A Lesson for Bars and Restaurants Who Want to Fight Music Licenses

BMI sells copyright licenses allowing bars and restaurants to play any of its 8.5 million musical works on behalf of over 600,000 songwriters, composers, and music publishers.  A golf course restaurant in Canton, Ohio ignored warnings they needed a license for three years, then BMI sued. It didn’t work out too well.

The company that owned the restaurant went bankrupt. Its majority owner was held personally liable for $28,115.80 in damages and legal fees, put under a permanent injunction, and may face more costs at the Sixth Circuit Court of Appeals where he represented himself and lost. Broadcast Music, Inc. v. Meadowlake, Roy E. Barr, No. 13-3933 (6th Cir. June 6, 2014)

Rafters Bar and Grill was an unpretentious restaurant and bar on the edge of a golf course which the court said was known for its taste for rock, everything “from Queen and Pink Floyd to ZZ Top and Lynyrd Skynyrd.” It was “less known for its taste for compliance with the copyright laws.”

Like most lawsuits they file against small businesses refusing to accept reality and pay for copyright licenses when music is performed for their customers, this was another easy case for BMI. The owner of a copyright in a musical composition has the exclusive right to control “public performance” of the work.

I don’t know how many times I’ve heard from an owner “This is America, they can’t do that.” It’s hard to know where to start. Sometimes I try pointing out copyright protection is in the first article of the US Constitution written in 1787, so it’s pretty American.

If Rafters wanted to play Brian May’s We Will Rock You after the Browns won a game, they had to pay his publishing company, Beechwood Music Corporation. BMI collects the public performance money for Beechwood according to their catalog search results.

 All BMI must show a court when it sues a bar or restaurant is evidence that certain songs covered by US copyrights were played from BMI’s catalog without authorization. If recorded music is played, what are the chances of not including a few of their songs out of 8.5 million?

So the only question in these cases often is who must pay. With Rafters bankrupt, the majority owner’s argument was he shouldn’t pay because he didn’t play the music and didn’t even supervise the business day to day. Unimpressed, the court took the time to discuss the concept of vicarious liability of direct copyright infringement for the benefit of everyone else wanting to avoid liability this way.

The Sixth Circuit includes Nashville, Cleveland, and Detroit in its territory. They know about music.

Defendants become vicariously liable for a direct infringement of a copyright by profiting from it and not using their right to stop it. The Supreme Court made this clear in the music file-sharing cases last decade. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster (2005). 

A two part test determines if you’re vicariously liable. If you have the right and ability to supervise the infringing behavior, and if you have a direct financial interest in the infringement, you’re liable. Mr. Barr owned 95% of the Rafters company, and it made money from customers attracted to the place by its music. The court said “the point of the doctrine is to encourage people like Roy to police performances at their restaurants in the first place.” 

Not knowing they played specific songs didn’t matter. The liability protection of Ohio’s LLC laws didn’t matter.

The district court wasn’t sure if Rafters was operating, but because it had shown “a high level of disregard for Plaintiffs’ rights in the past” it issued a permanent injunction just to be sure. If there are future violations of copyrights, contempt of court may join copyright infringement claims.

If BMI, ASCAP, or SESAC want your bar or restaurant to buy a copyright license, there are a few choices. You can stop playing music. You can try to negotiate a more favorable deal on the license. Or you can defy them and maybe become another lesson. This is America, and you will not win.

About Craig Pinkus

Craig Pinkus is a partner in the Intellectual Property Group. He also is a member of the Litigation and the Sports, Entertainment and Media Groups. He assists clients with a broad range of disputes and transactions involving all areas of intellectual property, entertainment, and other complex business arrangements. He has conducted trials and arbitrations throughout the United States and has argued appeals before the Seventh, Sixth and Federal Circuit Courts of Appeal, the Indiana appellate courts, and United States Supreme Court.
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2 Responses to A Lesson for Bars and Restaurants Who Want to Fight Music Licenses

  1. Steve Groth says:

    Great job tying back to the Constitution. Property rights are very American!

    Like

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