A United States federal court in New York has issued a split ruling in the mechanical royalty dispute between Spotify and the Mechanical Licensing Collective (MLC), allowing the case to continue while rejecting the MLC’s request for an immediate appeal.
District Judge Analisa Torres denied the MLC’s motion to file an interlocutory appeal, a mid-case appeal, against an earlier decision that Spotify Premium‘s addition of audiobooks qualifies as a bundle, which lowers Spotify’s mechanical royalty rates.
Rulings in the case#
- The MLC cannot immediately appeal the bundle classification.
- Spotify cannot use an “unclean hands” defense to bar the MLC’s claims.
Torres also ruled in the MLC’s favour on Spotify’s attempt to use the “unclean hands” doctrine. Under United States law, that doctrine involves accusing an opponent of inequitable behaviour. Spotify had argued it was being treated unfairly because the MLC had not sued other streaming services over their own music-and-audiobooks bundles.
The judge rejected that argument.
“This defense has no basis in law… no authority stands for the proposition that a party’s choice to selectively enforce copyright law bars enforcement of that law altogether.”
What happens next#
The litigation continues, including the MLC’s amended lawsuit focusing on Spotify’s reporting and royalties calculations.
In its most recent financial results, Spotify said that if the MLC were to be “entirely successful” in the dispute, the streaming service might have to pay around €437m in additional royalties covering the period from 1 March 2024 to the end of June this year to the MLC.
