Document: 441 U.S. 1 99 S.Ct. 1551 60 L.Ed.2d BROADCAST MUSIC, INC., et al., Petitioners,v.COLUMBIA BROADCASTING SYSTEM, al. AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, Petitioners, v. COLUMBIA Nos. 77-1578, 77-1583. Argued Jan. 15, 1979. Decided April 17, Syllabus Respondent Columbia Broadcasting System, Inc. (CBS), brought this action against petitioners, American Society of Composers, Authors and Publishers (ASCAP) Broadcast Music, (BMI), their members affiliates, alleging, inter alia, that the issuance by ASCAP BMI to CBS blanket licenses copyrighted musical compositions at fees negotiated them is illegal price fixing under antitrust laws. Blanket give licensees right perform any all owned or affiliates as often desire for a stated term. Fees are ordinarily percentage total revenues flat dollar amount, do not directly depend on amount type music used. After trial limited issue liability, District Court dismissed complaint, holding, license was per se violation Sherman Act. The Appeals reversed remanded consideration appropriate remedy, holding issued television networks form Act established copyright misuse. Held: does constitute unlawful Pp. 7-25. (a) "It only after considerable experience with certain business relationships courts classify violations Act." United States Topco Associates, Inc., 405 596, 607-608, 92 1126, 1133-1134, 31 515. And though there has been rather intensive scrutiny licenses, hardly counsels should outlaw restraint trade. Furthermore, States, its amicus brief in present case, urges which consent decrees earlier actions Government authorize networks, Congress, Copyright 1976, itself chosen employ similar practices. Thus, no nearly universal view subject automatic condemnation Act, than careful assessment rule reason generally applied cases. 7-16. (b) In characterizing conduct issuing rule, Court's inquiry must focus whether effect and, here because it tends show effect, purpose practice threaten proper operation predominantly free-market economy. "naked restrain[t] trade except stifling competition," White Motor Co. 372 253, 263, 83 696, 702, 9 738, but accompanies integration sales, monitoring, enforcement unauthorized use, would be difficult expensive problems if left individual users owners. Although fee set competition among owners, although use covered license, cannot wholly equated simple horizontal arrangement competitors quite different from anything owner could issue. light background, plainly indicates over years, face available alternatives including direct negotiation provided an acceptable mechanism least large part market performing rights compositions, automatically declared many manifestations. Rather, subjected more discriminating examination reason. 16-24. (c) Appeals' judgment licensing practices misuse dependent thereon, reversed, case further proceedings consider unresolved issues may have properly Appeals, employed industry. 24-25. 2 Cir., 562 F.2d 130, remanded. Jay H. Topkis, New York City, petitioners No. Amalya L. Kearse, 77-1578. Frank Easterbrook, Washington, D. C., curiae, special leave Court. Alan J. Hruska, respondents both Mr. Justice WHITE delivered opinion This involves laws respondent affiliates.1 basic question presented * operates one three national commercial supplying programs approximately 200 affiliated stations telecasting 7,500 network year. Many, all, these make recorded soundtrack. also owns radio various cities. It " 'the giant world rights,' 'No. outlet history entertainment.' "2 3 Since 1897, vested composition exclusive work publicly profit,3 legal self-enforcing. 1914, Victor Herbert handful other composers organized those who formed profit were so numerous widespread, most performances fleeting, practical matter impossible owners negotiate detect uses. "ASCAP 'clearing-house' solve problems" associated music. 400 F.Supp. 737, 741 (S.D.N.Y.1975). As today, 22,000 grant nonexclusive nondramatic works, distributes royalties accordance schedule reflecting nature factors. 4 BMI, nonprofit corporation broadcasting industry,4 1939, represents some 10,000 publishing companies 20,000 authors composers, much same manner ASCAP. Almost every domestic repertory either ASCAP, million million. 5 Both organizations operate primarily through Radio broadcasters largest music, almost hold BMI. Until litigation, held continuous basis since late 1940's had never attempted secure ASCAP5 members. Id., 752-754. 6 complaint filed charged Act6 laws.7 argued monopolies fixing, tying arrangement, concerted refusal deal, copyrights. Court, denying summary defendants, ruled did fall within rule. 337 394, 398 (S.D.N.Y.1972). 8-week trial, court rejecting again claim § feasible undue trade, tying, copyrights, monopolization. F.Supp., 781-783. 7 Though agreeing factfinding disturbing conclusions theories liability,8 140 (CA2 1977). conclusion, without more, settled liability misuse,9 required reversal judgment, well remand remedy.10 8 petitioned certiorari, presenting questions applicability constitutes cross petition challenge failure sustain claims. We granted certiorari importance 439 817, 77, 58 107 (1978). Because we disagree respect illegality reverse cause proceedings. II construing applying Act's ban contracts, conspiracies, combinations agreements "plainly anticompetitive," National Professional Engineers 435 679, 692, 98 1355, 1365, 55 637 (1978); Continental T.V., GTE Sylvania, 433 36, 50, 97 2549, 2558, 53 568 (1977), "lack . redeeming virtue," Northern Pac. R. 356 1, 5, 78 514, 518, 545 (1958), they conclusively presumed pro valid useful tool policy enforcement.11 fix prices goods services activities category.12 But easy labels always supply ready answers. 10 To CBS, "price fixing" literal sense: houses joined together into organization sets sells.13 simply determining two potential literally "fixed" "price." used field, shorthand way describing categories behavior applicable. approach alone establish particular types anticompetitive" very likely "redeeming virtue." Literalness overly simplistic overbroad. When partners fixing," See Addyston Pipe & Steel Co., 85 F. 271, 280 (CA6 1898), aff'd, 175 211, 20 96, 44 L.Ed. 136 (1899). necessary characterize challenged falling category apply label "per fixing." That will often, always, matter.14 11 Consequently, recognized 1133, 515 (1972), "[i]t ." 738 (1963). examined like before; indeed, "[i]n dealing industry confront conditions law sui generis." F.2d, 132. B 12 litigation cases involving arisen out efforts creators collect public performance entitled already indicated, originated possible facilitate dealings between involve active line commerce, surprising that, found, "[n]either nor stranger litigation." 743. 13 Department first investigated allegations anticompetitive 50 years ago.15 A criminal 1934, midtrial continuance returned courtroom. separate complaints 1941, then offered arbitrary being result pool.16 sought enjoin ASCAP's powers require organization. decree imposed tight restrictions operations.17 Following relating industry, successful private movie theaters,18 arrangements foreign organizations, 1941 reopened extensively amended 1950.19 14 Under decree, still substantially controls works performance. Members, therefore, retain individually performances, along purposes. forbidden specified unless user requested writing so. making written application period time per-program basis. insist based program played, offer applicant genuine economic choice common license. If putative licensee unable agree days, determination reasonable fee, having burden proving reasonableness.20 15 1950 time, continues primary instrument conducts decree. twice construed selected portions repertory.21 remains true guarantees availability members; agreed, impediments preventing desire. Historically, done 1946, taken until suit arose demanded kind license.22 16 Of course, even entered behest Antitrust Division, immunize defendant actions, contemplated violate nonparties. Sam Fox Publishing 366 683, 690, 81 1309, 1313, 604 (1961), involved ignored Federal Executive Judiciary carefully scrutinized conduct, practices, terms stand provide consideration, supervision, perhaps invalidation asserted practices.23 circumstances, unique indicator competitive virtues search values sure vain.24 bound Division's fact life completely analyzing practice. id., 694-695, S.Ct., 1315-1316. might remove naked price-fixing scheme ambit but, discussed infra, Part III, uncertain spurred purpose, restraining composers. 17 decrees, legality suits infringement. raised defense parties stipulated each station holder his radio. Against relying heavily Ninth Circuit rejected claims combination constituted fixing. K-91, Gershwin Corp., (1967), cert. denied, 389 1045, 88 761, 19 838 (1968). 18 Justice, principal responsibility enforcing administering relevant agreed reached Circuit. submission curiae opposing station's "some central agency holders pool wish them." Memorandum Amicus Curiae Pet. Cert. O.T. 1967, 147, pp. 10-11. elaborated what thought meant area: "The discriminatingly realities. There situations permitted joint selling agencies pooled activities, strict limitations guarantee abuse collective power thus created. Associated Press 326 [65 1416, 89 2013]; St. Louis Terminal, 224 383 [32 507, 56 810]; Appalachian Coals, 288 344 [53 471, 77 825]; Chicago Board Trade 246 231 [38 242, 62 683]. appears us such situation. extraordinary number spread across land, ease broadcast, sheer volume enormous quantity year, impracticability negotiating composition, ephemeral combine create music." (footnote omitted). concluded circumstances neither unreasonable 21 evidenced view. disagrees authorizes takes position, however, context 22 Finally, note Congress itself, new created compulsory secondary transmissions cable systems "[n]otwithstanding provisions laws, claimants themselves proportionate division them, lump file jointly single claim, designate agent receive payment behalf." U.S.C. App. 111(d)(5)(A). newly jukeboxes payable performing-rights societies can prove entitlement share. 116(c)(4). Moreover, requiring noncommercial pay provision laws" "may agents negotiate, to, pay, payments." 118(b). controlling, reflect economically beneficial circumstances. 23 violative Act,25 so, III 24 views results prior lower cases, opinions experts about merits while independently examine practice, factors caution too easily finding invalidation. A. 25 preliminary matter, mindful appear contain. If, held, whenever why profit?26 Likewise, behalf violations, equally establishing uses setting standard described use? 26 apparently saved applications, seems accommodate flexibility observations remedy tend impeach liability.27 27 prefer authorized, indeed directed, per-use rates use. 747 n. 7.28 conjunction injunction forbidding member own works.29 called upon determine board. sure, holding. 28 place, commerce allegedly restrained, exists Those liable statutory damages infringement willful financial gain, penalties.30 nothing 1976 slightest intended weaken control compositions. Quite contrary true.31 confer otherwise expect reasonably effectuate deemed Otherwise, anticipated protected exist pale reminder envisioned.32 C 29 More generally, rule,33 our see Gypsum 438 422, 436 13, 2864, 2873 57 854 (1978), economy—that is, facially restrict decrease output, portion market, instead designed "increase efficiency render markets less, competitive." Id. 16, 2875 16; U.S., 688, 1363; Sylvania 2558 4, 517. 30 it, (1963), Sullivan, Handbook Law 59, p. 154 (1977). developed situation marketplace: thousands users, millions Most want unplanned, rapid, indemnified access reliable method collecting Individual sales transactions expensive, monitoring enforcement, especially resources Indeed, recognize, costs prohibitive stations, nightclubs, restaurants, 140, 26, milieu arose. middleman obvious necessity negotiations, virtual impossibility, avoided. Also, presuppose intricate uses, reporting problem policing task owner. public-performance largely around single-fee gave unlimited protection major user-created competitor, came scene, turned 32 With advent changed, advantages far less when individuals public.34 reduces absolutely creating sold few, thousands,35 times, obviates need closely for.36 provides unavailable vast majority houses. bulk consequence achieve efficiencies, aggregate established. D 33 substantial lowering costs, course potentially sellers buyers, differentiates licenses. composed plus aggregating service. Here, whole truly greater sum parts; extent, product. characteristics: allows immediate delay negotiations37 great material. Many consumers clearly characteristics cost marketable package,38 small-performing occasionally compete licenses.39 extent product, really offering sellers, seller raw material.40 short, made inherently fully effectively.41 E 34 doubt—enough counsel rule—about threatens "central nervous system economy," Socony-Vacuum Oil 310 150, 226 811, 845 84 1129 (1940), pricing free market's means allocating resources. Not actual impact restraints. Mergers eliminate competition, illegal, withstand attack existing standard. Joint ventures cooperative usually unlawful, schemes, where agreement product all. 35 blanket-license competitors. sell mask markets.42 restraints placed ignored. found legal, practical, conspiratorial impediment CBS's obtaining licenses; real choice. 36 background mind, enough alternatives, attacked, ultimately survive attack, before today. IV 37 noted, 27, supra, enigmatic remarks departed court's strict, invited analysis. general import 9, Appeals.43 include preserved Appeals.44 38 consistent opinion. 39 ordered. 40 STEVENS, dissenting. 41 holds species categorically I remands leaving open rule-of-reason inquiry. think now answered affirmatively. 42 ample precedent affirmance ground differs rationale, modify judgment.1 directed fashion relief additional forms well.2 Even conclusion "illegal entirely petitioners' all-or-nothing violates reason.3 43 decide remand. my necessary.4 record full one, extensive discovery eight weeks trial. findings thorough supported. They reveal significant adverse competition. therefore affirm Appeals. December 1969, president wrote requesting "promptly provide, effective January 1970, payments measured your music."5 responded stating considered request treat such,6 per-composition basis.7 Rather pursuing discussion, instituted suit. 45 Whether letter demand relevant, relief. For seriously questioned, steadfastly adhered overall licenses,8 notwithstanding requests authorizations. 1971 NBC 2,217 specific compositions,9 group authority purchasing.10 Neither ever entire portfolio, experimental response sufficient policy, lawsuit surely is. repertoire—rather decision themselves—that raises serious case. 46 blanket-only sources copyright, patent, monopoly privileges. rules prohibit patentee enlarging conditioning purchase unpatented goods,11 refusing patent another, applicable copyrights.12 47 clear, mere several patents package covering illegality. point Automatic Mfg. Hazeltine Research, 339 827, 834, 70 894, 898, 94 1312, reconfirmed Zenith Corp. 395 100, 137-138, 1562, 1583-1585, 129. unquestionably correct inventory not, standing alone, unlawful. identify important limitation former, refused 831, 896. latter refusal. 140-141, 1585-1586. 48 offers side drawn distinction: unlike Hazeltine, copyrights perfectly possible—at matter—for publishers whatever he alternative alters blockbooking blanket-licensing policy. insistence condemned package-licensing While instructive, answer 49 depends evaluation market. And, permissible small vendor, coercion present, company dominates market.13 tells character dominated ASCAP-issued licenses.14 Virtually repertoire again, virtually exception, 51 patently discriminatory.15 purchases repertoire, needs satisfied selection. pays unrelated quality actually or, probably system. system, user's advertising revenues,16 measure reflects customer's ability pay17 totally factors—such cost, quality, product—that normally affect requires buy which, beyond "reasonable" getting,18 higher choose spend classic example discrimination. 52 establishes compositions.19 play popular current hit prime unknown soap opera. unaffected programs, incentive economize by, example, substituting songs favorites reducing program. thereby encourage larger share valuable expected characterized passed frequency music,20 tendency increase rewards expense known. Perhaps prospect event unlikely, songwriter opportunity try break sale unusually low price. absence opportunity, however unlikely be, characteristic cartelized market.21 state explained competitively, limited—and restrictive—licenses feasible. disclose music-performing basis, composer publisher fact, compensates precisely bases.22 distributions calculated collected way. shows govern, do. "synch" exists,23 motion picture discontinued,24 promptly industry.25 sum, demonstrates highly competitive, 54 describes firms engaged single, dealing, logical conclude restrained unreasonably. argues, deal holders. failed compelled take introduced evidence suggesting publishers, "disinclined" network, unpersuasive exposure.26 arguable go exploit destructive purveyors driving down level. none lawful, injunctive request. deprive complain restrained. Large small, victim conspiracy himself wrongdoer, forfeited law.27 excessive harm good justify legislative exemption Act.28 oligopolist adversely income considerations conduct. basically, underlying argument viewed acted complete freedom choosing supported findings. find cancel "tomorrow" continue programming networks. Nor risk expense. during dollars annual able develop needed machinery enter contracts.29 words, barriers paying significant, insurmountable. Far immunity findings, confirm willing assume risks attempt succeed preclude smaller powerful buyers foreclosed market.30 Despite size, obtain incurring unprecedented risks. fear unpredictable consequences, coupled predictable delays change purchasing inhibits management embark crusade. bargain forestall crusade, cure marketwide restraint. 59 Whatever made, clear unduly company's authorized answer. serve forever, appearance entry. judicial intervention, eventually broken benefits doing outweigh commencing dealing.31 lawful. An produces discrimination entry unreasonably restrains expectancy. History suggests, enduring character. aggregations scrutinized. duty aggregation Our repeatedly stressed limit privileges conferred strictly scope grant. discloses limits exceeded exercise exceed argues significantly component parts. premise, monopolistic proscribed certified class action. 771, quoting witness. leading publisher, subsidiaries world's manufacturer records tapes. Ibid. 6, Stat. 481. leader disposed interest 1959. 742. Unless otherwise, references well. 20, infra. §§ 2. seeks declaration 741. affirmed rejection monopolization contentions 132, 135, 141 At suggestion, solely 29. went suggest guidelines indicating despite forbidden. said: "Normally, price-fixing, price-fixing—in think, fashioned ensure negotiations prohibited 'naked restraint' ineluctably doomed extinction. compel who, reason, deem desirable. includes covenant sue indemnification others. "Our objection disinclination compete. objections removed engage licensing." (footnotes "This principle unreasonableness makes benefit everyone concerned, avoids incredibly complicated prolonged investigation involved, related industries, effort unreasonable—an fruitless undertaken." (1958). (1977); 609 10, 1134 (1972). 14, complains regardless contain little how copyrights: "Sound indicate convenient value agreement. Petitioner not. What acquired privilege developments desired 1312 (1950). 129 (1969). Cf., e. g., McKesson Robbins, 351 305, 76 937, 100 1209 (1956) (manufacturer/wholesaler independent wholesalers products manufactured); (1940) (firms controlling "surplus" gasoline intent increasing price); Trenton Potteries 273 392, 377, 71 700 (1927) (manufacturers distributors 82% vitreous pottery fixtures uniform prices). Cohn, Broadcasters Geo.L.J. 407, 424 91 (1941). E. Civ. 13-95 (S.D.N.Y.1941), 3-4. 1940-1943 Cases ¶ 56,104 (S.D.N.Y.1941). Alden-Rochelle, 80 888 (S.D.N.Y.1948); M. Witmark Sons Jensen, 843 (D.C.Minn.1948), appeal sub nom. Berger Amusement 177 (CA8 1949). 1950-1951 62,595 (S.D.N.Y.1950). original reported 56,096 (E.D.Wis.1941). 1966 following 1964. 71,941 (S.D.N.Y.). vary respects. specify agree. Nonetheless, stipulated, below accepted, "CBS difficulty, members." 745. (Application Shenandoah Valley Broadcasting, Inc.), 208 896 (S.D.N.Y.1962), 331 117 (CA2), 377 997, 1917, 1048 (1964); Co.), 73,491 (S.D.N.Y.1970). (Motion Metromedia, 341 1003 1965). did, 1971, frequently variety shows. acquire remaining theme packagers. supra. 62,595, 63,756. Cf. n.16. unthinking upset balancing procompetitive presumably worked cited 18, theaters "perform" pictures' soundtracks. barred assigning producers recording licensed, effectively Certain appearing amici argue extend effect. Buffalo 5670 (SDNY, Nov. 1978). board permit sufficiently realized follow context. Instead, addition licensing. susceptible rationale unusual "[t]he extinction." 140. contrary, "serve need" some. This, us, approach, yield readily bobtailed sense unaccompanied analysis demonstrating Surely, abandoned confined suing infringers, said consent. 139-140, alleged "wholly impracticable" houses, says exactly enjoined granting business. 506. Koenigsberg, Act: Advances Creator, Cleve.St.L.Rev. 515, 524, 528 Silver Stock Exchange, 373 341, 1246, "consumed" people creator's knowledge, "owner" reimbursement property enforce rights. Twentieth Century Music Aiken, 422 151, 162, 95 2040, 2047, (1975). size monitor inefficient duplicating other's merely subsume burdensome 690-692, 1364-1366, else start. changes technology marketing techniques undercut justification 4,000 8,000 762. distributing members, relies networks' Timberg, Aspects Merchandising Modern Music: Consent Judgment 1950, Contemp.Prob. 294, 297 (1954) ("The disk-jockey's itchy fingers bandleader's restive baton, said, wait contracts formal acquiescence characteristically author"). Significantly, deals nature, dramatic rights, musicals, advance sheet recording, synchronization, licensed Grinnell 384 563, 572-573, 86 1698, 1704-1705, 778 (1966); Philadelphia Nat. Bank, 374 321, 356-357, 1715, 1737-1738, 915 Comment, Associations Laws, Ind.L.J. 168, 170 Garner, : Licensing Provisions Amended Final Bull.Copyright Soc. 119, 149 (1975) ("no nation world"). product—a simultaneously incentives produce, decreased normal undesirable effects cartel. get increased revenue distributions, productivity consumer satisfaction. 217, 841 (distinguishing Bd. 231, 683 (1918), "was creation market"); 401, 381 "a market"). ('sellers') 'products' (compositions) 748. nevertheless monopolized submissions, disturb latter's respects, particularly challenging address issue, insists preserve court. event, matter. States' role Telephone 434 159, 166 8, 364, 369 376; Dayton Education Brinkman, 406, 419, 2766, 2775, 851; Massachusetts Mutual Life Ins. Ludwig, 426 479, 480-481, 96 2158, 2159, 784; Railway Express 265 425, 435, 560, 68 1087. 140-141 ante, (describing ordered "unusual" approach). throughout me clear. 134. ("CBS contends tie-in coercive device, "); ("As arguments grounded factual 'bypass' noted contention erroneous. fail record"); Brief Respondents 41. 753 counsel, next directors meeting, regarded BMI's stated: Decree explore you." 753-754. 12, 21. 56,104, 404 Analytically, difference two. covers repertoire; miniblanket long-term 30-33, 1964), 1048. Mercoid Mid-Continent Investment 320 661, 64 268, Ethyl Gasoline 309 436, 618, 852; International Business Machines 298 131, 701, 1085; Shoe Machinery 258 451, 363, 66 708. condemning "blockbooking" pictures, patents. Paramount Pictures, 334 915, 1260; Loew's 371 38, 97, 11. Tampa Electric Nashville Coal 365 320, 334, 623, 631, 580 (upholding requirements contract "[t]here dominant position Standard Fashion [Co. Magrane-Houston 346, 360, 653]; myriad outlets volume, industry-wide 293, 69 1051, 93 1371]; restrictive Salt 332 20]"); Times-Picayune 345 594, 610-612, 73 872, 881-882, 1277 because, affected 'insignificant insubstantial,' occupy "dominant position" market). enjoy 608-609, 880-881, proof compulsion required, cf. Royster Drive-In Theatres, Broadcasting-Paramount 268 246, 251 1959), 361 885, 156, 121; Milwaukee Towne Loew's, 190 561 (CA7 1951), 342 909, 72 303, 680. critical arrangement: "court believes probable foreclose affected." 327, 628. opinion, encompass Cirace, ASCAP: Economic Analysis Political Problem, Ford.L.Rev. 277, 286 (1978) ("the monopolist reap perfect confronting posed terms"). commencement action, amounted 1.09% net receipts sponsors deductions. 2.5% receipts; recent paid percentage, Jt.App. CA2 75-7600, E1051-E1052, E1135. 288: inception, exhibited discriminate gross discriminatory grants amounts, depending pay. effectiveness enhanced license." receipt application, "advise deems requested." days Southern "reasonable fee." 63,754 contains fee. expert, Robert Nathan, unequivocal point: "Q. Is compositions? "A. No sir." Tr. 3983. 15. distinguishes feature, theme, distribute gives compositions." 1960 option receiving deferred plan compensation length membership status individual's works. 69,612, 76,469-76,470 (S.D.N.Y.1960). P. Areeda Turner, 280-281, 342-345 286-292. song synchronization film videotape, obtained separately controlled (S.D.N.Y.1948). 759-763; 775-777 (testimony Albert Berman, managing director Harry Agency, Inc.). Television synch handled serves broker publishers. 767-771. Perma Mufflers, Parts 392 134, 138-140, 1981, 1984-1985, 982; Simpson Union 16-17, 1054-1055, 98; Kiefer-Stewart Joseph Seagram Sons, 340 214, 259, 261, 219. 689-690, 1364, 637. 762-765. user, transaction prohibitively high, routinely handling requests. writers support dealing. 767. apprehension overcome, exposure, users. venture substantial. One risk, traced relates "in can"—music performed movies network's inventory, accumulate inventories can." pointed "If [the stations] discontinue already-produced condition 'in can.' bilateral monopoly. indeterminate monopoly, terminate can' allow future identified price; termination profitable. ensures continuation preferable." inconsistent reject points out, addressed essentially claim; "the possibility owners' self-interested, non-coercive demands CBS' dropping high 'termination penalty' account 23.

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