BMI Says DOJ Position on 'Fractional Licensing' Is Wrong; Prohibition Could Harm Market
The government is wrong in its interpretation that a longstanding antitrust consent decree bars BMI from granting fractional licenses to perform songs, the organization told the 2nd U.S. Circuit Court of Appeals in a brief filed last week. The filling…
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was in response to BMI's yearlong legal fight with DOJ, which is appealing a lower court ruling that sided with BMI and said the decree's language doesn't prohibit such licensing (see 1705120040). DOJ, which filed an opening brief in May, favors 100 percent licensing, and supported by technology companies, broadcasters and others (see 1705260049). BMI said prohibiting fractional licensing could harm the market, which could become less competitive. It cited the Supreme Court's 1971 decision in U.S. v. Armour, which said a party to a consent decree can't engage in any activity "expressly and unambiguously prohibited" in the decree unless it falls outside that scope and then it isn't regulated. BMI said its consent decree "says nothing about fractional licensing." It said the government's stance is based on a "logical fallacy" and wants the court to "find an implied prohibition against fractional licensing." BMI posited a decree that required a pizzeria to sell pizzas to all customers without specifying whether the establishment "may only sell pizzas." The decree doesn't expressly address selling slices, so BMI said the pizzeria can sell both slices and whole pies. BMI said fractional licenses either are included in its repertory and therefore it can sell them or, they're excluded from the repertory and not regulated by the decree. "Either way, BMI is free to license such fractional interests and is certainly not prohibited from doing so," it added.