In what is becoming an exciting copyright lawsuit season, Federal Judge Jeffrey S. Frensley recently ordered Spotify Chief Executive Officer Daniel Ek to sit for a deposition in the long-running copyright infringement suit between Spotify USA, Inc. (“Spotify”) and Eight Mile Style, LLC (“Eight Mile”). Eight Mile, the publishing company and rights holder for music by rapper Eminem, sued Spotify in the Middle District of Tennessee for infringement in 2019. [2] It’s suit alleged that Spotify infringed on copyrights to 243 of Eminem’s songs by streaming the songs without appropriate licenses. [3]
Showcasing the interesting crossroads between artists, publishers, rights deals, and streaming, the suit has posed important questions about practices in the streaming world. The stature of Eminem (Marshall Mathers), the 15-time Grammy award-winning artist (including six rap album of the year awards) and 2003 Oscar winner for ‘Lose Yourself’, offers gravitas to the suit and provides an opportunity to shine a light on the streaming world cheered on by many artists. More important than the stature and catalog Eminem brings to the case is the fact that Eminem and rights to his music have been at the forefront of efforts to change the music industry and protect artists and the value of copyrights for over a decade.
Eight Mile is represented by the same legal team (from Nashville firm King & Ballow) that upended the licensing world with a suit (for an earlier publisher – though one owned by the same people – of Eminem’s work) against Universal Music Group (in a nutshell the suit challenged the treatment of digital downloads of music and resulted in an accounting change that altered the economics of digital distribution). The lead attorney on the cases, Richard Busch, was notably the lead attorney for the Marvin Gaye family in their suit against Pharrell and Robin Thicke for the ‘Blurred Lines’ infringement.
Though still decidedly in the early stages, Eight Mile’s suit deals with practices under the Music Modernization Act (signed into law by President Trump in 2018 at an amazing signing ceremony featuring Kid Rock, dis-invitations to many music executives, and an incredible afternoon speech by Kanye praising Hillary Clinton and his MAGA hat). In short, Eight Mile argues that Spotify failed to comply with the Music Modernization Act and used a mechanical process of obtaining licenses (sending out notices of intention to use music – a practice to be used when copyright owners are unknown) to stream Eminem’s music when they knew the identity of both the performer and the rights holder. As monetary damages, in addition to all attorney’s fees, the suit seeks all lost profits. In the alternative, the suit seeks the full amount of statutory damages available for willful infringement — $150,000 — for each of the 243 songs allegedly used without a license. 36.45 million dollars.
In a more important aspect of the suit, Eight Mile lodged a constitutional attack that could strip key limitations on liability from the Act itself. The Act represented a compromise between rights holders and streamers. In return for agreeing to a system that could (in Spotify’s own internal language) increase amounts paid to rights holders for their music, the slate would be wiped clean for past infringement after the new system for obtaining rights went into effect. Eight Mile argues that in limiting liability for past infringement, the Act is taking away artists’ (and rights holders’) ability to recover lost profits, statutory damages, and attorney’s fees — what Eight Mile characterizes as an unconstitutional taking of vested property rights. [4]
Still, in its early stages, Eight Mile’s attorneys sought to depose Ek as to what Eight Mile characterized as a stream first and ask permission later approach to dealing with rights. Spotify argued Ek’s testimony would be irrelevant as he had no hands-on involvement with licensing and would pose an undue burden given his hectic schedule as CEO.
Spotify also asserted that there was no reason for Ek to testify personally when there were numerous other executives at Spotify who could testify as to Spotify’s approach to licensing when expanding into the United States.
In a ruling likely capturing the attention of CEO’s in many industries who think layers of management might shield them from being deposed, Judge Frensley highlighted the broad nature of discovery and agreed with Eight Mile Style that there was a reasonable basis to believe Ek’s testimony could be relevant.
Judge Frensley pointedly rejected Spotify’s ‘undue burden’ or ‘he’s too busy’ arguments in stating “the issue of proper licensing relationships with the artists whose work comprises the entirety of Spotify’s business and its sole product is surely also a matter of importance…..” [5]
[1] Though rights to his songs are at issue in the case, Eminem is not a party to the current suit.
[2] The suit also alleged counts of vicarious infringement and contributory infringement against the Harry Fox Agency, one count of which was recently dismissed.
[3] https://www.scribd.com/document/422700072/Eight-Mile-Style-v-Spotify
[4] The issue of whether changes in copyright terms or damages implicates the takings clause has been frequently debated. See https://harvardlawreview.org/2015/01/copyright-reform-and-the-takings-clause/.
[5] The Court did recognize the Mr. Ek’s hectic schedule in limiting the deposition to a three-hour remote deposition
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