It seems that so called ‘mechanical licensing’ is still haunting Spotify, despite the probgress of the new Music Modernization Act which will almost certainly soon become law. Now a federal court in Tennessee has denied Spotify’s bid to dismiss a copyright infringement lawsuit brought in July 2017 by Bluewater Music Services Corporation, the independent publisher and copyright administration company in the US District Court for the Middle District of Tennessee against the streaming music giant.
Bluewater allege that Spotify wilfully infringed on 2,339 copyrighted works, including Sam Gay’s ’10,000 Pieces’ and Bob Morrison’s ‘You’d Make An Angel Want To Cheat.’ Bluewater says it had terminated the company’s license to reproduce and stream the works in November 2016 after discovering Spotify hadn’t paid any mechanical royalties and had also failed to negotiate a direct mechanical license: “Bluewater put Spotify on notice that ‘[f]failure to timely serve or file a valid NOI forecloses the possibility of a compulsory license, and, in the absence of a negotiated license, renders the making and distribution of phonorecords actionable as acts of infringement under and fully subject to the remedies provided by the Copyright Act.”
Spotify defended itself by claiming it didn’t have data to track the compositions and sound recordings on its service. Spotify also argued that streaming doesn’t require a mechanical license. Thus, streaming can’t infringe on production rights nor distribution rights, both of which are covered by mechanical licenses. Bluewater blasted the streaming giant, writing its businesses practices were reminiscent of “primitive illegal file sharing.”
Filing only one charge of action against the company – direct copyright infringement – Bluewater sought a maximum statutory damage award of $150,000 for each infringed work, whoch across some two thousand works could result in a claim for $321 Million in damages.
Last year, following a lawsuit from writer David Lowery and singer/songwriter Melissa Ferrick, the streaming giant agreed to pay songwriters $43.4 million. Spotify also settled with the National Music Publishers’ Association (NMPA) for a reported $30 million.
District Judge Jon Phipps McCalla and Magistrate Judge Jeffery S. Frensley denied Spotify’s motion to dismiss the Bluewater case. Spotify had argued Bluewater lacked true legal standing (dismissed) and that Bluewater had failed to state a claim for non-registered music compositions (the indie publisher has 23 music compositions listed as ‘Pending.’). The latter point is heading to the Supreme Court in a separate case (Fourth Estate Pub. Benefit Corp v. Wall-Street.com) but here the court denied Spotify’s motion to dismiss without prejudice. The streaming giant can still refile this part of the motion to dismiss after the Supreme Court’s decision.
The Music Modernization Act nullifies any copyright lawsuits related to mechanical licenses filed on or after January 1st, 2018.