Music Publishers Speed Past Peloton's Counterclaims in Copyright Lawsuit

Peloton's countersuit against 14 music publishers claiming copyright infringement against the at-home exercise company has been dismissed by a federal judge. 

The $370 million lawsuit, originally filed by the publishers last March, alleged that Peloton -- which manufactures exercise bikes that stream instructor-led fitness classes via built-in touch screens -- had used more than 1,000 copyright musical compositions without obtaining needed licenses. In its April 30, 2019, counterclaim, Peloton accused the publishers of anti-competitive behavior by engaging in a “coordinated effort” to fix prices and alleged that the National Music Publishers Association had conspired to prevent it from striking deals with the individual companies. The publishers and NMPA filed a motion to dismiss the counterclaim on Oct. 25.

In a 25-page decision filed Wednesday (Jan. 29), U.S. District Court Judge Denise Cote found that while Peloton sufficiently established a coordinated effort by the publishers to refuse the company sync licenses, it failed to identify a “relevant market” to support its anti-competition claim. Since Peloton previously entered into licensing agreements with other music publishers, Cote argues, it cannot rightly file a claim on antitrust grounds.

“Peloton does not explain why it cannot substitute songs with sync licenses owned by the Music Publishers for songs with sync licenses owned by other publishers,” Cote writes. “Indeed, as Peloton admits, it has successfully ‘collaborated with music publishers to develop an innovative [sync] licensing framework that is appropriate for its business and reached agreements with all the ‘major’ music publishers and many independent music publishers.’”

Cote also found that Peloton failed to establish "tortious interference" on the part of the NMPA, noting there was no evidence to suggest the publishers had ever reciprocated Peloton’s interest in finalizing sync agreements prior to the trade organization’s alleged obstruction.

Finally, the judge denied Peloton’s prior request to amend its “relevant market” definition -- in the event the current definition was found to be legally deficient -- to encompass only the publishers at issue.

“Peloton did not explain why its alternative definition of a relevant product market would cure the deficiencies that it anticipated this Court would find with respect to the interchangeability of music suitable for fitness videos,” she concluded, noting that Peloton had ample opportunities to amend the definition prior to today's ruling.

In a statement sent to Billboard, NMPA president and CEO David Israelite applauded the judge's decision. “Today’s victory is a reminder that tech companies like Peloton cannot build businesses that are reliant on songwriters without asking their permission and paying them,” he said. “Judge Cote has dismissed all of Peloton’s counterclaims which were only meant to distract from their failure to license 2468 songs. We are pleased that Peloton’s attempts to divert attention from the heart of the issue – properly paying creators for the music on which its billion-dollar business was built -- have been defeated.”

In their own statement, a Peloton spokesperson said of the decision, “We respectfully disagree with this ruling regarding our counterclaims and are assessing our options for appeal. We will continue to vigorously contest the plaintiff publishers’ infringement claims, which were not addressed in this decision.”

1/30/20: This article has been updated with revised figures regarding the publishers' lawsuit.

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