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Second Circuit Finds Webcaster Entitled to Statutory Copyright License under DMCA

By Barry Skidelsky, Esq. (co-chair of both the NYSBA/EASL/TV-Radio Committee and the FCBA's New York Chapter; contact: bskidelsky@mindspring.com or 212-832-4800).

On August 21, 2009, in Arista Records v. Launch Media (No. 07-2576-cv), a case of first impression for the federal appellate courts, the U.S. Court of Appeals for the Second Circuit upheld an SDNY decision below based on a jury verdict that found the online music service (now owned by Yahoo), which customizes its music offerings to the tastes of individual listeners, was not sufficiently "interactive" within the meaning of the Digital Millennium Copyright Act (DMCA) so as to deny Launchcast the opportunity to avail itself of a DMCA statutory copyright license. The distinction is crucial, because if Arista and the other record label plaintiffs (several of whom did not join in the appeal) had prevailed on their argument that Launchcast was an "interactive service" under 17 U.S.C. ยง 114(j)(7) (e.g.: involving an on-request transmission of a particular sound recording or a program specifically created for the recipient), Launchcast would have been required to negotiate with and pay each copyright holder of every song it wanted to use -- obviously a much more burdensome and expensive approach. The court examined in detail the legislative history of the sound recording performance right, and applied its analysis to the particular facts of this case, focusing on the methodology employed by Launchcast and the degree of control its end users are able to exert in selecting the music streamed. Without elaborating those details here, the court concluded that this Internet radio service is not a substitute for the purchase of recorded music, and that Launchcast listeners "do not even enjoy the limited predictability that once graced the AM airwaves on weekends in America when special requests represented love-struck adolescents' attempts to communicate their feelings to that special friend." One must keep in mind that this decision, which narrowly construes this particular performance right, is not binding on other circuits, and with different facts this court might have reached a different conclusion.

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