Home > doj, In a Goolag State of Mind > “Arrogance at its Worst: The Constitutional Fallacy Underlying the DOJ 100% Licensing Decision

“Arrogance at its Worst: The Constitutional Fallacy Underlying the DOJ 100% Licensing Decision

July 5, 2016

By Chris Castle

It appears that after receiving thousands of public comments from songwriters, publishers and commenters who racked their brains to offer practical and solutions-oriented ideas to help solve the music licensing issues so prevalent in our business, the Department of Justice has turned up their nose at these ideas in what Rep. Doug Collins has called “arrogance at its worst.”

Instead, the Department of Justice evidently has decided to leave in place the outdated ASCAP and BMI consent decrees and instead focus on one issue–taking away the rights of songwriters to contract and forcing any songwriter who cowrites with ASCAP or BMI songwriters in the past or future to accept the government’s boot on their throat in the form of consent decrees.  And they do so on a theory that was never designed for use by the government, a theory that is solely for the benefit of music users and Google in particular.

While Rep. Collins is right that this is “arrogance at its worst” it’s also very likely crony capitalism at its worst.  Because the only place Google seems to win on antitrust is in front of the Obama Justice Department and FTC.  And it may wind them up in front of a WTO arbitration that will get resolved long, long after President Obama leaves office and the Justice Department attorneys involved go wherever they go after government service.

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The Justice Department is relying on a theory of real property law that has been applied to copyright by a handful of courts in the U.S.  It is not a rule that is recognized outside the U.S. and it is not a rule that is recognized as creating a power in any government but especially the federal government in the U.S.

Simply put, co-owners of an undivided interest in property have the right to grant a 100% nonexclusive license in the whole property, subject to a duty to account to the co-owners not party to that license for their respective shares of revenue, and provided that there is not an agreement among the owners to the contrary (and also provided that the rate in this license is not economic waste).

Enter the Fallacy

Here’s where the DOJ launches their fallacious reasoning:  The U.S. cases frequently cited for this principle all involve voluntary licenses by one of the co-owners.

None involved the heavy hand of the government forcing one of the co-writers to license over any other co-writer’s own objections.

In other words:  The DOJ’s analogy of 100% licensing required by a consent decree–and clearly opposed by every songwriter based on the objective records of the DOJ’s own public comments–FAILS.  The main reason it fails is that it attempts to shoehorn a real property concept into a judge-made intellectual property concept and replaces a voluntary act by a co-owner with a government mandate enforced through the awesome power of unelected bureaucrats and unelected federal judges.

DOJ Interferes with a Massive Number of Private Contracts

But–it also fails because the Justice Department ignores the fact that courts and commentators have also found there to be limitations on the rights of co-owners to protect the rights of their other co-owners starting with the ability to contract among themselves to self-administer their respective contributory shares of copyright in a single work, especially a song.  (See comment by Stanford Law School Professor Paul Goldstein.)

Every songwriter is cautioned to sign a “split agreement” when they co-write.  These are one-page agreements (or at least short form agreements) that act as a joint administration agreement.  These agreements get signed regardless of whether the song is ever recorded or registered for copyright, but the songs often will be registered with the co-writers respective PROs.  And since the PRO databases are searchable for free, there’s a pretty good argument that any music user is on constructive notice of the ownership shares at the outset and that given industry practice, there’s a very good likelihood that if the song found its way into the PRO databases, there is some kind of writing among the writers that will vitiate any attempt to execute 100% licenses.

Not only that, but there’s actually an argument that can be made pretty effectively that even if there is no other writing among co-owners, the fact that they each have a different PRO represent their performing rights is itself an agreement that must be respected.  And once registered with a PRO, the world is on notice of that, too.

But the Justice Department turns up its nose at the expense and effort that it put the entire music community through in public comments all with the aspiration of helping solve a problem which is what we thought everyone was doing.  This is astonishing arrogance.

Not only is the Justice Department not interested in what the songwriters have to say about how they would like to improve their business, DOJ are engaged in a dangerous adventure into taking private property without just–or any–compensation.  Over the wishes of those who created the property.  

Why would they do this?  The Justice Department seems to have developed a new concern after all these decades that songwriters have suffered with the government’s boot on their throats.  The Justice Department’s concern is that one songwriter might be able to block a license.

Has that ever happened?  No–but one example comes to mind.

Given the mess that the rate courts have made of the archaic consent decrees, some writers have opted out of the whole show and formed and new PRO representing songwriters called Global Music Rights or “GMR”.  GMR’s songwriters are negotiating their own performing rights licenses, as is their right.

And GMR threatened to pull out of YouTube as is also their right.

So if the DOJ can point to the line of cases that support the idea that it is a well-settled principle of copyright law that the government can reach out through one consent decree and impose its rules on all songwriters, foreign and domestic, regardless of whether those writers are members of ASCAP and BMI, and without an opportunity for those songwriters to be heard–I’m all ears.

But don’t call it voluntary licenses.

 

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