    16-3830-cv
    United States v. Broadcast Music, Inc.

                        UNITED STATES COURT OF APPEALS
                            FOR THE SECOND CIRCUIT

                                   SUMMARY ORDER
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OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY
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    At a stated term of the United States Court of Appeals for
    the Second Circuit, held at the Thurgood Marshall United
    States Courthouse, 40 Foley Square, in the City of New
    York, on the 19th day of December, two thousand seventeen.

    PRESENT: DENNIS JACOBS,
             REENA RAGGI,
             CHRISTOPHER F. DRONEY,
                             Circuit Judges.

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    United States of America,
             Plaintiff-Appellant,

                -v.-                                       16-3830-cv

    Broadcast Music, Inc.,
             Defendant-Appellee.
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    FOR APPELLANT:                      Mary Helen Wimberly (Brent
                                        Snyder, Owen Kendler, Daniel E.
                                        Haar, Bennett Matelson, Kristen
                                        C. Limarzi, James J. Fredricks,
                                        Robert J. Wiggers, on the
                                        brief), United States Department
                                        of Justice Antitrust Division,
                                        Washington, D.C.

    FOR APPELLEES:                      Scott A. Edelman (Fiona A.
                                        Schaeffer, Atara Miller, Rachel

                                             1
                           Penski Fissell, Eric I. Weiss,
                           on the brief), Milbank, Tweed,
                           Hadley & McCloy LLP, New York,
                           New York.

     Appeal from a judgment of the United States District
Court for the Southern District of New York (Stanton, J.)

     UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
AND DECREED that the judgment of the district court be
AFFIRMED.

     The United States Department of Justice Antitrust
Division (“DOJ”) appeals from the judgment of the United
States District Court for the Southern District of New York
interpreting the consent decree between it and Broadcast
Music, Inc. (“BMI”). The court ruled that the consent
decree neither requires full-work licensing nor prohibits
fractional licensing of BMI’s affiliates' compositions. We
assume the parties’ familiarity with the underlying facts,
the procedural history, and the issues presented for
review.

     BMI is a non-profit performance rights organization
(“PRO”) founded in 1939 that holds the public performance
rights in over 10 million musical works. It serves as an
agent for songwriters and publishers, negotiating rates,
issuing licenses, and collecting fees. These original
rights-holders--BMI’s “affiliates”--grant BMI nonexclusive
power to license performance rights to their works. The
usual form of distribution offered by BMI (and its primary
competitor, the American Society of Composers, Authors, and
Publishers (“ASCAP”)) is a “blanket license” to all rights
held by BMI to any and all affiliated works. See Broad.
Music, Inc. v. Prana Hosp., Inc., 158 F. Supp. 3d 184, 189
(S.D.N.Y. 2016). Blanket licenses from BMI and ASCAP would
license nearly every domestic copyrighted composition.

     After the DOJ challenged the blanket license as an
illegal restraint of trade, BMI entered into a 1966 consent
decree, amended in 1994. See Broad. Music, Inc. v.
Columbia Broad. Sys., Inc., 441 U.S. 1, 10-11 (1979) (“BMI
v. CBS”); United States v. Broad. Music, Inc., 1966 U.S.
Dist. LEXIS 10449 (S.D.N.Y. Dec. 29, 1966); United States
                             2
v. Broad. Music, Inc., 1994 U.S. Dist. LEXIS 21476
(S.D.N.Y. Nov. 18, 1994). The dispute in this case is
whether, under the consent decree, “fractional” interests
BMI has acquired through its affiliates to a co-owned work
are included in BMI’s repertory and may be included in the
blanket license.

     The Copyright Act vests the creators of copyrighted
musical compositions with exclusive rights to public
performance, and provides that copyrights may be co-owned.
See 17 U.S.C. §§ 106, 201(a). BMI offers a “full-work
license” when its affiliates own the full set of rights to
a work such that a licensee may immediately perform it
without risk of infringement. For some works, however, the
co-owners have allocated between themselves fractional
interests of exclusive ownership, and then elected to
affiliate with different PROs. In these instances, BMI may
hold the right to public performance of fewer than all
collaborators; if BMI holds only a fractional interest in a
composition, it offers a license to only that share. See
J. App’x at 55. The decree does not address the issue of
fractional versus full work licensing, and the parties
agree that the issue did not arise at the time of the 1966
and 1994 amendments.

     On August 4, 2016, the DOJ closed a review of the ASCAP
and BMI Consent Decrees. It concluded that “the consent
decrees, which describe PROs’ licenses as providing the
ability to perform ‘works’ or ‘compositions,’ require ASCAP
and BMI to offer full-work licenses” to the exclusion of
fractional licenses. See J. App’x at 66. It further
observed that “only full-work licensing can yield the
substantial procompetitive benefits associated with blanket
licenses.” Id. DOJ conceded that if a PRO holds fewer
than all rights to a composition, a policy limited to full-
work licenses may “make it impossible for ASCAP or BMI ...
to include that song in their blanket licenses.” Id. at
76.

     Immediately afterward,   BMI asked Judge Stanton for a
pre-motion conference. BMI    argued that because the decree
did not prohibit fractional   licensing, it was permitted.
Judge Stanton observed that   “[n]othing in the Consent
Decree gives support to the   [Antitrust] Division’s views,”
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United States v. Broad. Music, Inc., 207 F. Supp. 3d 374,
376 (S.D.N.Y. 2016), and held that the “Consent Decree
neither bars fractional licensing nor requires full-work
licensing.” Id. at 377.

     We review the district court’s interpretation of a
consent decree de novo. Broad. Music, Inc. v. DMX, Inc.,
683 F.3d 32, 43 (2d Cir. 2012).

     This appeal begins and ends with the language of the
consent decree. It is a “well-established principle that
the language of a consent decree must dictate what a party
is required to do and what it must refrain from doing.”
Perez v. Danbury Hosp., 347 F.3d 419, 424 (2d Cir. 2003);
United States v. Armour & Co., 402 U.S. 673, 682 (1971)
(“[T]he scope of a consent decree must be discerned within
its four corners...”). “[C]ourts must abide by the express
terms of a consent decree and may not impose additional
requirements or supplementary obligations on the parties
even to fulfill the purposes of the decree more
effectively.” Perez, 347 F.3d at 424; see also Barcia v.
Sitkin, 367 F.3d 87, 106 (2d Cir. 2004) (internal citations
omitted) (The district court may not “impose obligations on
a party that are not unambiguously mandated by the decree
itself.”). Accordingly, since the decree is silent on
fractional licensing, BMI may (and perhaps must) offer them
unless a clear and unambiguous command of the decree would
thereby be violated. See United States v. Int’l Bhd. Of
Teamsters, Chauffeurs, Warehousemen & Helpers of Am., AFL-
CIO, 998 F.2d 1101, 1107 (2d Cir. 1993); see also Armour,
402 U.S. at 681-82.

     DOJ relies on the provisions that require BMI to
license "the compositions in defendant’s repertory," and
that define BMI’s "repertory" as “those compositions, the
right of public performance of which the defendant has or
hereafter shall have the right to license or sublicense.”
J. App’x at 23, 26, 31-32 (Art. II(C), Art. XIV(A)).
Although “the right of public performance” is not defined,
DOJ urges that it means specifically and exclusively “the
immediate right to actually perform” the work without risk
of infringement, a right that cannot be conferred by a
fractional license. We are unpersuaded, for several
reasons.
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     The “right of public performance” is a term of art in
copyright law. See 17 U.S.C. §§ 106(4), 201(a); see also
Berger v. Heckler, 771 F.2d 1556, 1568 (2d Cir. 1985) (In
interpreting a consent decree, “deference is to be paid to
... the normal usage of the terms selected.”) The
Copyright Act contemplates that the right of public
performance “may be transferred in whole or in part” and
“owned separately,” including as a “subdivision” of the
right. See 17 U.S.C. § 201(d). Each individual co-owner
has a right to public performance, and such a right is not
associated specifically with “full-work” licensing or with
an indivisibility principle. See Hugo Boss Fashions, Inc.
v. Fed. Ins. Co., 252 F.3d 608, 617-18 (2d Cir.
2001)(parties are presumed to intend the established legal
meaning of a phrase in a contract).

     As Judge Stanton observed, the blanket license itself
does not necessarily confer a right of immediate public
performance: the license covers all the rights held by the
PRO regardless of whether those rights are valid or
invalid, exclusive or shared, complete or incomplete. See
J. App’x at 33 (Art. XIV(D))(“Nothing in this Article XIV
shall prevent any applicant from attacking ... the validity
of the copyright of any of the compositions in defendant’s
repertory nor shall this Judgment be construed as importing
any validity or value to any of said copyrights.”).

     Extrinsic evidence does not assist the DOJ. The decree
was amended in 1994 at a time when fractional licensing was
apparently common practice. “If the parties had agreed to
such a prohibition, they could have chosen language that
would have established the sort of prohibition that the
Government now seeks.” Armour, 402 U.S. at 679.

     DOJ relies on Pandora Media, Inc. v. ASCAP, 785 F.3d 73
(2d Cir. 2015), which held that the ASCAP consent decree
unambiguously prohibits a publisher's “partial withdrawal”
of the right to license its works to certain music users:
since the decree requires ASCAP “to license its entire
repertory to all eligible users, publishers may not license
works to ASCAP for licensing to some eligible users but not
others.” Id. at 77. Pandora is not on point. BMI is not
proposing to discriminate between licensees; and the case
                             5
does not consider fractional licensing. BMI seeks to offer
all its interests, full and fractional, to any user in a
manner entirely consistent with Pandora. Id. at 78 (noting
the “decree provides for blanket licenses covering all
works contained in the ASCAP repertory”).

     DOJ also relies on BMI v. CBS, which identified one
procompetitive benefit of the blanket licensing arrangement
as allowing “the licensee immediate use of the covered
compositions, without the delay of prior individual
negotiations and great flexibility in the choice of musical
material.” BMI v. CBS, 441 U.S. at 21-22. Use of the
phrase “immediate use” does not imply a rule that BMI may
license music rights only if they are complete, or full-
work. The Court explained one procompetitive feature of
the blanket license that reduces transaction costs of
individual bargaining among rights-holders; it did not
offer an interpretation of the terms of the decree or set
forth a standard that must be satisfied. In any event, the
blanket license reduces transaction costs even if it
obviates individual bargaining only as to the fractional
rights it includes. Neither the language of the opinion
nor the consent decree itself guarantees immediate
performance with respect to every composition.

     To the extent DOJ asks us read an additional
requirement into the decree to advance these procompetitive
objectives, we are foreclosed from doing so. See
Teamsters, 998 F.2d at 1107; King v. Allied Vision, Ltd.,
65 F.3d 1051, 1058 (2d Cir. 1995). It would be
inappropriate to consider, on an incomplete record, the
potential competitive impact of our interpretation. The
parties agree, but some amici urge nevertheless that we
should reject BMI’s interpretation because allowing
fractional licensing would impair the procompetitive
aspects of the consent decree and give rise to
anticompetitive consequences. Such arguments are “out of
place:” “although the relief . . . may be in keeping with
the purposes of the antitrust laws, we do not believe that
it is supported by the terms of the consent decree under
which it is sought.” Armour, 402 U.S. at 681, 683.

     If the DOJ decides that the consent decree, as
interpreted by the district court, raises unresolved
                             6
competitive concerns, it is free to move to amend the
decree or sue under the Sherman Act in a separate
proceeding. See id. at 674-75 (“If the Government had
wished to test” whether the challenged activity was
unlawful, “it could have brought an action to enjoin” it
under the antitrust laws, or “it could have sought
modification of the [Consent] Decree itself.”).

     For the foregoing reasons, and finding no merit in the
DOJ’s other arguments, we hereby AFFIRM the judgment of the
district court.

                           FOR THE COURT:
                           CATHERINE O’HAGAN WOLFE, CLERK




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