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United States v. Am. Soc'y of Composers

United States Court of Appeals for the Second Circuit

March 3, 2010, Argued; September 28, 2010, Decided

Docket Nos. 09-0539-cv (L), 09-0542-cv (con), 09-0666-cv (xap), 09-0692-cv (xap), 09-1572-cv (xap)

Opinion

 [***1362]  [*68]  JOHN M. WALKER,  [**5] JR., Circuit Judge:

This case presents two distinct questions that arise from the transmittal of musical works over the Internet: First, whether a download of a digital file containing a musical work constitutes a public performance of that musical work; and, second, whether the district court, acting in its capacity as the rate court, was reasonable in its assessment of the blanket license fees of Yahoo! Inc. and RealNetworks, Inc. (collectively, "the Internet Companies") to publicly perform any of the millions of musical compositions in the American Society of Composers, Authors and Publishers ("ASCAP") repertory.

For the reasons set forth below, we affirm the district court's ruling that a download of a musical work does not constitute a public performance of that work, but we vacate the district court's assessment of fees for the blanket ASCAP licenses sought by the Internet Companies and remand for further proceedings.

BACKGROUND

I. FACTS

The Internet Companies seek separate blanket licenses to publicly perform the entirety of the ASCAP repertory for certain of their websites and services. ] A blanket license is a license that gives the licensee the right to perform all of the works  [**6] in the repertory for a single stated fee that does not vary depending on how much music from the repertory the  [***1363]  licensee actually uses. United States v. Am. Soc'y of Composers, Authors & Publishers, No. 41-1395 (WCC), 2001 U.S. Dist. LEXIS 23707, 2001 WL 1589999, at [*69]  *1 (S.D.N.Y. June 11, 2001). ASCAP licenses the non-dramatic, public performance rights in copyrighted musical works. More than 295,000 composers, songwriters, lyricists, and music publishers in the United States participate exclusively in licensing their music through ASCAP. ASCAP licenses approximately 45% of all of the musical works that are played on-line.

The Internet Companies perform music in myriad audio and audio-visual contexts. Yahoo! provides music content in various ways across its website. For example, a user can enjoy the specific song or music video he desires from an "on-demand" stream in Yahoo! Search, listen to a radio-style webcast in Yahoo! Music, view audio-visual clips from movies and television shows in Yahoo! Movies and Yahoo! TV, or upload and share his own videos using Yahoo! Video. 1 However, only a small portion of the activity on Yahoo!'s website involves performances of musical works, and not all of the areas on Yahoo!'s  [**7] website offer audio or audio-visual content.

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627 F.3d 64 *; 2010 U.S. App. LEXIS 19983 **; 96 U.S.P.Q.2D (BNA) 1360 ***; Copy. L. Rep. (CCH) P29,981; 2010-2 Trade Cas. (CCH) P77,197

UNITED STATES of AMERICA, Plaintiff-Appellee, -- v. -- AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, Defendant-Appellant-Cross-Appellee, In the matter of Applications of REALNETWORKS, INC., YAHOO! INC., Applicants-Appellees-Cross-Appellants.

Subsequent History: As Amended October 14, 2010.

Costs and fees proceeding at, Motion granted by United States v. ASCAP (In re RealNetworks, Inc.), 2011 U.S. Dist. LEXIS 41137 (S.D.N.Y., Apr. 15, 2011)

US Supreme Court certiorari denied by Ascap v. United States, 132 S. Ct. 366, 181 L. Ed. 2d 232, 2011 U.S. LEXIS 6771 (U.S., Oct. 3, 2011)

Prior History:  [**1] American Society of Composers, Authors and Publishers ("ASCAP") appeals the district court's ruling that a download of a digital file containing a musical work does not constitute a public performance of that work. Yahoo! Inc. and RealNetworks, Inc. (collectively, the "Internet Companies") cross-appeal the district court's assessment of the fees for the blanket licenses they seek to perform musical works in the ASCAP repertory.

We affirm the district court's ruling that a download of a musical work does not constitute a public performance of that work, but we vacate the district court's assessment of fees for the blanket ASCAP licenses sought by the Internet Companies and remand for further proceedings in light of this opinion.

United States v. ASCAP, 485 F. Supp. 2d 438, 2007 U.S. Dist. LEXIS 31910 (S.D.N.Y., 2007)United States v. ASCAP, 599 F. Supp. 2d 415, 2009 U.S. Dist. LEXIS 31999 (S.D.N.Y., 2009)United States v. ASCAP, 559 F. Supp. 2d 332, 562 F. Supp. 2d 413, 2008 U.S. Dist. LEXIS 36226 (S.D.N.Y., 2008)

Disposition: AFFIRMED in part, VACATED in part, and REMANDED.

CORE TERMS

music, district court, license, download, royalty rate, streaming, user, benchmark, sites, transmission, advertising, website, song, networks, television, Authors, blanket, played, Publishers, Composers, formula, subscription, calculating, audio-visual, subscribers, broadcast, publicly, cable television, repertory, window

Contracts Law, Types of Contracts, General Overview, Copyright Law, Ownership Rights, Performances, Scope of Copyright Protection, Reproductions, Civil Procedure, Appeals, Standards of Review, De Novo Review, Summary Judgment Review, Standards of Review, Definition of Performance, Governments, Legislation, Interpretation, Displays, Distribution, Foreign & International Protections, Protected Rights, Clearly Erroneous Review, Questions of Fact & Law, Protected Subject Matter, Musical Works, Assignments & Transfers, Licenses