Last September, Gerry Fox wrote about why he and our firm are fighting the government on behalf of Songwriters of North America. Here’s some background on the litigation, along with an update on where the proceedings stand.
Songwriters earn a living largely from licensing a key part of the copyrights they own when they create music: the right to perform their music in public. Bars, restaurants, radio and TV stations, and internet streaming services are among the thousands of users who get licenses from songwriters through performance rights organizations; the two largest are ASCAP and BMI. And the living that most songwriters earn is not extravagant: often they are the smallest of small-business owners in America. These are individual men and women who may well be composing music or lyrics at the kitchen table while they wait for their kids' school bus or in the evening after everyone else has gone to sleep.
If you think about industries that are regulated by the federal government, chemical companies, the toxic waste they produce, and the EPA might come to mind; songwriters, the music they create, and the Justice Department probably don’t. But the Justice Department since 1941 has in fact regulated licensing of nearly all songwriters’ performance rights in the United States. The regulation happens through the Justice Department’s enforcement of two consent decrees that the government entered into over 75 years ago: one with ASCAP and one with BMI. The consent decrees settle antitrust lawsuits that the government brought against ASCAP and BMI all those decades ago.
The marketplace for performance rights, an important part of the music industry, has grown and flourished since the consent decrees came into force. That marketplace includes customary practices concerning “fractional licensing.” An example of this is when two music artists collaborate, and one is an ASCAP member and the other is a BMI member, each artist can assign a 50% share in the performance rights to the rights organization that artist is affiliated with. But the Justice Department on August 4, 2016 announced a determination—made principally by the Department’s Antitrust Division—about how the Department now intends to enforce the consent decrees. That determination includes a rule prohibiting fractional licensing. The government for the first time says that the ASCAP and BMI consent decrees require “full-work” (or “100%”) licenses.
The government’s determination has rocked the industry. The Justice Department announced its 100% licensing rule despite repeated warnings from industry participants about the widespread disruptions that would result: songwriter contracts will need renegotiating; ASCAP and BMI will need to figure out which songs in their huge repertories do or don’t run afoul of the 100% licensing mandate; and songwriting collaborations may never happen if one writer is concerned about complications when a potential co-writer is affiliated with a different performance rights organization.
One group that tried to warn the Justice Department about the consequences of mandating 100% licensing is Songwriters of North America (SONA), a grassroots songwriter advocacy organization. Its roster of over 200 professional songwriter and composer members represent a broad range of musical genres and include Grammy, Emmy, and Academy Award-winning artists.
SONA and three individual songwriters—Michelle Lewis, Thomas Kelley, and Pamela Sheyne—came together to challenge the new rule in a complaint that Gerard Fox Law filed against the Justice Department, the Attorney General, and the head of the Antitrust Division in the U.S. District Court for the District of Columbia. Songwriters of North America et al. v. United States Department of Justice et al., No. 1:16-cv-01830 (D.D.C. filed Sept. 13, 2016). The case is pending before Judge Tanya Chutkan.
The complaint asserts two claims. The first alleges violations of the U.S. Constitution: SONA members and the individual songwriter plaintiffs have Fifth Amendment rights not to be deprived of property without due process of law. But the new rule mandating 100% licensing diminishes and encumbers songwriters’ copyright interests and private contractual rights. This property was taken without compensation and by means that violate SONA members’ procedural and substantive due-process rights.
Plaintiffs’ second claim is based on administrative law as embodied in the Administrative Procedure Act (APA). The APA prohibits federal agencies from adopting rules without appropriate procedural safeguards, or that are arbitrary, capricious, an abuse of discretion, otherwise unlawful, or unsupported by facts and the public record. The APA also prohibits an agency from exceeding its authority. Plaintiffs allege that the new 100% licensing rule violates the APA on all these scores.
The government defendants on November 18, 2016 filed a motion to dismiss the complaint. On behalf of SONA and the individual songwriter plaintiffs, attorneys at Gerard Fox Law filed an opposition to the motion on February 7, 2017, and the government is expected to file a reply on March 9, 2017. The plaintiffs have requested oral argument on the motion to dismiss. In a sense, this battle between songwriters and the government is now joined.