IP Law Daily Independent music publisher has standing to sue music streaming service Spotify for copyright infringement
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Wednesday, October 3, 2018

Independent music publisher has standing to sue music streaming service Spotify for copyright infringement

By Brian Craig, J.D.

An independent music publisher and copyright administration company, Bluewater Music Services Corporation, has standing and can bring an action for copyright infringement against the popular music streaming service Spotify, the federal district court in Memphis, Tennessee has ruled. The court held that administrator agreements for music compositions conferring some exclusive rights give Bluewater standing to sue for copyright infringement. The court also declined to dismiss the complaint over 23 music compositions with pending registrations that have not been registered. The district court will wait until the U.S. Supreme Court resolves the issue in Fourth Estate Pub. Benefit Corp. v. Wall-Street.com, LLC over pending registrations (Bluewater Music Services Corp. v. Spotify USA Inc., September 28, 2018, McCalla, J.).

Bluewater Music Services Corporationis an independent music publisher and copyright administration company based in Nashville, Tennessee that claims to own or administer 2,142 allegedly infringed works. Spotify USA Inc. is an interactive music streaming service that Bluewater asserts must obtain either a direct or compulsory license allowing the reproduction or distribution of each musical composition on its streaming service. Bluewater filed an initial complaint on July 18, 2017 alleging direct copyright infringement. Bluewater seeks maximum statutory damages of $150,000 for each act of willful infringement comprising more than 2,000 musical compositions, for total damages exceeding $300 million. Spotify filed a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), which the court denied.

Standing. As a threshold question, the court considered whether Bluewater has standing to bring the action under the Copyright Act. Section 501(b) of the Copyright Act establishes that the "legal or beneficial" owner of an exclusive right is entitled to "institute an action for any infringement of that particular right committed while he or she is the owner of it." 17 U.S.C. § 501(b). To have standing to bring suit, a party must have some ownership rights over at least part of the exclusive right. Spotify argued that the complaint must be dismissed because Bluewater does not allege "ownership interest" in 1,372 musical compositions. Threshold countered that the administrative agreements confer exclusive ownership rights as well as the right to grant nonexclusive licenses to other parties. Standing can be established under Section 106 if someone has the exclusive right "to distribute copies" of the work. 17 U.S.C. § 106. This statutory language matches the "sole and exclusive right" to license works for mechanical reproduction in the administrator agreements. The court concluded the language in the administrator agreements granted some of the exclusive rights to support standing. Thus, the court denied the motion to dismiss the complaint for lack of standing.

Pending registrations. The court then turned to whether the complaint sufficiently states a claim as to 23 music compositions listed as "pending" but have not been processed and registered with the Copyright Office. The court recognized a circuit split about whether copyright registration prior to filing suit is required. The U.S. Supreme Court will address the circuit split in Fourth Estate Pub. Benefit Corp. v. Wall-Street.com, LLC(Dkt. No. 17-571) regarding whether under 17 U.S.C. § 411(a) a copyright infringement action may be taken after the creative work has been filed with the Copyright Office, but before registration is approved. Because the U.S. Supreme Court will answer the issue before the scheduled trial date, the district court denied without prejudice the motion to dismiss for failure to state a claim over the pending registrations.

This case is No. 3:17-cv-01051.

Attorneys: Christina Manna (King & Ballow) for Bluewater Music Services Corp. and Bluewater Music Corp. Christopher Jon Sprigman (Simpson, Thacher & Bartlett LLP) for Spotify USA Inc.

Companies: Bluewater Music Services Corp.; Bluewater Music Corp.; Spotify USA Inc.

MainStory: TopStory Copyright TechnologyInternet TennesseeNews

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