## Facts

- Pandora operated a non-interactive internet music-streaming service requiring public performance licenses for musical works.
- ASCAP, a performing rights organization, licensed public performance rights under an antitrust consent decree (AFJ2) that obligates it to offer licenses and permits a federal “rate court” to set reasonable fees if negotiations fail.
- Major music publishers (Sony/ATV, Universal, and EMI) attempted to “partially withdraw” from ASCAP by removing ASCAP’s authority to license their works to “new media” services (including Pandora) while leaving ASCAP able to license those works to traditional users.
- Pandora sought summary judgment that AFJ2 required ASCAP to offer a blanket license covering all works in the ASCAP repertory, including works subject to attempted partial withdrawal.
- In separate rate-court proceedings, Pandora petitioned for a judicially set fee for a blanket license for January 1, 2011 through December 31, 2015.
- After a bench trial, the district court set the rate at 1.85% of Pandora’s relevant revenue for the entire 2011–2015 term.
- ASCAP and the publisher intervenors appealed the partial-withdrawal ruling; ASCAP also appealed the rate determination for 2013–2015.

## Issues

1. Whether AFJ2 permits publishers to partially withdraw from ASCAP for a subset of licensees (e.g., new-media services) while remaining in ASCAP for other users, thereby limiting Pandora’s access to a blanket license covering those works.
2. Whether the district court committed legal error or clear error in setting a blanket-license fee of 1.85% of revenue for 2011–2015, including its selection and rejection of proposed benchmarks.

## Decision

- The Second Circuit affirmed the summary judgment ruling that AFJ2 unambiguously bars partial withdrawals of public performance licensing rights by category of licensee.
- The court held that works subject to attempted partial withdrawal remained in the ASCAP repertory for purposes of Pandora’s requested blanket license, and ASCAP was required to offer a license covering those works.
- The Second Circuit affirmed the rate order, holding the district court did not clearly err in determining that 1.85% of revenue was a reasonable fee for the full 2011–2015 term.
- The court upheld the district court’s rejection of alternative benchmarks proposed by ASCAP and the publishers and found the legal determinations supporting the rate sound.

## Legal Principles

- Under ASCAP’s antitrust consent decree (AFJ2), once a work is in the “ASCAP repertory” (i.e., ASCAP has the right to license it), ASCAP must offer licenses for that work to requesting users on a nondiscriminatory basis; AFJ2 does not allow media- or user-specific fragmentation through partial withdrawals.
- AFJ2’s licensing structure (including blanket licenses and rate-court review for reasonable fees) is construed to preserve access to the full repertory and to limit ASCAP’s market power; private policy preferences of rightsholders cannot override unambiguous decree text.
- In AFJ2 rate-court proceedings, appellate review is deferential to factual findings; rate determinations and benchmark assessments are upheld absent clear error, while legal conclusions are reviewed de novo.

## Conclusion

The Second Circuit held that ASCAP’s consent decree prohibits publishers from partially withdrawing licensing authority for particular user categories and affirmed a rate-court determination setting Pandora’s blanket-license fee at 1.85% of relevant revenue for 2011–2015.


Pandora Media, Inc. v. Am. Soc'y of Composers, Authors & Publishers, 785 F.3d 73 (2d Cir. 2015)