IP News

Ringtone Sales Do Not Require Public Performance License

In In re Application of Cellco Partnership D/B/A Verizon Wireless, No. 09-CV-7074 (S.D.N.Y. Oct. 14, 2009), the U.S. District Court for the Southern District of New York granted Verizon's motion for summary judgment that it did not require a public performance license for musical compositions in order to provide ringtones to its customers.

The American Society of Composers, Authors, and Publishers (“ASCAP”) is a performing rights organization that licenses on a non-exclusive basis the non-dramatic public performance rights to musical works. Pursuant to a consent decree stemming from antitrust litigation filed by the U.S. Department of Justice, anyone desiring a license for the public performance of any ASCAP musical composition may apply to ASCAP for such a license and may perform the music for a fee to be determined later. The Southern District of New York sits as a rate court to resolve any disputes over ASCAP's licensing fees.

In the present case, Verizon filed an application for a determination of a reasonable fee for a blanket license for the public performance of musical compositions in ASCAP's portfolio. Of note, Verizon already pays a royalty to songwriters and music publishers per download for the reproduction and distribution of their musical works. Therefore, only the public performance right under 17 U.S.C. ' 106(4) was at issue.

Verizon sells ringtones to customers who download them through the Internet or through a Verizon telephone. A ringtone cannot be played while it is being downloaded. Verizon's role in a ringtone is to provide a signal to a customer's telephone to indicate an incoming call. That signal is the same regardless of whether the customer has set her telephone to indicate an incoming call with a ringtone.

The court held that Verizon's transmission of a ringtone to a cellular telephone customer does not constitute a performance of a musical work “publicly” as that term is used in the statute. Under 17 U.S.C ' 101, to perform a work “publicly” means: “(2) 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.” (hereinafter the “Transmission Clause”). The court reasoned that the transmission itself is not a public performance since only one subscriber is capable of actually receiving the transmission. ASCAP argued that the Transmission Clause requires analysis of potential audiences and that Verizon's transmission was the first link in a chain of transmissions to the public. The court disagreed, however, and held that a transmission could only be considered “to the public” where it is but one link in a chain whose final link was undisputedly a public performance. Verizon's was not.

ASCAP next argued that there is a public performance of musical works when cell phones play ringtones to signal incoming calls and that Verizon was directly or secondarily liable for those public performances. The court disagreed, reasoning that 17 U.S.C. ' 106(4) exempts performances of a musical work that occur within the “normal circle of a family and its social acquaintances.” The court further opined that to the extent the ringtones were played in the presence of a broader audience and at a level to be heard by others, that playing satisfied 17 U.S.C. ' 110(4), which further exempts from liability those performances not made for any “commercial advantage.”

Finally, ASCAP argued that Verizon itself engages in a public performance when ringtones play in public on customers' phones since it controls the entire series of steps that allow and trigger the performance. The court again disagreed, reasoning that Verizon's only role in the playing of a ringtone is the sending of a signal to alert a customer's telephone of an incoming call, and that signal is the same whether the customer has downloaded a ringtone or not.