## Facts

- ASCAP and BMI are performing rights organizations that aggregate nonexclusive public performance rights from many copyright owners and license those rights to users, including television networks.
- Television networks typically obtained “blanket licenses,” paying a fee for the right to perform any composition in the organizations’ repertories during the license term, without song-by-song pricing.
- CBS historically used blanket licenses for network programming and later sued, alleging the blanket-license system unlawfully restrained trade by eliminating price competition among individual compositions.
- CBS argued that because the blanket license covered all works, networks had no reason to consider price differences among songs, and that direct licensing from individual copyright owners was not practically feasible due to transaction costs and risks tied to already-produced programs.
- After the Supreme Court rejected per se treatment and required rule-of-reason analysis, the case returned to the Second Circuit to assess competitive effects and the feasibility of alternatives such as direct licensing.

## Issues

1. Whether ASCAP’s and BMI’s blanket licenses for nondramatic television performance rights constituted an unreasonable restraint of trade under Sherman Act § 1 under the rule of reason.
2. Whether CBS proved that practical alternatives (especially direct licensing) were not feasible, such that the blanket license effectively foreclosed meaningful competition and produced net anticompetitive effects.

## Decision

- The Second Circuit affirmed judgment for ASCAP, BMI, and their members.
- The court held CBS failed to prove the blanket-license system was an unreasonable restraint of trade under the rule of reason.
- The court found direct licensing was legally available and practically feasible, undermining CBS’s claim that the blanket license coerced networks into a noncompetitive purchasing method.
- The court concluded the record did not show substantial anticompetitive harm outweighing the transaction-cost and clearance efficiencies associated with blanket licensing.

## Legal Principles

- Collective licensing arrangements that are not per se unlawful must be evaluated under the rule of reason by weighing demonstrated anticompetitive effects against efficiencies in the relevant market context.
- A central rule-of-reason inquiry is whether the challenged practice is effectively compulsory because viable competitive alternatives are unavailable or infeasible.
- Where rights are nonexclusive and direct licensing is realistically available, a blanket license is less likely to be an unreasonable restraint, even if it reduces song-by-song price comparison.
- The plaintiff bears the burden to prove, on the evidentiary record, that the net effect of the challenged licensing practice is an unreasonable restraint of trade.

## Conclusion

Applying rule-of-reason review, the Second Circuit upheld ASCAP and BMI’s network blanket-license practice because CBS did not demonstrate that direct licensing was infeasible or that the blanket license caused net anticompetitive effects sufficient to establish an unreasonable restraint of trade under Sherman Act § 1.


Columbia Broad. Sys., Inc. v. ASCAP, 620 F.2d 930 (2d Cir. 1980)