Professional Documents
Culture Documents
1
1 they seek to perform musical works in the ASCAP repertory.
2
1 O’Sullivan, David Seidman,
2 Attorneys, Appellate Section,
3 Antitrust Division, Department of
4 Justice, Washington, DC on the
5 brief), Attorney, Appellate Staff,
6 Civil Division, Department of
7 Justice, Washington, DC for United
8 States.
9
10 MICHAEL E. SALZMAN(Marvin L.
11 Berenson, Joseph J. DiMona, John
12 Coletta, Broadcast Music, Inc., New
13 York, New York on the brief),
14 Hughes, Hubbard & Reed LLP, New
15 York, New York for Amicus Curiae
16 Broadcast Music, Inc.
17
18 KEENAN POPWELL (John C. Beiter,
19 Zumwalt, Almon & Hayes PLLC,
20 Nashville, Tennessee on the brief),
21 SESAC, Inc., New York, New York for
22 Amicus Curiae SESAC, Inc.
23
24 DAVID LEICHTMAN (Hillel I. Parness,
25 Robins, Kaplan, Miller & Ciresi
26 LLP, New York, New York, W. Edward
27 Bailey, Eleanor M. Lackman, Lovells
28 LLP, New York, New York, David
29 Uwemedimo, Confederation
30 Internationale des Societes
31 d’Auteurs et Compositeurs, Neuilly
32 sur Seine, France on the brief),
33 Robins, Kaplan, Miller & Ciresi
34 LLP, New York, New York for Amicus
35 Curiae Confederation Internationale
36 des Societes d’Auteurs et
37 Compositeurs.
38
39 JAY COHEN (Lynn B. Bayard, Paul,
40 Weiss, Rifkind, Wharton & Garrison
41 LLP, New York, New York, Jay
42 Rosenthal, Kathryn E. Wagner,
43 National Music Publishers’
44 Association, Inc., New York, New
45 York on the brief), Paul, Weiss,
46 Rifkind, Wharton & Garrison LLP,
47 New York, New York for Amici Curiae
48 Association of Independent Music
3
1 Publishers, Church Music Publishers
2 Association, Music Publishers’
3 Association of the United States,
4 National Music Publishers’
5 Association, Inc., and Production
6 Music Association.
7
8 CHARLES CUMMINGS (Carl W. Hampe,
9 Baker & McKenzie LLP, Washington,
10 DC, Charles J. Sanders, Attorney at
11 Law PC, Briarcliff Manor, New York
12 on the brief), Baker & McKenzie
13 LLP, New York, New York for Amici
14 Curiae The Society of Composers and
15 Lyricists, National Academy of
16 Recording Arts and Sciences, Inc.,
17 Ad Hoc Coalition of Production
18 Music Company Owners, The Game
19 Audio Network Guild, and
20 Songwriters Guild of America.
21
22 AL J. DANIEL (Toby M.J.
23 Butterfield, Christopher J. Marino,
24 Cowan, DeBaets, Abrahams & Sheppard
25 LLP, New York, New York, C. Paul
26 Spurgeon, Society of Composers,
27 Authors, and Music Publishers of
28 Canada, Toronto, Ontario, Canada on
29 the brief), Cowan, DeBaets,
30 Abrahams & Sheppard LLP, New York,
31 New York for Amicus Curiae The
32 Society of Composers, Authors, and
33 Music Publishers of Canada
34
35 PAUL M. SMITH (Steven R. Englund,
36 Carrie F. Apfel on the brief)
37 Jenner & Block LLP, Washington, DC
38 for Amici Curiae Digital Media
39 Association, Entertainment Software
40 Association, and Motion Picture
41 Association of America, Inc.
42
43 JOHN T. MITCHELL, Interaction Law,
44 Washington, DC for Amici Curiae
45 National Association of Recording
46 Merchandisers, Inc., and
47 Entertainment Merchants
48 Association, Inc.
4
1 SUSAN CLEARY, Independent Film and
2 Television Alliance, Los Angeles,
3 California for Amicus Curiae
4 Independent Film and Television
5 Alliance
6
7 BRUCE G. JOSEPH, Wiley Rein LLP,
8 Washington, DC for Amicus Curiae
9 CTIA – The Wireless Association.
10
11 JOHN M. WALKER, JR., Circuit Judge:
12
13 This case presents two distinct questions that arise from
28 proceedings.
29 BACKGROUND
30 I. FACTS
5
1 The Internet Companies seek separate blanket licenses to
4 that gives the licensee the right to perform all of the works in
5 the repertory for a single stated fee that does not vary
17 ways across its website. For example, a user can enjoy the
21 shows in Yahoo! Movies and Yahoo! TV, or upload and share his own
1
Yahoo! provides audio and audio-visual content in the
following areas of its website and through the following
services: the Yahoo! homepage, Yahoo! Music, My Yahoo!, Yahoo!
Movies, Yahoo! Video, Bix, Yahoo! Kids, Yahoo! TV, Yahoo! Games,
6
1 activity on Yahoo!’s website involves performances of musical
2 works, and not all of the areas on Yahoo!’s website offer audio
3 or audio-visual content.
7
1 download is a transmission of an electronic file containing a
7 the song is not audible to the user during the transfer. Id. at
8 442, 446. Only after the file has been saved on the user’s hard
18 common: the larger the audience and the more times a site is
3
Advertising on websites can take numerous forms,
including, inter alia, display advertising, rich-media
advertising, and sponsorships. Display advertising may be
displayed, inter alia, as an item on a web page, in a pop-up or
pop-under window, on an interstitial page (an ad page that
appears between two content pages), or in a floating window that
moves across the user’s screen. Rich-media advertising,
consisting of streaming audio or video, is generally played in
the audio and audio-visual players in which the musical works are
performed, either before, during, or after the performances of
the musical works.
8
1 visited, the greater the revenue generated. See United States v.
12 court issued rulings in April 2007, April 2008, and January 2009
4
In 1941, the United States brought a civil action against
ASCAP for alleged violations of the Sherman Antitrust Act based
on the fact that ASCAP’s members license their songs
collectively, thereby enhancing their market power. The action
was settled by the entry of a consent decree, see United States
v. Am. Soc’y of Composers, Authors & Publishers, No. 13-95, 1941
U.S. Dist. LEXIS 3944 (S.D.N.Y. Mar. 4, 1941), which has
subsequently been amended from time to time. The most recent
version, entered on June 11, 2001, the Second Amended Final
Judgment (“AFJ2”), currently regulates how ASCAP may participate
in the music industry and gives the United States District Court
for the Southern District of New York jurisdiction as the rate
court to oversee the implementation of the AFJ2. United States
v. Am. Soc’y of Composers, Authors & Publishers, No. 41-1395
(WCC), 2001 WL 1589999 (S.D.N.Y. June 11, 2001). In its capacity
as the rate court, the district court determines a reasonable fee
for an applicant’s ASCAP license. Id. at *6-*8
9
1 performance of that work. In its 2008 decision, the district
19 television networks.
10
1 perform music – less certain customary costs (such as for
11
1 and services, but without explaining how it arrived at these
3 DISCUSSION
10 forth these various rights, including the right “to reproduce the
15 these downloads create copies of the musical works, for which the
20 court held that these downloads are not public performances, and
21 we agree.5
5
We review a district court’s grant of summary judgment
based on its interpretation of the Copyright Act de novo. See
Larry Spier, Inc. v. Bourne Co., 953 F.2d 774, 775 (2d Cir.
1992).
12
1 In answering the question of whether a download is a public
8 “render,” or “play.”
13 Sigmon Coal Co., 534 U.S. 438, 450 (2002) (internal quotation
6
Section 101 of the Copyright Act, its definitional
section, fully defines “[t]o ‘perform’ a work” as “to recite,
render, play, dance, or act it, either directly or by means of
any device or process or, in the case of a motion picture or
other audiovisual work, to show its images in any sequence or to
make the sounds accompanying it audible.” 17 U.S.C. § 101.
7
Because we see no ambiguity in the language of the
Copyright Act, we need not reach ASCAP’s arguments regarding (i)
13
1 Simon, 310 F.3d 280, 290 (2d Cir. 2002) (internal quotation marks
14
1 These definitions comport with our common-sense
7 1969. Yo-Yo Ma “plays” the Cello Suite No. 1 when he draws the
8 bow across his cello strings to audibly reproduce the notes that
11 a potential listener.
15
1 The downloads at issue in this appeal are not musical
6 manner during the transfers; the user must take some further
7 action to play the songs after they are downloaded. Because the
11 as defined by § 101.
15 follows:
16
1 otherwise communicate a performance,” id., namely the
17
1 being a transmittal that is itself a performance of the
2 underlying work. See 536 F.3d at 134 (“The fact that the
6 performance.”).
9
Our opinion does not foreclose the possibility,
under certain circumstances not presented in this case, that
a transmission could constitute both a stream and a
download, each of which implicates a different right of the
copyright holder.
18
1 one point in time and performed at another. Transmittal
4 Real Estate Investors, Inc., 866 F.2d 278, 282 (9th Cir.
9 Venture, 211 F.3d 10, 11-13 (2d Cir. 2000), to hold that the
19
1 satellite and could not, itself, be perceived by viewers.
20
1 transmit directly to the public,” the earlier transmission
10 who then plays his unique copy of the song whenever he wants
14 See id. at 137, 138; see also United States v. Am. Soc’y of
20 works.10
10
Several amici suggest that our obligations under
the 1997 World Intellectual Property Organization Copyright
Treaty (“WIPO Copyright Treaty”) require us to find that
downloads of musical works constitute public performances.
The WIPO Copyright Treaty provides authors with the
following right:
21
1 II. Fee Determination for Using the ASCAP Repertory
22
1 relative to their overall time on the website. We conclude
3 respects.
12 A. Standards of Review
23
1 fact that ASCAP, as a monopolist, “exercise[s]
3 Id.
16 value, are reviewed for clear error. Music Choice IV, 426
19 Capital Cities/ABC, Inc., CBS Inc., & Nat’l Broad. Co.), 157
24
1 determination of the revenue attributable to the actual uses
18 components.
25
1 relation to the value they derive performing musical works
26
1 as the MUAF can be understood to do here.11 With respect to
11
If designed and calibrated properly, a single
formula incorporating a MUAF should produce a fee reasonably
equivalent to the fee produced by a set of formulae that
applies a different reasonable rate to the revenue derived
from each of Yahoo!’s different music uses, as is attempted
in Yahoo!’s agreement with BMI, infra. (Thus, the single
formula will be sensitive to the different intensities of
Yahoo!’s various music uses.) The MUAF (if suitably
constructed) calculates and accounts for the contribution
that music makes to the overall service that Yahoo! sells to
its customers, and makes the rate formula sensitive to
relative changes in that contribution over time.
27
1 the components of the MUAF, however, we find error.
2 1. Yahoo!
28
1 the district court’s method for calculating the MUAF was
13
The district court, recognizing the imprecision of its
metric, offered, inter alia, the following rationale for using
it: “Although the streaming time is increased by visitors who
stream music as a ‘background’ while they are engaged in other
activities on the website, such as searches or e-mailing, that
effect is largely if not wholly offset by the myriad incidental
performances of music in movies, advertisements, user-uploads and
elsewhere, which are not counted as music streaming time (against
Yahoo!).” RealNetworks & Yahoo! II, 559 F. Supp. 2d at 413. We
find this sort of rough estimation, with no basis in the record,
unreasonable because there appears to be a much more precise
metric available to the district court.
29
1 interacting with another page, website, or computer program,
3 but has left that page open. For example, user A, who is
14
We are not suggesting that the amount of time music is
played has no correlation to the revenue attributable to music on
Yahoo!’s licensed sites and services. Streaming time likely
30
1 constructing a MUAF that failed to take into account these
31
1 MUAF) or in some other way altogether, in light of the
2 foregoing discussion.
15 time, comScore will count the time for only the single
20 counting the time use for each of the Yahoo! windows open
21 while comScore is counting the time use for only the single
16
ComScore is an Internet audience measurement firm that
measures traffic to, and time spent on, Internet sites and
services.
32
1 window engaged by the user. Without addressing whether one
7 streaming time.
11 could have been used for the denominator, but that Yahoo!
19 practicable.
20 2. RealNetworks
33
1 despite its decision not to apply MUAFs in 2008, without any
17
The district court found that Rhapsody is an unlimited
on-demand music subscription service that offers subscribers
access to over four million songs. In addition to streaming
music and selling permanent downloads of music, Rhapsody
subscribers can also conditionally download music. A conditional
download is a download that may be accessed by the user for a
limited duration or number of uses.
34
1 the total number of hours of streams to users in each month
12 Judgment Order 4)
35
1 or practicable than the method used in the benchmark
10 of Yahoo!’s MUAF.
12 1. Yahoo!
36
1 apply a uniform 2.5% royalty rate and that, in setting the
4 music use.
37
1 hearing, for example if a user tunes into a more customized
38
1 television companies pay ASCAP under their flat royalty rate
9 altogether.” Id.
21 reasonable.
39
1 general-entertainment and music-intensive cable television
9 would pay under the court’s formula to the 0.375% and 0.9%
40
1 comparing percentages of overall revenue bases is of little
19
The district court’s analysis of the terrestrial radio
stations’s licencing agreements with ASCAP suffers from the same
flaw.
20
This conclusion is supported by the fact that the major
broadcast television networks, which perform a blend of cable-
television style programming, as well as less music-intensive
programming such as news and sports, pay between 0.24%-0.34% for
their ASCAP licenses.
41
1 applying a 2.5% rate to all of Yahoo!’s music use based on
21
The district court’s analysis of Yahoo!’s agreement with
the major record companies is erroneous for the same reason. The
court did not use this benchmark to assess how much Yahoo! should
pay for its right to perform ASCAP musical works in music videos.
It instead used this benchmark to make a far more general
conclusion concerning how much Yahoo! should pay for all of its
various music uses.
22
The district court concluded that the royalty rates used
in the BMI-Yahoo! license are not probative of what the market
would yield for Yahoo!’s license in this case because, it
concluded, the BMI-Yahoo! license is a “per-segment” license that
confers a different set of rights than the “blanket” license
Yahoo! seeks from ASCAP. Yahoo! contests this finding. In light
of our remand, it is not necessary to rule on this issue. We
leave it open to the district court, however, to revisit this
finding on remand.
42
1 similar manners, BMI’s agreements are instructive. See
23
ASCAP’s licensing agreement with Turner Broadcasting
further supports the conclusion that the market is capable of
yielding a royalty rate that reflects the varying intensity of
Yahoo!’s music uses. Turner owns numerous types of television
stations that use music differently from one another – including,
by way of example, general entertainment cable television
stations such as TNT and TBS, and a cable news station, CNN – all
of which are covered under a single license with ASCAP. Similar
to Yahoo!’s agreement with BMI, Turner’s license with ASCAP
includes different rates on a per-network basis, thereby
reflecting the economic reality that Turner’s different channels
43
1 The district court found that effectuating the BMI
44
1 Muzak LLC), 275 F.3d 168, 176-77 (2d Cir. 2001) (assessing
24 must pay ASCAP for its license, in light of our holding that
45
1 the district court’s valuation of Yahoo!’s use of the ASCAP
19 2. RealNetworks
24
We also do not mandate that, if the district court were
to use a blended uniform rate, the rate would have to be lower
than 2.5%. We only hold that the district court’s application of
the benchmark agreements in its opinion does not support an
across the board 2.5% rate.
46
1 The district court applied the Music Choice and radio
47
1 D. Download Revenues
23 may be considered.
48
1 CONCLUSION
49