United States v. Broadcast Music, Inc

Filing 61

OPINION & ORDER re: (22 in 1:13-cv-04037-LLS) MOTION for Partial Summary Judgment filed by Pandora Media, Inc.: Pandora's motion is denied. The relevant compositions are not within BMI's repertory, and it lacks the power to license them to any applicant, including Pandora. Nothing in this opinion affects the right of licensees to continue to perform the withdrawn compositions under presently-existing licenses. They were legal when made, and the rights they granted are not to be altered retroactively. As far as this ruling is concerned, they continue according to their terms until their expiration. (Signed by Judge Louis L. Stanton on 12/18/2013) Filed In Associated Cases: 1:13-cv-04037-LLS, 1:64-cv-03787-LLS (tn)

OORIGINAL

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

x

I

BROADCAST MUSIC, INC.,
Pet it iorler,
13 C

4037

(LLS)

- against
Related to 64 Civ. 3787

(LLS)

OPINION & ORDER

PANDORA MEDIA, INC.,

SONY/ATV MUSIC PUBLISHING LLC,

EMI MUSIC PUBLISHING,

UNIVERSAL MUSIC PUBLISHING, INC.

Intervenors.

-x
This case grows out of a series of "withdrawals u of digital
s, by music publishers affiliated with Broadcast Music Inc
("BMIU) from Pandora Media, Inc.
Media Services."

("Pandora U

)

and other "New

BMI's petition seeks an order exercising the

Court's rate setting authority under article XIV of the BMI
Consent Dec

, sett

e music license terms and fees

after giving effect to the withdrawals, for performances of the
remainder of the compositions in BMI's

United States v. Broadcast Mus c
71,941 (S.D.N.Y. 1966),
71,378 (S.D.N.Y. 1994).

Trade Cas.
Trade Cas.

1

1

ory.

­

(CCH)
(CCH)

~

,

Moving for partial summary judgment, Pandora argues that
the withdrawals are ineffectual, because the antitrust consent
decree

which BMI

s requires BMI to of

r a license

to Pandora to perform all of the compositions in the BMI
repertory as of January I, 2013, de

te the fact that certain

music publishers have by agreement wi

BMI withdrawn from BMI

the right to license their composit

to so called "New

a

Services u such as
However, the BMI Consent Decree

res BMI to offer

a license to perform all of the compositions in its
When BMI no longer is authorized by music publisher
copyright holders to license their compositions to Pandora and
are no longer el

New Media Services, those composit
ory.

for inclusion in BMI's

le

BMI can no longer license

theIT. to Pandora or any other applicant.
ngly, Pandora's motion for summary judgment is
denied.
BACKGROUND

BMI is a non-profit performing rights organization
that

licenses

non-exclusive

rights

ic

of

("PRO")

ormance

to

a

variety of music users on behalf of affiliates who are the music
compositions'

copyright

approximately

600,000

holders.

BMI's

composers,

2

­

affiliates

songwriters

and

se
music

publ ishers,

and

mill on musi

mate

7.5

that

plays

compositions.

Pandora
music

consists

BMI' s

a

lS

streaming

compositions

internet

Ii

o

service

directly

ir

copyright

holders, or through BMI and other PROs.
A. THE BMI CONSENT DECREE

BMI's ability to license

public performance r

of

s

ts musical repertory is governed by the Consent Decree settl ng
t
to

santi trus
the

court,

If

BMI

sui t

brought

Consent

which

sets

the United States.

Decree
fees

e

ishes

for

licenses

cannot agree on a reasonable fee.
s

The Decree al so

s
when

An amendment

Court
BMI

as

and

a

"rate

applicants

BMI Consent Decree Art. XIII.

cert

condi tions and requirements on

BMI's issuance of licenses.
Sect on VTI(B)
"De

of the BMI Consent Decree states in relevant
shall,

upon

the

aster,

license

ory

broadcasting

programming

by

t

r

request
s

on

of

publi

either

a

any
to

per

od basis, at defendant's option.

unl censed

perform

program

or

l

per

1f

Section IX(C) of the BMI Consent Decree states:
De endant shal not,
connection with
license
it the public performance of
compositions by music users other than
to offer a license at a price or prices
defendant with t~e consent of the copyr
the performance of such specific (i.e.,

- 3

any ffer to
musi
ste2..-S re use
to be fixed by
etor for
per
I

S

which

compositions,
use
prospect
licensee.
Although
Decree,

not

icitly

"Traditionally,

1 be

mentioned

sted by ::.1:1e

in

the

BMI

Consent

the BMI's license of choice has been a

'blanket license,'

a license that

3MI's entire

ory in exchange for an annual

States
2001) .

v.

Broadcast

s the licensee access to

Music

As defined by Section II(C)

\\'!Jefendant's

ory'

public

of

the right

United

of the BMI Consent Decree,

means those compositions,
which

defendant

to 1 icense or

has

icense."

or

the right of
fter

BMI

shall

Consent Decree

Art. II (C) .
Section VIII
ze

as

des:

valid

agreement whi

or

"Def

perform

any

shall result in disc

between licensees simil

11 not enter into,

performing

rights

license

nating in rates or terms

situated."

Section XIV (A) states:
ect to all provisions of this Final
defendant shall,
within nlne
(90)
days of its
receipt of a written application from an applicant for
a license for the right of public performance of any,
some or all
of
the
compositions
in defendant's
repertory, advise the applicant in writing of the fee
which it deems reasonable for the license requested.
If
either

BMI

and

an

applicant

may apply to

reasonable license fee.

cannot

agree

s Court for the

Id.

4 ­

on

a

1 icense

fee,

rmination of a

B. DEALINGS BETWEEN BMI & PANDORA

On June 30, 2005, Pandora and EMI entered into a standard
01

t form license agreement which allowed Pandora to stream

all
8 9.

music compositions in EMI's repertory.

~~

In 2012, Pandora determined that the terms of this license

were no

lo~ger

appropriate

iness, and terminated it

its

fo~

effective December 31, 2012.
to

Kennedy Decl.

Id.

~

9.

After the parties failed

iate a new type of license, Pandora filed a written
year bl

cation with EMI for a f

January I, 2013, id., which it may
withdrawn.

license

later wholly or partly

While the parties were in

iations, EMI fi ed

its pet tion with the Court for

ion of reasonable

license fees on June 13, 2013
have negot

ed

erim

. No.1).

EMI and Pandora

icense fees to be in ef

January I, 2013 until the parties negotiate an agreed
the Court issues a final
EMI Petition

~

inning

from
~ate

or

setting license terms and fees.

55.

C. PUBLISHER WITHDRAWALS OF NEW MEDIA LICENSING RIGHTS FROM
BMI

Effective

I, 2013, EMI allowed its affiliate

publishers (the intervenors and others)
Withdrawal and modi

their affil

to elect D

tal Rights

ion agreements to excl

EMI's right to license "New Media Transmissions by New Media

-

5

Services,u 2 hereinafter re
rights."
1

Guidelines

to as "New Media licensi
gital

sn), available at ht

s

thdrawal

://www.bmi.

The Digital Rights Withdrawal Addendum to BM-'s publisher
affiliation
provides the following definitions:
1. Definitions.
a. A "New Media Transmission" shall mean:
1.

a digital audio transmission that,
addit
to
requiring a public performance license, also
res the music user to comply with the
license requirements
17 U.S.C. § 114, § 115
and/or § 106(1);

11.

a
gital transmission of a music video or user­
uploaded video (i.e., a vi
uploaded to the
service by the end-user) that, in addition to
requiring a public
license, also
res that the
ce, in order to offer the
music video or user-uploaded vi
on or via the
ce, obtain a license directly from the owner
or administrator of the
ghts
the musical
composition(s) embodied therein for
s other
than the right of public performance (e.g.,
synchronization or mechanical rights)
and/or

111.

a digital transmission made from a
tal music
file either (a) uploaded by an end-user to the
server and/or (b) matched from a file on
end­
user's
or device to a digita music file
on the
server (such server, in either
case, often re
to as either the "cloud" or
a "locker").

b. "New Media ServiceD shall mean a standa one service by
which New Media Transmissions of musical compositions
are made available or accessible (i)
marily by
means of the Internet, a wireless mobile
telecommunications network, and/or acomputer network
and (ii) to the public, whether or not, in
-

6

com/entry/guidel
September 16

1

s for_digit

2013).

_rights_withdrawal

(As of

The modification was set

in an

addendum which states:
This addendum ("Addendum") to the publisher affiliation
will confirm the understanding of BMI and
("Publisher") with respect to Publi
IS
sire to
withdraw the right to license certain digital transmissions
(the "New Media Transmissions" as defined below) of musical
works licensed to BMI (the "Publisher Works" as defined
below) .
DiMona Decl'
The

l

Ex. G

I

D

ital Rights Withdrawal Addendum

l

p.

ies (BMI and publisher) Accepted and Agreed:
For the avoi
of doubt as of the Effective Date of
Withdrawal Publisher shall have the exclusive right to
license New Media Transmissions of Identified Interests and
Corresponding Interests in Publisher Repertoire Relat
Repertoire and Administered Repertoire and BMI shall no
longer have any right to license New Media Transmissions of
Identified Interests and Corresponding Interests
repertoire for the
nder of
Term.
I

I

l

l

Id. at p. 3.
BMI public

announced:

s withdrawal does not affect any of BMI s other
licensing act
ies.
It does not affect BMI S right
to license traditional broadcast
e and satellite
transmissions
or
their
related
new
media
transmissions.
BMI cont
s to have the right to
license
I other dig al uses
even for publishers
that have withdrawn from BMI the I
ted digital
rights defined above for new media services.
I

I

I

l

I

for a subscription feel other fee or
i and
whether or not such offering includes exposure to
advertisements before during and/or after the
transmission of such compositions .
l

7

of

Scope

Withdrawal,

Rights

Digital

(as

http://www.bmi.com/licensing/entry/drw

t~an

t

"Cata"ogs

ishers

withdrawing
that

are

are

to

ta

subject

Di

st

July

unaf
Rights

cted,
Withdrawal

re if they are acquired

wi : be restored to the BMI
or newly admi

of

to BMI from affiliates other

lic

Composit

2013)

at

available

by an Affiliate that has not e ected
de:ines p. 2.

igital Rights Withdrawal."

In September 2012, Sony/EMI 3 became the first publisher to
announce its planned withdrawal of New Media licensing rights
from BMI.

's Motion p. 9.

Pandora negotiated direct

licenses with Sony/EMI for the year 2013.
On November I, 2013,
summary judgment.

filed this motion for

~

10.

ia:

Pandora seeks a determination that, as the

compositions are held in BMI's
Pandora without

Kennedy Decl.

to

, BMI must offer
publishers'

to

ative withdrawals

of BMI's right to do so.
Sony/EMI and fellow publisher Universal Music Publi
Group's motions to intervene in t
November 4, 2013

s case were granted on

(Dkt. No. 28).

3"Sony/EMI" refers to the corrbined catalogs of Sony and EMIj
Sony/ATV became the administrator of EMI's catalog in July 2012.
-

8

­

DISCUSSION

the publisher withdrawals do not affect

Pandora argues

the scope of its license, and points to Sections VIII(A)
ire BMI to grant a

XIV{A) of the BMI Consent Decree whi

continuing license to perform "all of the compositions in the
rate proceedings or

defendant's repertoryH

res t

The BMI Consent Decree

iations.

all compositions in the BMI

be offered to all applicants.
Under

Section

applicant

requests

XIV
a

of

the

license

BMI

for

Consent

"any,

some

Decree,
or

when

all

of

an
the

compositions in defendant's repertory," BMI must grant a license
for performance of
from "anyH

(a

Under

BMI

the

icants

l

the requested composit
piece" license)

Consent

with

icants simil
BMI repertory,

fees

Decree,
that

situated.

to "all"

these
do

which may range
(a blanket license).

opt ions

not

By plac

are

open

discriminate

to

1

between

a composition in the

the affiliate routinely authorizes its inclusion

in blanket licenses of BMI's whole

to all applicants.

But if the withdrawal of its authority to do so by some
affi iates with
admi

ster the

to compositions for which they own or
ghts is within those affiliateS

l

ghts,

BMI cannot offer New Media licensing rights for those
compositions to New Media app icants, including

f

BMI

cannot offer those compositions to New Media applicants, their

9 ­

lity does not meet the standards of the BMI Consent

avail

cannot be held in BMI's repertory.

:Jecree, and t

Since they

are not in BMI's repertory, BMI cannot deal in or license those
compositions to anyone.
As

copyright

copyrights

the

holders,

Section

106

of

the

divide

Copyright

their
17

Subject to sections 107 through 122, the owner of copyr
under this title has the exclusive rights to do and
authorize any of the
lowing:

to

§

to

may

Act,

U.S.C.

pursuant

publishers

106, which provides:

(3) to distribute copies or phonorecords of the copyr
ed
work to the public by sale or other transfer of ownership,
or by rental, lease, or lendingi

in the case of literary,
musical,
dramatic,
choreographic works, pantomimes, and motion pictures and
other audiovisual works, to perform t
copyrighted work
publiclYi
(4)

(5 )

in

sound recordings,
the case
ed work publicly by means of

The publ ishers

are pri viI

performance

of

exercise of

that

withdraw

their

their

compositions

right
New

to

license,

copyright

holders.

A.uthors

&

see
have

performance

Pandora and New Media Services.
as

See

or not

as

the publi

Media

to
a

perform
digital

the

license,

the

fit.

o

In

the

with BMI

licensing

rights

to

from

is well within their power
United

Publ ishers

- 10 ­

In

States
re

v.

Am

ication

Soc'
of

of

Yahoo!

627

Inc.
confers

F.3d

upon

(2d

owner

t

ely by

of

v.

Am.

920

a

copyright
Tasini,

v.

copyright

owner.

Cir.

("The

1984)

483

Copyright

bundle

the reproduction right,

withdraw

New

Buffalo Broad.
744

F. 2d

accords

the

including the performing right and

Thus,

from

ing

to use the various

o~hers

and to convey t

(citing Copyright Act).

and

specifical

Ac~

screte

of

Publishers,

&

Act

or retained

(2001))

Authors

ers

rights recognized by the Act,

~o

a

(citing

If)

copyright owner the right to authorize

r

("The

2010)

533 U.S.

Soc'
(2d

Cir.

which may be ';:ransfe

the

York Times Co.

917,

71

ghts,

exclus

Co .

64,

BMI

the

se rights

copyright

holders have

authority

i~s

ely." )

license

~o

the
the

performance of their compositions by the New Media Services.
It is the BMI Consent Decree
rest

c~

the antitrust law)

ng In its

BMI

yory compositions which

it can no longer offer to the New Media Services,
until

recent

performing

timate,

accepted as
those

BMI's

works.

which

qualified,
repertory

who were up
licensed and
consists

of

composi tions whose performance BMI "has the right to license or
icense"

i

broadcaster,
ory" .
ions of t

it

"shal

license
BMI

upon
the

Consent

the

rights
Decree

request

any

publicly
Arts.

ght are withdrawn,

- 11 ­

of

II(C)

to
i

unlicensed

perform
VII{B).

its
When

the affected compositions

rtory,

membership in BMI's

are no longer eligible

and it

cannot include them in a blanket license or license them at all.
BMI
the

contends

"grand

that
(the

right"

shows that

t

its

long-standing

right

of

public

all the compositions in its repertory.
BMI has never offered grand
treated

equally:

BMI

In contrast,

not deal.

recently been of
ac

by,

Services, and (exc

for

They are a commodi

to

and

1 applicants;

exercised

withdrawing
affiliate
Media

Services,

has

not

the

themselves

catalog

is

withdrawn

compositions

"restored to the BMI
"grand r

have until

they have been

by

the

New

Media

the affected compositions are still

guidelines

publisher's

who

theater

in which BMI does

offered by BMI to all applicants other than New
withdrawal

But

for those now withdrawn by some publishers

from New Media applicants)

the

6 9.

grand

Media I icensing rights

to any and

licensed

to perform

All applicants are

s.

licenses

New

license

performance)

BMI Brief pp.

er

cannot

performances to anybody.

dramatic

to

to licenses

no universal

lS

inability

recognize

in

the

re."

that

transferred

their

when

to

Guidel

s

p.

a

another

compositions

from

New

catalog

transferred

s" example has no analog in,

Indeed,

~edia.

are

Thus,

the

2.

and nothing to do with

ssues in this case.
It

is

sirr.ilarly

synchronization

imrr.aterial

rights

that

(the

-

BMI

cannot
to

12 ­

offer

license

certain
musical

composi t ions
jukebox

in

conj unct
and

licenses

with visual

images)

or

for

which

broadcasters,

noncommerci

rights

are

operation

statutorily excluded from BMI's purview because of t
ght Act,

the

17 U.S.C.

§§

116, 118.

The publishers are
But BMI

free to license these rights to all music users.
not of
BMI
Consent

s

, nor has it ever offered, these rights to anybody.
and

the

Decree

intervenors
prevents

particular customers.

nothing

argue

BMI

from

agree

in

not

That puts matters backwards.

the
to

BMI
serve

Nothing in

the Consent Decree settling this antitrust case can be read to
allow one with BMI's market power to re
of

its

privil
by

icants.

The

copyright

to the intervenors,

holding

its

ory

to deal

th certain

law necessarily gives

that

but BMI cannot combine with them
compositions

that

come

th

an

invitation to a boycott attached. 4

The Department of Justice has submitted its views, which
ore
creation of any
dable inconsistency between
s
decision and the
ier one of the Honorable
se Cote,
U.S.D.J., I
ition of Pandora Media Inc., No. 12 Civ.
8035 (DLC) , slip. op. (S.D.N.Y.
. 17, 2013).
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
the Court of
Is for the Second Circuit or decree amendment procedures,
or managed commercially.
- 13

CONCLUSION

not within

ory, and it lacks the power to license

B~I's

lc.ding Pandora.

them to any applicant,

Nothing in this opinion af
cont

they

right of licensees to
sently

They were legal when made, and the rights

ed are not to be altered retroact

this ru.L
until

ts t

withdrawn compositions under

to perform

existing licenses.

relevant compositions are

ed.

Pandora's motion is

is concerned, t

cont

y.

As far as

according to their terms

ir expiration.

So ordered.

Dated: New York, New York
December 18, 2013

t",."j I.. ~t...J;,.
LOUIS L. STANTON
U.S.D.J.

14 ­