Last August, Eminem’s publisher filed a lawsuit against Spotify alleging the streaming site has infringed the copyrights in almost 250 of his songs — to the tune of billions in damages — and now he’s bringing Harry Fox Agency into the fray.
On July 1, Eight Mile Style filed an amended complaint alleging that HFA conspired with Spotify to conceal the infringement by backdating Notices of Intention to obtain compulsory mechanical licenses and falsifying royalty documents. HFA is a nearly century-old organization that plays an important if often overlooked role providing rights management for music publishers. In recent decades, it has gotten more and more involved with the issuance of mechanical licenses, which digital outlets need for the reproduction of compositions. Those have been available without negotiation, but music users need to let the rights-holders know and make payments. HFA has assisted in compliance. Now, HFA is basically being accused of favoring Spotify to the detriment of publishers.
“Defendants’ scheme to engage in copyright infringement was a massive success,” writes attorney Richard Busch in the complaint, which is posted below. “Kobalt, serving as the entity authorized to collect royalties from licenses validly made for the Eight Mile Compositions, was tricked into believing that Spotify had compulsory licenses and into accepting ‘royalty statements’ distributed by HFA on behalf of Spotify.”
Eight Mile says Kobalt trusted HFA because of its reputation in the industry, but it later found that billions of streams had not been accounted for and the payments were based on the statutory royalty rate, which wasn’t applicable because Spotify didn’t actually obtain a compulsory license. Spotify has argued it obtained a license from Kobalt, but Eight Mile maintains Kobalt is merely its royalty collector and doesn’t have the authority to enter into such an agreement.
“The most egregious example of Spotify’s willful infringement is with respect to the iconic musical composition ‘Lose Yourself,’” writes Busch, noting that the song topped Billboard charts for months and won an Oscar for best original song and multiple Grammys. “Despite ‘Lose Yourself’ being one of the most famous and popular songs in the world, HFA informed Eight Mile in February, 2019, that Spotify, and its agent HFA, had placed ‘Lose Yourself’ in what they call ‘Copyright Control,’ an internal HFA designation reserved for songs that HFA does not license because HFA supposedly does not know who is the copyright owner or how to contact the copyright owner of the song. Putting one of the most well-known songs in the world in this category is objective evidence that Spotify, through HFA’s contributions, engaged in willful copyright infringement.”
Eight Mile also says it has emails from HFA asking about revenue splits for “Lose Yourself” that date back to 2010, proving that it’s known who owns the song and had contact the relevant information for the better part of a decade. It argues the fraudulent NOIs were part of a scheme to avoid having to pay for more expensive direct voluntary mechanical licenses while still ensuring Eminem’s music was on its site leading up to its initial public offering. Eight Mile says it would have demanded equity in Spotify in negotiating a direct license, as well as a higher royalty rate, or it would have refused to allow the songs to be streamed on the site.
“Spotify, through it and HFA’s fraudulent contributions, has built a multi-billion dollar business with no assets other than the recordings of songs by songwriters like Eminem made available to stream on demand to consumers on its digital platform,” argues Busch. “Spotify’s apparent business model from the outset was to commit willful copyright infringement first, ask questions later, and try to settle on the cheap when inevitably sued. It later included, as discussed below, working (with their equity holders, such as the major music publishers) to pass legislation that would purport to get them off the hook scot-free.”
That legislation is the Music Modernization Act of 2018, which sought to streamline the process of matching songs with their owners in an attempt to make sure they’re properly licensed. Eight Mile argues the law effectively wipes out past infringement if a rights holder didn’t sue before the end of 2017 and that amounts to an unconstitutional taking of its property rights and denial of due process. The publisher argues that provision of the law isn’t applicable in this matter anyway because the MMA liability limitation only applies to works for which the copyright owner is unknown and Eight Mile maintains Spotify and HFA it owned the rights to Eminem’s compositions.
Eight Mile also takes issue with a 2016 settlement between Spotify and the National Music Publishers’ Association, arguing it is “woefully inadequate and failed to hold Spotify adequately accountable” and alleging that’s because the three largest dues paying members of NMPA own big equity shares in Spotify.
In addition to suing Spotify for direct copyright infringement, Eight Mile has added claims for contributory copyright infringement and vicarious copyright infringement against HFA. It’s asking the court for a declaration that the companies don’t qualify for the MMA limitation from damages, that the retroactive elimination of damages in this case would be unconstitutional and that Eight Mile is owed either statutory damages of $150,000 per work or actual damages that include injury to the market value of its copyrights, defendants’ profits and the value of the equity interest it was deprived of because of the infringement.
HFA has not yet responded to a request for comment.