Since its launch, Spotify has become one of the most popular music streaming services in the world.  With such high visibility and widespread usage, it comes as no surprise that Spotify has faced a myriad of lawsuits in the past few years.  Lawsuits have become even more common as Spotify prepares for its initial public offering this year. Since its inception, Spotify has already faced a multi-million-dollar lawsuit from a collection of songwriters.  The class-action lawsuit was eventually settled for $43 million.  Now, Spotify faces another two lawsuits alleging copyright infringement and improper licensing.

Intellectual property lawsuits have become commonplace for popular mobile applications and streaming services.  In order for Spotify to provide users with the large collection of music it currently boasts, complicated licensing agreements with multiple parties must be executed.  For example, Spotify must often negotiate with not only the record companies, but sometimes must execute separate agreements with songwriters or artists themselves.

While Spotify has successfully executed a number of licensing deals that provide them with blanket licenses covering a wide variety of songs, some popular songs do not fall under these blanket licenses.  While determining which song requires separate licensing agreements can be a meticulous and time-consuming task, this does not excuse Spotify from conducting due diligence.  Unfortunately, Spotify has admitted in the past that they often fail to complete full research on every song they stream.

Bluewater Music Services Corporation (“Bluewater”) has taken issue with Spotify’s processes, suing them for willful copyright infringement.  Bluewater alleges that about 35 billion streams, totaling $15 million in royalties, were played without proper payment between 2011 and 2015.  As such, Bluewater seeks the maximum $150,000 statutory damage per each infringement because it alleges that Spotify’s infringement was willful.

In order to avoid such lawsuits, service providers should consult experienced intellectual property lawyers for counsel or even retain them to do the proper due diligence itself.  An unwillingness to conduct proper intellectual property due diligence due to time constraints or difficulty will not likely be accepted by a court as a proper defense.

If the companies do not want to pay attorneys to conduct the due diligence, they could alternatively retain the attorneys to train staff on how to efficiently conduct such due diligence in-house.  Similarly, they could request attorneys to provide or create company-specific guidelines to follow when researching specific intellectual property assets (i.e., songs in this case) in order to avoid costly lawsuits down the line.

If companies decide to have intellectual property counsel merely advise them instead of conducting the actual due diligence, they should ensure that they routinely consult the attorneys, at least annually, in order to keep abreast of any new changes in copyright or technology law.  As technology innovates, the law continues to do so as well.  As such, companies must remember to regularly meet with counsel in order to stay on top of any new federal guidelines or international doctrines.

For more information on this topic, please visit our Copyright Litigation service page, which is part of our IP & Business Litigation Practice.

Klemchuk LLP is an Intellectual Property (IP), Technology, Internet, and Business law firm located in Dallas, TX.  The firm offers comprehensive legal services including litigation and enforcement of all forms of IP as well as registration and licensing of patents, trademarks, trade dress, and copyrights.  The firm also provides a wide range of technology, Internet, e-commerce, and business services including business planning, formation, and financing, mergers and acquisitions, business litigation, data privacy, and domain name dispute resolution.Additional information about the litigation law firm and its litigation attorneys may be found at www.klemchuk.com.

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