A federal judge has rejected one of Pandora’s key arguments in its legal battle with comedians, dismissing claims that a licensing group called Word Collections was operating as an illegal comedy “cartel.”
Months after a slew of comedians (including the estates of George Carlin and Robin Williams) sued Pandora to seek more royalties for spoken-word content, the streamer fired back in May with allegations that the comics had violated federal antitrust laws by doing so.
Pandora claimed that by teaming up with Word Collections to demand such royalties, the comedians were effectively trying to create a “monopolistic portfolio” of comedy rights, aimed at “dramatically increasing” the prices streamers must pay for comedy.
But in a ruling on Wednesday, Judge Mark C. Scarsi dismissed those claims. He said Pandora had not properly alleged that Word Collections and the comedians had conspired to fix prices, nor that they amounted to an illegal monopoly in the comedy world.
“Pandora’s description of Word Collections’ impressive but short list of comedians whose works it licenses does not suffice to demonstrate that Word Collections owns a dominant share of the comedy recording market in the United States,” the judge wrote.
The ruling is a blow for Pandora, though not a fatal one. The judge left open the possibility that the streamer could re-raise the issue, and the company can still pivot to other defenses, like the more fundamental argument that comics are simply not legally entitled to the added royalties they’re seeking.
A rep for Pandora declined comment.
Judge Scarsi’s decision came amid a long and tricky fight over how and when streamers like Pandora must pay for the comedy recordings that appear on their services – a more unsettled legal question than one might think.
Every piece of music is covered by two copyrights – one for the sound recording itself and another for the underlying work that’s been recorded. Streaming services like Pandora pay for both when it comes to songs, but for comedy records, they’ve typically only ever paid for the recordings.
Part of the problem is that there is no society like ASCAP or BMI to collect such royalties for spoken works. Over the past 18 months, two groups – Word Collections and Spoken Giants – have moved to fill that void and have begun asking streaming services to pay those fees for comedy; those efforts are what prompted Spotify to pull down some comedy content last fall.
And since February, a number of comedians have taken the issue to court, accusing Pandora of willfully refusing to pay for content: “Pandora did what most goliaths do: it decided it would infringe now to ensure it had this very valuable intellectual property on its platform to remain competitive, and deal with the consequences later. Later is now.”
Pandora has sharply refuted the allegations, arguing it has “always satisfied its copyright obligations” by paying “millions of dollars in license fees every year” for comedy recordings. It says that comedy records are less akin to music and more like movies, for which streamers like Netflix typically pay only a single, all-encompassing license, regardless of the various elements that are used in the film.
If Pandora’s antitrust counterclaims remain dismissed, those core arguments about copyrights and licenses could now take center stage in the case.
Richard Busch, a prominent music litigator who is representing the comedians, told Billboard on Thursday that he and his clients are “obviously very happy with the decision.”
“We always believed the antitrust counterclaim Pandora brought was ludicrous and a transparent attempt to intimidate these legendary comedians,” Busch said. “The court could not have been clearer in its ruling. We now hope to be able to focus on and litigate the serious copyright infringement claims that are at the heart of this litigation.”
