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In what the New York Law Journal describes as a ‘victory’ for Pandora, the federal appeals court in Manhattan has ruled that three major music publishing companies (Universal, EMI and Sony/ATV) cannot limit Pandora’s access to the catalogue of the American Society of Composers, Authors and Publishers (ASCAP)
The U.S. Court of Appeals for the Second Circuit held that the consent decree governing ASCAP clearly precludes the partial withdrawals of public performing licensing rights by publishers. The court’s decision interpreted a 2001 consent decree governing the licensing activities of ASCAP and upheld Southern District Judge Denise Cote’s grant of summary judgment to Pandora last year. The consent decree, called AFJ2, requires that it “grant to any music user … a non-exclusive license to perform all of the works in the ASCAP repertory” in return for a reasonable fee or in default of an agreed rate, a sum set by a rate court. The major publishers had argued that ASCAP was setting below-market rates for public performance licenses, and initially EMI, Sony and Universal withdrew their new media rights in 2013. Pandora filed a rate court petition in 2012 and moved for summary judgment before Cote in 2013. Sony, EMI and Universal intervened in September 2013.
Judge Cote held a bench trial that concluded with her March 14th, 2014 opinion, granting summary judgment to Pandora. She then set a rate of 1.85%, below the amount proposed by ASCAP for all five years and despite the fact taht when Universal and Sony/ATV started negotiating directly with the streaming service they secured a better deal. Universal said that what began as a “relatively routine matter” of rate setting under the consent decree ended with Cote issuing “an unprecedented ruling that seriously misconstrued the scope of the ASCAP consent decree in a manner that infringes on the exclusive statutory rights of publishers.” The appellate court greed with Cote’s “determination that the plain language of the consent decree ambiguously precludes ASCAP from accepting partial withdrawals.” “The licensing of works through ASCAP is offered to publishers on a take-it-or-leave it basis” Judges Pierre Leval, Chester Straub and Christopher Droney said: “As ASCAP is required to license its entire repertory to all eligible users, publishers may not license works to ASCAP for licensing to some eligible users but not to others” noting “Individual copyright holders remain free to choose whether to license their works through ASCAP” and “They thus remain free to license – or to refuse to license – public performance rights to whomever they choose.”
ASCAP was critical of the latest court decision. The society’s CEO Elizabeth Matthews said: “This ruling reaffirms what we already know – that the ASCAP consent decree and the rules that govern music licensing are outdated and completely out of step with the way people listen to music today. We are encouraged that the Department of Justice is reviewing the ASCAP consent decree and by the growing chorus of voices in support of our efforts to modernise music licensing – from the Copyright Office to Congressional sponsors of the Songwriter Equity Act”. She added: “Powerful corporate interests, like Pandora, are determined to stand in the way of meaningful music licensing reform so that they may continue to short change songwriters. This is a wake up call for creators to stand together, get involved and fight for their right to be paid a fair market rate for the use of their works”.
Pandora Media, Inc. v. American Society of Composers, Authors and Publishers, 14-1158-cv
http://www.newyorklawjournal.com/id=1202725678269/Circuit-Affirms-Pandoras-Access-to-Music-Catalogues?slreturn=20150407061858