Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.
Speaker 1: It's official. A federal judge has ruled that Google is
Speaker 1: a monopolist, a stunning defeat for the search giant and
Speaker 1: a huge win for the government in its biggest antitrust
Speaker 1: showdown against a tech giant in a quarter century. And
Speaker 1: make no mistake, the Biden administration and Attorney General Merrick
Speaker 1: Garland have made taking on the tech giants a priority.
Speaker 2: Monopolies threaten the free and fair markets upon which our
Speaker 2: economy is based. They stifle innovation, They hurt producers and workers,
Speaker 2: and they increase costs for consumers.
Speaker 1: DC judge on mit Meta found that Google broke the
Speaker 1: law by exploiting its dominance to squash competition and stifle innovation.
Speaker 1: The sanctions could be anything from a breakup of the
Speaker 1: company to unwinding its excluded deals, but that won't be
Speaker 1: decided until after yet another trial. Of course, Google says
Speaker 1: it will appeal. Joining me is anti trust Expert William Kavasik,
Speaker 1: a professor at GW Law School and the former chair
Speaker 1: of the Federal Trade Commission, will this decision stand as
Speaker 1: a landmark, along with say the at and t Standard
Speaker 1: Oil and Microsoft cases.
Speaker 3: It's the beginning of a process that could become a landmark,
Speaker 3: but there's still many rivers to cross before this specific
Speaker 3: contest is over. We have a proceeding coming up this
Speaker 3: fall on the remedy to be issued. Judge Meta will
Speaker 3: be writing an opinion on what that remedy should be,
Speaker 3: probably issues that by the end of the year. But
Speaker 3: then we go through the inevitable process of appeals where
Speaker 3: Google and maybe the government point is, decide to appeal.
Speaker 3: Different issues raise different points about Judge Meta's decisions on
Speaker 3: liability and remedy. So this promising first step for the
Speaker 3: government is only the first step in the process that
Speaker 3: will lead through a fairly difficult gauntlet of appeals. And
Speaker 3: I think ultimately this is a case that gets to
Speaker 3: the US Supreme Court. The Supreme Court hasn't informed me
Speaker 3: about whether that's the case, So this is speculation that
Speaker 3: I can't defend in any scientific way. But it's a
Speaker 3: case of such significance both were with respect to doctrine
Speaker 3: and commerce, that it's a natural candidate to be reviewed
Speaker 3: by the Supreme Court, and that process could take us
Speaker 3: well into twenty twenty six. So your crucial question about
Speaker 3: what kind of landmarks this is, I will answer with
Speaker 3: the typical academics evasion. It depends on the final resolution
Speaker 3: of the matter through the appeals, an answer that won't
Speaker 3: come to us probably for two more years.
Speaker 1: Judge Meta found the Google is a monopolist and has
Speaker 1: acted as one to maintain its monopoly. Can you explain
Speaker 1: broadly how he came to that conclusion?
Speaker 3: On the crucial question of monopoly, the government has to
Speaker 3: show that the company exercises tremendous power within an area
Speaker 3: of commerce and in any trust language, that's usually called
Speaker 3: a relevant market. It's a technical term that refers to
Speaker 3: products that people regard as good substitutes for each other,
Speaker 3: and the government, to Judge Meta's satisfaction, proved that in
Speaker 3: a market consisting of general search services, that Google indeed
Speaker 3: is a monopolist, It does not have effective competitors, that
Speaker 3: it accounts for an overwhelming share of activity of searches
Speaker 3: that are carried out, and as a consequence, its power
Speaker 3: is not only significant today, but the court concluded it's
Speaker 3: going to be durable. But any trust law, it's not
Speaker 3: enough to simply be big. There are lots of expressions
Speaker 3: by courts over time. That's saying achieving a position of
Speaker 3: preeminence is the market of distinction. It's not a badge
Speaker 3: of shame. So you have to do something more. You
Speaker 3: have to show that that power was achieved to means
Speaker 3: that are improper, that you achieved it through improper means,
Speaker 3: you protected it through improper means. A colleague once told
Speaker 3: me that it means in US law that you need
Speaker 3: not only be big, you have to be bad as well.
Speaker 3: And on that point, Judge Meta found that Google's behavior
Speaker 3: in a number of instances was improper. That it excluded
Speaker 3: rivals from having access to business opportunities that they needed
Speaker 3: to compete, and it did it through a variety of
Speaker 3: different forms of exclusivity agreements that gave it the sole
Speaker 3: access to a crucial asset in dealing with third parties
Speaker 3: such as Apple and the Menta. Competitors didn't have the
Speaker 3: opportunity to use that valuable asset to compete effectively with Google.
Speaker 3: So for those two core elements of the monopolization case,
Speaker 3: Judge Meta validated the heart of the government's seriod. The
Speaker 3: government did not get everything it wanted here, but it
Speaker 3: got validation of its core interpretation of this crucial principle
Speaker 3: of monopolization law that the firm in question must indeed
Speaker 3: have tremendous power within a specific part of the marketplace,
Speaker 3: and must have achieved or protected that position through improper means.
Speaker 3: On those larger themes, Judge Meta concluded that the government
Speaker 3: had proven its case. Google has some things in this
Speaker 3: opinion that I'm sure likes. Disappointed with the larger outcome, I imagine.
Speaker 1: Google plans to appeal no surprise, and in a statement
Speaker 1: said that this goes to your point that Meta's opinion
Speaker 1: recognize Google as the Internet's best search engine quote, but
Speaker 1: concludes that we shouldn't be allowed to make it easily available.
Speaker 1: Do you think Google has a lot of ammunition for appeal?
Speaker 3: It enjoys a couple of potential advantages on appeal, and
Speaker 3: a couple of that aren't merely potential, they're real. The law,
Speaker 3: the jurisprudence of US antitrust law since the late seventies
Speaker 3: has tended to error on the side of dominant terms
Speaker 3: in evaluating their behavior. It has not told them they
Speaker 3: can do anything they want, but it's imposed fairly severe
Speaker 3: burdens on government and private planets. Trying to attack the
Speaker 3: behavior of dominant firms, so that the arena in which
Speaker 3: the appeals will take place is one in which the
Speaker 3: doctrine is generally sympathetic to the kinds of arguments that
Speaker 3: Google has offered about its own work and developed or
Speaker 3: in the trial. Another advantage is that they'll point to
Speaker 3: the evidence in the record that suggests that people turn
Speaker 3: back to Google when they have a choice, When the
Speaker 3: starting point of their experience is another product, they switch
Speaker 3: to the default, they abandon that product and turn back
Speaker 3: to Google. So Google's going to stay. There's evidence in
Speaker 3: the case that says people come back to us because
Speaker 3: we're offering them the better experience. Those aren't so many arguments.
Speaker 3: Those are arguments that enjoy some philosophical and doctrinal support
Speaker 3: and what courts have done in the past. So Google
Speaker 3: would be standing before the Court of Appeals saying that
Speaker 3: the practices that the government complains about cannot appropriately be
Speaker 3: deemed to be improper, and the remedial hearings will focus
Speaker 3: a lot on what Google should be allowed to do
Speaker 3: in the future, how much should it be able to
Speaker 3: bid for, say, the placement on the iPhone. When it
Speaker 3: comes to the famous rect angle on the iPhone. Should
Speaker 3: it be more cautious and how it bids, should it
Speaker 3: bid less aggressively? What exactly should its position be? Those
Speaker 3: are hard issues to be resolved in the remedial proceeding.
Speaker 3: And then jed Ji Metta in a couple of places
Speaker 3: expressed a concern that has appeared in earlier Supreme Court
Speaker 3: decisions about the difficulty judges face in trying to tell
Speaker 3: companies whom they must deal with and on what terms
Speaker 3: they must deal with them. It express concern about mandating
Speaker 3: a general obligation on the part of dominant firms to
Speaker 3: deal with other companies, anxiety about the role that courts
Speaker 3: would undertake, and becoming a referee that examines and evaluates
Speaker 3: each of these interactions between the dominant firm and the
Speaker 3: third party. Court said, we're not wealth suited to do that.
Speaker 3: The intervention that we have to undertake has to be
Speaker 3: much cleaner and not involve such long term, ongoing entanglements.
Speaker 3: We can't do that. You know, during the remedy proceedings
Speaker 3: and probably in the appellate process, Google will be saying, well,
Speaker 3: in light of that express concern, how do you write
Speaker 3: an order or an injunction that tells us what we
Speaker 3: can and can't do without in some crucial ways just
Speaker 3: disabling us. How do you do that? So those would
Speaker 3: be very live and important issues for debate during the It.
Speaker 1: Sounds as if, and I could be wrong here, you
Speaker 1: think that Google has the better arguments on appeal.
Speaker 3: I don't know in substance that they have the better
Speaker 3: arguments on appeal. I just think a caution to keep
Speaker 3: in mind. In some ways, amid the euphoria that many
Speaker 3: felt about the outcome, those who wanted the judge to
Speaker 3: find liability, the caution is that there's a lot of
Speaker 3: hard work to be done in defining what it is
Speaker 3: Google can't do in the future, and Google's operating in
Speaker 3: the judicial environment, a doct final environment built up, especially
Speaker 3: since the late nineteen seventies that tends to be sympathetic
Speaker 3: to some of the kinds of arguments that Google has
Speaker 3: been making. So it's really a caution that, notwithstanding the
Speaker 3: exceptional result that the government achieved, that there are many
Speaker 3: rivers to cross before the final outcome validates the approach
Speaker 3: that they've been taken, and Google is not yet defeated
Speaker 3: in its efforts to persuade the appellate judges that it
Speaker 3: didn't behave improperly.
Speaker 1: So you mentioned the remedy and judgment US scheduled to
Speaker 1: hearing for next month to decide the timing for the
Speaker 1: separate trial. And the remedies and potential remedies mentioned have
Speaker 1: been everything from ordering a breakup of Google to unwinding
Speaker 1: exclusive search deals everything in between. What do you see
Speaker 1: as the most likely potential remedy or remedies.
Speaker 3: A starting point is like to be controls on conduct,
Speaker 3: that is, to define the types of agreements that Google
Speaker 3: cannot enter into in the future, to indicate that certain
Speaker 3: types of existing agreements or practices are no longer permissible
Speaker 3: with the caveat that writing, the injunction that prohibits those
Speaker 3: practices will require a lot of further attention and thought
Speaker 3: in light of some of the concerns that we've just
Speaker 3: been talking about. In some sense, the boulder, the more
Speaker 3: visually striking solution is to force the company to divest assets.
Speaker 3: That's the breakup solution. Theoretically, it's in the solution set.
Speaker 3: It's a well established anti trust remedy from anopilization going
Speaker 3: back to the earliest phase of enforcement of the Sherman
Speaker 3: Act in the late nineteen in early twentieth centuries. It's
Speaker 3: also been a remedy the courts have applied with some reluctant,
Speaker 3: some anxiety on the part of individual federal judges about
Speaker 3: whether they are performing surgery of a sort that's going
Speaker 3: to make the commercial system better or worse off. So
Speaker 3: I would say there's an implicit additional burden that government
Speaker 3: plaintiffs carry when they're trying to argue for divestiture remedies
Speaker 3: in monopolization cases. It's not impossible to bear that burden.
Speaker 3: And the famous DOJ prosecution of Microsoft, DOJ succeeded in
Speaker 3: persuading the trial judge to mandate to the separation of
Speaker 3: Microsoft into two parts, an operating systems company and an
Speaker 3: applications company. To the Court of Appeals rejected that remedy
Speaker 3: for a variety of reasons, but one of them was
Speaker 3: that Judge Jackson, the trial judge in the case, held
Speaker 3: an adequate set of hearings on the remedy. He basically
Speaker 3: had a two hour conversation with the parties in the
Speaker 3: courtroom and that was it. So conceptually, legally, theoretically, it's
Speaker 3: part of the solution set in practice. It challenging remedy
Speaker 3: in some instances. For the government to obtain I'd say
Speaker 3: to get the remedy, the government has to do two things.
Speaker 3: Want us to say that the misconduct created serious competitive
Speaker 3: clause in the relevant line of commerce, seriously retarded competition,
Speaker 3: and that the structural solution is vital to restoring competition
Speaker 3: and making it effective in the future. That impossible, but
Speaker 3: very challenging, which tends to mean that a more likely
Speaker 3: outcome perhaps is some set of controls on conduct rather
Speaker 3: than mandated divestitures.
Speaker 1: And at this point we don't even know what the
Speaker 1: government will be asking for as remedies. So, as you say,
Speaker 1: a long way to go. Thanks so much for sharing
Speaker 1: your insights with us. That's Professor William Kavasik of GW
Speaker 1: Law School. I'm June Grosso and you're listening to Bloomberg.
Speaker 3: Look for me, youngs in on the West Side Way.
Speaker 3: What we like to do?
Speaker 1: That way from Beyonce and jay Z fum Cedy crazy
Speaker 1: to do a lip up the Pitbull and Cardi b.
Speaker 3: Alex Dallas, Alec Dumms, Alex Sunn, Alex Shun, Alec Million, Dalis.
Speaker 1: Your favorite NBA team may have been using copyrighted music
Speaker 1: from your favorite artists in promotional videos on social media
Speaker 1: without getting permission. Nearly half of the teams in the
Speaker 1: league are being sued for using copyrighted songs without consent
Speaker 1: in videos on TikTok, Facebook, Instagram, YouTube, and x meaning
Speaker 1: they didn't pay a fee to get the required synchronization license.
Speaker 1: The New York Knicks, the Philadelphia seventy six ers, and
Speaker 1: the Atlanta Hawks are among the fourteen teams being sued
Speaker 1: by music companies for knowingly and wilfully infringing on their
Speaker 1: intellectual property rights. Joining me is intellectual property litigator Terrence Ross,
Speaker 1: a partner at Katinyuchen Terry, explain the issue here.
Speaker 4: Here's the problem that they face. Each of these social
Speaker 4: media sites has a license with the major music publishing
Speaker 4: houses and recording studios, and they have available to their
Speaker 4: users hundreds of thousands pieces of music. The problem is
Speaker 4: that that license is limited to non commercial use, and
Speaker 4: this is where companies make mistakes all the time on
Speaker 4: social media platforms. And this is truly these lawsuits are
Speaker 4: truly a cautionary tale for every business that should wake
Speaker 4: up and pay attention here. When a business goes on
Speaker 4: a social media platform, it's simply assumed that you're doing
Speaker 4: that for commercial purposes your business. What other purpose could
Speaker 4: there be other than for commercial purpose? And therefore that
Speaker 4: license that individual users teenagers for example, can take advantage
Speaker 4: of cannot be taken advantage of by a business because
Speaker 4: it expressly excludes commercial use on these websites, whether it
Speaker 4: be TikTok or Instagram. And that's the problem here is
Speaker 4: that these NBA teams did not seem to be cognizant
Speaker 4: of that limitation on the general available license and simply
Speaker 4: assumed that they could do this, and nobody really thought
Speaker 4: twice and.
Speaker 1: I assumed isn't a defense.
Speaker 4: I assume it's not a defense like that famous Steve
Speaker 4: Martin vitt. Sorry here, Hunter, I didn't know that armed
Speaker 4: robbery was against the law. That doesn't work in a
Speaker 4: court of law. Fair use is a legitimate defense, But
Speaker 4: in light of the fact that they were trying to
Speaker 4: take advantage of a license to the site for music
Speaker 4: and simply didn't comply the right way, it makes it
Speaker 4: really hard to then succeed with the fair use defense,
Speaker 4: in my opinion.
Speaker 1: And when drinkmaker Bang Energy was sued for using hundreds
Speaker 1: of copyrighted songs in TikTok videos. It said it believed
Speaker 1: that the TikTok licenses gave it permission, but the judge
Speaker 1: said it really didn't matter what Bang thought. Going back
Speaker 1: to the Steve Martin defense, it seems like a lot
Speaker 1: of similar suits are being.
Speaker 4: Filed, so there's a large number of these that have
Speaker 4: been percolating over the last year. The Beastie Boys sued
Speaker 4: Chile's the restaurant chain for using their song sabotage in
Speaker 4: social media clips. Sony sued Marriott just this last May
Speaker 4: for using some of its songs. Sony has a very
Speaker 4: large music catalog, and Mary apparently used some of those
Speaker 4: in its social media platform campaigns. So you're seeing this
Speaker 4: happen all the time. It's part of a broader trend
Speaker 4: within the music business. The music industry and performers in
Speaker 4: general believe that they're being undercompensated, and so they have
Speaker 4: become very aggressive on the litigation front. There have been
Speaker 4: a number of lawsuits against streaming platforms, mostly recently Verizon
Speaker 4: ut suit alleging that they are willfully allowing this to
Speaker 4: happen that people share songs notwithstanding getting copious numbers of
Speaker 4: copyright down notices from the music companies. And so this
Speaker 4: is just part of a larger trend of pushing back
Speaker 4: by music companies, recording studios, performers to try to capture
Speaker 4: more monetary compensation for their work.
Speaker 1: To me, this seems like an open and shutcase.
Speaker 4: Look, if I got hired to represent one of the teams,
Speaker 4: I'd be calling and trying to answer real quick what
Speaker 4: they want. You know, litigating a lawsuit like this can
Speaker 4: only be embarrassing at best, and at worst can really
Speaker 4: be a black eye for a team, particularly since the
Speaker 4: music ledged to be used here is by some of
Speaker 4: the most popular performers on the contemporary music scene. The
Speaker 4: allegations are that the songs used came from hit Bull, Doja, Cat, Dualipa,
Speaker 4: Miley Cyrus, jay Z, Cardi B, just to name a few.
Speaker 4: I mean, these are really popular performers and their fans
Speaker 4: tend to resent it when their music is being used
Speaker 4: improperly like this, and so this can only be a
Speaker 4: black eye for these NBA teams. There's that old saying,
Speaker 4: you know, the first rule of holes h O. L.
Speaker 4: Ees is when you're in a hole, stop thinking. And
Speaker 4: so my view is, you know, I didn't vote meacopa
Speaker 4: meticopa man maxima culpa, and do my five hail Mary's
Speaker 4: and pennants and and move on. You know, just what
Speaker 4: is it that you want to make this go away?
Speaker 4: And do it and we'll promise never to do it again,
Speaker 4: and then I put in place some sort of training
Speaker 4: for the people who are actually doing my social media
Speaker 4: platform so that this never happens again. Now, part of
Speaker 4: the problem here is that sometimes corporations farm that workout
Speaker 4: to third parties. I mean, there are lots of companies
Speaker 4: who for a price, will do your social media postings
Speaker 4: for you. That's what most celebrities have. You know, you
Speaker 4: don't see people like Kevin Durant sitting down and doing
Speaker 4: his own posting on TikTok. What you see is, you know,
Speaker 4: wealthy people in big corporation pushing that out, outsourcing it
Speaker 4: to third party you will do it for them. And
Speaker 4: that's a different problem to the except the NBA teams
Speaker 4: are doing that, not doing it in house. They've got
Speaker 4: to crack down on that and make sure that their
Speaker 4: third party vendors who are providing these services are doing
Speaker 4: it in a lawful way.
Speaker 1: Maybe the Knicks thought that since jay Z is such
Speaker 1: a fan and since courtside all the time, he wouldn't
Speaker 1: mind if they used his song, that could well be
Speaker 1: the case.
Speaker 4: I don't know, so I suspect me honestly to I mean,
Speaker 4: we can laugh about this, and it is comical in
Speaker 4: some ways, but I suspect that none of these teams
Speaker 4: realized what was going on. None of these teams would
Speaker 4: have willfully set out to break the copyright laws because
Speaker 4: they don't have their own copyrights and don't want them infringe.
Speaker 4: This is a mistake that the team's made, and it's
Speaker 4: what we would call in the business innocent infringement, and
Speaker 4: they should just do their penance, figure out what it
Speaker 4: needs to make this go away, and make sure it
Speaker 4: doesn't happen.
Speaker 1: Yet, So none of these fourteen teams, sophisticated corporate players
Speaker 1: realized that they had to get to use an artist
Speaker 1: copyrighted music and a promotional video. Don't they have teams
Speaker 1: of in house lawyers advising them on things like this.
Speaker 4: Fundamentally, the NBA is an entertainment business, and as with
Speaker 4: any entertainment business, they have to have copyrights on their broadcast, trademarks,
Speaker 4: on their logos, on the team names, et cetera. So
Speaker 4: they are aware of intellectual property laws. There's no question
Speaker 4: about that. The question that he poses, how did this happen?
Speaker 4: Each of these NBA teams have in house legal staff.
Speaker 4: The league has a fairly large in house legal staff
Speaker 4: that can be accessed by the teams as necessary. I mean,
Speaker 4: most of the trademark registration process goes through the League,
Speaker 4: not through the individual teams. And so the question is
Speaker 4: a very good one. He asked you how could this happen?
Speaker 4: And the simple answer is that, as with many corporations,
Speaker 4: the mere fact that you're big and that you have
Speaker 4: knowledge of the intellectual proper it doesn't mean that you
Speaker 4: have a large enough legal staff or legal staff that
Speaker 4: is experienced in intellectual property to be able to deal
Speaker 4: with every problem that comes up. The biggest problem that
Speaker 4: NBA teams face are labor and employment issue, so they
Speaker 4: obviously have people who are very familiar with employment issues
Speaker 4: and with the collective bargaining agreement. They also have basic
Speaker 4: contract problems, contracts with the venue that they play in,
Speaker 4: contracts with sponsors, and so they obviously have people on
Speaker 4: their legal staff who are very familiar contracts. That doesn't
Speaker 4: mean that they're going to have a copyright specialist because
Speaker 4: that doesn't come up as often, and they probably when
Speaker 4: they have a problem refer to outside council in that field.
Speaker 4: And so the simple answer is, yeah, their big corporation,
Speaker 4: but when it comes to social media platforms, they're often
Speaker 4: no more cognizant of what the rules are than any
Speaker 4: late person like your kid or my kid.
Speaker 1: So the plaintiffs are seeking damages of up to one
Speaker 1: hundred and fifty thousand per song infringed, So it's not
Speaker 1: about how many times the videos were viewed.
Speaker 4: It's an interesting aspect of the Copyright Act. You can
Speaker 4: seek actual damages whatever the harm to you was. And
Speaker 4: perhaps one of these videos was viewed a million times,
Speaker 4: and you can make some sort of argument that that
Speaker 4: would be worth two cents for each viewing to you.
Speaker 4: So that's one way you can go the actual loss.
Speaker 4: That's often really hard to prove in copyright cases like this,
Speaker 4: and so the Copyright Act includes as a core part
Speaker 4: of the damage's provision the remedy of statutory damages. Congress
Speaker 4: knowing that it was hard to prove up actual loss,
Speaker 4: and copyright cases allowed for a plaintiff, a copyright owner
Speaker 4: to come in to court and say, look, I had
Speaker 4: these three works, they were each infringed, and for each
Speaker 4: work you can get up to up to one hundred
Speaker 4: and fifty thousand dollars in what they're called statutory damages. Now,
Speaker 4: that's not an automatic one hundred and fifty thousand and
Speaker 4: one hundred and fifty thousand knowledge is for willful copyright infringement.
Speaker 4: For innocent infringement, it's much less. For ordinary infringements the
Speaker 4: cap of thirty thousand, and for wolf one infringements the
Speaker 4: cap of the one hundred and fifty thousand. So it's
Speaker 4: not simply well, you infringe three songs times one hundred
Speaker 4: and fifty thousand. Doesn't work that way. There has to
Speaker 4: be a determination made as to the mental state of
Speaker 4: the defendant when it went about this infringement. And as
Speaker 4: I said, I don't think any of these teams set
Speaker 4: out to willfully infringe, as that term is used in
Speaker 4: the copyright laws. They made a mistake, and so I
Speaker 4: think the damages, if this were to go to Troup,
Speaker 4: should be set at much lower than one hundred and
Speaker 4: fifty thousand dollars per work. But there's some teams who
Speaker 4: used a lot of different songs. The Knicks had twenty
Speaker 4: three different songs allegedly used. The Orlando Magic had thirty
Speaker 4: seven different songs allegedly used by them. So I mean
Speaker 4: there's a lot of potential damages on the line.
Speaker 1: Yeah, and Terry, let's say the Knicks had tried to
Speaker 1: get a license, how much would it have cost?
Speaker 4: What should have happened here is the Knicks would have
Speaker 4: had to go to the license or of the music
Speaker 4: and got what's known as a thing nchronization license. A
Speaker 4: synchronization license is required whenever you want to use a
Speaker 4: song that is copyrighted in a video format. So keep
Speaker 4: in mind we're dealing here with social media platforms that use,
Speaker 4: for example, a video of a Knicks player dunking on
Speaker 4: an opposing player, and you know there'll be some written
Speaker 4: commentary like oh another great dunk, And then to make
Speaker 4: it interesting, the video clip will have music playing the background. Well,
Speaker 4: that requires a sync license in order to show the
Speaker 4: music in a video format. And that's fundamentally what they
Speaker 4: did wrong here, not going getting that. How much would
Speaker 4: it cost it's an individualized negotiation. It's not a set price.
Speaker 2: You know.
Speaker 4: It's different than internet streaming. These satellite radio stations, for example,
Speaker 4: there is a set price per song. I don't remember
Speaker 4: what it is, like nine point six cents or something
Speaker 4: like that, that's revised every couple of years. That's not
Speaker 4: true with a sink license. It's individually negotiated and they'd
Speaker 4: have to go and see what they could get. Usually,
Speaker 4: the license and companies are very eager to do that,
Speaker 4: and you certainly would get it for a lot less
Speaker 4: than one hundred and fifty thousand dollars per song.
Speaker 1: So it seems like these suits will be settled, although
Speaker 1: I don't know why Chili's hasn't settled with the Beastie Boys.
Speaker 4: I don't understand why an eighties or religated. Usually the
Speaker 4: answer is that the plaintiff is asking for an exorbitant amount,
Speaker 4: not being reasonable in the settlement negotiation, and so you
Speaker 4: have to wait and push it down the road a
Speaker 4: little bit until it gets to what happens in most
Speaker 4: courts nowadays, a court ordered mediation, usually with a magistrate
Speaker 4: judge who sort of beats up on the plaintiff to settle,
Speaker 4: but you would think that this would settle relatively quickly.
Speaker 4: I mean one team here, the Indiana Pacers, who have
Speaker 4: been accused of only infringing one or two songs, and
Speaker 4: you would think that would get settled real quick. But
Speaker 4: some of these others, where the thirty seven songs, there's
Speaker 4: a lot of infringement and a lot of potential damages,
Speaker 4: so that might be harder to settle in the short term.
Speaker 4: But I doubt it any of these we'll go to trial.
Speaker 1: Thanks so much, Terry, and I have to say, I
Speaker 1: think the rule of holes is something that every lawyer
Speaker 1: should follow. That's Terrence Ross of Catain. Euchen Rosenman.
Speaker 4: With NFL Sunday Ticket on YouTube, you can watch your
Speaker 4: favorite teams.
Speaker 3: Out of market Sunday games, so no matter where you live,
Speaker 3: it'll feel a little more like home at least on Sundays.
Speaker 4: NFL Sunday Ticket only on YouTube and YouTube TV.
Speaker 1: Anti Truss litigation over the NFL's Sunday Ticket has been
Speaker 1: going on for more than a decade, but now in
Speaker 1: just a five week span, the NFL's biggest financial threat
Speaker 1: in years has been erased in court almost like magic,
Speaker 1: well legal magic. At the end of June, a jury
Speaker 1: had sided with football fans and awarded four point seven
Speaker 1: billion dollars in damages to subscribers, finding that the NFL
Speaker 1: had violated anti trust laws in distributing out of market
Speaker 1: Sunday afternoon games on a premium subscription service. Because damages
Speaker 1: can be tripled under federal antitrust laws, the NFL was
Speaker 1: facing a more than fourteen billion dollar reward, but then
Speaker 1: last week, a California federal judge tossed out the verdict
Speaker 1: after striking the testimony of two expert witnesses and concluding
Speaker 1: that the jury had improperly calculated the damages. Joining me
Speaker 1: is Bloomberg Intelligence senior litigation analyst Jenniferree, the jury found
Speaker 1: anti competitive behavior, did the judge find any anti competitive behavior?
Speaker 5: So the judge didn't necessarily find anti competitive behavior. What
Speaker 5: he said was that it wasn't unreasonable based on the
Speaker 5: evidence presented at trial for the jury to reach that conclusion.
Speaker 5: So essentially he supported the jury reaching the conclusion that
Speaker 5: the agreements between the NFL teams and the NFL, and
Speaker 5: possibly also with DirecTV were anti competitive restraints.
Speaker 1: The NFL had argued that the jury had made up
Speaker 1: methodology to calculate the damages, and that was one of
Speaker 1: the points that the judge really focused on. Tell us
Speaker 1: why he went off on that.
Speaker 5: I have to tell you it was really kind of
Speaker 5: a strange way for a jury to calculate damages. So
Speaker 5: what happens in trial is there are experts, and the
Speaker 5: experts are there to assist the jury to explain to
Speaker 5: them how damages can be calculated, what they think the
Speaker 5: world would have looked like but for these restraints that
Speaker 5: were deemed to be anti competitive, and what the prices
Speaker 5: would have been. So what a jury is meant to
Speaker 5: do is say, okay, in that butt for world where
Speaker 5: we didn't have these restraints, what would people have paid?
Speaker 5: But what did they actually pay and what's the difference.
Speaker 5: And the judge actually instructed them that way. You have
Speaker 5: to say how much were people overcharged because of this
Speaker 5: bad behavior? What they need to get back is what
Speaker 5: they overpaid essentially, But instead the jury just kind of
Speaker 5: projected all of that and they took the list price.
Speaker 5: This is Sunday ticket is what we're talking about, right.
Speaker 5: It's something you can buy from the NFL to get
Speaker 5: out of market games. And that's what the issue is here,
Speaker 5: what did people pay for Sunday ticket. They took the
Speaker 5: list price for Sunday ticket, and then they took the
Speaker 5: testimony about what the actual average price paid for Sunday
Speaker 5: ticket was. Because you know, people get coupons, they get discounts,
Speaker 5: they get specials, whatever, so there was, you know, a
Speaker 5: little more than I think one hundred dollars difference between
Speaker 5: the list price and the average price actually paid. They
Speaker 5: took that difference. So in other words, they took what
Speaker 5: was the discount and then they multiplied that by the
Speaker 5: number of subscribers. So that really doesn't bear any relation
Speaker 5: to what the experts testified as to the overcharges. So
Speaker 5: the judge said, look, you can do the math. You
Speaker 5: can see how they calculated this. It's to the penny
Speaker 5: and it doesn't make sense.
Speaker 1: So that's part of it. The jury calculation was wrong,
Speaker 1: according to the judge. He also struck two economic experts
Speaker 1: who had testified for the subscribers.
Speaker 5: Right, you know, I just talked about the butt four world.
Speaker 5: So one of those experts described what the butt four
Speaker 5: world might have looked like if they hadn't had the restraints,
Speaker 5: and the other one sort of talked about that and
Speaker 5: what people would have paid, how things would have been,
Speaker 5: and what would have been paid to be a subscriber
Speaker 5: to these out of market telecasts of NFL games, And
Speaker 5: an expert's conclusions and testimony really have to be based
Speaker 5: on some sort of a methodology and economic methodology that
Speaker 5: makes sense. And here he basically said it really wasn't.
Speaker 5: It wasn't reliable. Neither expert were reliable one because really
Speaker 5: their testimony wasn't based on a methodology that made sense.
Speaker 5: In one case, the first expert basically said, Hey, if
Speaker 5: you didn't have these restraints, it would be just like
Speaker 5: college football. We have a bunch of college football games
Speaker 5: all over the place on some cable channels, on some
Speaker 5: over the air channels like ABC on cable channels, and
Speaker 5: you see, you know, loads of games every weekend, and
Speaker 5: this would be just like that. But he didn't really
Speaker 5: explain how it would. NFL has differences. It's different from
Speaker 5: college football. It isn't the same. And CBS and Box
Speaker 5: have some contracts with the NFL which aren't necessarily illegal,
Speaker 5: and those probably would have stayed in place. But he
Speaker 5: didn't do is say how this would have happened and
Speaker 5: when asked, how would this have all worked out? He said,
Speaker 5: these are sophisticated entities. They would have made it work.
Speaker 5: That isn't good enough. You know, it needs to be
Speaker 5: based on some economic analysis that backs up, explaining exactly
Speaker 5: how everything would have panned out, what would have been shown,
Speaker 5: how it would have been shown, how much it would
Speaker 5: have been had the restraints not been in place. And
Speaker 5: so the judge said, this is really just speculation that
Speaker 5: things would have been like college football, without explaining why
Speaker 5: or how it would be like college football.
Speaker 1: It's surprising to me that the plaintiffs, after all these
Speaker 1: years of litigation, didn't get an expert who could do that.
Speaker 1: It doesn't sound like it's something that's so impossible to
Speaker 1: figure out.
Speaker 5: I think they thought it would be sufficient because there
Speaker 5: was some effort by the defendants earlier in the litigation
Speaker 5: it's called a dobear motion to try to exclude the experts,
Speaker 5: and they weren't able to do that. The judge said, no,
Speaker 5: I'm going to go ahead and let them testify. And
Speaker 5: I think the plaintiffs thought that this testimony might be
Speaker 5: good enough. College football did face years ago a case
Speaker 5: that was similar to this one, and as a result
Speaker 5: of that litigation, we got what we got out of
Speaker 5: the NCAA. We got a lot of college games on
Speaker 5: a lot of different cable stations and over the air stations,
Speaker 5: and I think they thought it would be good enough
Speaker 5: to basically say, look, it's very similar, and it would
Speaker 5: be similar. But again, from the perspective of what an
Speaker 5: expert supposed to provide, the judge just deemed that to
Speaker 5: be too speculative.
Speaker 1: Was this a shocking decision to toss out the verdict?
Speaker 5: I think not, because first, all the way through trial,
Speaker 5: the judge seemed a really skeptical of plaintiff's evidence. He
Speaker 5: made comments like, I don't really think the evidence that
Speaker 5: you're presenting here supports your theory or supports your case.
Speaker 5: I don't really think you're making your case. So he
Speaker 5: was skeptical the whole way. So that's one thing. And
Speaker 5: the second thing is when you did look at the
Speaker 5: damages that the jury awarded, they did look odd. They
Speaker 5: weren't the damages that the experts predicted would be the
Speaker 5: appropriate damages, and you saw that it was kind of
Speaker 5: clear the way they calculated them in a way that
Speaker 5: didn't make sense, right, So I think that wasn't surprise.
Speaker 5: And then June also, this has a long history, right,
Speaker 5: This litigation has been going for ten years, and it
Speaker 5: already went before the Supreme Court at one point, I
Speaker 5: should say that the NFL tried to get Supreme Court review.
Speaker 5: The Supreme Court didn't pick up the case because it
Speaker 5: was just on emotion to dismiss, and that's kind of
Speaker 5: early on in the matter and sort of procedural. But
Speaker 5: in saying we won't review the case, Justice Kavanaugh released
Speaker 5: a statement and in the statement, he basically said he
Speaker 5: doesn't think that the plaintiff's case is good here that
Speaker 5: he agrees with the NFL's position, and they didn't take
Speaker 5: the case because it's just on emotion to dismiss.
Speaker 2: It's early on.
Speaker 5: But by the way, NFL, if you lose, practically invited
Speaker 5: them to come back to the Supreme Court.
Speaker 1: That's some invitation to get. What surprised me here is
Speaker 1: the jury didn't follow the judge's instructions and the judge
Speaker 1: said they calculated the damages incorrectly. So then you order
Speaker 1: a new trial and you give another jury a chance,
Speaker 1: especially after ten years of litigation.
Speaker 5: So I think a new trial could be where we
Speaker 5: end up here. But the reason he did that is
Speaker 5: because there were sort of three issues.
Speaker 2: Right.
Speaker 5: He didn't just say that the jury's damages made no sense.
Speaker 5: That was one thing, But he also discounted and discluded
Speaker 5: the evidence of two experts. And because he did that,
Speaker 5: he granted judgment notwithstanding the verdict. Because without those two
Speaker 5: experts testimony, there was no evidence presented at all to
Speaker 5: establish that there was injury or what the damages would
Speaker 5: have been for that injury. And because of that, it
Speaker 5: was judgment notwithstanding the verdict. Now here's the thing. What
Speaker 5: happens now. I would think that the plaintiffs will probably appeal,
Speaker 5: based on what we talked about right at the beginning
Speaker 5: of this segment, that the judge didn't find it unreasonable
Speaker 5: for the jury to decide that there'd been anti competitive conduct. Right,
Speaker 5: So the judge agreed with that. So on that basis,
Speaker 5: consumers and commercial entities, they're do something right, There was
Speaker 5: anti competitive conduct according to this jury. I would think
Speaker 5: the plaintiffs would appeal, and I would believe that the
Speaker 5: upshot of that appeal, if they're successful, would be to
Speaker 5: send it back for a new trial on damages.
Speaker 1: This has been going on so long that in twenty
Speaker 1: seventeen a judge dismissed the lawsuit right at that point,
Speaker 1: too right, And the Ninth Circuit two years later reversed
Speaker 1: and revived the litigation.
Speaker 5: That was really early on. So it was first dismissed,
Speaker 5: it went to the Ninth Circuit. The Ninth Circuit resurrected it,
Speaker 5: and that's when the NFL tried to get before the
Speaker 5: Supreme Court. It was on that Ninth Circuit's decision to
Speaker 5: send it back to the trial court on remand well
Speaker 5: it was a reversal, so you know, no motion to dismiss,
Speaker 5: keep litigating, and that's when the Supreme Court refused to
Speaker 5: take the case. And then we went through the litigation
Speaker 5: and the trial.
Speaker 1: And does the Sports Broadcasting Act from the nineteen sixties
Speaker 1: play in here.
Speaker 5: What it does is it exempts professional football from antitrust laws,
Speaker 5: the conspiracy laws for the purpose of organizing a league,
Speaker 5: right and for the purpose of having all these teams
Speaker 5: that must come together to present professional football, the game's
Speaker 5: the Super Bowl, et cetera. And what it did at
Speaker 5: the time is it exempted it for the purpose of
Speaker 5: pooling their licensing for free TV. But there was nothing
Speaker 5: but free TV. Then there was no cable. It was
Speaker 5: just ad supported television is what we got, and we
Speaker 5: didn't pay for it. Things are different today. So one
Speaker 5: of the arguments here by the NFL was that, well,
Speaker 5: we're exempt from the antitrust laws because of the Sports
Speaker 5: Broadcasting Act.
Speaker 2: We can do this.
Speaker 5: We can go ahead and license pull the rights to
Speaker 5: the telecasts of all the games and then sell them
Speaker 5: as a package to Direct TV and let Direct TV
Speaker 5: charge subscribers whatever they want to, right, because this was
Speaker 5: the issue. So the question is does the Sports Broadcasting
Speaker 5: Act apply or not? And I think that if the
Speaker 5: NFL was planning ahead and looking at their conduct, their
Speaker 5: position would have been, well, we're exempt, so we can
Speaker 5: do this.
Speaker 1: And another surprise to me in this case is that
Speaker 1: we haven't heard from the plaintiffs saying we're going to
Speaker 1: appeal this. Usually that's the refrain right after a losing verdict,
Speaker 1: especially because they've been successful at the Ninth Circuit before.
Speaker 2: You know.
Speaker 5: I think it's such an interesting situation because I would
Speaker 5: think the plaintiffs would want to appeal just because they
Speaker 5: did get the jury verdict that there was anti competitive conduct.
Speaker 5: But on the other hand, this litigation has been going
Speaker 5: for ten years now. If they appeal, we're tacking on
Speaker 5: years and years and years because the Ninth Circuit is
Speaker 5: pretty backed up. They've got a lot of cases. They're
Speaker 5: taking a long time to decide on these appellate matters
Speaker 5: you're looking at. It could be another two years before
Speaker 5: they get that decision. It's been ten years. And if
Speaker 5: the decision is to send it back to a new trial,
Speaker 5: I mean, I think at this point they may just
Speaker 5: want to get paid. So what I think this could
Speaker 5: lead to is some sort of a settlement here.
Speaker 1: Not much of a settlement though, I don't think so.
Speaker 5: I mean, you know, that's the thing their issues here.
Speaker 5: On both sides. The NFL probably feels like they have
Speaker 5: a strong case, But on the other hand, everybody's probably
Speaker 5: tired of this litigation and it may be worth their
Speaker 5: while just to pay these plaintiffs and make it all
Speaker 5: go away, because the litigation itself is costing them a
Speaker 5: lot of money and as I said, could drag on
Speaker 5: for years. So we'll have to see what happens. I
Speaker 5: suspect at least there will be an appeal and it
Speaker 5: might get to the Ninth Circuit.
Speaker 1: So we'll see whether the peel comes first or the settlement.
Speaker 1: Thanks so much, Jen. That's Jennifer Reed, Bloomberg Intelligence Senior
Speaker 1: litigation Analyst. And that's it for this edition of the
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