In the latest chapter of music industry versus streaming services, Spotify has come under fire again for allegations that it did not secure the proper licensing rights from popular rap artist Eminem before streaming his songs billions of times. The music publisher claims the Music Modernization Act is unconstitutional.
New Twist on Licensing & Royalty Right – Is the MMA Unconstitutional?
Eight Mile Style, Eminem’s music publisher, filed a copyright infringement lawsuit in federal court last week against Spotify over royalty and licensing rights. While lawsuits against Spotify have not been uncommon, the latest development is new because Eminem’s publisher’s claims that the Music Modernization Act (“MMA”), which Spotify used to avoid paying royalties, is actually unconstitutional on its face.
The complaint made by Eminem and his publisher is groundbreaking because this is the first time a famous artist has declared the MMA to be unconstitutional, which surprises many as the MMA was supported by many different stakeholders in the music industry. While all sides agreed that the MMA was not a perfect piece of legislation that would solve all standing issues, the MMA enjoyed popular support because it was the first piece of legislation that actually began to tackle new copyright issues that had arisen due to the new technology platform and services that are known as digital streaming.
Eight Mile Style Argues Copyright Control Provision-Loophole in MMA is Unconstitutional
Before the passage of the MMA, digital streaming services such as Spotify and Apple Music had been sued multiple times under allegations that they had not paid the proper royalties due to songwriters, artists, and composers. In their defense, the streaming services had argued that the lack of a digital and centralized database made it unduly burdensome for the services to be able to track down the rightful owners of copyrighted works.
In the particular case at hand, Eight Mile Style has alleged that Spotify has purposely used the MMA to skirt paying proper royalties because it has listed many of Eminem’s songs under “copyright control,” which means that the song has no known owner. While Eight Mile Style is mostly faulting Spotify for its allegedly deceitful practices, complaining that it is ridiculous that Spotify would try to assert that Eminem’s music has no “known owner,” the complaint also takes issue with the MMA by arguing that it is unconstitutional because it does not provide adequate compensation for copyrighted works taken under “copyright control,” thereby violating the Fifth Amendment’s Takings Clause.
Generally, the “copyright control” provision of the MMA was intended to be applied to music that has either become public domain by virtue of the expiration of copyright protection or because there are no confirmed owners of the copyright in question. Because Spotify used this provision in order to avoid paying royalties, Eight Mile Style is arguing that this loophole in the MMA violates the Fifth Amendment, which limits the eminent domain (i.e., taking) power of the federal government by requiring compensation to be paid when private property is taken for public use, because streaming services have thus been able to avoid paying royalties by claiming works to be under “copyright control.”
The Music Industry and IP Counsel Will be Interested in the Outcome of This MMA Unconstitutional Claim
While it is possible that Eight Mile Style and Spotify could potentially settle this case before it ever gets to the Supreme Court, many agree that the Fifth Amendment issues raised by Eminem are not frivolous and should be heard before the Supreme Court. As such, it behooves counsel to follow this case as it winds its way through federal courts and potential appeals. Should the case settle early, it is possible the claim that the MMA could have unconstitutional issues will likely be raised by others. Additionally, streaming music platforms falling back on the MMA copyright control provision as a default safe harbor from obtaining proper licensing and paying royalties should take heed.