Spotify Subject to New Copyright Infringement Claim

Spotify Subject to New Copyright Infringement Claim by Mark S. KaufmanThe 19-billion dollar music streaming service Spotify found itself on the wrong end of a major lawsuit at the end of 2017.

Wixen Publishing Inc. v. Spotify USA Inc. is still in the complaint phase, but the music industry press is already dissecting the merits of the case — as well as the possible implications of the verdict. Filed in the Central District of California, the case is another test of Spotify’s royalty payment practices after it settled a proposed class action worth 43 million dollars.

Wixen’s position is that Spotify is clearly and willfully infringing because, as most people who deal in copyright know, there are two parts to the copyright in music:

  1. The  sound recording (also known as the master recording), AND
  2. The composition (for the sheet music – “sheet” referring to old-fashioned paper… )

Spotify had previously brokered a deal with the recording companies in order to get permission to use the sound recordings, but they did not negotiate a deal with the composers and songwriters. Instead they retained the Harry Fox Agency, which collects royalties for compulsory mechanical licenses.

A mechanical license is a license that the holder of the underlying musical work automatically grants (under the U.S. Copyright Act) to another party to cover, reproduce, or sample specific parts of the original composition. The amount, governed by statute, for a permanent download is 9.1 cents for the first five minutes and 1.75 cents for every minute thereafter. See https://www.harryfox.com/find_out/rate_charts.html.

The Harry Fox Agency administers and collects those mechanical royalties for most of the songwriters in the United States, but apparently not the select group of songwriters that are with Wixen Publishing. The deal that Spotify made with the Harry Fox Agency (HFA), Wixen alleges, is inadequate. Wixen claims that there are far too many songwriters for HFA to contact and to represent:  “it was ill-equipped to obtain all the necessary mechanical licenses” and Spotify allegedly knew it. The lawsuit is basically saying, “Spotify is a multi-billion dollar company but it skipped a major step” in complying with US copyright law: paying the minimum mechanical royalties to composers.

In a 256-page exhibit to its complaint, Wixen calculates the amount owed as 1.6 billion dollars — that’s 11,000 infringements multiplied by the maximum statutory amount of $150,000. The case is Wixen Publishing Inc. vs Spotify USA Inc., filed in the Central District of California under 2:2017cv09288.

Mark Kaufman

Mark S. Kaufman
Kaufman & Kahn
kaufman@kaufmankahn.com

747 Third Avenue
32nd Floor
New York, NY 10017
Tel. (212) 293-5556
Fax. (212) 355-5009

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