2nd Circuit Affirms Fractional Licensing for BMI; Tells DOJ To Move To Amend Consent Decree

U.S. v. BMI, No. 16-3830 (2d Cir. Dec. 19, 2017).

The Second Circuit affirmed the District Court's judgment interpreting the consent decree between the Department of Justice and Broadcast Music, Inc. (“BMI”), in which the court ruled that the consent decree neither requires full-work licensing nor prohibits fractional licensing of BMI’s affiliates' compositions.  The DOJ had concluded that the consent decrees require ASCAP and BMI to offer full-work licenses to the exclusion of fractional licenses, which led to the lower court's decision subject to the appeal.

The Second Circuit focused on the plain language of the consent decree.  "This appeal begins and ends with the language of the consent decree."

2nd Circuit Closes Out "Turtles" Pre-72 Sound Recording Case In Favor Of Sirius

Flo & Eddie, Inc. v. Sirius, No. 15-1164-cv (2d Cir. Feb. 16, 2017).

After the New York Court of Appeals answered the Second Circuit's certified question that New York common law does not recognize a right of public performance for creators of pre-1972 sound recordings, the Second Circuit reversed the district court’s denial of Sirius's motion for summary judgment and remanded with instructions to grant Sirius's motion for summary judgment and to dismiss the case with prejudice.  The Second Circuit noted that the answer to the certified question was determinative of the other claims.

2d Cir. Addresses DMCA "Repeat Infringer" Policy In MP3Tunes Appeal; Finds Only A Single Statutory Damages Award For Infringed Composition & Sound Recording; Addresses Many Other Copyright Law Issues

EMI Christian Music et al. v. MP3Tunes, No. 14-4369 (2d Cir. Oct. 25, 2016).

In the MP3Tunes appeal, the Second Circuit vacated the District Court’s grant of partial summary judgment to the defendants based on its conclusion that MP3tunes qualified for safe harbor protection under the DMCA because the District Court applied too narrow a definition of “repeat infringer”; (2) reversed the District Court’s grant of judgment as a matter of law to the defendants on claims that MP3tunes permitted infringement of plaintiffs’ copyrights in pre‐2007 MP3s and Beatles songs because there was sufficient evidence to allow a reasonable jury to conclude that MP3tunes had red‐flag knowledge of, or was willfully blind to, infringing activity involving those categories of protected material; (3) remanded for further proceedings related to claims arising out of the District Court’s grant of partial summary judgment; and (4) affirmed the judgment in all other respects (relating to statutory damages for sound recordings and compositions, cover art liability, respondeat superior liability for MP3Tunes executives, personal jurisdiction, vicarious and contributory liability, statutory damages for singles & compilations, and punitive damages).

The plaintiff record labels and music publishers argued that MP3tunes never reasonably implemented a repeat‐infringer policy.  In addressing this argument, the Second Circuit answered two questions: first, whether certain MP3tunes users qualified as “repeat infringers”; and second, if so, whether MP3tunes reasonably implemented a policy directed at them.  As to the first question, the Second Circuit held "all it takes to be a 'repeat infringer' is to  repeatedly upload or download copyrighted material for personal use."  (Emphasis in original)  Having answered that question, the Court then found that MP3tunes did not "even try to connect known infringing activity of which it became aware 2through takedown notices to users who repeatedly created links to that infringing content in the sideload.com index or who copied files from those links...A jury could reasonably infer from that evidence that MP3tunes actually knew of specific repeat infringers and failed to take  action "

The Court also, notably, addressed statutory damages and whether it was improper to make only a single award where there are different owners of the copyright in the sound recording and in the composition.

 In our view, then, Congress did not intend for separate statutory damages awards for derivative works such as sound recordings, even when the copyright owner of the sound recording differs from the copyright owner of the musical composition.    In sum, the District Court’s decision to permit only one award of statutory damages for the musical composition and corresponding sound recording comports with both the plain text and the legislative history of the Copyright Act.  We therefore affirm that part of the judgment.

In addition to attacking the District Court’s exercise of personal jurisdiction over him, the individual defendant (MP3Tune's CEO) argued that there was insufficient evidence to support the jury’s finding that he was vicariously or contributorily liable for MP3tunes’s infringements.  The Second Circuit disagreed,

DMCA Safe Harbor Applies To Pre-1972 Sound Recordings & Plaintiffs Have Burden Of Proving Red-Flag Knowledge; 2d Cir.

Capitol Records, LLC v. Vimeo, No. 14/1048 (2d Cir. June 16, 2016).

The Digital Millennium Copyright Act (DMCA) safe harbor (section 512 of the Copyright Act) applies to pre-1972 sound recordings and protects service providers from infringement liability under state copyright laws, holds the Second Circuit on an interlocutory appeal in a copyright infringement action brought by record labels against Vimeo.  Further, the Court held that the mere fact that a video contains all or virtually all of a “recognizable,” copyrighted sound recording and was viewed in some fashion by a service provider’s employee is insufficient to prove knowledge or red flag knowledge of infringement; and further that the record company plaintiffs' evidence was insufficient to support the imputation of knowledge to Vimeo through the theory of willful blindness.

On the safe harbor question, the Second Circuit found that "A literal and natural reading of the text of § 512(c) leads to the conclusion that its use of the phrase 'infringement of copyright' does include infringement of state laws of copyright. One who has been found liable for infringement of copyright under state laws has indisputably been found 'liable for infringement of copyright'.”  Further, "To construe § 512(c) as leaving service providers subject to liability under state copyright laws for postings by users of infringements of which the service providers were unaware would defeat the very purpose Congress sought to achieve in passing the statute."  Construing the safe harbor of § 512(c) as not granting protection to service providers from liability for state-law-based copyright infringements would substantially defeat the statute’s purposes.  Accordingly, the 2nd Circuit vacated the district court's grant of summary judgment to Plaintiffs as to the availability of the DMCA safe harbor to Vimeo in relation to liability for infringement of pre-1972 sound recordings. 

On the "red flag" part, the 2nd Circuit addressed the shifting burdens of proof (plaintiff has the burden of proving red flag knowledge) and held that "A copyright owner’s mere showing that a video posted by a user on the service provider’s site includes substantially all of a recording of recognizable copyrighted music, and that an employee of the service provider saw at least some part of the user’s material, is insufficient to sustain the copyright owner’s burden of proving that the service provider had either actual or red flag knowledge of the infringement."  The Court then addressed several reasons why.  Accordingly, the Court held that Vimeo was entitled to summary judgment on those videos as to the red flag knowledge issue, "unless plaintiffs can point to evidence sufficient to carry their burden of proving that Vimeo personnel either knew the video was infringing or knew facts making that conclusion obvious to an ordinary person who had no specialized knowledge of music or the laws of copyright."

Lastly, the Court rejected the Plaintiffs’ argument that the district court erred in its ruling in Vimeo’s favor as to the Plaintiffs’ reliance on the doctrine of willful blindness.

Federal 2nd Circuit Certifies Pre-72 Question To New York's Highest Court in Flo & Eddie Case

Flo & Eddie v. SiriusXM Radio, 15-1164cv (2d Cir. Apr. 13, 2016).

In the "Turtles" case against Sirius for common law copyright infringement of pre-1972 sound recordings under New York common-law, the Second Circuit certified the question to New York's highest court, the Court of Appeals: "This case presents a significant and unresolved issue of New York copyright law: Is there a right of public performance for creators of sound recordings under New York law and, if so, what is the nature and scope of that right? Because this question is important, its answer is unclear, and its resolution controls the present appeal, we reserve decision and certify this question to the New York Court of Appeals."

The lower court had denied Sirius' motion for summary judgment, and the Second Circuit reviewed the matter de novo.  The Circuit stated "the issue before us is whether New York common law affords copyright holders the right to control the performance of sound recordings as part of their copyright ownership."  However, New York's highest court has not ruled on the issue in any prior case, and without such guidance, the Circuit was "in doubt" whether New York provides such rights under common law.  Thus, the Court found that certification to the New York Court of Appeals was appropriate.  Accordingly, the Court reserved decision and certified the following question for decision by the New York Court of Appeals:

"Is there a right of public performance for creators of sound recordings under New York law and, if so, what is the nature and scope of that right?"

Co-Ownership Claims In Jay-Z Songs Time Barred; 2nd Cir.

Mahan v. Roc Nation, No. 15-1238cv (2d Cir. Feb. 24, 2016).

A former Roc-a-fella Records sound engineer's copyright co-ownership claims in certain Jay-Z recordings, brought 14 years after the recordings were made and released, are time-barred, holds the Second Circuit Court of Appeals in affirming the lower court's dismissal of the claim.  The Court found that defendants had expressly repudiated the plaintiff's ownership claim years prior, when the multi-million copy selling albums were released without attribution to him or the payment of any royalties.  Accordingly, the clock started ticking then.  The Court further found that the defendants were properly awarded their attorney's fees under the Copyright Act, and remanded solely for a determination of the amount of fees available on the appeal.

No Rehearing By Second Circuit For "Santa Claus" Copyright Termination Case

Baldwin v. EMI Feist, No. 14-182 (2d Cir. Jan. 29, 2016).

In the copyright termination case concerning "Santa Claus Is Comin' To Town," the Second Circuit denied defendant-EMI's application for a rehearing (by the panel or en banc).

Second Circuit Affirms Dismissal Of Untimely Copyright Claims Against 50 Cent

Simmons v. Stanberry, No. 14-3106-cv (2nd Cir. Jan. 15, 2016).

Plaintiff, who alleged he was the exclusive licensee of a hip-hop beat later sold to rapper 50 Cent and successfully exploited by him, was too late in filing a lawsuit against the licensor and 50 Cent, says the Second Circuit in affirming dismissal of Plaintiff's copyright claims.  Plaintiff was aware of the dispute of defendants' right to exploit and use the beat, and of the alleged infringement, but waited more than three years to file suit.  Relying upon Kwan v. Schlein, 634 F.3d 224 (2d Cir. 2011), the Court held that notwithstanding the occurrence of allegedly infringing acts within three years of filing the action, the suit was nonetheless barred by the Copyright Act’s three-year statute of limitations, 17 U.S.C. § 507(b).  Because Plaintiff's ownership claim was time barred, he could not revive the time-barred claim of ownership of a copyright interest by relying on the defendants’continued exploitation of the copyright within three years of his filing suit.

Second Circuit Affirms ASCAP Rate Court In Pandora Dispute Over Partial Withdrawals And License Rate

Pandora Media, Inc. v. ASCAP, 14-1158-cv(L) (2d Cir. May 6, 2015).

The Second Circuit Court of Appeals affirmed the ASCAP "rate court's" decision: (1) granting Pandora summary judgment that the ASCAP consent decree unambiguously precludes partial withdrawals of public performance licensing rights; and (2) setting the rate for the Pandora‐ASCAP license for the period of January 1, 2011 through December 31, 2015 at 1.85% of revenue.

ASCAP contended that publishers may withdraw from ASCAP its right to license their works to certain new media music users (including Pandora) while continuing to license the same works to ASCAP for licensing to other users.  The appellate court agreed with the district court’s determination that the plain language of the consent decree unambiguously precludes ASCAP from accepting such partial withdrawals. Also, the Court found that under the circumstances, it was not clearly erroneous for the district court to conclude, given the 6evidence before it, that a rate of 1.85% was reasonable for the years  in question.

Appeals Court To Hear Sirius's Pre-72 Case

Sirius XM Radio, Inc. v. Flo & Eddie, Inc.; No. 15-497, (2d Cir. 04/15/2015) (Doc. 30).

In the pre-1972 sound recording case between Sirius XM and the Turtles, the Second Circuit Court of Appeals granted Sirius XM's petition, pursuant to 28 U.S.C. 1292(b), for leave to appeal the district court’s orders denying summary judgment and reconsideration.  Generally, federal appellate courts have limited jurisdiction over interlocutory decisions (e.g., injunctions).  However, the appellate court has discretion to permit an appeal from an interlocutory appeal when the district judge is explicitly of the opinion that the order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation.  28 U.S.C. 1292(b).

Interlocutory Appeal Granted In Turtles/Sirius Case

Flo & Eddie v. Sirius, No. 1:13-cv-05784-CM (SDNY filed 02/10/15) (Doc. 118).

The District Court certified for interlocutory appeal to the Second Circuit the question: "Under New York law, do the holders of common law copyrights in pre-1972 sound recordings have, as part of the bundle or rights attendant to their copyright, the right to exclusive public performance of those sound recordings?"  Having certified the question for interlocutory appeal, the District Court stayed all proceedings pending a decision by the Second Circuit.

2d Cir. To Hear Vimeo Interlocutory Appeal

Capitol Records, LLC v. Vimeo LLC, 2d Cir. Index Nos. 14-15 and 14-16 (2d Cir. April 9, 2014) [Doc. 57].

The Second Circuit agreed to hear interlocutory appeals, pursuant to 28 U.S.C. § 1292(b), and to consolidate the appeals.  The Second Circuit is now in a position to rule on whether the DMCA applies to pre-1972 sound recordings, and to clarify the willful blindness doctrine.

Dismissal Of Bay City Rollers' Royalties Suit Upheld By 2nd Circuit

Mitchell v. Faulkner, No. 13-576-cv (2d Cir. filed 8/29/2013).

The Second Circuit affirmed the lower court's Rule 12(b)(6) dismissal of plaintiffs' (Bay City Rollers) claims for unpaid royalties based in the alternative on breach of contract and unjust enrichment.  The contract claim failed because it was barred by the statute of frauds, in that any agreement to pay royalties extending beyond one year must be in writing to satisfy the statute of frauds.  The unjust enrichment claim failed because it was barred by the statute of limitations.  As stated by the Second Circuit
A claim for unjust enrichment must be based on the value of plaintiffs’ contribution to the joint effort of the band at the time it made the relevant records, not on the income stream resulting from a revival over thirty years later. That contribution and the failure of the defendants to pay for the value of the effort occurred well over six years ago and is barred by the statute of limitations.  N.Y.C.P.L.R. § 213.


New Trial In EMI/Citi Case

Terra Firma Investments v. Citigroup, Docket No. 11-1267 (2d Cir. May 31, 2013)

After a jury trial, judgment was entered against Plaintiff.  The Second Circuit vacated the judgment and remanded for a new trial, "[b]ecause the district court’s jury instructions were based on an inaccurate understanding of the relevant English law".

This case concerns the 2007 acquisition of EMI by the private equity firm Terra Firma.  Terra Firma sued Citigroup, alleging that during the auction, a Citi banker advising the auction fraudulently induced the Terra Firma to make an inflated bid for EMI.  A jury ruled in Citi's favor.

2d Cir Affirms Adjustable Carve Out Rates For Performance Rights Licenses

BMI v. DMX, Inc., Docket Nos. 10-3429-cv and 11-127-cv (2d Cir. decided June 13, 2012) (decision).

The 2d Circuit holds that the consent decrees with the performing rights organizations permits blanket licenses subject to carve-outs to account for direct licensing by the music user.  Then, the 2d Circuit held that the rate-court (SDNY) set reasonable rates.

ASCAP Royalty For Mobile Devices Affirmed By 2d Cir.

ASCAP v. MobiTV et al., Docket Nos. 10-3161-cv(L) (2d Cir. May 22, 2012).


This  appeal  concerns determination  of  the  proper  royalty  that ASCAP is  entitled to  receive  for  a  blanket  public performance license for music in the ASCAP repertory that is embodied in  television  and  radio  content  to  be  delivered  to  viewers  and listeners using mobile telephones.

When the parties could not agree on a price for the performance rights to the music component of Mobi’s offerings, ASCAP sought a reasonable rate in the District Court for the Southern District of New York, acting as a rate court pursuant to  a  consent  decree.  Following  a  bench  trial,  the  District  Court
(Denise  Cote,  District  Judge)  issued  a  judgment  on  July  7,  2010, establishing various royalty rates, depending on the nature of the programming, and designating the revenue bases to which those rates apply. See  In re Application  of MobiTV, Inc.,  712  F. Supp.  2d  206 (S.D.N.Y.  2010).  ASCAP  appealed,  contending  that  the District Court’s rate formulation should have been based on the retail
revenues  received  by  the  wireless  carriers  from  sales  to  their customers, rather than the content providers’ wholesale revenues paid by Mobi.  The Second Circuit disagreed with ASCAP and AFFIRMED.

2d Cir Decision On DMCA Safe Harbor In Viacom v Youtube

Viacom v. YouTube (2d Cir. Apr. 5, 2012). Decision. Not a "music" case, but extremely important decision that will impact future infringement cases.

This appeal required the Second Circuit to clarify the contours of the “safe harbor” provision of the Digital Millennium Copyright Act (DMCA) that limits the liability of online service providers for copyright infringement that occurs “by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider.” 17 U.S.C. § 512(c). The District Court held that the defendants were entitled to DMCA safe harbor protection primarily because they had insufficient notice of the particular infringements in suit. The Second Circuit held:


We conclude that the District Court correctly held that the § 512(c) safe harbor requires knowledge or awareness of specific infringing activity, but we vacate the order granting summary judgment because a reasonable jury could find that YouTube had actual knowledge or awareness of specific infringing activity on its website. We further hold that the District Court erred by interpreting the “right and ability to control” provision to require “item-specific” knowledge. Finally, we affirm the District Court’s holding that three of the challenged YouTube software functions fall within the safe harbor for infringement that occurs “by reason of” user storage; we remand for further fact-finding with respect to a fourth software function.


Downloads Not Public Performances; Fees Must Be Recalculated

US v. American Society of Composers, Authors and Publishers, 09-0539-cv (L), NYLJ [web_id_#], at *1 (Court, Decided September 28, 2010) [LINK]

"This case presents two distinct questions that arise from the transmittal of musical works over the Internet: First, whether a download of a digital file containing a musical work constitutes a public performance of that musical work; and, second, whether the district court, acting in its capacity as the rate court, was reasonable in its assessment of the blanket license fees of Yahoo! Inc. and RealNetworks, Inc. (collectively, "the Internet Companies") to publicly perform any of the millions of musical compositions in the American Society of Composers, Authors and Publishers ("ASCAP") repertory.

For the reasons set forth below, we affirm the district court's ruling that a download of a musical work does not constitute a public performance of that work, but we vacate the district court's assessment of fees for the blanket ASCAP licenses sought by the Internet Companies and remand for further proceedings."

2d Cir Rules On Copyright Statutory Damages

Bryant v. Media Right Productions Inc., 09-2600-cv, 5/5/10 NYLJ "Decision of Interest" (2d Cir. decided April 27, 2010).

Affirming lower court's finding that musical albums were compilations, and therefore each infringer was liable for only one award of statutory damages per album, rather than one award per song.

"...[I]nfringement of an album should result in only one statutory damage award. The fact that each song may have received a separate copyright is irrelevant to this analysis." The Court expressly declined to adopt an"independent economic value test" (adopted by other circuits) that would have allowed a statutory damage award for each song on the album because the Copyright Act specifically states that all parts of a compilation must be treated as one work for the purpose of calculating statutory damages. "We cannot disregard the statutory language simply because digital music has made it easier for infringers to make parts of an album available separately." See also fn. 6, collecting local district court cases that have considered whether a compilation is subject to only one statutory damage award (and noting that those courts reached the same conclusion).

The Court then went on to review the District Court's decision on intent (it had found that the conduct was innocent, not willful infringement), its calculation of statutory damages ($2,400), and its decision not to award attorneys' fees.

2d Cir Finds Antitrust Suit Stated Against Record Labels For Online Sales

The United States Circuit Court, Second Circuit, holds that plaintiffs' antitrust complaint alleging a conspiracy by major record labels to fix the prices and terms under which their music would be sold over the Internet states a claim for violation of Section 1 of the Sherman Act under Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). The amended complaint contains "enough factual matter (taken as true) to suggest that an agreement was made," id. at 555, and therefore states a claim.

"The present complaint succeeds where Twombly's failed because the complaint alleges specific facts sufficient to plausibly suggest that the parallel conduct alleged was the result of an agreement among defendants," Judge Katzmann said.

The defendants "agreed to launch MusicNet and pressplay, both of which charged unreasonably high prices and contained similar DRMs", and the entities did not "dramatically" drop "their prices for Internet Music (as compared to CDs), despite the fact that all defendants experienced dramatic cost reductions in producing Internet Music."

Starr v. Sony BMG, No. 08-5637-cv, NYLJ 1/14/2010 "Decision of the Day" (2d Cir. decided Jan. 13, 2010).