U.S. v American Society of Composers, Authors, and Publishers

U.S. v American Society of Composers, Authors, & Publishers
- F. 3d -, 2010 WL 3749292 (2nd Cir. September 28, 2010)
Lexis: 2010 U.S. App. LEXIS 19983

Facts: Internet Companies (Yahoo! Inc. and RealNetworks, Inc.) sought blanket licenses to perform the entirety of the American Society of Composers, Authors, & Publishers (“ASCAP”) repertory for some of their websites and services. The Internet Companies perform music in a number of ways across their websites and services including streaming music and music videos either supported by advertisements or on a subscription basis. In addition to performing the music through streaming transmissions, the companies allow users to download digital copies of the music.

Procedural Posture: Acting in its capacity as the rate court, the district court decided that downloads are not public performances of the musical work and also set the rate amounts for the Internet Companies’ usages that are considered public performances (streaming, etc.). The instant appeal followed.

Holding: Affirmed district court judgment as to downloads because downloading a copy of a file that contains a musical work is not a public performance of the musical work; vacated and remanded district court judgment as to the applicable license fee determination

Important Dicta: Copyright holders of musical performances are protected from unauthorized downloads by asserting their rights of copying and distribution.

Likely Future Importance or Unanswered Questions: ASCAP will not be able to collect mandatory fees for downloads of musical performances; however, companies will not be able to “get around” infringing copying and distribution rights by arguing that downloads are public performances.

Critical analysis: The court turned to the Section 101 of the Copyright to determine if a download is a “performance.” The court found that a download is neither a “dance” nor an “act” and therefore the court construed the terms “recite,” “render,” and “play.” The court approached the case like any statutory construction case and found that the ordinary meaning of those words included an element of contemporaneous perceptibility, usually by an audience. The court found that downloading a file is not a public performance because the music is not audible during download; the file is merely transferred from the server to the home computer. The court rejected ASCAP’s argument under the Section 101 of “publicly” (which provides “to transmit or otherwise communicate a performance . . . to the public”) reasoning that “transmitting a performance to the public” refers to the performance created by the act of transmission. An alternate reading, the court says, would render portions of the Act superfluous. Finally, the court points to the fact that streaming music and music videos are unquestionably public performances as illustrative of why downloads are not. Only after the file has been downloaded can a user perceive the performance by opening and playing the file.

Because the district court erred in determining the music-use-adjustment factor in deciding the license fee, the circuit court vacated and remanded that portion of the judgment. The music-use-adjustment is based on the observation that the reasonableness of a blanket license fee fundamentally depends on the reasonableness of the revenue attributed to the actual uses of the music by the applicant (Internet Companies). The district court erred, inter alia, by accounting for the revenue attributable to the music use by calculating the amount of time the music is streaming although streaming time neither correlates nor drives advertising revenue. Furthermore, the district court did not properly explain all of its reasoning in reaching the licensing fee which needed further clarification on remand.

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