September 18, 2013 8:17am PT by Eriq Gardner
Judge Allows Pandora to Maintain License to ASCAP's Repertory
Thanks to a ruling by a New York federal judge on Tuesday, Pandora Media won't lose the right to stream many popular songs to its users.
In 2011, Pandora attained a five-year blanket license from ASCAP, a performing rights organization. Subsequently, large music publishers including EMI Music and Sony/ATV Music withdrew from ASCAP the right to license their compositions to "new media" services such as Pandora. Pandora then reached an agreement with Sony/EMI in June 2012, only to see Warner, Universal and BMG announce their intentions to withdraw new media rights as well.
So Pandora went to court, seeking a determination that ASCAP publisher withdrawals did not impact the scope of its overall ASCAP license.
On Tuesday, U.S. District Judge Denise Cote granted Pandora's summary judgment motion by determining that the consent decree that ASCAP operates under requires it provide Pandora with a license to perform all of the works in its repertory, even if it purports to lack new media rights.
The consent decree stretches back to 1941, when the Justice Department filed an antitrust lawsuit alleging monopolization of performance rights licenses. A consent decree was reached and it has been adjusted over the years, most recently in 2001, in what's known as the "Second Amended Final Judgment" ("AFJ2").
AFJ2 restricts how ASCAP may issue licenses and provides a mechanism to determine fees for licenses when an applicant such as Pandora can't come to terms. Pandora is currently in the midst of such a rate-setting proceeding, which will go to trial in December.
After hearing from the parties about whether the publishers' purported withdrawals of new media rights effect the overall scope of Pandora's five-year blanket license, Judge Cote interprets AFJ2 and rules, "It is clear that the 'ASCAP repertory' is defined in terms of 'works' and not 'individual rights' in works with respect to classes of potential licensees."
The judge agrees with Pandora to interpret "works" broadly to mean compositions and not rights with respect to those compositions.
"While the Copyright Act allows rights within works to be alienated separately in general, AFJ2 imposes restrictions beyond those imposed by the Copyright Act on ASCAP. AFJ2 Sections VI and IX(E) deny ASCAP the power to refuse to grant public performance rights to songs to particular users while, at the same time, retaining the songs in question in its repertory," adds the judge.