By: David Oxenford, Wilkinson Barker Knauer LLP
Global Music Rights, the relatively new performing rights organization that signed a number of composers of popular songs away from ASCAP and BMI in order to seek higher music royalties for the public performance of their works on radio stations and other media platforms (see our articles here and here), lost one round in its litigation with the Radio Music License Committee in RMLC’s attempt to bring GMR under some sort of rate review under the antitrust laws. RMLC has alleged that GMR, by combining multiple artists in a single essentially take-it-or-leave-it package, is able to charge rates well above what any artists could receive on its own, thus violating the antitrust laws (see our articles here and here). This is a theory like the one which lead to an arbitration with SESAC dramatically lowering royalty rates the radio industry pays to that organization (see our articles here and here). In a decision released Friday, the Judge presiding over RMLC’s case rejected GMR’s arguments that the suit should be dismissed without a trial. The Judge, in a short three-page opinion, said that viewed in their most favorable light to RMLC (which is the standard used in deciding on such motions), the facts alleged by RMLC were enough to support the claims it made in the lawsuit, so the case will go to trial.
But this is not necessarily a great victory, as the Judge notes that it remains to be seen whether, when the full facts are introduced at the trial and challenged by GMR, these facts will in fact be enough to sustain the claims of RMLC. A similar finding was made in GMR’s countersuit – arguing that RMLC formed an illegal buyer’s cartel in violation of the antitrust laws by trying to negotiate royalty rates for most commercial radio operators (see our article here on that countersuit). The Court rejected RMLC’s argument that the GMR suit should be dismissed, finding that there were enough facts raised to potentially support GMR’s claims, though also warning that it remained to be seen if, once the facts were presented and challenged at trial, whether they indeed would sustain GMR’s claims.
So the litigation continues. As we have written before, the suit, unless settled, could take years to resolve. Perhaps these decisions give both sides more reasons to think about a settlement as they know that they are looking at significant legal fees if the case goes to trial, with likely years of appeals after that. Moreover, the Judge’s opinions show that both parties have significant stakes in any adverse decision – a finding that GMR’s structure violated antitrust law could be used as precedent by other music services to challenge the rates that it is imposing on them, while a finding against RMLC could undermine its negotiations on behalf of the radio industry on other music rights issues (though its position has never been found to be an issue in other cases where it has represented the commercial radio industry). Once again, we will need to watch as this case slowly develops as trial preparation moves forward.
David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access).
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