United States v. Am. Soc’y of Composers, Authors & Publishers, No. 09-0539 (2d Cir. September 28, 2010)
On September 28, the United States Court of Appeals for the Second Circuit affirmed the ruling of the Southern District of New York that a digital download of a song does not constitute a public performance under section 106(4) of the Copyright Act. The court also vacated the district court’s assessment of fees for the blanket licenses that Yahoo! Inc. and RealNetworks Inc. sought from The American Society of Composers, Authors and Publishers (“ASCAP”), and remanded for further proceedings.
The holding in this case prevents ASCAP from “double-dipping” by receiving compensation for both copies and performances of its members’ musical works. It also provides much needed clarification on how license fees should be calculated for music streamed over the Internet.
JOLT Digest previously reported on the district court’s ruling that cell phone ringtones do not constitute public performances. BroadbandBreakfast.com and Bloomberg Businessweek each provide an overview of the case. The 1709 Blog and Internet Cases examine the court’s reasoning in detail.
Yahoo! Inc. and RealNetworks Inc. previously applied for an assessment of license fees from the United States District Court for the Southern District of New York, seeking blanket licenses from ASCAP to publicly perform the entirety of the ASCAP repertory on their websites. Acting as the rate-setting court, the district court ruled in 2007 that a download of a musical work does not constitute a public performance of that work. On that basis, the district court then determined the method for calculating the fees that Yahoo! and RealNetworks would pay for blanket licenses from ASCAP. The questions decided in the instant case were presented on ASCAP’s appeal of the district court’s final determination of the license fees in 2009.
Since the Second Circuit held that a digital download of a song was not a public performance of that song, ASCAP was not entitled to compensation for downloads under its performance royalty agreements. Judge Walker distinguished digital downloads from “performances” as defined in section 101 of the Copyright Act because, unlike the examples listed in section 101, digital downloads are not “contemporaneously perceived.” In so holding, the court looked to the terms “recite,” “render,” and “play” that are found in the definition. The court also distinguished digital downloads from the online streaming of songs, because streaming—like broadcasting—makes a song audible to the listener simultaneously with its transmission.
The Second Circuit found that the district court did not adequately support the reasonableness of its method in determining the formula used to calculate the fees payable to ASCAP for the blanket licenses. The court found error in both the district court’s method for measuring the contribution percentage of each company’s music use to its total revenue, and the royalty rate of 2.5 per cent that would be applied uniformly to the entirety of each company’s businesses. The case has been remanded to the district court for reconsideration of its fee assessment.
Greg Tang is a 1L at the Harvard Law School.