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SXSW Panel on Music Modernization Act’s Reachback Safe Harbor

March 17, 2018

I was fortunate to moderate an excellent panel at the SXSW Continuing Legal Education seminar this week.  Our topic was “The Future of Mechanical Licensing in the U.S.”  Little did we know when the panel was booked in September that this would be such a hot topic following the introduction of the deeply controversial Music Modernization Act on December 21.

One of the legal process questions the panel discussed was the MMA’s “reachback” safe harbor that retroactively limits infringement claims filed after January 1, 2018 without regard to when the MMA’s blanket license is actually available.  The timing of this is particularly odd given the fact that the MMA was announced on December 21, 2017 and a public version of the bill was not available until mid-January.  I’m willing to be educated on this, but I don’t believe any of the public messaging on the legislation from either the Congress or the supporters of the MMA ever mentioned this reachback safe harbor.   (See, e.g., the December 26, 2017 summary of the bill on Rep. Ted Lieu’s site which does not mention the Jan 1 date.)

If Wixen Music Publishing hadn’t found a draft non-public version of the bill, they would not have known of the proposed January 1, 2018 deadline until after that date had passed.  It was Wixen’s filing on December 29, 2017 that really informed the industry of the safe harbor because the story got attached to the press push behind Spotify’s IPO/DPO announcement which pushed the story in earned media.

Litigators in the panel meeting room were mystified by how this reachback safe harbor would work procedurally.  If you have a ripe claim (such as someone who had a claim against Spotify that arose after the June 26, 2017 cut off of the Ferrick class action but before the January 1, 2018 safe harbor deadline) and you sue after January 1, 2018, if the MMA is enacted after you sue, what happens?  You have to bet that the DIMA companies will raise the safe harbor as a defense, but should they win on that point?  Should the applicable court then bar recovery for statutory damages and attorneys fees?

Nobody knew and my bet is that nobody knows.  It was comforting to have a group of lawyers come to the same conclusion I did–the MMA safe harbor is Kafkaesque at best.

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