A federal judge has granted an appeal request from Kobalt as it faces a push from Spotify to foot a massive damages bill. Photo Credit: Wesley Tingey
With Spotify having scored a victory in a marathon royalties battle against Eminem publisher Eight Mile Style, the presiding judge has temporarily denied the streaming giant’s motion for a massive damages payment from Kobalt.
Judge Aleta A. Trauger signed the corresponding order today, following a filing in which Kobalt urged the court to reconsider its underlying judgement or, alternatively, pause the damages bill pending appeal. DMN obtained exclusive copies of both legal documents, which have arrived over half a decade after Eight Mile levied the initial complaint.
For some quick background – the convoluted courtroom confrontation is decidedly unsuited for inverted-pyramid writing – that original infringement action named Spotify as the sole defendant, and the Harry Fox Agency was added as a second defendant in a 2020 amended complaint.
Then, Spotify in 2020 targeted Kobalt as a third-party defendant; DMN covered this development and all manner of others in detail. Stated concisely, though, the platform expressed the belief that the underlying allegations lacked merit while also claiming that if anyone should be on the hook for the allegedly due royalties and damages, it was Kobalt.
Fast forward past more than a few twists to mid-August of 2024, when the presiding judge, despite acknowledging that “Spotify’s handling of composer copyrights appears to have been seriously flawed,” partially signed off on the streaming service’s motion for summary judgement (and partially granted Kobalt’s own motion).
Keeping the focus on brass-tacks takeaways in the interest of relative brevity, regarding the terms of Spotify’s 2016 blanket license agreement with Kobalt, the court granted the platform’s summary judgement push for indemnification.
Zeroing in on the definition of “administrator,” the language of the agreement, and a whole lot of related subjects, the judge validated the indemnification clause notwithstanding Kobalt’s opposition.
The latter company, the actual contract spelled out in part, would hold Spotify “‘harmless from any and all third party claims, damages, liabilities, costs and expenses.’” On cue, Spotify filed a (sealed) motion to obtain compensation for a presumably huge legal-fees bill.
“In Spotify’s Motion for Award of Damages (Doc. No. 708),” the court wrote of the sealed motion, “it seeks substantial attorney’s fees, for which it has not submitted itemized attorney time entries, and suggests that the court may find it necessary to rely on a special master if the court seeks such documentation for review.”
Predictably, that expensive-sounding proposal didn’t sit right with Kobalt, which promptly urged the court to reconsider the underlying ruling or, alternatively, certify an interlocutory appeal.
As the third-party defendant sees it, the damages question hinges on the adopted definition of “administer,” and specifically whether the indemnification provision extended to works, like the Eminem compositions, for which Kobalt lacked the stateside authority to issue mechanical licenses.
(In the end, following the expiration of a prior deal, that authority ultimately rested with Bridgeport Music, a distinct publisher “closely associated” with Eight Mile Style, per the court’s order on the summary judgement motions.)
“Does the 2016 BMLA [blanket mechanical licensing agreement] require Kobalt to indemnify Spotify for Kobalt’s failure to license a composition over which it lacked U.S. mechanical licensing authority,” Judge Trauger summed up of the central question at play, “but over which it exercised other rights associated with administration, such as non-U.S. mechanical licensing, worldwide synch licensing (subject to publisher approval), and acceptance of license requests?”
Furthermore, it’d “be in the interests of justice and efficiency to allow the question of liability on those claims” – meaning those on which Spotify prevailed over Kobalt – “to be appealed alongside the other issues in this case,” Judge Trauger wrote.
Consequently, setting the stage for this appeal, the court also ordered judgement to be officially entered on all claims save those in favor of Spotify against Kobalt.
