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From Antitrust Law Daily, September 19, 2016

BMI consent decree doesn’t require full-work licensing

By Greg Hammond, J.D.

A decades-old consent decree, which defined Broadcast Music, Inc.’s (BMI’s) repertory as "those compositions, the right of public performance of which [BMI] has…the right to license or sublicense," did not require full-work licensing—a blanket license from BMI that would allow music users to publicly perform, without risk of copyright infringement liability, all works in BMI’s repertory. The federal district court in New York City entered declaratory judgment, stating that the term "right of public performance" was left undefined as to scope or form and that the consent decree therefore neither bars fractional licensing nor requires full-work licensing (U.S. v. Broadcast Music, Inc., September 16, 2016, Stanton, L.).

The BMI consent decree (1996-1 Trade Cases ¶71,378), which resolved price fixing allegations, seeks to "prevent the anticompetitive exercise of market power while preserving the transformative benefits of blanket licensing," according to the Antitrust Division’s closing statement. The "blanket licenses" provide music users, such as bar owners, television and radio stations, and Internet music distributors with access to millions of songs without resorting to individualized licensing determinations or negotiations, thereby enabling users to publicly perform the musical works of the thousands of songwriters and music publishers who are members of the performing rights organizations.

In 2014, the Antitrust Division undertook its investigation of the BMI consent decree and a similar consent decree involving the American Society of Composers, Authors and Publishers (ASCAP), in response to requests from ASCAP and BMI that the government support proposed modifications. According to the Justice Department, the most significant of the proposed modifications was a proposal supported by ASCAP, BMI, and music publishers to allow music publishers to "partially withdraw" from ASCAP and BMI, thereby prohibiting the performing rights organizations from licensing the withdrawing publishers’ music to digital services such as Pandora or Spotify. In May 2015, the U.S. Court of Appeals in New York City held that the ASCAP consent decree precluded partial withdrawals of public performance licensing rights.

The Antitrust Division concluded that the consent decrees require full-work licensing and that the decrees should not be modified to allow so-called fractional licensing. BMI sought declaratory judgment that the consent decree does not require 100 percent or "full-work" licensing.

The district court determined that nothing in BMI’s consent decree gives support to the Antitrust Division’s views that the decrees require full-work licensing. Rather, the court concluded that the phrase in Art. II (C) of the consent decree—defining BMI’s repertory as "those compositions, the right of public performance of which [BMI] has…the right to license or sublicense"—is descriptive, not prescriptive. In addition, the "right of public performance" is left undefined as to scope or form, to be determined by processes outside the consent decree. Consequently, the consent decree neither bars fractional licensing nor requires full-work licensing, the court declared.

The case is No. 64 Civ. 3787 (LLS).

Attorneys: Kelsey W. Shannon for U.S. Department of Justice. Frank Thomas Spano (Hogan & Hartson LLP) and Scott Alexander Edelman (Milbank, Tweed, Hadley & McCloy LLP) for Broadcast Music, Inc.

Companies: Broadcast Music, Inc.; American Society of Composers, Authors and Publishers

MainStory: TopStory Antitrust NewYorkNews

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