A federal Court of Appeals in California yesterday handed a big win to music publishers and a big loss to karaoke companies. The court held that a compulsory mechanical license does not include the right to print or display song lyrics in real time with the recordings.

Leadsinger, a device manufacturer, filed a lawsuit in 2004 against BMG Music Publishing and Zomba Enterprises asking the court to declare licensing rights. Leadsinger manufactures a microphone player with recorded songs imbedded in a microchip. When connected to a television, lyrics appear on the screen in real time as the song is playing.

Although Leadsinger obtained a mechanical license from the Harry Fox Agency, which represents compulsory mechanical rights for BMG and Zomba, BMG insisted that the company must secure negotiated synchronization and lyric reprint licenses for the karaoke use.

Leadsinger refused, instead filing the suit asking the federal District Court to declare that the mechanical license -- or the fair use doctrine -- authorized the company's use of the lyrics. The District Court dismissed the suit, and the company appealed.

The Appeals Court wrote that the visual presentation of successive portions of lyrics projected onto a television screen is an audiovisual use under copyright law. That use required a synchronization license.

The opinion was certified for publication, which means the opinion becomes legal precedent that other courts within the federal ninth circuit region must follow in similar cases. The ninth circuit encompasses California, Oregon, Washington, Arizona, Alaska, Hawaii, Nevada, Idaho and Montana.

Karen Thorland with Loeb & Loeb in Los Angeles represented the publishers. Anthony Handal with Brown Rudnick Berlack Israels in New York represented Leadsinger.