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AMERICAN SOC'Y OF COMPOSERS v. PATAKI

March 19, 1996

AMERICAN SOCIETY OF COMPOSERS, AUTHORS, AND PUBLISHERS, by its President and Chairman Marilyn Bergman, Plaintiff, and BROADCAST MUSIC, INC., Plaintiff-intervenor,
v.
GEORGE E. PATAKI, in his Official Capacity as Governor of the State of New York, et al., Defendants.



The opinion of the court was delivered by: JONES

 BARBARA S. JONES, United States District Judge:

 Plaintiff, American Society of Composers, Authors and Publishers ("ASCAP") and plaintiff-intervenor, Broadcast Music, Inc. ("BMI") (hereinafter referred to collectively as "plaintiffs"), seek an injunction enjoining the enforcement of sections 31.04.4(c) and 31.04.5 of the New York Arts and Cultural Affairs Law (hereinafter referred to as the "provisions" or the "New York provisions") enacted by the State of New York on August 8, 1995 with an effective date of January 1, 1996, on the grounds that they are preempted by the federal Copyright Act of 1976, 17 U.S.C. ยง 101, et seq. (1994), pursuant to the Supremacy Clause of the United States Constitution, Article VI, clause 2.

 A temporary restraining order was issued by the Court on December 22, 1995, which enjoined defendants from enforcing the provisions with defendants' consent. After consideration of the briefs, supporting affidavits, and oral argument heard on March 8, 1996, this Court hereby grants plaintiffs' motion for a preliminary injunction.

 Findings of Fact

 The following facts are essentially undisputed for the purposes of this motion. ASCAP and BMI are performing rights societies whose members are the creators and owners of copyrighted musical compositions. Performing rights societies such as ASCAP and BMI were created to enable writers and owners of musical works to exercise their rights in and to reap the financial benefits of their copyrights. Both BMI and ASCAP "operate primarily through blanket licenses, which give the licensees the right to perform any and all of the compositions owned by the members or affiliates as often as the licensees desire for a stated term." Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1, 5, 60 L. Ed. 2d 1, 99 S. Ct. 1551 (1979). The organizations collect fees for the licenses and distribute the fees as royalties to their members after deducting operating expenses. The royalties that ASCAP distributes to its members form the largest single source of income to songwriters and music publishers.

 Plaintiffs are authorized by their members to detect and police infringements of their copyrights. Performing rights societies such as ASCAP and BMI are necessary to the enforcement of the copyright law because "as a practical matter it [is] impossible for many individual copyright owners to negotiate with and license the users and to detect unauthorized uses." Id. at 4-5. In their effort to enforce the rights of copyright owners, plaintiffs use a series of written and personal communications with the proprietors of establishments, typically bars or restaurants, asking them to enter into a licensing agreement. *fn1" If the proprietor ignores the first communication, usually a letter, it is followed up with additional letters and telephone calls. *fn2" These communications are aimed at negotiating a license for the performance of copyrighted musical works at the establishment.

 If, after these communications, a proprietor continues to refuse to negotiate a license for the public performance of copyrighted work, plaintiffs begin what has been termed "a surreptitious (but entirely legal) undercover investigation." Milene Music, Inc. v. Gotauco, 551 F. Supp. 1288 (D.R.I. 1982). *fn3" In order to detect whether one of these proprietors is publicly performing copyrighted music without a license, an undercover investigator enters the proprietor's establishment and takes notes as to whether copyrighted music in the plaintiff's repertory is being performed. From those notes, the investigator prepares a report which is sent to the office and reviewed to confirm that the songs that were being played without a license are listed in the plaintiff's repertory. Investigators sometimes make more than one "undercover" visit *fn4" in order to continue the investigation to establish a pattern of infringement for use in negotiations or, if negotiations fail, in federal litigation.

 Prior to the filing of a complaint alleging copyright infringement, plaintiffs send a final letter notifying the proprietor of the results of the investigation and identifying the songs that were performed without a license. Plaintiffs include with this letter a copy of the complaint to be filed in the infringement suit.

 As noted above, it is undisputed that plaintiffs follow these procedures in their efforts to negotiate licenses and investigate copyright infringement. In 1995, however, the state enacted an amendment to the New York Arts and Cultural Affairs Law which imposes additional procedural requirements on plaintiffs. Sections 31.04.4(c) and 31.04.5 provide:

 
4. No performing rights society or any agent or employee thereof shall:
 
(c) fail to provide written notice to a proprietor or his or her employees within seventy-two hours after entering the proprietor's business for the purpose of investigating the possible performance, broadcasting or transmission of nondramatic musical works, and disclosing that such agent or employee was investigating on behalf of such performing rights society and disclosing:
 
(1) the name of the performing rights society
 
(2) the date on which such agent or employee conducted the investigation; and
 
(3) the copyrighted works in such performing rights society's repertory performed at the business ...

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