9-6 BMI [music copyright misuse]
BROADCAST MUSIC INC., ET AL V. HAMPTON BEACH CASINO
BALLROOM INC. ET AL
1995 U.S. Dist. LEXIS 13103; Copy. L. Rep. (CCH) P27,459 (D.N.H. 1995)
C. Copyright Misuse Defense
Defendants do not attempt to challenge BMI's evidence of copyright infringement.
Rather, they argue that BMI's motion should be denied because there are genuine issues
of material fact as to whether BMI misused its copyright. ***
Copyright misuse occurs when a copyright owner restrains competition in the sale of an
item that is not within the scope of the privilege granted under the copyright. Lasercomb
Am. Inc. v. Reynolds, 911 F.2d 970, 975 (4th Cir. 1990) (discussing Morton Salt Co. v.
G.S. Suppiger, 314 U.S. 488, 86 L. Ed. 363, 62 S. Ct. 402 (1942)); cf. United Tel. Co. v.
Johnson Publishing Co., 855 F.2d 604, 610 (8th Cir. 1988) (discussing patent misuse and
its application in copyright context).1
A defendant may prove copyright misuse by either proving (1) a violation of the antitrust
laws; or (2) that BMI otherwise illegally extended its monopoly or violated the public
policies underlying the copyright laws. Lasercomb, 911 F.2d at 978 (attempted use of
copyright to violate antitrust law would give rise to misuse defense, but is not required to
state such a defense); National Cable Tel. Ass'n v. Broadcast Music, Inc., 772 F. Supp.
614, 652 (D.D.C. 1991); Coleman v. ESPN, Inc., 764 F. Supp. 290, 295 (S.D.N.Y 1991)
(misuse defense prevents copyright owner from recovering for infringement where owner
impermissibly extended monopoly in manner equivalent to unreasonable restraint on
trade). For example, misuse may be found based on blanket licensing practices if there
are no alternative licensing arrangements available, Coleman, 764 F. Supp. at 295 n.11,
or where the purchase of a license is "tied" to the purchase of another copyright, United
Tel. Co., 855 F.2d at 611. HBCB does not allege that BMI's licensing practices violated
the antitrust laws, therefore, I focus on whether BMI's negotiations with HBCB illegally
extended BMI's monopoly power in violation of the public policy underlying the
copyright laws.
In essence, defendants argue that BMI illegally exploited its monopoly power by
demanding that HBCB pay an excessive license fee. They support this argument with
1
Copyright misuse derives from the doctrine of patent misuse that is a well established defense to patent
infringement claims. ****
Seg. 9, item 6 (2007) 1
9-6 BMI [music copyright misuse]
evidence that: (1) BMI's proposed fee is substantially higher than the fee it charged the
Ballroom's prior owner; (2) the proposed fee is substantially higher than the fee HBCB
pays to ASCAP; and (3) BMI based the proposed fee on erroneous information
concerning the number of performances, ticket prices, and expected ticket sales. Even if
this information is considered in the light most favorable to the defendants, however, it is
insufficient to withstand plaintiff's summary judgment motion.2
First, evidence that BMI's proposed fee substantially exceeds the fee paid by the
Ballroom's prior owner does not prove that the proposed fee is excessive unless both
businesses are similarly situated. Since defendants have produced no evidence that would
allow me to compare their business with the prior owner's business, a reasonable fact
finder could not conclude that the proposed fee is excessive simply because it
significantly exceeds the fee charged the prior owner. Similarly, even if ASCAP's fee is
substantially lower than BMI's proposed fee, a reasonable fact finder could not infer from
this evidence that the higher fee represents the unlawful exploitation of market power
without some evidence concerning the similarities and differences between the two
licenses. Since defendants have failed to produce any such evidence to support their
claim I must reject this argument. Finally, although defendants did offer evidence to
show that the proposed fee was based on erroneous information concerning the number
of performances, ticket prices, and the number of tickets HBCB expected to sell at each
performance, they provided no evidence to suggest that they ever communicated this
information to BMI during the course of negotiations over the proposed fee. Under these
circumstances, defendants are in no position to argue that BMI was attempting to exploit
its market power by charging for performances that would not include BMI's music.
In summary, defendants have offered insufficient evidence to support their copyright
misuse defense. Accordingly, plaintiffs are entitled to summary judgment.
2
Defendants assert that this evidence also proves that BMI violated provisions of the Decree prohibiting
(1) discrimination in the rates that BMI charges to similarly situated licensees; and (2) restrictions
preventing the performance of copyrighted works in order to exact additional compensation from
licensees. Even if a copyright misuse defense could be established by proving a violation of the Decree,
defendants' evidence suffers from the same deficiencies discussed below. Accordingly, defendants cannot
survive summary judgment on this basis even if copyright misuse could be proved by establishing that
BMI violated the Decree.
Seg. 9, item 6 (2007) 2