to view Flava’s videos online.  Users are allowed to download Flava’s videos, but not to upload them.   myVidster is an online social bookmarking service that allows people to bookmark online materials so that other people with similar tastes can find those materials easily.  myVidster does not host videos on its website.  People who access a video through a bookmark on myVidster’s website see the video through a frame that myVidster puts around it.  The video remains on the server it was uploaded to.  Flava sued myVidster for copyright infringement.  The discussion focused on whether myVidster is a contributory infringer when someone uses its website to bookmark a video and then someone else clicks on the bookmark and watches the video.

The district court judge granted Flava’s motion for a preliminary injunction based on his analysis of Flava’s likelihood of successfully establishing copyright infringement at trial.  myVidster appealed to the Seventh Circuit Court of Appeals.  In an opinion written by Judge Richard A. Posner, the Seventh Circuit vacated the grant of preliminary injunction.  The Seventh Circuit ruled that the district court judge erred by considering Flava’s likelihood of success on the merits as the only factor.  The Seventh Circuit further ruled that, on the basis of the record before it, myVidster did not copy or distribute copyrighted works, that it was not a contributory infringer and that there was no basis for the preliminary injunction to be granted.

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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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ASCAP Challenge to Royalties for Mobi Offerings Rejected by Second Circuit

The American Society of Composers, Authors and Publishers (ASCAP) and MobiTV (Mobi) reached an impasse in their dispute about the royalty fees for a license for Mobi to publicly perform works controlled by ASCAP.  At the district court level, ASCAP claimed Mobi owed it $41 million in fees for the years 2003 to 2011.  Mobi calculated that it owed ASCAP $301,257.99 for fees due from November 2003 to July 2009.  The district court ruled that Mobi owed ASCAP $405,000 for fees from November 2003 through March 2010. 

The district court calculated its award using the amounts Mobi pays to cable television networks for content and the revenue Mobi receives from wireless carriers as the revenue base, i.e. the figure from which the royalties are calculated.  ASCAP appealed the case to the Second Circuit Court of Appeals, claiming that the district court should have calculated the royalty rate based on the retail revenues wireless carriers receive from sales to their customers.  The Second Circuit affirmed the district court’s decision.

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Significant Damages and Attorney’s Fees Award in Music Performance Copyright Infringement Case Upheld by Ninth Circuit

Seven music company members (Music Companies) of the American Society of Composers, Authors, and Publishers (ASCAP) sued East Coast Foods, Inc. and its sole officer and director, Herbert Hudson, for copyright infringement arising out of musical performances of eight works at the Long Beach, California, Roscoe’s House of Chicken and Waffles restaurant.  The Ninth Circuit Court of Appeals upheld the district court’s grant of summary judgment and award of $36,000 in damages in favor of the Music Companies and the district court’s award of $162,728.22 in attorney’s fees to the Music Companies.

East Coast owns the Roscoe’s restaurant chain.  The Long Beach Roscoe’s restaurant opened in 2001.  The Sea Bird Jazz Lounge is attached to the restaurant.  ASCAP is a nonprofit music licensing organization that collects royalties for its members.  ASCAP contacted East Coast shortly after the Long Beach Roscoe’s opened to offer East Coast a license to perform music in the restaurant and lounge.  East Coast did not obtain a license and between 2001 and 2007, ignored ASCAP’s recurring requests to pay licensing fees. 

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