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May 8, 2015

King & Spalding Achieves Important Appellate Victory for Pandora Media

NEW YORK, May 8, 2015 — King & Spalding achieved an important appellate victory on May 6 on behalf of Pandora Media in the company’s licensing dispute with the American Society of Composers, Authors and Publishers (ASCAP). The U.S. Court of Appeals for the Second Circuit in Manhattan rejected ASCAP’s appeal of a lower court ruling that ensured Pandora’s access to the catalogs of certain ASCAP publisher members under Pandora’s blanket license agreement with ASCAP, notwithstanding those publishers’ efforts to restrict such access. The lower court also had set a reasonable rate for Pandora’s use of ASCAP music after a lengthy bench trial, and the Second Circuit affirmed that ruling as well, rejecting ASCAP’s demand for a much higher rate.

The dispute arose after the world’s two largest music publishers, Sony/ATV and Universal, attempted to selectively withdraw “new media” licensing rights from ASCAP in order to require Pandora to negotiate public performance licenses for those publishers’ works directly with the publishers (as opposed to securing a blanket license through ASCAP). ASCAP nevertheless retained the right to license the “withdrawing” publishers’ works to the vast majority of music users. By so “withdrawing,” the publishers wished to circumvent the effective compulsory license and court rate oversight provisions of ASCAP’s consent decree with respect to certain “new media services” (while retaining the benefits of collective licensing through ASCAP for the vast majority of licensees).

Citing Pandora’s application for a license through 2015 under ASCAP’s consent decree—which unambiguously requires ASCAP to grant any music user a license to perform all of the works in its repertory—Pandora sought a court ruling confirming that these publisher withdrawals could not impact the company’s access to the entire ASCAP repertory, inclusive of the catalogs of the “withdrawing” publishers. In October 2013, Pandora, represented by King & Spalding, obtained a favorable summary judgment ruling on this issue in district court. The Second Circuit affirmed that decision on May 6.

“The licensing of works through ASCAP is offered to publishers on a take‐it‐or‐leave‐it basis,” the Second Circuit wrote in its opinion. “As ASCAP is required to license its entire repertory to all eligible users, publishers may not license works to ASCAP for licensing to some eligible users but not others.”

The publishers’ attempt to leverage their size to extract higher rates from Pandora in direct licenses by selectively withdrawing their works from ASCAP thus was legally invalid. The decision has industry-wide implications, as it applies to all ASCAP licensees. The Second Circuit’s affirmance of the rate set by the district court also is of significant economic benefit to Pandora (and likely other similar digital music services).

Pandora was represented in this matter by King & Spalding intellectual property partners Kenneth Steinthal and Joe Wetzel, who both are based in the firm’s San Francisco office and who led the victorious trial team, as well as appellate litigation partner Jeffrey Bucholtz (Washington, D.C.), who argued the case in the Second Circuit. Other members of the cross-office Pandora team include associates Blake Cunningham (Austin), Katy Merk and Ethan Davis (San Francisco) and David Mattern (Washington, D.C.).

King & Spalding’s full-service intellectual property practice combines proven first-chair trial and business lawyers with true industry specialists. It consists of more than 90 IP professionals, including more than 80 lawyers, agents and technical advisors with technical degrees, located in the firm’s offices in Atlanta, Austin, Charlotte, Houston, Moscow, New York, San Francisco, Silicon Valley and Washington, D.C. The practice was selected as a 2013 “Intellectual Property Practice Group of the Year” by Law360.

King & Spalding’s national appellate practice has established a reputation for successfully representing clients in major appeals in virtually every litigation forum, including before the U.S. Supreme Court, the federal and state appellate courts, government agencies, and national and international arbitration panels. Law360 selected King & Spalding’s appellate group as a 2013 practice group of the year based on the significance, size, complexity and number of appellate matters it handled. The group has also been recognized by Chambers USA and Legal 500 as among the nation’s best.

About King & Spalding
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