If you have been following the machinations by the Obama Justice Department [sic] over amending the ASCAP and BMI consent decrees,  you may have found yourself wondering who was responsible for rejecting the good faith efforts of the songwriting community in favor of a cynical back room deal with multinational tech companies and broadcasters.  I have some thoughts about this, and ask your indulgence–it will take some of your time to read this timeline, but I think you’ll be glad you did.

As you read, ask yourself this question:  If it looks, acts and quacks, is it corrupt?  And if it is, what can you do about it?

As I understand it, Obama lawyers made clear to at least the songwriter groups invited to participate in private conference calls that there was one person pulling the strings.  That’s consistent with the public statements from SONA and the NMPA.

We can infer that person did so probably with the blessing if not the instruction of the White House.

I suggest to you that the Obama Justice Department’s ruling on 100% licensing and partial withdrawal is so illogical and divorced from reality that it can really only be understood in one way–corruption.  And this is why the House and Senate Judiciary Committees need to investigate what really happened here.  And credit where credit’s due–the idea for this investigation comes from Rep. Doug Collins and the questions raised by Rep. Hakim Jeffries, Rep. Jerry Nadler and Rep. Judy Chu.

The Ghost in the Machine

As MTP readers will recall, a Silicon Valley lawyer named Renata B. Hesse was appointed to oversee the sections of the Antitrust Division of the U.S. Department of Justice, and was recently appointed to oversee the entire Antitrust Division.  After that elevation, her portfolio still includes Litigation Section III–run by a lawyer named David C. Kully–which itself has responsibility for the entire entertainment industry and newspapers among other sectors of the U.S. economy.

—>Kully sued to block the court-supervised sale of the Orange County Register to Tribune Publishing in a bankruptcy auction.  Too bad Google wasn’t buying, that sale would have sailed right through the Justice Department [sic].  Oversight of newspapers may be one reason why you don’t seen many newspapers brave enough to criticize him.  (We’ll come back to whether Litigation III’s portfolio is a proper allocation of the taxpayers’ resources given that the structure just makes agency capture that much easier.)

On July 12, 2016, Rep. Collins called for an investigation into conflicts of interest at the DOJ on its handling of the ASCAP and BMI consent decrees, and was he ever correct.  Of course, if the Obama Administration intends to request Senate confirmation of Hesse and William J. Baer (a long time Washington Establishment type who is now Acting Associate Attorney General), that will be an excellent opportunity to raise some of these questions.  Since I’ve been known to be a betting man, I will tell you right now that I doubt seriously whether Hesse will ever see a confirmation hearing in the lame duck term of President Obama.  And since Baer was recently confirmed in his last role at the DOJ, there may not be a pressing need to go through the confirmation process with him, either.  But we can dream.

Ms. Hesse appears to be the thought leader behind imposing 100% licensing on the songwriter community.  I arrive at this conclusion by process of elimination, as the DOJ professional staff do not appear to be taking credit for coming up with it on their own.  Ms. Hesse is the one who has authority over the process, at least most directly, so if the DOJ professional staff did not originate the idea, and if no one in the voluminous consent decree public comments came up with it, it must have come down from on high.  At least within the DOJ or even higher.

However, it is worth noting that the ASCAP/BMI consent decree review started before Hesse took over as head of the Antitrust Division from Bill Baer.

I doubt that Ms. Hesse came up with this all on her own, so I asked myself how did this person end up being in the position she is currently in with the authority to do so much damage to so many people who don’t deserve it.  Not to mention the fact that when it comes to anything that the Google network touches, which is pretty much everything in human experience, the U.S. Government–at least currently and unlike their European counterparts–only seems to be interested in enforcing the antitrust law to protect Google, not to challenge it.

So how did this relatively obscure lawyer end up where she is?  Let’s take a look at a timeline of events in Ms. Hesse’s career.  I started a few months ago by reading Ms. Hesse’s official biography on the Justice.gov website, but noticed immediately that it omitted large chunks  of her most recent career path.  That omission led me to look elsewhere in other public sources, such as the White House visitor logs and other public sources.

After graduating from Clinton alma mater Wellesley and Boalt Hall at Berkeley, Ms. Hesse worked at Brobeck, Phleger & Harrison for 7 years.  Brobeck was a casualty of the Dot Bomb Bubble explosion and went out of business in 2003.  Ms. Hesse’s LinkedIn profile tells us that she left Brobeck in 1997 and joined the U.S. Department of Justice in 2002 as Section Chief of the Networks and Technology Enforcement Section of the Antitrust Division where she worked until 2006 when the revolving door deposited her at the top Silicon Valley law firm of Wilson Sonsini Goodrich & Rosati (the major Silicon Valley competitor of Brobeck when Ms. Hesse worked at Brobeck).

According to an interview she gave to an American Bar Association journal, Ms. Hesse started her legal career in intellectual property, presumably Valley-style at Brobeck which she “kind of” likes because it’s “fun and interesting”:

The Second Resume Gap

I often say that the fastest way to get a jihadi video taken down from YouTube is for me to blog about it on MTP.  I don’t know if this is also true of Ms. Hesse’s bio, but I can’t help noticing that it got cleaned up recently on the justice.gov website.

As Artist Rights Watch noted in a previous post, Ms. Hesse’s “old” official biography on the justice.gov website omitted her job at Wilson Sonsini which omission was determined by comparing her Linkedin profile to the official bio.  But that LinkedIn profile also includes its own unexplained gap about what she did prior to joining the DOJ in 2012–her then-current employment as Deputy Assistant Attorney General for Criminal and Civil Operations:

Member
Wilson Sonsini Goodrich & Rosati
July 2006 – June 2011 (5 years)

Section Chief, Antitrust Division
U.S. Department of Justice
January 2002 – May 2006 (4 years 5 months)

Associate
Brobeck, Phleger & Harrison
1990 – 1997 (7 years)

Notice, there is a gap of five-odd years between 1997 and 2002.  Which is strange, because during this time she is mentioned in a November 2, 2001 Justice Department press release as the contact for public comments on the DOJ consent decree with Microsoft–at which point she was the lower rank of “Trial Attorney” before being promoted to Section Chief in January 2002:

The proposed Final Judgment will be published by the Federal Register, along with the Department’s Competitive Impact Statement, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments concerning the proposed consent decree within 60 days of its publication to: Renata Hesse, Trial Attorney, 325 7th Street, N.W., Suite 500, Washington, D.C. 20530, (202-616-0944). At the conclusion of the 60-day comment period, the

Court may enter the proposed consent decree upon a finding that it serves the public interest.

The Timeline

July, 2006: Wilson Sonsini Goodrich & Rosati hires Ms. Hesse, most immediately the former chief of the Networks and Technology Enforcement Section of the Department of Justice Antitrust Division.  Hesse joins WSGR as a partner in its antitrust and trade regulation practice, joining another revolving door person Susan Creighton, the former Director of the Federal Trade Commission’s Bureau of Competition from 2003-2005 (the post previously held by Bill Baer).  Ms. Creighton appeared before the 2011 Senate Antitrust Subcommittee investigation into Google’s business practices along side Google boss Eric Schmidt (the hearing where Schmidt refused to answer Senator Cornyn’s questions about Google’s prosecution for violations of the Controlled Substances Act on the advice of counsel, aka taking the Fifth).  Hesse and Creighton are two revolving door hires.

December 18, 2008: In a Meet Innovators interview with Hesse, interviewer Adrian Bye asks, “There’s been obviously antitrust issues between Google and Yahoo! Are you able to comment on any of those?” Hesse replies, “I’m not, really, I’m afraid since I did a lot of work for Google on it.”

July 29, 2010: The Google legal team consisting of Hesse, Creighton, Dana Wagner and Matthew Bye begin lobbying state attorneys general investigating Google for violations of state antitrust law.

September 24, 2010: DOJ settles U.S. v. Adobe Systems Inc., et al. stopping Adobe, Apple, Google, Intel, Intuit, and Pixar from signing non-solicitation agreements for employees. The settlement requires annual monitoring by the DOJ Antitrust Division for five years.

December 14, 2010:  Then-Attorney General Eric Holder presided over a December 14, 2010 meeting at the White House requested by Google during the DOJ’s drug investigation into Google’s bad acts.   (Eric Holder followed Jamie Gorelick into the position of Deputy Attorney General under the Clinton Justice Department.)

March 23, 2011: Hesse, Wagner, Bye, Creighton actively trying to make state investigations into Google’s business practices go away.

April 8, 2011: Department of Justice Antitrust Division approves Google acquisition of ITA Software, issuing consent decree that set the requirements governing Google’s future operation of the ITA business. The term of the consent decree is five years and requires Google to report all complaints to the DOJ.

May 20, 2011: FOIA logs from the Ohio Attorney General’s office reveal email communications between Hesse and Beth Finnerty, the Ohio AG Section Chief, referencing Ms. Hesse’s “Google portfolio” of work at Wilson Sonsini: (Hesse): “Beth: Google would prefer that you serve them directly, but cc Dana Wagner and also someone at our firm. Since I will be moving on relatively soon, I think it makes sense for you to copy Chul Pak (copied on this message) in my stead. Chul is a partner in our New York office (used to run Mergers IV at the FTC) and is going to be taking over my Google portfolio. He’s terrific and I know you guys will work well together.

June 3, 2011: A Global Competition Review article highlights Wilson Sonsini’s work for Google and Hesse’s involvement in the five-partner team advising Google on antitrust matters: “Susan Creighton leads a five-partner group at Wilson Sonsini Goodrich & Rosati in Washington DC. Creighton, Scott Sher and Renata Hesse are all Who’s Who entrants…A renewed flow of deals is keeping the team very busy. It advised Google throughout the DOJ’s investigation of its just cleared purchase of ITA software.

June 24, 2011: The Federal Trade Commission opens its antitrust investigation of Google.

August 19, 2011: Google enters into non-prosecution agreement with U.S. Attorney’s Office for the District of Rhode Island, avoiding a grand jury appearance but admitting that it violated the Controlled Substances Act in marketing products to U.S. customers (that apparently included minors). Google pays a fine of $500 million and enters into a two-year remediation program monitored by the Department of Justice and the Food and Drug Administration as part of deal blessed by the Department of Justice and, presumably, the Attorney General of the United States.  (See MTP post “Questions for Mr. Holder on Google Drugs“.)

February 6, 2012: President Obama appoints Arnold & Porter partner William J. Baer to head Antitrust Division of DOJ.  (See Baer’s Revolving Door profile.)

February 29, 2012: After the nonprosecution agreement detailed Google’s many violations of the Controlled Substances Act, not to mention business ethics, Google is sued by multiple stockholder groups for breach of fiduciary duty, etc., relating to the use of the stockholder’s money to pay the $500,000,000 fine for its executives’ bad behavior.  According to the Wall Street Journal and the hearing transcript, Google’s lawyer told the court that the stockholders should not have access to the 4,000,000 documents Google produced in the Rhode Island grand jury investigating the Controlled Substances Act violations that lead to the $500,000,000 fine.  In particular, documents that established the culpability of Larry Page that was at issue in the stockholder case:

“The U.S. attorney in Rhode Island went off the reservation and gave a long interview about all the evidence and why it was he was so excited about the case,” [Google’s Wilson Sonsini] lawyer Boris Feldman told the judge at a Delaware state court. “It ended up being so far off the reservation that the Justice Department apologized to Google for it and muzzled him.”  (See court hearing transcript.)

I have heard a rumor that this apology was arranged by Washington wheeler-dealer Jamie Gorelick, former Fannie Mae executive, former Deputy Attorney General under President Bill Clinton who was succeeded by Eric Holder and who represents Google in a variety of matters.  And mentor of Beth Wilkenson who the FTC brought in to run the busted Google antitrust investigation.

March 26, 2012: Google Chief Economist Hal Varian meets with former Deputy Attorney General Carl Shapiro, a member of the Obama Council of Economic Advisors (and co-author with Varian of Information Rules: A Strategic Guide to the Network Economy.) Shapiro’s Google connections include:

–Senior consultant to Charles River Associates before joining the Obama Administration and again from 2012 to present. Charles River Associates advised Google during the FTC’s antitrust investigation.  Shapiro re-joined Charles River on November 19, 2012, days before the FTC opened settlement negotiations with Google on that antitrust investigation.

–Shapiro co-authored several white papers and studies with other academics and scholars who have received Google funding in the past including Durie Tangri partner and Stanford Professor Mark Lemley  and Brookings’ Robert Litan.  (Professor Lemley is also a founding partner of Durie Tangri, the San Francisco firm that gleefully screwed the world’s authors in the “Google Books” case and represented Goldieblox against the Beastie Boys for Goldieblox knowing use of a Beastie’s song in an ad against the dying wishes of MCA.)

April 26, 2012: Google Chairman Eric Schmidt meets privately with White House Chief of Staff Jack Lew.

April 27, 2012: Federal Trade Commission announces the appointment of Jamie Gorelick crony Beth Wilkenson to oversee Google antitrust investigation because there just aren’t enough qualified lawyers at FTC’s professional staff–you know, the ones that recommended prosecution of Google.

—>>May 1, 2012: Carl Shapiro meets alone with Hesse in the White House mess. This was the first White House meeting Ms. Hesse attended.

May 4, 2012: A few days later, Global Competition Review reports that Hesse “has emerged as a likely candidate to take over the vacant deputy assistant attorney general position at the Department of Justice.”

May 4, 2012: Google chief lobbyist Johanna Shelton, Google Senior Trademark Counsel Annabelle Danielvarda, and Google Legal Director Terri Chen meet with U.S. Intellectual Property Enforcement Coordinator Victoria Espinel.

May 7, 2012: Ms. Danielvarda, Ms. Chen and Google State Policy Counsel David Lieber meet again with Espinel.

August 2012: Hesse appointed Special Advisor to the Civil Enforcement Division of the U.S. Department of Justice.

October 1, 2012: Google General Counsel Kent Walker, Google Senior Patent Counsel Suzanne Michel and Google lobbyist Johanna Shelton meet with Victoria Espinel.

October 11, 2012: Google lobbyist Johanna Shelton and Google IP Counsel Fred von Lohmann meet with Victoria Espinel.

October 13, 2012: Bloomberg reports that FTC staff has circulated a 100 page memo recommending suing Google for abusing its dominance of Internet search in violation of antitrust laws and that the FTC is considering a separate lawsuit against Google for misusing its standard essential patents to block rivals’ smartphones from coming to market.

November 6, 2012: President Obama re-elected.

November 16, 2012: Google’s former Google Deputy General Counsel for Patents & Patent Strategy from 2003-2012, Michelle Lee is announced as the Director of the new satellite Silicon Valley office of the U.S. Patent and Trademark Office, in San Jose, California.

—->November 19, 2012: Renata Hesse named as Acting Assistant Attorney General for the Antitrust Division. News accounts report that Ms. Hesse will be “leading the department’s efforts on intellectual property issues.”

November 21, 2012: Bloomberg reports; “U.S. Said to Waver on Antitrust Case Against Google”. The story quotes anonymous sources claiming, “Google may skirt the most serious antitrust allegations under investigation.”

November 27, 2012: Bloomberg reports that Google CEO Larry Page meets with FTC officials to settle the antitrust probe and that Eric Schmidt is seen on Capitol Hill with Google lobbyist Susan Molinari. The story notes that the FTC has told Google it won’t accept a resolution short of a consent decree and that issues under discussion with the FTC include “alleged misuse of patents to try to block rivals’ smartphones from coming to market.”

November 27, 2012: Hesse meets privately with Victoria Espinel at the White House.

November 30, 2012: Obama campaign manager Jim Messina meets privately with White House Chief of Staff Pete Rouse at 1:30 pm. An hour later at 2:30 pm, Rouse meets privately with the DNC’s Patrick Gaspard. And at 3:30 pm, Rouse meets privately with Google Chairman Eric Schmidt.

—>>November 30, 2012, The Washington Post reports that Google and FTC negotiations avoid search issues, instead focusing on potential issues related to standard essential patents and Google’s Motorola patent portfolio.

December 10, 2012: Renata Hesse, David Kappos, U.S. Patent & Trademark Office; Malcolm Lee, Department of Commerce; Terrell McSweeney, DOJ Antitrust Division; Peter Pappas, USPTO Chief of Staff; Ari Schwartz, Department of Commerce meet with Victoria Espinel.

December 8, 2012:  USC Annenberg releases first corporate responsibility report on brand-sponsored piracy.

December 17, 2012, Former FTC Chairman William Kovacich criticizes the Google-FTC rumored settlement in a Bloomberg story: “The notion of voluntary commitments is close to worthless…They are feeble policy-making instruments and they will not in any way placate the complainants, who will correctly see them for what they are, which is an attempt to provide cover to walk away.”

December 30, 2012: Bill Baer is confirmed as head of DOJ’s Antitrust Division, then investigating Google to no conclusion.

January 3, 2013: FTC closes its antitrust investigation of Google without a consent decree and requiring only a voluntary commitment from Google that it make available to competitors the company’s standard-essential patents on a fair, reasonable and non-discriminatory (FRAND) basis. Senate Judiciary Committee Chairman Patrick Leahy said of the decision: “I am disappointed… [the FTC-Google settlement] relied on simple, voluntary commitments from Google to end certain practices that a majority of Commissioners found to have raised strong concerns about impeding innovation.”

February 14, 2013:  USC-Annenberg calls out Google on brand sponsored piracy.

April 18, 2013:  Reps. Goodlatte and Schiff send letter to Randall Rothenberg at Google-dominated Internet Advertising Bureau asking for explanation of flaws in IAB “best practices” on brand-sponsored piracy.

June 6, 2013: National Association of Attorneys General (NAAG) charges that Google is continuing to allow ads for illegal online pharmacies (at Summer NAAG at which I was a speaker).

August, 2013: DOJ allows Google Drugs non-prosecution agreement with Google to lapse, but illegal drug ads are easily findable all over YouTube.

—>August, 2013:  Billboard reports that DOJ is investigating UMPG and Sony/ATV partial withdrawals from ASCAP and BMI.

September and December 2013:  Billboard reports that DOJ investigation into UMPG and Sony/ATV paused due to unprecedented rate court decisions barring partial withdrawal from ASCAP and BMI.

December 2013:  Billboard reports that Pandora lost part of its BMI case on an issue that would likely have been solved by Ms. Hesse’s current devotion to 100% licensing;

Pandora was struck a blow on Wednesday when a rate court ruled that the Internet radio leader doesn’t have a blanket license that includes the songs of publishers who have withdrawn their digital rights.

The BMI/Pandora rate court ruling means if Pandora doesn’t cut some kind of deals with publishers like Universal Music Publishing Group, BMG and Kobalt — who all have notified BMI that come Jan. 1, they intend to withdraw their digital rights — Pandora could be in copyright violation if they haven’t pulled those songs by that date.

Judge Louis L. Stanton has ruled the exact opposite of what occurred when Pandora squared off with ASCAP — a rival collection society to BMI — at another rate court hearing on Sept. 17. Judge Denise Cote ruled that Pandora had a license in effect and were covered by the ASCAP blanket license, including songs from all the publishers that intended to withdraw.

Yet both judges came to the same reasoning on how the consent decrees disallow the partial withdrawals of rights. Stanton agreed with Cote that publishers are either all in or all out, a position which was bolstered by Ethan Glass, a lawyer from the Department of Justice [then Assistant Chief of the Litigation III Section, now a partner at Quinn Emmanuel, Google’s “go-to” patent lawyers].

March 2014:  Reps Bob Goodlatte and Adam Schiff send “Dear Colleague” letter to House members calling out ad-sponsored piracy.

April 2014: Billboard and Politico report that Justice Department is leading industry sources to believe that it will amend consent decrees.

June 2014:  DOJ announces review of ASCAP and BMI consent decrees by Litigation Section III, the unit of the Antitrust Division that regulates the entire entertainment industry including the music business under command of Ms. Hesse.  No mention of 100% licensing.

June 6, 2014: DOJ Litigation Section III requests public comments on general review of ASCAP/BMI consent decrees, no mention of 100% licensing.

—>July 2014: Billboard reports that DOJ sends CID to ASCAP, BMI, Sony/ATV and UMPG regarding “alleged coordination among ASCAP, BMI, Sony/ATV Music Publishing, and Universal Music Publishing Group” presumably at the request of music users including Pandora, Google and other DiMA members.

August 6, 2014: Deadline for filing public comments on consent decrees.

November 8, 2014: Loretta Lynch nominated for Attorney General.

November 12, 2014:  Global Music Rights told The Hollywood Reporter that their writers are prepared to take 42 of his clients, representing some 20,000 copyrighted works, away from the YouTube ecosystem, including the new Music Key.

November 26, 2014:  Broadcasters request payola waiver from FCC.

December 2014: Pharell Williams notifies YouTube he is pulling his songs from YouTube.

April 15, 2015:  European Commission sends antitrust complaint to Google for violations of EU competition law.

May, 2015: Google, Pandora and companies with market cap over $2 trillion form MIC Coalition to lobby against songwriters.

May 15, 2015: Reuters reports that the Obama Administration is locked in “internal wrangling” over what position to take in the Oracle v. Google case and that legal teams from Google and Oracle had made separate March presentations to the Department of Justice and other government officials in the case. The presentations centered around a U.S. Supreme Court request that U.S. Solicitor General Donald Verrilli “weigh in” on the case to provide the U.S. Government’s opinion on the matter. Bloomberg also reports that Public Knowledge lawyer Charles Duan met with Department of Justice antitrust officials to advance Google’s point of view in the case.  (Google has acknowledged funding Public Knowledge in a filing in the Oracle case made under penalty of perjury, commonly referred to as the “Google Shill List”.)

—> August 17, 2015:  MIC Coalition sends letter to Hesse requesting investigation of SESAC.

Google and Pandora are both members of the MIC Coalition, as are DiMA and the Consumer Electronics Association of which Google and Pandora are members.

—> September 22, 2015:  DOJ Antitrust Litigation III Section requests public comment on 100% licensing.

October 2015: Pandora and Google lawyers request a vote from ABA IP Section on resolution that supports DOJ position on 100% licensing, which is voted down by experts, does not pass and is withdrawn.

November 2015: DOJ closes public comments on 100% licensing.

January 12, 2016: Rep. Doug Collins requests that the Copyright Office opine on the legal validity of 100% licensing as contemplated by the Department of Justice.

January 29 2016:  Copyright Office responds to Rep. Collins with report on “full work” licensing that rejects DOJ’s ultimate position.

April 15: 2016:  Hesse appointed Acting Assistant Attorney General and head of the Antitrust Division.

July 2016: Kully holds conference calls with songwriters attempting to get them to believe that 100% licensing is normal and seeking industry acceptance of rule change.  Songwriters reject this idea forcefully.

Kully refuses to send a draft of the regulation, instead reading draft aloud over the telephone.

Kully refuses to answer a direct question of whether the White House is involved in decision on 100% licensing.  Kully attempts to solicit criticism of 100% licensing, but songwriters believe this is not in good faith as it would be to DOJ’s advantage to manufacture some kind of industry consensus.

July 7, 2016:  Kully tells songwriters that the ruling is coming whether they like it or not.  Ruling to be released on July 29.

July 29, 2016:  Kully leaves a voice mail on songwriters phones telling them the release has been delayed.  Selected journalists receive copy of regulation embargoed until August 4.

August 4, 2016: DOJ releases “statement” with no attribution to any person.  Entire creative community reacts negatively, Public Knowledge and MIC Coalition take victory lap.  As usual, Google is silent.