The suits filed by George Lopez, Andrew “Dice” Clay, Lewis Black, the estates of Robin Williams and George Carlin, and others against Pandora conglomerated into one Titanic legal action, pundits are already drawing comparisons between the current lawsuit against Pandora and actions against infamous file-sharing services like Napster and LimeWire, who were targeted by musicians including Metallica for improperly or unfairly permitting their work to be shared and downloaded without compensation to the writers or performers.
Ultimately, suits like the Napster class-action ended up spelling the demise of peer-to-peer file sharing on the scale internet users had become accustomed to. This checkered history explains why streaming services like Pandora, Apple Music, and Spotify are so cautious about making sure they have the right agreements and licenses in place to use these works.
Usually.
[We] Don’t Get No Respect!
Like everyone else in a creative career, stand-up comedians rely on copies of their performances and works to generate revenue when they’re not actively touring or otherwise engaged. Writers count on copies of their books being sold. Actors often realize additional royalties from their on-screen performances or a piece of the action from the film’s theatrical runs and home-video-based incarnations, in addition to the payouts they receive during filming. Artists sell prints of their work, in addition to the far pricier originals. Musicians sell albums, merchandise, and have contracts that guarantee them royalties for using their work in film and TV soundtracks, sheet music, and most prominently on streaming services, which are generally very careful to ensure they have the appropriate licenses and agreements in place to use the work lest they find themselves vulnerable to lawsuits.
All of these rights and payments stem from copyright, which is to say the fact these people or their estates or agents have ownership of the works in question and the right to grant permission to use their work for a specific purpose.
For performance art pieces like music, there is a twofold copyright standard to consider: the actual performance being filmed or documented, and the underlying written material from which the artist creates the performance. Logically, the same rules that govern musical performances and intellectual property should apply to other forms of performance art like stand-up comedy. Until recently, however, it was exceedingly rare for a comedian to take that tack when it came to their performances, and even more unusual for them to actually have a chance of winning. Stand-up comedians have traditionally been overlooked by copyright law as applied and followed by streaming services.
And as the current lawsuit against Pandora shows, they’ve lost their sense of humor about it in a big way!
But now that the legendary George Lopez signed on to a class-action suit against audio streaming giant Pandora that reads like a Who’s Who of modern American comedy, that script seems poised to be flipped in a way that is going to have broad downstream impact (pardon the unintentional pun) on how comedic performances are licensed, broadcast, and compensated. Specifically, Pandora could be in real legal and financial trouble if their allegations contain even a shred of truth.
But do they?
Pandora’s Box
Pandora has a long, public, and “proud” history of cheating comedians. In 2017, Pandora admitted openly to the Securities and Exchange Commission that they knew they were using these performances without proper licensure, which could and in all probability would ultimately leave them open to lawsuits, but Pandora had no intention of ceasing the practice. Their stated reason for not ceasing this blatantly illegal activity was because stand-up comedy was such an essential element of their audience offerings that compensating comedians fairly for their work in the same way as other performance art, or dropping unlicensed works from their library, would decimate their business model and their listener base.
After Sirius XM Radio acquired Pandora for a $3.5 billion stock transfer, these public and almost braggadocious admissions stopped—but the practices Pandora admitted to in 2017 and earlier apparently didn’t.
Black and Lopez both assert they’ve never been paid a dime for their performances being streamed on Pandora. Other comedians allege that Pandora has underpaid them because while Pandora acquired the license for the performance copyright, they failed acquire the license for the underlying written material, which would and should have meant a larger payday for the comics in question. And with Pandora openly admitting to such malfeasance in regulatory filings which are a matter of public record, it would seem that Pandora has made the comedians’ case against it for them.
Can Pandora Win?
On its face, Pandora would be far better off simply to quietly settle out of court and wait for the smoke to clear. A prolonged public trial might result in a flood of current licensors and listeners deserting the site until and unless they clean up their act, devastating both their audience and their income. It would certainly do them no favors either with listeners or other sources of revenue, who would likely be watching the proceedings with very skeptical eyes.
If the case goes to trial, however, Pandora does have one card to play that may at least help mitigate some of the damage.
In intellectual property law, there is a doctrine known as “vigorous defense.” The legal underpinnings of this doctrine are somewhat complex, but the general concept boils down to “If you don’t exercise your IP rights vigorously and in a timely fashion, you lose them.” Pandora could argue that they did unlawfully use these performances, but the statute of limitations has expired for the artists to have meaningfully brought action against Pandora with a realistic expectation of receiving the full statutory damages to which they might otherwise have been entitled. If Pandora admitted in a public forum that they were doing this, as they did in 2017, and no action was taken at the time by the afflicted artists because they knew or should have known at the time that their IP rights were being violated, the test of vigorous doctrine would have been failed and any punitive action assessed by the courts would be at most a token amount and a fraction of what the comics would otherwise be entitled to.
Either way, the “vigorous defense” test most likely wouldn’t obviate the legal need for Pandora to properly license works it made available to its user base moving forward or to compensate the artists for damages for which the statute of limitations had not yet run out. This means that Pandora would still be on the hook for three years’ worth of back royalties, along with any other statutory and punitive damages the courts assessed. Appealing would only further exacerbate the issue and further inflame public sentiment against the company, but Pandora may well decide it’s in the company’s best interests to do so anyway.
No matter how this clash between one of the biggest streaming services in the world and some of the most legendary names in comedy shakes out, one thing’s for sure: No one involved finds this a joke–but SOMEONE will be laughing all the way to the bank!
About John Rizvi, Esq.
John Rizvi is a Registered and Board Certified Patent Attorney, Adjunct Professor of Intellectual Property Law, best-selling author, and featured speaker on topics of interest to inventors and entrepreneurs (including TEDx).
His books include “Escaping the Gray” and “Think and Grow Rich for Inventors” and have won critical acclaim including an endorsement from Kevin Harrington, one of the original sharks on the hit TV show – Shark Tank, responsible for the successful launch of over 500 products resulting in more than $5 billion in sales worldwide. You can learn more about Professor Rizvi and his patent law practice at www.ThePatentProfessor.com
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