11:04am PT by Eriq Gardner
Music Publishers Win Major Copyright Fight Over Streaming of Legendary Rock Concerts
The Wall Street Journal once called Wolfgang's Vault, a collection of thousands of live concert performances, "the most important collection of rock memorabilia and recordings ever assembled."
On Monday, however, in a case that went into the finer details of music licensing and featured depositions from Rock and Roll Hall of Famers Keith Richards, David Byrne and Michael Stipe, a federal judge concluded that the owners of Wolfgang's Vault had committed massive copyright infringement by streaming the collection to the public.
U.S. District Court Judge Edgardo Ramos stops short of issuing an injunction with word that "licensing hurdles are not insurmountable" and that the public interest is served by having these iconic recordings available. Nevertheless, a trial is coming that will determine both the extent of the copyright infringement and how much William Sagan, who runs Wolfgang's Vault, owes for allowing the streaming and downloading of performances by The Rolling Stones, The Who, The Grateful Dead, Willie Nelson, Ray Charles, Aretha Franklin and Carlos Santana, to name just a few.
The National Music Publishers' Association led its members to file suit back in 2015 with the allegation that Wolfgang's Vault lacks the requisite licenses to stream a collection of works that was acquired from Bill Graham and operators of other concert venues. About 200 musical compositions were primarily at issue in the case. (A separate class action is also pending.)
Although the defendants investigated whether the fruits of rock history were really under copyright ownership, with the exception of certain works by The Who's Pete Townshend, ownership was ultimately conceded for the purposes of summary judgment. There was also no question of the exploitation of these works, and so this dispute largely focused on whether Sagan held valid licenses.
Several defenses were raised, and as Spotify fights its own billion-dollar lawsuit and as Congress debates changing the law as it relates to music licensing, Ramos' discussion of some of the copyright issues is a significant one for those who produce and distribute music.
The defendants argued that they held valid mechanical licenses — and what's crucial to an understanding here is that Section 115 of the U.S. Copyright Act provides a compulsory license to allow anyone to make a mechanical reproduction of a musical composition. What that means is that whenever a work embodying a composition is created and distributed, the maker needn't negotiate terms with the publisher. The licensing rate is instead set by statute. Nevertheless, those who wish to take advantage of Section 115 must still follow certain protocol and there are certain limitations.
One of the limitations, as argued by the music publishers in the case, was that audiovisual works — here, video recordings of songs being performed live at concert — are not eligible for Section 115 compulsory mechanical licenses.
Judge Ramos agrees.
"Defendants claim that because their live concert recordings 'first fixed' the sounds in those recordings as part of an audiovisual work, the resulting 'material object' qualifies as a phonorecord," he writes in reference to what is entitled to a compulsory license. "The Court finds Defendants' interpretation unpersuasive. The second sentence [of the relevant statute] cannot save Defendants from the first sentence's categorical exclusion of audiovisual works. That is because the second sentence speaks only in terms of 'the material object in which the sounds are first fixed.' Pursuant to its terms, then, the second sentence itself reinforces the concept that phonorecords include only sounds, and makes no mention of audiovisual works."
Meaning, the defendants failed to properly license 206 concert videos.
Next, there's the question of music that at the time of performance had yet to be "fixed," meaning the performer hadn't released the song on record or compact disc. In such instances, the law requires that the consent of the musical performers be obtained.
In 2009, three years after it began exploiting its collection of live recordings, Sagan's company entered into deals with three major record labels: Warner Music Group, Sony Music Entertainment and Universal Music Group. The defendants argued this was proof of consent, but Ramos rejects the proposition that this shows performer consent.
"[T]he agreements do not identify the performers, or attach any written consents from those performers," he writes. "There is therefore no basis on which a trier of fact could determine which performers or recordings these Joint Exploitation Agreements ostensibly cover."
The judge adds that defendants have failed to produce a single performance agreement.
"Finally, there is undisputed evidence that the three performing artists whom Defendants sought to depose — Keith Richards, David Byrne and Michael Stipe — could not recall ever consenting to the recording of their performances," the opinion adds.
Then, there's the aspect of Section 115 that requires additional consent from the owner of a sound recording fixed prior to 1972 (when sound recordings began falling under federal law).
"Defendants claim that Plaintiffs have not refuted the evidence that pre-1972 recordings were properly authorized," writes Ramos. "This argument is totally without merit. As an initial matter it is Defendants who bear the burden of proving that their licenses were valid. But more importantly, there is nothing for Plaintiffs to refute: Defendants point to no evidence that the sound recordings were fixed pursuant to an express license or valid compulsory license from the holders of copyrights in the Musical Works, i.e., Plaintiffs or their predecessors."
The defendants attempted to go through the Harry Fox Agency to clear licenses, and putting aside some of the issues surrounding audiovisual and pre-1972 works, the judge finds that the licenses would be invalid for untimeliness. The law requires that notices of intent (NOI) are filed, and Ramos sees factual disputes over whether and which filings actually occurred.
"While that issue does not alter the Court's analysis of infringement, as discussed below, it does raise a triable issue on whether untimely NOIs were recklessly or willfully filed after the distribution of phonorecords," he writes.
As such, a trial will explore whether the copyright infringement was willful (meaning that plaintiffs could be entitled to statutory damages up to $150,000 per work).
In the 54-page decision with a lot to chew upon, the judge runs through other issues like whether there was an implied license granted by the publishers accepting payments for several years without objecting. To that question, the judge addresses the lack of mutual understanding by the parties, Congress' intention when imposing liability for failure to comply with Section 115, and ultimately, no indication that the music publishers intended recordings of their musical works to be exploited.
Here's the decision (below) that was released to the parties back on March 30 and then took a couple weeks to be released to the public thanks to redactions. The plaintiffs were led by Barry Slotnick at Loeb & Loeb, while the defendants were handled by Michael Elkin at Winston & Strawn.