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Internet radio service Pandora prevails in license dispute

By Jonathan Stempel

(Reuters) - Pandora Media Inc has won a Manhattan federal court decision rejecting efforts by some music publishers to narrow a license that enables the largest U.S. Internet radio service to play their music.

U.S. District Judge Denise Cote said an existing antitrust consent decree that requires the American Society of Composers, Authors & Publishers to license its works to Pandora from 2011 to 2015 "unambiguously" covers all its works, even if publishers seek to "withdraw" authority to license to "new media" services.

"We're obviously gratified by the result," said Kenneth Steinthal, a partner at King & Spalding in San Francisco who represents Pandora.

The decision could strengthen Pandora's case as it pursues related litigation on what constitutes "reasonable" licensing fees. Cote has scheduled a December 4 trial on that matter.

ASCAP has about 470,000 members, and said it represents music from artists like Leonard Bernstein, Beyoncé, Duke Ellington, George Gershwin, Alan Jackson, Jay-Z and Katy Perry.

The case arose after publishers including EMI Music Publishing Ltd, Sony/ATV Music Publishing LLC and Universal Music Publishing Group withdrew or tried to withdraw new media licensing rights from ASCAP, allowing them to negotiate directly with Internet radio services.

Concerned that it would lose access to some music content for its roughly 72 million active listeners, Pandora in July sought a court ruling that publisher withdrawals would not affect the ASCAP license.

In response, ASCAP argued that Pandora had understood that the consent decree license could be narrowed.

Cote, however, rejected its argument.

"ASCAP argues that 'ASCAP repertory' refers only to the rights in music works that ASCAP has been granted by its members as of a particular moment in time," the judge wrote. "Pandora argues that 'ASCAP repertory' is a defined term articulated in terms of 'works' or 'compositions,' as opposed to in terms of a gerrymandered parcel of 'rights.' Pandora is correct."

ASCAP Chief Executive John Lofrumento said in a statement late on Tuesday that ASCAP members make their living creating the music without which Pandora would have no business.

"The court's decision to grant summary judgment on this matter has no impact on our fundamental position in this case that songwriters deserve fair pay for their hard work, an issue that the court has not yet decided," Lofrumento said.

Lofrumento added that ASCAP looks forward to the December 4 trial where the group will once again reiterate its stance.

Pandora shares closed up $1.20, or 5 percent, at $25.19 in Tuesday trading on the New York Stock Exchange. Cote issued her decision after U.S. markets closed.

The case is In re: Petition of Pandora Media Inc, U.S. District Court, Southern District of New York, No. 12-08035.

(Reporting by Jonathan Stempel in New York; additional reporting by Sakthi Prasad in Bangalore; Editing by Stephen Coates)

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