The Obama Department of Justice filed notice on November 11 that it intended to use the peoples money to appeal BMI Rate Court Judge Louis Stanton’s devastating ruling against the DOJ’s bizarre position on “100% licensing”. Professor Steve Winogradsky and I summarized the results of the ruling in this post.
Aside from the terrible legal optics–the appeal is not unlike a prosecutor losing a capital murder case and then appealing–there is an overtly political aspect to the timing of the appeal as David Lowery has pointed out on The Trichordist. Filed on a Friday in the “news dump” time slot immediately following a U.S. Presidential election, the filing was likely to be lost in the news hole.
Why appeal Judge Stanton? First, there is the spite factor. Given that the head of the Antitrust Division is Renata B. Hesse, a former outside lawyer for Google, it should not be a surprise to learn that division head was the driving force behind the 100% licensing position at the DOJ. Given also that Judge Stanton, who has been interpreting the BMI consent decree for many, many years, was so decisive in ruling against the DOJ, that message should have been what every songwriter already knows. The U.S. government’s position was Kafka-esque insanity that has been called out by everyone in the music business as well as Texas Governor Greg Abbott who called on Attorney General Lynch to abandon the DOJ’s position.
Whatever the back story, there is a simple solution to this problem–the incoming administration can simply dismiss the appeal.
How Did This Happen?
Internally at the Antitrust Division, it’s entirely likely that the decision to appeal this ruling was approved by Ms. Hesse. Ms. Hesse was promoted to acting associate attorney general, the DOJ’s third-highest ranking official–but will leave office without a confirmation hearing due in part to the timing of her appointment. A prominent lawyer in the Big Tech legal community, Ms. Hesse is also well-known as someone who nearly exclusively represented Google during a revolving door hiatus in private practice where she protected the interests of the multinational media corporation.
Given her loyalties, it was natural for the Google-backed MIC Coalition to turn to Ms. Hesse when it wanted the government to attack SESAC, one of two U.S. based PROs not currently under consent decree. (Read their letter here.)
It is hard to believe that the DOJ’s decision to appeal the 100% licensing case was taken without Ms. Hesse’s chop given the commitment of the people’s money involved in a lengthy appeal. It is equally hard to believe that Ms. Hesse’s former client had no influence on her decision to grind the songwriters just a little while longer to make her point.
Whatever the motive behind the appeal, it must be said that the BMI ruling also undercuts another event near and dear to Google–the termination of Register of Copyrights Maria Pallante by recent Obama appointee Carla Hayden, the new Librarian of Congress.
There is some circumstantial evidence that Google’s lobbying influence was brought to bear in removing Ms. Pallante, though both Google and Ms. Pallante declined to talk to us. Google’s business model is essentially making money off other people’s content, and the company’s strategy has been to infringe on copyrighted material like books and fight it out later in court. The copyright office administers laws that protect owners.
For example, Ms. Pallante’s office opposed a Justice Department interpretation of licensing that would have undercut collaborations. As it happens, that change was reportedly pushed by a former outside counsel for Google who had moved over to Justice. Ms. Pallante’s view won in court.
Given the campaign to discredit Register Pallante, the Googlers now left in the bunker simply could not allow that home run by Register Pallante to stay on the scoreboard without going into extra innings with an appeal.
It should also not be forgotten that Songwriters of North America sued the DOJ over this very 100% licensing ruling, a case that is largely concerning the DOJ’s mishandling–which inevitably will mean Ms. Hesse’s mishandling–of the 100% licensing position and its refusal to provide written versions of the DOJ’s planned statement for public comment. If the case survives summary judgement, the discovery could include the filing of this appeal as an extension of the mishandling of the process.
Finally, you have to wonder why the Obama Justice Department is trying to back their successors into a corner with this odd appeal so close in time to when the new President will take over.
But therein lies a simple solution to the entire caustic episode, however. In a few weeks, the Department of Justice will have a new boss. President Trump and his new Attorney General could easily decide to stand by the analysis of the subject matter expert–the BMI Rate Court Judge–and simply dismiss the case to end the madness.