Class Action Filed Against Spotify for Copyright Infringement

David Lowery, individually and on behalf of others similarly situated, has filed a class action against Spotify USA, Inc.(Spotify), alleging that Spotify has, and continues to, unlawfully reproduce and/or distribute copyrighted musical compositions to more than 75 million users via its interactive commercial music streaming service, as well as its offline listening service.

The complaint was filed on December 28, 2015 in the United States District Court for the Central District of California, Civil Action Case Number 15-cv-09929 (BRO) (RAO), and seeks injunctive relief to enjoin Spotify from continuing such alleged copyright violations, to have a third party auditor appointed to identify the owners of the works reproduced and/or distributed by Spotify without Spotify's first obtaining a mechanical license prior to such reproduction and/or distribution, and to require Spotify to remove all such works from its services until it obtains proper licenses for them. The plaintiff also seeks restitution of Spotify's alleged unlawful proceeds, including Spotify's gross profits, compensatory damages in an amount to be ascertained at trial, statutory damages as authorized by the Copyright Act, as well as attorney fees and costs and pre- and post-judgement interest.

Statutory damages may be awarded in the court's discretion up to $30,000 for each infringed work and, if willful, up to $150,000 per infringed work, plus attorney's fees. Therefore, given the scope and breadth of the purported class, the potential damages may well exceed $100 million (of course, these are all just allegations subject to proof of liability and of damages, assuming that class action status is granted).

The plaintiff, David Lowery, alleges he has been a fixture of the music industry for decades, is a prolific songwriter and producer as well as the author or co-author of more than 150 songs for his popular groups Cracker and Camper Van Beethoven.

Spotify, the defendant, is an interactive commercial music streaming service (among other services) that operates an Internet website (www.spotify.com), which permits users to customize listening choices for recorded music and to create Internet "radio stations." It is alleged in the complaint that Spotify claims to have played over 25 billion listening hours of music since its launch seven years ago. Attached to the complaint to substantiate this claim is an announcement by Spotify to the public boasting of such broad reach.

The complaint further alleges that Spotify offers its services to the public via both free non-subscription and premium paid subscription bases. Paid subscribers enjoy numerous specified benefits and users of its premium service pay a monthly fee of $9.99. Specifics of these services can be found at Spotify's website.

The complaint also alleges that Spotify claimed in writing in an exhibit attached to the complaint that as of June 10, 2015, it has 75 million active users and 20 million paid subscribers, and that it has paid more than $3 billion in royalties. In addition, the complaint alleges that Spotify sells the right to advertise to users on its website and mobile applications to earn revenue above and beyond paid subscriptions.

Spotify's alleged "egregious and willful violations" of the plaintiff's and the class members' rights as contained in the complaint refer particularly to Spotify's recent admissions regarding its failure to obtain licenses for the musical works it distributes and reproduces, as well as its failure to compensate copyright owners for its use of their works. In support of these allegations, the plaintiff attaches as an exhibit to the complaint Spotify's May 23, 2014 Comments to the United States Copyright Office's Notice of Inquiry made in connection with the Copyright Office's Music Licensing Study. In those comments, Spotify admits, it is alleged, that in some instances, "Spotify may not be able to identify the copyright owners from the sound recordings provided to Spotify". In addition, it is alleged that Spotify failed to pay songwriter royalties to a publishing company approximately 21% of the time.

One of the major issues raised by this complaint is the system in the U.S. for licensing music, which predates the Internet and all that it entails concerning distribution of music in mobile, streaming and other formats. The inability or difficulty to obtain consents from many of the varied owners of music rights has brought to the fore the tension between the presumed right of the public to gain access to the music, and the copyright owners' right to control the reproduction and distribution of their copyrighted works. A final solution probably should involve federal legislation, but given the mood of Congress these days, that seems highly unlikely, to say the least. Originally published on January 7 of The Entertainment, Arts and Sports Law Blog, an online publication of the Entertainment, Arts and Sports Law Section of the New York State Bar Association.


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