Dept. of Justice Appeals BMI Consent Decree Decision

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Courtesy Photo

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The Department of Justice has filed a notice that it is appealing a September ruling by federal Judge Louis Stanton that concluded fractional licensing is allowed under the BMI consent decree.

This appeal, which was expected, comes after the Judge KO'd the DOJ's interpretation that the consent decree requires 100 percent licensing, AKA full-works licensing. The DOJ reached that conclusion after a two-year review of the consent decree requested by music publishers and songwriters who hoped that the 75-year old decrees would be amended for the digital environment to allow publishers to partially withdraw digital rights from blanket licenses. But the DOJ decided against any changes and instead said that the consent decree requires the two performance rights organizations, ASCAP and BMI, to execute 100 percent licensing or full-work licensing.

In songs where there are multiple writers, fractionalized licensing requires a licensee to get a license from every rights owner in a song but under full-work licensing, someone only needs a license from one of the rights holders. Publishers have long maintained that it is the industry's practice to exercise fractionalized licensing while licensees like radio and digital services have long maintained that they only need a license from one rights holder of a song.

The DOJ statement was cheered by the licensees but when BMI challenged the DOJ's position in court, the BMI rate court judge disagreed with the agency's interpretation and said that fractionalized licensing is allowed under the consent decree. That decision was hailed my music publishers and derided by digital services and radio broadcasters.

Now, with the DOJ appeal, the Judge's Sept. 16 opinion and declaratory judgement will be scrutinized by the U.S. Court of Appeals for the Second circuit.

"While we hoped the DOJ would accept Judge Stanton's decision, we are not surprised it chose to file an appeal," BMI president/CEO Mike O’Neill said in a statement. “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 organizations, numerous publishers and members of the music community, members of Congress, a U.S. Governor, the U.S. 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."

ASCAP also issued a statement on the DOJ appeal. "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. ASCAP looks forward to resolution of this matter as we continue to advocate for modernizing the consent decrees for today’s world.”

When the DOJ interpretation on licensing was first announced, both ASCAP and BMI jointly said they would fight the decision, with BMI filing suit and ASCAP taking the lead in getting songwriters' issues rectified by the legislature.