BMI’s answer to DOJ’s appeal on full-work licencing

This appeal presents a single question: does BMI’s Consent Decree prohibit BMI from licensing a fractional interest in the public performance right to a musical work (commonly referred to as “fractional licensing”), when BMI does not control the entirety of the public performance right for that musical work? As demonstrated below, the answer to this question is no.

If the government were correct that works in which BMI has only a fractional interest of the performance right are not part of the repertory, such works would not fall within the requirement that BMI license all works in its repertory to all music users or, indeed, under any other provision of the decree. The correct conclusion to be drawn from two premises (1) the repertory includes only works that BMI has the right to license on a full-work basis, and does not include works that BMI may license only on a fractional basis; 2) the decree requires BMI to license all works in its repertory to all music users.) would be that the licensing of fractional interests are unregulated rather than prohibited. The licensing of such works would be neither prohibited nor required.

Defying the clear logic of its own premises, the Government concludes that because the fractional interests are not (in its view) part of the repertory, BMI is prohibited from offering fractional interests to music users. This conclusion is a complete non-sequitur. The Government argues that “the right of public performance” can only be understood to mean a single, complete right. That is not so. The use of the definite article “the” in “the right of public performance” is used to describe the particular type of right that is being granted or licensed, not to connote that it is a complete right. Were the Government’s position adopted, songwriters who wished to control the licensing of their interests in performance rights might be forced to choose their collaborators based on PRO affiliation rather than creative chemistry.

The purported express requirement in the decree that BMI license works in its repertory on a full-work basis, without any indication that this is the only basis on which BMI may license, does not create an unwritten implied prohibition on licensing fractional interests which are, by the Government’s logic, excluded from the BMI repertory. A requirement to do X does not, without more, constitute a prohibition on doing Y, unless Y is the precise converse of X. Licensing fractional interests – where BMI has no ability to license the whole – is not contrary to a requirement that BMI license on a full-work basis when it is able to; it is additive. BMI offers all of the interests it represents, both full-work and fractional.

Had the parties wished to limit the scope of the repertory to include only works for which BMI could grant a full right of public performance, they could have included the scope of the particularized right in the definition. Specifically, the parties could have defined the BMI repertory in Article II(C) to mean “(only) those compositions, the (full) right of public performance of which BMI has or hereafter shall have the right to license or sublicense.” They did not, thus leaving open the possibility that BMI include in its repertory works for which it can license the full right of public performance as well as works for which it holds only a fraction of the right of public performance.

In CBS, the Court held only that the issuance of blanket licenses is not per se unlawful and instead, “when attacked” under the antitrust laws, the blanket license “should be subjected to a more discriminating examination under the rule of reason.” The court rejected CBS’s argument that copyright owners would hold out for “unconscionably high fees,” thereby making direct licensing impossible. The court affirmed conclusion that “hold ups” are “not a consequence of the blanket license.” Neither the BMI nor the ASCAP rate court has ever set a rate accounting for royalties to be paid to the other PRO’s affiliates on account of their interests in split works.