A federal judge has officially denied Spotify’s early motion for summary judgement against Kobalt as part of a long-running legal battle centering on allegedly unpaid royalties for billions of Eminem streams.
This most recent development in the years-old courtroom confrontation arrives about two months after the presiding judge confirmed that Spotify CEO Daniel Ek would have to face an up to three-hour-long remote deposition.
More broadly, the underlying lawsuit initiated back in August of 2019, when Eminem publisher Eight Mile Style formally accused the Stockholm-based streaming service of infringing upon 243 of the rapper’s compositions and failing to pay the mentioned royalties.
Besides seeking $36 million in damages, the publisher in the original complaint called for Spotify to cough up “advertising revenue and the value of the equity interest Eight Mile was deprived of by virtue of the infringement.”
Meanwhile, Spotify, in addition to maintaining that Eight Mile’s infringement claim “lacks merit,” stated that it had been “licensed by Eight Mile’s agent, Kobalt” to bring the much-streamed works in question to fans. Consequently, Spotify named Kobalt – which last week sold a controlling interest to media-focused investment firm Francisco Partners – as a third-party defendant.
Subsequently, Eight Mile added the Harry Fox Agency as a defendant, alleging that it and Spotify had executed a “fraudulent scheme” in order to conceal a “failure to acquire timely compulsory mechanical licenses.”
Back to Spotify’s initially highlighted motion, though, Judge Aleta A. Trauger acknowledged that “summary judgment on the issue of whether Kobalt has a contractual right to indemnify it [Spotify] in this litigation” could “remove uncertainty and potentially speed the resolution of this case.”
Nevertheless, “Kobalt has identified persuasive grounds for permitting it to develop the record further before the court makes a ruling,” the order states, referring specifically to “the fact that there has, at this point, been no expert discovery.”
“As Spotify has pointed out, there are obvious reasons why Kobalt itself might wish to know, sooner rather than later, whether it should expect to be liable for indemnification in this case. The decision to contest an early resolution of that question is, however, Kobalt’s to make,” the filing drives home.
Moving forward, it’ll be interesting to see how this component of the wider suit plays out. Spotify is said to have known that Kobalt at the time of their 2016 pact was licensing only its administered share (not necessarily 100 percent) of the compositions at hand.
Even so, the companies’ licensing contract also indicated that “except for payments made to third parties administering the public performance right and the applicable sound recording rights holders associated with the Publisher Compositions, no other payments, licenses, rights, authorities or permissions are necessary for Spotify to Use the Publisher Compositions,” according to the latest legal document.
And on the indemnification front, the six-year-old pact relayed that Spotify and Kobalt would hold one another “harmless from any and all third party claims, damages, liabilities, costs and expenses (including reasonable legal expenses and counsel fees) (‘Claims’) relating to any allegation, that, if true, would constitute a breach of the Indemnifying Party’s representations, warranties, or covenants.”
But Kobalt (which remains embroiled in a separate licensing standoff with Facebook parent Meta) says that “it did not have any right to license those compositions in the first place and that the compositions were therefore not ‘Publisher Compositions,’” per the newest filing. “Spotify responds that it does not matter whether Kobalt had the right to license the compositions, because the definition of ‘Publisher Compositions’ included all compositions that Kobalt ‘administered,’ even if it did not license them.”