Both sides in a dispute over how much Pandora should pay a performing rights organization said the PRO won. Judge Louis Stanton of the U.S. District Court for the Southern District of New York was said to have awarded Broadcast Music Inc. a royalty rate of 2.5 percent of Pandora's annual revenue, up from the current rate of 1.75 percent. Pandora vowed an appeal to the 2nd U.S. Circuit Court of Appeals, also in New York. "After a nearly two-year legal battle over the value of the BMI repertoire to the Pandora digital music service, the Rate Court ruled resoundingly in BMI’s favor and concluded that our proposed rate of 2.5 percent of revenue was 'reasonable, and indeed at the low end of the range of fees of recent licenses,'" BMI said in a Thursday news release. "The decision also establishes that existing marketplace agreements can be taken into account when determining rates, a key factor for us, and the industry. This is an important step forward in valuing music in the digital age." The ruling in docket 1:13-cv-04037-LLS on BMI v. Pandora wasn't available on the court's online filing service. It may be released this week, a court official said. Earlier this month, the 2nd Circuit ruled for Pandora on a case involving American Society of Composers, Authors and Publishers, upholding a 1.85 percent rate in March 2014 for the company to pay from its annual revenue for ASCAP works (see 1505060072). The benchmarks cited by Stanton "don't provide an appropriate competitive foundation for a market rate," Pandora Government Affairs Director Dave Grimaldi said Friday. "We anticipated a range of potential outcomes in this case and remain confident in our ability to grow and thrive. Pending the outcome of the appeal, this ruling could increase our content costs as a percent of revenue by up to 80 basis points." ASCAP cheered Stanton's decision, though it wasn't a direct party to it. Stanton's decision "cited market benchmarks ASCAP has long argued are relevant in rate court proceedings," an ASCAP spokeswoman noted Friday. "This decision is welcome news for music creators, but make no mistake, Pandora will stop at nothing in their ongoing effort to shortchange songwriters. ASCAP and the music community must continue to fight for the urgent reforms needed to enable all songwriters, composers and music publishers to obtain fair compensation for the use of our music.”
The U.S. Court of Appeals for the Federal Circuit denied Akamai Technologies' appeal of its $45.5 million patent infringement lawsuit against Limelight Networks, ruling Wednesday that U.S. District Court Judge Rya Zobel's original ruling in Boston against Akamai was correct. The Supreme Court had remanded Akamai's appeal to the Federal Circuit last year, ruling then that a company can claim patent infringement only if another company was involved in every step of the infringement (see report in the June 3, 2014, issue). The Federal Circuit vacated its original ruling in Limelight's favor in July (see report in the July 29, 2014, issue). Federal Circuit Chief Judge Sharon Prost and Judge Richard Linn ruled for Akamai, saying in their majority opinion “there is nothing to indicate that Limelight’s customers are performing any of the claimed method steps as agents for Limelight, or in any other way vicariously on behalf of Limelight.” Judge Kimberly Moore dissented in the case, saying the majority opinion “creates a gaping hole in what for centuries has been recognized as an actionable form of infringement.” Limelight shouldn't be immune from liability just because its customers perform a few of the requisite steps for patent infringement on Limelight's behalf, she said. Moore's dissent “provides all the more reason for the court” to reconsider what constitutes patent infringement, an Akamai spokesman said. “We have used precious assets and time to defend our position, and we are very pleased with today’s outcome,” said Limelight CEO Bob Lento in a statement.
The FTC and Department of Justice “support increasing patent quality as part of their mission to protect and promote competition and consumer welfare,” and offered recommendations to the Patent and Trademark Office on how to balance the interests of patentees and the public, in joint comments submitted to the office in response to the PTO’s “comprehensive initiative to increase the quality of granted patents,” an FTC news release said Thursday.
The National Music Publishers’ Association and SoundCloud agreed on terms of a rights agreement that will let NMPA’s independent music publishers and songwriters monetize content on SoundCloud that contains their work, the association said Wednesday. “This agreement ensures that when SoundCloud succeeds financially, so do the songwriters whose content draws so many users to their site," NMPA President David Israelite said in a news release. SoundCloud declined to comment beyond confirming NMPA’s announcement.
Pandora's deal to buy a "small station in South Dakota" shows the company "has declared war on songwriters," said National Music Publishers’ Association CEO David Israelite of the firm's attempt to lower its royalty rate through the acquisition. "In the history of the struggle between creators and those who try to profit off of their work without paying them fairly, this move by Pandora ranks as the most cynical and shameless." The station "has become a pawn in Pandora's game to pay the creators on which it built its business even less," Israelite said in a news release Tuesday. The FCC said the previous day that Pandora could be up to 49.99 percent foreign owned, paving the way for the company to get agency approval for its $600,000 planned buy of KXMZ(FM), Box Elder, South Dakota, from Connoisseur Media (see 1505050049), a deal that NMPA has criticized (see report in the June 17, 2013, issue). A representative of the station had no immediate comment Wednesday, and Pandora declined to comment. "Pandora is radio," and buying KXMZ would qualify the company for the same Radio Music License Committee license "under the same terms as our competitors," the company said Monday when it got the FCC foreign ownership declaratory ruling. "This move makes sense to us beyond the licensing parity alone."
Twitter CEO Dick Costolo said the “winner” of Saturday's welterweight boxing match between Floyd Mayweather and Manny Pacquiao was the company's Periscope live-stream app, one of several services that were used to transmit unauthorized live streams of the fight. HBO and Showtime charged $100 for pay-per-view access to the fight. HBO, Showtime and Twitter didn’t comment on the use of Periscope as a technology for unauthorized live streams of the fight. HBO and Showtime had successfully sought a court order in advance of the fight against boxinghd.net, sportship.org and entities that are in “active concert or participation with them” to prohibit them from live streaming the fight. The HBO/Showtime injunction request also asked the court to order ISPs used by the websites and associated entities to “suspend all services with respect to Defendants’ Infringing Websites, including all registrars, hosts, name servers, site acceleration providers, providers of video delivery resources, and providers of computer and network resources through which video transits.” The Electronic Frontier Foundation criticized HBO and Showtime Friday, saying in a blog post that “this kind of site-blocking, without real legal process, is essentially one of the worst parts of the ill-conceived, long-dead Stop Online Piracy Act (SOPA) being brought in through the courtroom back door.” Costolo's remarks were in a Sunday tweet.
The U.S. Trade Representative’s 2015 Special 301 Report “is another one-sided and harmful missive to the rest of the world that names and shames countries for not mirroring, or even exceeding, the United States’ restrictive copyright rules,” said Electronic Frontier Senior Global Policy Analyst Jeremy Malcolm and Global Policy Analyst Maira Sutton in a blog post Thursday. The report, released Thursday, said USTR kept China and India among the 13 countries on its priority watch list for copyright and other IP rights violations. USTR had elevated Ecuador and Kuwait to the priority watch list since it published its 2014 report (see 1504300061). The 2015 report places a high importance on trade secret protections as criteria for criticizing other countries’ IP rights practices, with the USTR never specifically defining what it considers a trade secret protection. That means the term “can encompass a wide range of information that it encourages nations to protect with heavy-handed enforcement,” EFF said. The Trans-Pacific Partnership’s most recent draft IP language is “dangerously broad,” and if “this is the kind of language that the USTR holds as a minimum standard for enforcement, we should expect to see the agency to increasingly push for draconian rules that would threaten critical reporting published online,” EFF said. The 2015 report also includes a renewed emphasis on domain name disputes, calling on countries to protect U.S. trademarks.
Music-sharing service Grooveshark shut down Thursday after parent company Empire Media reached a settlement with Sony Music Entertainment, Universal Music Group (UMG) and Warner Music Group (WMG) to end the labels’ years-long legal battle in U.S. District Court in New York over claims that Grooveshark knowingly facilitated copyright infringement (see reports in the Nov. 23, 2011, and Dec. 22, 2011, issues). “We started out nearly ten years ago with the goal of helping fans share and discover music,” Grooveshark said in a statement. “Despite best of intentions, we made very serious mistakes. We failed to secure licenses from rights holders for the vast amount of music on the service. That was wrong. We apologize. Without reservation.” Grooveshark agreed as part of its shutdown to “wipe clean all the data on our servers and hand over ownership of this website, our mobile apps and intellectual property, including our patents and copyrights.” Empire Media didn’t disclose other details about its settlement with Sony, UMG and WMG. U.S. District Judge Thomas Griesa had issued a court order allowing the jury to award up to a maximum of $150,000 in damages for each of the almost 5,000 songs the labels claimed Grooveshark had infringed.
Multiple proponents of the U.S. Copyright Office’s proposed new exemptions to the Digital Millennium Copyright Act’s Section 1201 told us Friday they aren’t planning to file reply comments on the proposals, while others indicated they are planning to file comments but hadn’t completed work on them by our deadline. Comments were due after our deadline Friday. The Free Software Foundation and Music Library Association had argued in favor of the proposed exemptions in comments filed in February (see 1502110062), but said they didn’t plan to file reply comments. The New America Foundation’s Open Technology Institute planned to file reply comments in favor of proposed exemptions for software and medical device security research, Senior Policy Counsel Laura Moy said. She said she also planned to testify in support of the proposals at forthcoming Copyright Office hearings. Other proponents of the exemptions, including the Electronic Frontier Foundation and Public Knowledge, didn’t say whether they would file reply comments.
Congress plays a critical role in driving innovation and economic growth, said U.S. Patent and Trademark Office Director Michelle Lee at a Congressional Caucus on Intellectual Property and Piracy Protection event Wednesday. Protecting patents, trademarks and copyrights provides incentives to invent and create, protects innovators and creates a platform for financial investment in innovation, Lee said, according to the text of her remarks. A Department of Commerce report said IP-intensive industries support more than 40 million jobs and contribute more than $5 trillion to the U.S. gross domestic product, she said. “The work that we do at the USPTO is more important than ever,” Lee said. “Our focus on the highest level of quality is why we recently launched a new Enhanced Patent Quality Initiative,” she said according to written remarks. “We are pleased that Congress is actively pursuing legislative efforts to curtail abusive patent infringement litigation practices,” and “undertaking a review of copyright law,” she said. “Abusive tactics have no place in our patent system,” as they “divert resources away from the research, development and innovation that fuel our nation’s economic growth,” Lee said. Abusive tactics are “particularly harmful to startups and small businesses who lack the resources and expertise to properly defend themselves,” Lee said, which is why “legislation to curtail abusive patent litigation and bad faith threats of litigation is both necessary and appropriate.” Also Wednesday, bipartisan patent legislation was introduced by Senate Judiciary Committee members (see 1504290028).