BMI Rate Court Judge Rules Against Dept. of Justice's '100 Percent' Licensing Decision

The Hollywood Reporter

In a surprise move, BMI's rate court judge ruled on Friday that fractional licensing is allowed under the consent decree the performing rights organization operates under, industry sources tell Billboard.

In making that ruling, Judge Louis Stanton ruled against the Dept. of Justice's controversial decision on June 30 - which insisted that the consent decree mandated full-works licensing and gave both ASCAP and BMI a year to adopt that type of licensing. The decision was roundly criticized by the publishing industry and embraced by licensees, including digital services and radio networks.

The difference between fractionalized licensing and full-works licensing is that in the former case, a licensee must obtain a license from each copyright owner of a song - no matter how many authors it may have - in order for the user, say radio, to play that song. The music publishing industry says that fractionalized licensing is the way it has worked for decades.

In full-works licensing, a licensee or music user would need a license from only one of the songwriters - and licensees claim that's they way they have been operating, too, for decades.

The argument came to a head when the DOJ was asked to review the consent decree to modify for the modern music environment. But instead of modifying it, the DOJ instead made the consent decree even more onerous to music publishers and songwriters.

In response, the two PROs, ASCAP and BMI, said they were going to fight it - BMI through its rate court, which held its hearing Friday, while ASCAP would lobby Congress to seek a legislative correction, if the court case failed.

Meanwhile, a new songwriter group, Songwriters of North America, also have filed a lawsuit against the Dept. of Justice over its decision. That lawsuit stated that the 100-percent ruling is "an illegitimate assertion of agency power in gross violation of plaintiffs' due process rights, copyright interests and freedom of contract, and needs to be set aside."

In the BMI court case, the two sides were supposed to have a hearing in the judge's chambers setting forth the schedule on how BMI's case against the DOJ would proceed. But because so many representatives from both sides were present, they held the hearing in court, where testimony was heard from both sides, each putting forth their position on why full-works licensing or fractionalized licensing should be the way licensing is conducted.

This story will be updated as new information becomes available.

This article originally appeared on Billboard.com.