U.S. v. Broadcast Music Inc.

District court overrules DOJ’s interpretation of 75-year-old music industry consent decree, finding it neither bars issuance of fractional licenses for music nor requires BMI to issue full licenses.

Broadcast Music Inc. asked the Department of Justice to review a consent decree entered in 1941 that allowed the organization to issue licenses only for works to which it holds all the rights. BMI sought to determine whether the consent decree barred fractional licensing — partial licensing that sometimes occurs when a song has multiple authors. After a two-year review, the DOJ released a statement on Aug. 4, 2016, in which it concluded that when organizations cannot offer music users a full license, those works are ineligible for licensing under the terms of the consent decree. According to the DOJ, if BMI were allowed to grant a partial license for the right to play a certain song, music users seeking to avoid infringement liability would have the “daunting task” of hunting down all partial owners and getting licenses from them.

Following publication of the DOJ’s statement, BMI filed a declaratory judgment action for a ruling that the consent decree does not require full-work licensing. The district court found that the consent decree neither bars the issuance of fractional licenses for music nor requires performance rights organizations such as BMI to issue full licenses. Specifically, the district court pointed out that the phrase in Article II(c) of the consent decree defining BMI’s repertory as “those compositions, the right of public performance of which [BMI] has . . . the right to license or sublicense” is descriptive, not prescriptive. The “right of public performance” is left undefined as to scope or form, to be determined by processes outside the consent decree, it held.

The district court further found that nothing in the consent decree extended to problems such as those involved in determining the validity of copyrights in BMI’s repertory and that the consent decree contained no provision concerning the value of fractional versus full-work licensing. That issue is therefore left to be determined under copyright, property and other laws, explained the district court.