Significant victory impacts the more than $2 billion music performing rights industry affecting more than 750,000 songwriters, composers, and music publishers
Milbank, Tweed, Hadley & McCloy LLP prevailed against the US Department of Justice (DOJ) on behalf of music performing rights licensing company BMI in the US District Court of the Southern District of New York in a decision that impacts more than 750,000 songwriters, composers and music publishers in the more than $2 billion music performing rights industry.
On August 4, the DOJ announced that it was closing its two-year-long review of the BMI and ASCAP consent decrees, and declining to modify the 75-year-old antitrust decrees to bring them into the 21st century. The DOJ did not stop there. In a statement that shocked the industry, the DOJ said that the BMI decree requires it to license co-written songs on a full-work-basis, even if BMI only represents a fraction of the interest in the work. The DOJ’s position, without a complete renegotiation of the contractual arrangements between co-writers around the globe, risked turning upside down the licensing of co-written works, and significantly limiting collaboration among songwriters. Countless songs would have fallen out of BMI’s repertory, and would not have been readily able to be performed in the US. Milbank, on behalf of BMI, immediately asked Judge Stanton, the Federal judge responsible for overseeing the BMI consent decree in the Southern District of New York, for relief.
On September 16, Judge Stanton agreed with BMI that “[n]othing in the Consent Decree gives support to the Division’s views,” and issued a declaratory judgment confirming, as BMI argued, that “the Consent Decree neither bars fractional licensing nor requires full-work licensing.” This decision will allow the status quo of efficient fractional licensing of the public performing right that has been prevalent in the industry for decades to continue.
“This is a big victory for songwriters and the music industry,” said Litigation partner and Chairman of Milbank Scott A. Edelman. “We are pleased that the ruling allows BMI to issue licenses for the music it has the rights for.”
The decision, closely watched by the music industry and national press, follows a previous Milbank trial victory on behalf of BMI against Pandora in 2015 in the historic music licensing rate case, which resulted in a 43% increase in rates and set a new market rate for all digital music services. The Pandora litigation first raised the questions regarding BMI’s licensing obligations under its consent decree that prompted the DOJ review.
The Milbank team was led by Litigation partners Scott A. Edelman and Atara Miller with Antitrust partner Fiona Schaeffer and special counsel Rachel Penski Fissell.
