Verizon Wireless and AT&T do not need public performance licenses for the ringtones they sell to their customers, a federal judge has ruled.
Noting that the companies already pay licensing fees to download the 30-second snippets of music, Southern District Judge Denise L. Cote in In re Application of Cellco Partnership, 09 civ. 7074, said the American Society of Composers, Authors and Publishers cannot demand additional royalties for the times the ringtones go off in a public place, such as in a restaurant or at the beach.
"ASCAP has not shown any infringement of its members' right by playing of ringtones in public from Verizon's customers telephones," the judge concluded in granting Verizon's motion for summary judgment. "The customers are not liable for copyright infringement and neither is Verizon."
The judge also issued a short order in In Re Application of AT&T Mobility, 09 civ. 7072, granting summary judgment for AT&T "for substantially the same reasons."
In Cellco, the judge said the ringtones, whether they are being downloaded onto a phone or being played once the phone rings, do not constitute a "performance" within the meaning of the Copyright Act, 17 U.S.C. §106.
The case drew several amici supporting both sides. Cote was assigned to the case after the July death of Judge William C. Conner, who had been hearing disputes with regard to copyright license fees under a 1941 consent decree in the antitrust litigation United States v. American Society of Composers, Authors and Publishers, 41 Civ. 1395.
Verizon applied to the court on Jan. 23, 2009, for a determination of reasonable fees for a blanket license to play tunes from ASCAP's repertory.
Under §106(4), a copyright owner may hold the right "in the case of literary, musical, dramatic, and choreographed works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly."
One of the questions before Cote in determining whether Verizon could be directly or secondarily liable for copyright infringement is whether the company met one definition for performing a work publicly in 17 U.S.C. §101: "to transmit or otherwise communicate a performance ... by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times."
The judge observed that because only a subscriber can receive the transmission or purported performance, it is not made to the public and is not covered by the Transmission Clause "at least when considered by itself."
ASCAP had argued that downloading a ringtone is the first step in a series of transmissions to the public.
But Cote said "there is no qualifying public performance under §106(4) when the customer uses the ringtone to alert her to an incoming call. Thus, even the downloading of a ringtone is considered as the first link in the chain of transmissions, it does not qualify as a public performance."
ASCAP also had argued that a public performance occurs when a phone plays a ringtone, but Cote said Verizon could not be found either secondarily or directly liable.
As for secondary liability, she cited the exemption from §106(4) found in §110(4) for "those performances of a musical work that occur within the 'normal circle of a family and its societal acquaintances.'"
The judge said the "expectation of profit is important to determining whether a performance fits within the §110(4) exemption" and, here, "Verizon customers are not playing ringtones for any 'commercial advantage;' they do not get paid any fee or compensation for these performances; and they do not charge admission."
Since a customer cannot be held directly liable when a ringtone plays, Verizon cannot be held secondarily liable, the judge concluded.
THE CUSTOMER CONTROLS
Cote also said there was no direct liability, because Verizon neither "performs" the music, "Nor does Verizon engage in conduct that can be said to cause a ringtone to be played in public."
"Verizon does not 'recite, render, play, dance or act [the ringtone] either directly or by means of any device' and thus does not 'perform' the music as that term is defined in the Copyright Act. 17 U.S.C. §101," she held. "Nor does Verizon engage in conduct that can be said to cause a ringtone to be played in public."
The judge pointed out that "Verizon's only role in the playing of a ringtone is the sending of a signal to alert a customer's telephone to an incoming call."
She added, "Once the customer has downloaded the ringtone onto her telephone, she controls the telephone and makes the decisions that determine whether the ringtone will be triggered by an incoming call signal."
Cote also made it clear that "despite the accusation that Verizon enjoys revenue from publicly played ringtones, Verizon makes no revenue from the playing of ringtones."
Instead, she said, "It makes revenue from selling ringtones and it already pays a mechanical licensing fee in connection with those sales."
Bruce Joseph, Andrew McBride and Michael Sturm of Wiley Rein in Washington, D.C., represented Cellco Partnership, doing business as Verizon Wireless.
David Leichtman, Hillel Parness and Eleanor Lackman of Lovells represented ASCAP.
"While ASCAP is disappointed with the ringtones summary judgment issued yesterday by the U.S. District Court, this federal rate court proceeding with mobile providers is about much more than just ringtones," said an ASCAP spokesperson. "We have always pursued fair payment for individual music creators whose creative works are used to build the businesses of others and that effort will certainly continue."
Michael Salzman of Hughes Hubbard & Reed filed an amicus brief on behalf of Broadcast Music Inc., which collects license fees on behalf of its songwriters and music publishers and distributes them as royalties.
"BMI believes that the ringtones are public performances and songwriters should be paid for the downloads," Salzman said.
Cote's decision resolves only part of the two rate cases before her. Still to be decided are several issues, including the use of music in ring-backs, the sounds heard when calls are placed.