The Real Slim Shady Didn’t License That!

The Real Slim Shady Didn’t License That!

Marshall Mathers (stage name Eminem; aka Slim Shady) is a celebrated musical artist from Detroit, with 15 Grammy awards, and star of the film 8 Mile which was loosely autobiographical. One of his most famous songs, “Lose Yourself” was recently at the center of a lawsuit. In 2019, Eminem’s  publishing company Eight Mile Style sued Spotify claiming that Spotify streamed a number of its musical compositions without proper licenses.

In 2018, US copyright law was amended to address issues related to licenses required by digital music providers. Prior to the amendment, digital music providers were required to obtain licenses on a song-by-song basis. A single song  might have several copyright owners (performers, composers, lyricists, producers, and their heirs). If licenses must be negotiated on a song-by-song basis, that makes for a complicated system for rights holders and platforms to ensure that royalty payments are properly distributed. For emerging companies, in the rush to obtain market share, the licensing work became sloppy. Traditional damages for copyright infringement could be up to $150,000 for each work infringed. When there is an entire music catalog in play, potential damages can add up quickly.

The 2018 amendment, called the Music Modernization Act (MMA), among other things, created a “blanket license” for digital music providers to obtain a license and remit payments to a single agency that negotiates and distributes payments for rights holders. It also created a liability limitation for digital streaming providers, like Spotify, on certain conditions, including capping damages for infringement at the amount of the lost royalty.

Eight Mile Style alleged that Spotify had not obtained the proper licenses for its hundreds of songs, including “Lose Yourself” which has been streamed on Spotify over one billion times. Eight Mile Style requested the court award the traditional money damages, rather than merely the lost royalties.

Spotify has been streaming music since 2006 and has been streaming at least some of Eight Mile Style’s music since 2011. In fact, Spotify had paid royalties as though the proper licenses had been in place the whole time and named Eminem the most-streamed musical artist ever in 2014. Why did Eight Mile Style wait until after the MMA was passed into law in 2018? Why would it potentially limit its ability to recover damages from Spotify?

The court considered this question and determined that, by waiting, Eight Mile Style was in a prime position to challenge the constitutional muster of the MMA. If the whole MMA could be struck down—Abracadabra—Eight Mile Style would be able to recover all kinds of damages on all other musical works that it owned — as would many other rights holders. This would put Eight Mile Style in a strong negotiating position with Spotify.

In the US legal system, courts hear matters of law and also matters of equity (meaning fairness). One such fairness principle is that a party must not come to court with “unclean hands.” Courts can, and do, consider circumstances when a party attempts to game the system by sitting on their rights in order to maximize damages. This sort of opportunistic behavior is generally not tolerated well. Here, the court concluded that Eight Mile Style must have known about Spotify’s infringement, and waited until it could use the infringement to apply maximum leverage as part of its larger business model.

Thus, Eight Mile Style’s conduct barred them from claiming infringement due to their delay in asserting rights and their acceptance of royalties without protest. Essentially, Eight Mile Style had “one shot” to stop Spotify but chose to “let it slip” , leading to dismissal of its lawsuit. Of course, Eminem notoriously references these types of conflicts in his lyrics. Maybe we will get a diss track out of it! (Dear Slim, please call it “Unclean Hands.”)