Who can sue for copyright infringement? Bluewater v. Spotify

An artist is granted a copyright in their work when they work is fixed in a tangible medium. This means that when a painter creates a portrait, a photographer takes a picture or a musician writes down their song lyrics, a copyright is created. In the United States a copyright can be registered with the library of congress to gain additional protections but registration is not necessary for the copyright to be created. A copyright grants the owner of the copyright the exclusive right to reproduce, distribute, perform, display, transmit, and make derivative works based on the original work. If someone other than the copyright owner exercises on of these exclusive right that can be considered copyright infringement. A copyright owner can file a lawsuit to recover damages for copyright damages and for an injunction to stop future copyright infringement.

The artists that create copyrighted works are frequently not interested in the business of selling the works. The artists are passionate about being creative and producing new material, not the drudgery of contract negotiation and marketing. For that reason there is a robust industry dedicated to the management of copyrights on behalf of artists. These management companies act as agents of the artist to negotiate licensing agreements, collect royalties and to pursue infringement of the copyright. The artist does not sell or transfer the copyright to the management company, rather the copyright owner assigns one of its exclusive rights under copyright to the management company.

An important concept in law is that to file a lawsuit, a plaintiff must have standing. Standing means that the plaintiff is a party to the controversy, the plaintiff has an interest in the outcome of the lawsuit. If a plaintiff does not have standing the case can be dismissed. Copyright law recognizes that a management company that has been assigned an exclusive right of a copyright owner has standing to sue for violations of that exclusive right. It should be noted that the right to sue cannot be separately assigned, a copyright owner must assign one of the executive rights granted by copyright law and the management company can file a lawsuit when that exclusive right is infringed on.

The question then becomes, if a copyright owner assigns an exclusive right to a management company but the copyright owner has some reservations in the assignment, does the management company have standing to sue?

Bluewater Music Services v. Spotify USA Inc., 3:17-cv-01051 (M.D.TN 2017) is a case that deals with this question. The plaintiff in this case is a company which manages the mechanical licensing of music for artists. The defendant is an internet company that broadcasts music. The primary dispute in the case revolves around whether Spotify properly licensed music which is managed by the plaintiff. Spotify is focusing on whether the plaintiff has standing to sue for copyright infringement.

The contract between the plaintiff and the copyright owner stated that anyone may license a copyrighted work, a the statutory mechanical licensing rate, by filing paperwork. The contract also required the copyright owner’s approval if someone wanted to license a copyrighted work for less than the statutory rate. In essence, the plaintiff did not have the power to stop people from licensing the music it managed and if someone wanted to negotiate a lower fee, the copyright owner had to approve it. Spotify claims that this means the plaintiff does not have an exclusive licenses to the copyright and does not have standing.

Spoify made this argument to the District Court, the court did not agree with Spotify. Now Spotify has filed an interlocutory appeal to get the Circuit Court’s opinion.

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