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Sirius XM v SoundExchange Antitrust Complaint

Sirius XM v SoundExchange Antitrust Complaint

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Published by: title17 on Mar 28, 2012
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09/02/2013

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IN T11Fl. UNI`T'ED STATES DIN I RICI CMAZ '
FOR `I'111 'OI)'TIIh;RN DISTRU. I O1' NEW l ORK
SIRIES NM RADII) INC'..
Plaintiff`,
 
~ Case No.
v.
S{)t NDIX('I IAN(
il,.
INC.
and
f\N'iFRICAN
ASSO('Irl"l R)N OF lNDNPI:.''''Nil I MI
SIC, j COMPLAINT
Defendants.
URY TRIAL DENIANDED
Plaintiff, Sirius XM Radio Inc. ("Sirius NM"). by and through its undersigned
attorneys, alleges as follows:
1. BACKCROUND
1.
irius XM brings this antitrust and tortious interference action to halt theunlawful conduct of the recording industry's copyright collective, Defendant Soundbxchangre.Inc., Defendant the Association of Independent Music ("A2IM") and various other recordindustry trade associations. "These organizations, acting in concert with one another and withtheir individual recording company members, have erected an industry-wide conspiracy toboycott and tortiously interfere with Sirius XM 's efforts to secure through the workings of acompetitive market copyright rights critical to the conduct of its business.
AS
a result of thisconcerted refusal to deal, the Defendants and other industry trade organizations, in concert withnumerous individual record labels, have eliminated price competition in. among others, the
 
market |~xJig/|x/ tu\m/oixxinnmn[u/unJ rcuon]ina:, |ft.'ns~Nc under I lie statutory /iccnying
provisions of
14o[ the Copyright Act o[|V76. /hc pur
p
ose and c/l~c|o|'this
unlawful conduct has been ko allow Soundl~x/huugu,uc|intnx behalf o( the entire record
ixduo
ry,
to monopolize the licensing o[/|/ese huhix in direct contravention of
icensing
{rumcv/ock curelN/ycono\nuueJ hy(`on!`r/
l'x{ ficuncoxork expressly prescribes that any
such collective licoomin4 of such rights must hcnox-ev//uin' in nature so as not to Interfere inindividual |iccnxing(nn'./c(i`,nx between individual copyright nwnemand users such uuSirius
%M. In further: ./ ''|' this conspiracy l)ckx|onis and others have coerced record companies to
refrain from entering into competitive market licenses, used implicit and explicit threats toenforce compliance, misled record companies as to their economic interes
t
s, and even
encouraged
some record companies to terminate license agreements
they had already concluded
with Siduu}{M.
2.
\5 described more fully throughout this Complaint. Sirius %M makes
significant
uses
of copyrighted
sound
recordings
in
its
satellite
radio and
other businesses.
Certain of those UsCs involve digital transmissions of sound recordings as defined by copyright
law (sometimes referi
-
cdto 11CI
-
CIII as SOLInd I
-
CC(,)r(lin(y performance rights). The law establishes
a "statutory license" for the benefit of services like
Sirius XM covering
certain digital
performances
of copyrighted sound recordings.
The
relevant statute establishes three
mechanisms fOr services to acquire the sound recording performance rights that they need. Thefavored niechanism is by direct dea
l
ings in a competitive market with the owners of those rig
h
ts
typically record companies. In recognition that such direct dealings may. in certain cases.not
he effective in clear
i
ng all necessary rights in a timely manner. the law allows sound recor
d
ing
copyright owners to designate "common agent oil a nonexclusive basis to neuotlirte. agree to~
~
 
pay, or receive payments," 17 t i.S.('. § 1 14(c)( 1). If negotiations with the common agent
laic,
the last statutory resort is a rate-setting pn cecding before the Copyright Royalty Board.
Soundl
,
zxchange has emerged as the recordintL industry's "common agent.
,
for a variety of business reasons, Sirius XM has sought to negotiate terms ofsound recrrrdin performance rights licenses, among other copyright rights incident toconducting its business, through direct negotiation with individual recorded music companies.Direct licensing of' thesort proposed by Sirius NM oilers substantial benefits to the recordcompanies in comparison to their reliance on Soundkxchange to distribute royalties pursuant to
statutory licenses it negotiates or litig:rres over on the record industry's behalf. lhese include
lhstcr and more transparent royalty reporting and payment, avoidance of SoundExchangeadministrative costs, and the ability to grant broader rights to Sirius XM than SoundExchangelegally is able to, thereby affording the record company's artists and recordings both widerexposure and access to new media and promotions run by Sirius XM.
4.
larmed at the prospect that record companies, acting in their individualeconomic interests, would pursue direct licensing with Sirius XM, and that such licensingwould inject competition into the licensing ofcopyrights used by Sirius XM, Defendants andtheir co-conspirators determined to suppress that competition. "Their orchestrated response hasresulted in a concerted refusal to deal by numerous record companies approached by Sirius XMto negotiate direct licenses. The unlawful purpose and effect of this boycott has been to forceSirius XM into a single avenue for procuring the rights it needs: dealing exclusively withSoundl?xchange. as the record industry's collective licensing agent.
I
-
he boycott has been implemented between and among the Defendants andother trade associations, who have conscripted into the scheme otherwise competing record

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