In a case that could affect the livelihoods of tens of thousands of persons in the music business, the Supreme Court yesterday agreed to review an antitrust ruling against two organizations representing nearly all the world's professional composers.
The two organizations - backed by musicians as diverse as Eubi Blake, Sammy Cahn, Roberta Flack, Ira Gershwin and Ned Rorem, as well as the estates of Bela Bartok, Duke Ellington and Igor Stravinski - are:
Broadcast Music, Inc. (BMI), a "middleman" authorized by more than 33,000 wirters and 16,000 publishers to grant "blanket" licenses under which broadcasters and others who pay a flat fee, or a designated portion of receipts, [WORD ILLEGIBLE] perform any of the million-plus compositions in BMI's repertory.
American Society of Composers, Authors and Publishers (ASCAP), which, in behalf of 16,000 writers, 6,000 publishers, and 30 foreign affliates with hundreds of thousands of members, acts as a clearinghouse to license performances of their copyrighted works.
The 2nd U.S. Circuit Court of Appeals handed down the ruling in August 1977 in a case brought by Columbia Broadcasting System, Inc., owner of one of the three national television networks, the world's largest phonograph company, and several music publishers that have agreements with BMI or are ASCAP members.
CBS filed a complaint on New Year's Eve 1969, following a breakdown in negotiations with BMI over renewal of its blanket license. The suit sought either a new-type license under which BMI would be required to fix a price level for each type of use of a composition in its repertory, or, in the alternative, an injunction under which BMI no longer could offer a blanket license to any TV network.
Federal Judge Morris E. Lakser ruled against CBS, saying: "Convenience is the prime virtue of the blanket license: it provides comprehensive protection against infringement, that is, access to a large pool of music without the need for thousands of individual licenses which otherwise would be necessary . . .
"Moreover, it gives the user unlimited flexibility in planning programs, because any music it chooses is 'automatically' covered by the blanket license."
In August 1977, however, the 2d U.S. Circuit Court of Appeals reversed. The offering of blanket licenses to the TV networks is unlawful price-fixing and misuses of copyrights, the court held.
Similarly, CBS said that what is involved "is nothing less than the delegation by all sellers, to a central committee, of the authority to fix prices on their products."
But BMI, saying it exercises "no control over the market," contended that it is "no more a price-fixer than is a wholesaler of eggs who buys . . . separately from a number of farmers and sells them together to a supermarket chain." ASCAP - which also offers blanket licenses - says that it is "in essence a cooperative." The ruling would create "turmoil in the music listening business," it says.
In a friend-of-the-court brief for numerous composers, former antitrust chief Robert H. Bork said the ruling threatens to make illegal "any economic integration . . . not merely ASCP and law partnerships, but corporations, sports leagues, joint ventures, and family farms - because each is a combination of persons who could operate individually . . ."
The court took other actions: "Bad Faith" The court refused a petition by Arthur Andersen & Co. to reverse a ruling in which the 10th U.S. Circuit Court of Appeals accused the "Big 8" accounting firm of "both flagrant bad faith and callous disregard" of the orders of Federal Judge Sherman Finesilver in Denver. He had fined it $59,949 for balking discovery in a damage suit brought by the state of Ohio.
Mutual Funds. The court agreed to review a 2d U.S. Circuit Court of Appeals decision that the Investment Company Act of 1970 implicitly precludes a mutual fund's independent directors from making a good-faith business judgment to forego prosecution of possible claims against the fund's investment adviser and other directors. Natural Gas
The court agreed to review a ruling barring the Federal Energy Regulatory Commission from requiring natural-gas producers to take "prudent" measures to assure continued delivery of gas dedicated to interstate pipelines.
The court left standing rulings:
Upholding regulation of aluminum residential electrical wiring by the Consumer Product Safety Commission.
Invalidating a National Highway and Traffic Safety Administration standard intended to assure that truck air brakes cause a less disproportionate share of serious and fatal highway accidents.
In a major case involving a ruling to apply the anti-fraud provisions of the securities laws to employer-financed involuntary pensions, the justices denied permission to file friend-of-the-court briefs, all against such application, to the federal government, the AFL-CIO and the American Bar Association.