SONA and Songwriters Fight DOJ’s Misguided 100% Licensing Rule

Things are heating up in the lawsuit filed by Songwriters of North America and three of its members (SONA) challenging the new gloss of the Department of Justice (DOJ) on the 75-year-old consent decrees that govern the licensing practices of ASCAP and BMI, the two largest performance rights organizations (PROs). SONA sued the DOJ on September 13, 2016, questioning the DOJ’s reinterpretation of the consent decrees to require the PROs to license all of the works in their repertories on a 100% basis. As reported by Billboard yesterday, CPIP Senior Scholar & Director, Copyright Research and Policy Sandra Aistars is assisting SONA’s legal team at Gerard Fox Law PC in the litigation.

After completing a two-year review of the ASCAP and BMI consent decrees, the DOJ issued a statement on August 4, 2016, concluding that the decrees require the two PROs to offer only “full-work licenses.” On this view, the PROs would not be able to continue licensing the fractional interests in the musical compositions owned by the songwriters they represent. As the U.S. Copyright Office noted in early-2016, such fractional licensing is a “longstanding practice of the music industry.” Nevertheless, the DOJ claimed that the change “should not meaningfully disrupt the status quo in the licensing of public performance rights.”

This assertion was immediately challenged by the PROs. ASCAP President Paul Williams issued a statement that same day vowing to work with BMI “to overturn the DOJ’s decision” in both Congress and the courts. BMI filed a letter with District Judge Louis L. Stanton, who oversees BMI’s consent decree, announcing its intention to seek a declaration that the decree “does not require 100% licensing.” Six weeks later, Judge Stanton issued an opinion declaring that BMI’s consent decree “neither bars fractional licensing nor requires full-work licensing.” The victory was celebrated as a win for songwriters, and both ASCAP and BMI issued statements praising the decision. The DOJ has since appealed the issue to the Second Circuit.

In its complaint filed in the District of Columbia, SONA argues that the DOJ’s 100% licensing rule violates songwriters’ due process rights, both substantive and procedural, under the Fifth Amendment as well as the Administrative Procedures Act. Calling the DOJ’s rule “a dramatic departure from the status quo,” SONA points out that it will “limit and undermine the creative and economic activities” of songwriters by forcing them to “undertake the burdensome and potentially costly process of revisiting and amending their core business practices, private contracts, and collaborative relationships” in order to comply.

Arguing that the case should be dismissed, the DOJ challenges the standing of SONA to even invoke the court’s jurisdiction. The DOJ claims that any harm caused by the consent decrees is too speculative and remote to create an actual case or controversy, and it suggests that no songwriters have been deprived of any protected liberty or property interest under the Due Process Clause. In its opposition brief filed this past Tuesday, SONA strongly opposes that contention:

[P]laintiffs have alleged and will prove at trial that [the DOJ’s] new rule has caused immediate injuries and will cause imminent injuries to each plaintiff, thus establishing standing. Plaintiffs have also pleaded facts sufficient to show that the government’s action is interfering with their freedom to contract, freedom of association, and freedom of speech, and that the government has taken their valuable intellectual-property rights without compensation, thus violating plaintiffs’ substantive and procedural due-process rights.

Admonishing the DOJ’s “casual disregard for the welfare and livelihoods of America’s songwriters,” SONA points out that, under the DOJ’s new rule, songwriters will:

  • Be deprived of the ability to choose the PRO that will license their shares of coauthored works;
  • Be required to withdraw works from representation by ASCAP or BMI;
  • Have songs that they must license outside of the PRO system;
  • Need to cede administrative control over their copyrights, including the right to collect royalties, to unaffiliated third parties;
  • Be compelled to renegotiate existing contractual relationships on a song-by-song basis;
  • Be forced to consider whether they should decline to collaborate with creators who are not members of the same PRO; and
  • Have reason to consider withdrawing from ASCAP or BMI altogether.
  • Now that President Trump is in office, there is new leadership at the DOJ. Jeff Sessions was sworn in as the U.S. Attorney General earlier today, and Brent Snyder took over as acting director of the DOJ’s Antitrust Division less than three weeks ago. Just last week, the DOJ asked the Second Circuit for an extra 90 days to file its opening brief in its appeal of Judge Stanton’s ruling that the BMI consent decree does not require 100% licensing. According to the DOJ, the “requested extension is necessary to allow new leadership in the Department of Justice adequate time to familiarize themselves with the issues.” Perhaps there is hope that the DOJ will discontinue its misguided push for a 100% licensing rule that will inevitably threaten the livelihoods of songwriters.