2:53pm PT by Ashley Cullins
Music Publishers Knock Out Peloton's Antitrust Countersuit
More than a dozen music publishers don't have to sweat Peloton's claim that they engage in anticompetitive conduct as a New York federal judge on Wednesday dismissed the indoor cycling giant's counterclaim.
The fight began in March 2019 when 15 music publishers sued Peloton for copyright infringement. While the company had negotiated licenses with some of the publishers for the music Peloton instructors play during their classes, not every publisher struck such a deal. Talks with the National Music Publishers Association to expand the licensing agreements to others fell apart, and the copyright infringement suit followed.
Then Peloton responded with claims that the publishers and their trade association were seeking to extract supracompetitive license terms in violation of federal antitrust laws and that the NMPA interfered with its ability to negotiate with the publishers directly.
U.S. District Judge Denies Cote's decision on Wednesday likely left the publishers singing a happy tune. Cote agreed with their argument that Peloton's antitrust claims failed because it didn't identify a relevant market — even though she acknowledged the cycling company plausibly alleged the publishers conspired to deny it licenses to their works.
"Peloton defines the relevant market as sync 'licenses to the copyrighted works controlled (in whole or in part) and collectively negotiated by the [Music] Publishers through NMPA,'" writes the judge. "Peloton does not explain why it cannot substitute songs with sync licenses owned by the Music Publishers for songs with sync licenses owned by other publishers. Indeed, as Peloton admits, it has successfully 'collaborated with music publishers to develop an innovative [sync] licensing framework that is appropriate for its business and reached agreements with all the "major" music publishers and many independent music publishers.'"
Cote found that Peloton had plenty of opportunity to amend its relevant market and didn't, and allowing it to do so at this stage in litigation would cause unreasonable cost and delay. She also found that Peloton's tortious interference claim fails because the company didn't show that it would have entered into licensing agreements with the member publishers were it not for the NMPA's interference.
"We respectfully disagree with this ruling regarding our counterclaims and are assessing our options for appeal," a Peloton spokesperson said in a statement. "We will continue to vigorously contest the plaintiff publishers' infringement claims, which were not addressed in this decision."
Read the full opinion below.
NMPA president David Israelite on Wednesday sent The Hollywood Reporter this statement in response to the decision: "Today’s victory is a reminder that tech companies like Peloton cannot build businesses that are reliant on songwriters without asking their permission and paying them. Judge Cote has dismissed all of Peloton’s counterclaims which were only meant to distract from their failure to license 2,468 songs. We are pleased that Peloton’s attempts to divert attention from the heart of the issue — properly paying creators for the music on which its billion-dollar business was built — have been defeated."
After amending their complaint, the music publisher plaintiffs now include Downtown Music Publishing, ole Media Management, Big Deal Music, Pulse Music Group, Peer International Corporation, PSO Limited, Peermusic, Peermusic III, Peertunes, Songs of Peer, Reservoir Media Management, the Richmond Organization, Round Hill Music, the Royalty Network, Ultra International Music Publishing, Tune Core, Raleigh Music Publishing, Me Gusta Music, STB Music and Greensleeves Publishing.
Jan 29, 3:41 p.m. Updated with statement from Peloton.