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US Department Of Justice to appeal 100% licensing agreement

By | Published on Monday 14 November 2016

US Department Of Justice

The US Department Of Justice has confirmed it will appeal the impromptu court ruling that overturned its decision on whether or not American collecting societies BMI and ASCAP must operate a 100% licensing system.

All you consent decree fans out there will remember that when the DoJ reviewed the regulations governing the collective licensing of song rights by American performing rights organisations BMI and ASCAP, it concluded earlier this year that both societies should be offering 100% licences. But the two societies, and pretty much every American songwriter and music publisher, insisted the government department had got it wrong, wrong, wrong.

Under a BMI licence, 100% licensing would mean that a licensee would be able to use any song in the society’s catalogue, even if BMI only controlled a slice of said song. Traditionally the licensee would need a separate licence from whichever entity or entities controlled the other slices of a co-owned work, which might be ASCAP or smaller American PROs SESAC or GMR. Under the 100% licensing system, BMI would receive all the royalties and would then need to pay the other societies their share.

As soon as the DoJ confirmed its conclusion on this point, ASCAP said it would lobby Congress on the issue, while BMI took the matter to court. In September, at what was expected to be hearing to discuss the time tabling for that court case, the judge who oversees the BMI consent decree, Louis Stanton, reached an immediate surprise judgement, ruling in BMI’s favour. The DoJ had got it wrong with all that 100% licensing nonsense, and BMI was perfectly entitled to operate the opposite system, aka fractional licensing.

The DoJ’s appeal means that Stanton’s interpretation of BMI’s consent decree will now be considered by the Second Circuit court. BMI said on Friday that the government agency’s decision to appeal the ruling was “disappointing” but not a surprise. BMI boss Mike O’Neill added: “While we hoped the DoJ would accept Judge Stanton’s decision, we are not surprised it chose to file an appeal”.

He went on: “It is unfortunate that the DoJ continues to fight for an interpretation of BMI’s consent decree that is at odds with hundreds of thousands of songwriters and composers, the country’s two largest performing rights organisations, numerous publishers and members of the music community, members of Congress, a US Governor, the US Copyright Office and, in Judge Stanton, a federal judge. We believe Judge Stanton’s decision is correct and look forward to defending our position in the Court Of Appeals for the Second Circuit”.

Rival PRO ASCAP backs BMI on this issue, the assumption being that if a court rules in BMI’s favour on 100% licensing, the same principle will have to be applied to its consent decree. Its CEO, Beth Matthews, said this weekend: “The Second Circuit’s ruling in this case will affect the rights of more than a million American songwriters and composers, thousands of whom have expressed strong opposition to the DoJ’s position, and we are hopeful the court will affirm Judge Stanton’s decision”.

She concluded that “ASCAP looks forward to resolution of this matter as we continue to advocate for modernising the consent decrees for today’s world”.