Japan’s Supreme Court rules music licensing scheme breached anti-competition law

The Supreme Court of Japan has ruled that a music licensing scheme run by the country’s largest copyright licensing body, the Japanese Society for Rights of Authors, Composers and Publishers (JASRAC), breached anti-competition law.

In its ruling yesterday (April 28), the court found JASRAC’s fixed-rate licensing scheme that it offers to Japanese broadcasters to be in breach of Japan’s Antimonopoly Act, upholding a 2013 decision from the Tokyo High Court.

JASRAC licenses 90% of the copyright protected music works in Japan. Under one of its schemes, the body offers broadcasting companies a licence to music at a fixed rate, which is 1.5% of the broadcaster’s annual revenue.

In Japan, a record label owns the reproduction rights to songs, but JASRAC owns the rights to lyrics and compositions. In order for a broadcaster to have the right to play music, it has to obtain rights from both JASRAC and the record label.

But copyright licensing body e-License challenged the blanket scheme at the Japan Fair Trade Commission in 2012. The commission then found that JASRAC did not violate anti-competition law.

In response, e-License appealed against the decision, which was later heard by the Tokyo High Court. The high court reversed the commission’s decision in 2013, ruling that the scheme offered no economic incentives to broadcasters to make deals with other licensing bodies.

The Supreme Court’s decision now means the case will now go back to the commission, which will review whether the blanket licensing scheme led to the exclusion of other parties from the market and whether it was contrary to the public interest.

Daisuke Tatsuno, partner at law firm Baker & McKenzie in Tokyo, said the decision was “good news” for other collecting societies.

He said: “Based on the Supreme Court’s decision, JASRAC would need to change its business scheme for licensing music to broadcasters, and instead develop a new one in which the royalty amount would be calculated based on the actual volume of usage.

“This would be of course good news for other collecting societies, including e-License, because this decision would open the door for the competitors into the market of music licensing to broadcasting companies,” he added.

Neither JASRAC nor e-License responded to a request for comment.