Viacom, Google on Same Copyright Page in Appellate Fight Over Music Licensing

The 2nd U.S. Circuit Court of Appeals hears arguments whether the Justice Department is right to bar BMI from issuing fractional licenses.
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The U.S. Justice Department's decision last year to require "full-works licensing" by public performance outlets ASCAP and BMI may have the music industry warning that certain groups of songwriters might no longer be able to collaborate with each other, but it's managed to unite two old copyright foes, Viacom and Google.

ASCAP and BMI are currently litigating the DOJ's new position that 100 percent licensing of song compositions is required under consent decrees made in the 1940s to settle an antitrust investigation. The prospect how this might interfere with relationships in music — where multiple authors often work together on joint works before assigning co-ownership shares to different entities — has landed in court in more ways than one.

Last September, U.S. District Court Judge Louis Stanton handed BMI a victory by rejecting the DOJ's position that consent decrees don't bar the issuance of fractional licenses. History will show that Stanton is the same judge that presided over the long war between Viacom and Google over what was uploaded to YouTube during the video site's early days. That case eventually settled.

Now, both Viacom and Google have signed on to the same amicus brief challenging Stanton's music licensing decision at the 2nd U.S. Circuit Court of Appeals. They are not alone. The amicus brief also features Netflix, Spotify and, among others, the American Beverage Licensees — the place to go for both Bacardi and Mast-Jaegermeister. 

The group tells the 2nd Circuit that it needn't be concerned with the possibility of song co-owners breaching contracts among themselves by licensing a work without the other co-owners' consent. What's important, they say, is "the nature of a joint work, the plain language of the decree, and the consequences of disrupting the decree’s careful balancing of pro- and anti-competitive effects."

As for specific concerns, the audiovisual content providers — Netflix, Viacom, etc. — express worry about being put into a disadvantageous position when video works with incorporated music land in their hands.

"If BMI engaged in fractional licensing, co-owners of split works could continue to withhold performance rights at the outset and effectively deprive the downstream exhibitor of license coverage for already-produced content unless the exhibitor took licenses at whatever fee the rights holder might charge. The exhibitor would be forced to engage with the rights holders at a time when it has no option but to use the music already in the can. The major publishers recognize the inordinate market power this timing issue gives them."

Google has similar anxiety because it runs a digital music service and doesn't like the idea of multiple, overcomplicated negotiations. The brief talks about the prospect of rights holders potentially using hold-up opportunities and withdrawing from BMI and ASCAP and forming new PROs.

"This problem is exacerbated for the radio and digital music industries because record labels typically release sound recordings for airplay weeks or months before the ownership of the compositions embodied in those recordings is made known (or even determined)," states the brief. "Moreover, there are often extended disputes about who controls the rights to compositions. For example, the hit 'Uptown Funk' originally had six credited songwriters before a dispute resulted in 10 getting credit."

Here's the full amicus brief. There's 10 lawyers here, and while we don't know who deserves credit for the authorship, it's signed by Kenneth Steinthal at King & Spalding.

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