Earlier this month, the Songwriters of North America (SONA), a grassroots group of 200 songwriters in the U.S., filed a federal lawsuit against the Department of Justice, The New York Times reported. Apparently, SONA is suing the DOJ over licensing rights.The lawsuit also named Attorney General Loretta E. Lynch and Acting Assistant Attorney General Renata B. Hesse as defendants, since they head the Justice Department's Antitrust Division.
Why are they suing the Department of Justice?
SONA claimed in the two-count suit that the DOJ-Antitrust Division new rule on 100 percent music licensing violates the Administrative Procedure Act, according to Courthouse News.
The lawsuit claims that songwriters will lose control over licensing rights.
The songwriters are seeking declaratory and injunctive relief from the decision, arguing that it also infringes on Fifth Amendment rights because it allows for the removal of property rights without due process.
The details of the lawsuit
The basis for SONA's lawsuit is that the Justice Department's decision asserted power beyond its authority and violated songwriter property rights, copyright interests and contract freedom. Specifically, The NY Times explained that the decision could void existing contracts between collaborators on a song. This means that regardless of one co-writer's involvement in creating the song, he or she could fully license the song on his/her own without consent from the other collaborators.
From a broader perspective, SONA also argued the government has no place in regulating the music industry or its marketplace. A separate NY Times report showed that as a result, songwriters have less control over the way their music is licensed or how they negotiate their royalty agreements.The lawsuit also contended that most songs which are successful on the commercial music marketplace have co-writers who belong to separate performance rights organizations such as ASCAP and BMI. Billboard reported that, with collaborators having complete ability to license a song while belonging to different performance rights organizations, this could adversely impact the way songwriters can license their music in the marketplace.
Third party and foreign involvement
Another key aspect of the suit is that foreign songwriters and those composers who do not belong to ASCAP or BMI will not have the right to license their collaborative works through the organizations. SONA argued that these are rights granted to songwriters under the Copyright Act.
Under the new rule, songwriters may have to license songs outside the PRO system, give up control of their copyrights and royalties to unaffiliated third parties, renegotiate each song's contract, and consider withdrawing songs from ASCAP or BMI altogether, according to the lawsuit.
The Department of Justice's decision
This decision came two years after an initial plea and proposal from ASCAP and BMI to the Justice Department to modify its licensing consent decree. Sony/ ATV and BMG, among other major music publishers, had lobbied to amend the decree, so that they could withdraw from the standard regulation licenses offered under ASCAP and BMI.
Then the agency decided in late June, 2016, not to modify its consent decree on song licensing processes at all. Instead they decided to rule further to enforce 100% licensing by BMI and ASCAP, striking down the theory that each rights holder can license only that individual’s share of a song. Billboard reported that this leads to ASCAP / BMI no longer being allowed to engage in fractionalized licensing, and any rights holder has the right to license an entire song to a user.
As a result, the Justice Department follow up with an announcement in August, 2016 which stated that songwriters in licensing agreements may need to renegotiate their contracts.
What will happen after the lawsuit?
SONA is not alone in its pursuit of litigation and regulation reform against the Department of Justice. In an interview with Billboard, Representative Doug Collins of Georgia explained that he is set to introduce a new bill to amend music licensing rights.
"The decision will only make it harder for songwriters who are already being harmed by government overregulation in this space," Collins argued. "Under current law, songwriters are being paid pennies on the dollar for their creative works, particularly when it comes to streaming. That's why I've introduced the Songwriter Equity Act to ensure that fair market value is taken into account when rates are set."In addition to Rep. Collins' bill, Courthouse News also reported that ASCAP will lobby Congress for new legislation. BMI has already brought an action against the agency in the U.S. District Court, Southern District of New York. It was victorious in that action on September 16, 2016 with the U.S. District Cout stating that the consent decree does not demand or require full-work licensing.
While it remains to be seen exactly what the ramifications of SONA's lawsuit and any litigation or legislation to follow will bring to the licensing rights, it is clear that the entire music industry wants to see changes made. This problem has become much more complex with the impact that online streaming music outlets have had on licensing rights and royalty compensation for songwriters.
Do you have any questions? Would you like to discuss the matter further? If so, please contact me, Jill Michael, at 201-806-3364.