A US court has said it will not dismiss the antitrust lawsuit filed against lyrics aggregator Musixmatch by its rival LyricFind. This means the case can now proceed and will move into the discovery phase, where the two companies must share documents relating to the lawsuit with each other.
LyricFind says that an exclusivity agreement between Musixmatch and music publisher Warner Chappell was anticompetitive, and designed to scupper a deal it was negotiating with Spotify.
Musixmatch presented various arguments for why the case should be dismissed, including that the Californian courts don’t have jurisdiction over the dispute and that LyricFind has failed to “state a claim upon which relief can be granted” under US law – in other words, it’s failed to make credible claims that its rival has actually violated any US antitrust laws.
However, Judge Jacqueline Scott Corley has rejected many of Musixmatch’s arguments for dismissal, concluding that her court does have jurisdiction, and that LyricFind has “plausibly alleged” that Musixmatch “entered into an exclusive agreement causing injury of the type antitrust laws are intended to prevent”. And at this stage, for the case to proceed, “plausible allegations” are all that is required.
Needless to say, LyricFind has welcomed the ruling, with the company’s founder Darryl Ballantyne insisting that this decision shows “just how weak” the arguments to dismiss presented by Musixmatch and its owner TPG were, while also “highlighting how desperate they are to sweep their anticompetitive scheme under the rug”.
The court “saw right through their frivolous arguments”, he goes on, adding, “we are eager to dive into discovery and see exactly how deep this rabbit hole goes”.
But a spokesperson for Musixmatch was keen to stress that “this is a preliminary ruling in the legal process based solely on LyricFind’s allegations”. They then added that, “once the relevant facts are presented and examined, we remain confident we will prevail”.
Both Musixmatch and LyricFind aggregate and license lyrics from the music industry, which they then offer to digital platforms that want to use lyrics as part of their service – the most visible use being in music streaming services. Traditionally in the lyrics business, competing aggregators have all licensed the same lyrics from the same publishers, and then competed with each other on service provision and price.
However, last year Musixmatch negotiated an exclusivity deal with Warner Chappell, meaning only it can now provide lyrics owned or co-owned by the Warner publisher.
LyricFind claims that the primary motivation for that exclusivity deal was to stop it from being able to provide any Warner-controlled lyrics to its clients, making its offer much less attractive. Not least because LyricFind was bidding to take over as lyric provider to Musixmatch’s most important customer, Spotify.
Musixmatch denies that its Warner deal violates any competition laws in the US. However, with Judge Corley accepting that LyricFind’s allegations are at least “plausible”, both sides’ legal claims will now need to be fully considered and tested in court.
In its bid to get the litigation dismissed on jurisdiction grounds, Musixmatch pointed out that it is an Italian company, and that its Warner Chappell deal is technically with the UK division of the Warner publisher, meaning the US courts should not have jurisdiction over the case.
However, Corley accepted multiple arguments from LyricFind as to why her court does in fact have jurisdiction. These included LyricFind’s claim that the Warner deal covers works owned by Warner Chappell US and that the “greatest value” will be derived from those works. While Musixmatch said that claim was “speculative”, Corley said it had failed to submit evidence “challenging these assertions”.
She also noted that, although Musixmatch says it has never had a formal office in California, its website used to boast about having a base in San Francisco. “Regardless of whether Musixmatch has or had an office in California”, she ruled, “LyricFind presents evidence Musixmatch publicly represented as much”.
Given many streaming services are based in the US, it is “plausible” Musixmatch would want to portray itself as having a US base, she added, which means it “purposefully availed itself of the benefits of conducting business in California specifically and the United States generally” and therefore “must submit to the burdens of litigation in this forum”.
