Lyrics provider LyricFind’s lawsuit against rival Musixmatch will go forward after a US federal court rejected a large part of Musixmatch’s motion to dismiss the case.
In a decision handed down on Wednesday (September 3) Judge Jacqueline Scott Corley allowed much of the case brought by LyricFind to go forward, though she dismissed some of its complaints.
“LyricFind plausibly alleges Musixmatch entered an exclusive agreement causing injury of the type antitrust laws are intended to prevent and substantially foreclosing competition,” Judge Corley wrote in her decision, which can be read in full here.
“This is a preliminary ruling in the legal process based solely on LyricFind’s allegations. Once the relevant facts are presented and examined, we remain confident we will prevail,” a spokesperson for Musixmatch told MBW following the ruling.
LyricFind sued Musixmatch and its key investor TPG in March, alleging that Musixmatch’s exclusive deal with music publisher Warner Chappell Music violates US antitrust laws.
That agreement, which went into effect this spring, grants Musixmatch exclusive rights to both sub-license Warner Chappell Music lyrics and provide the lyric data to third parties, even those who have direct licensing relationships with WCM.
LyricFind argued that the agreement was meant to push it out of the lyrics rights licensing and lyric data services marketplaces by removing its ability to provide a comprehensive catalog of lyrics, and that it also ties the hands of music streaming services like Spotify, as they now have to license WCM lyrics through Musixmatch “at monopolistic prices.”
In a motion to dismiss filed in June, Musixmatch called the lawsuit “meritless” and said it was a “textbook example of a disappointed competitor seeking to use the courts to achieve what it could not in the marketplace.”
Among other things, Musixmatch argued that the California court didn’t have jurisdiction, because Musixmatch is an Italy-headquartered company, LyricFind is Canadian, and the exclusivity deal with Warner Chappell was drafted under UK law.
But Judge Corley agreed with LyricFind’s arguments that the court has jurisdiction because many of the DSPs affected by it, such as Amazon Music and Apple Music, are headquartered in the US, and the largest part of Warner Chappell’s music catalog is American.
“LyricFind plausibly alleges Musixmatch entered an exclusive agreement causing injury of the type antitrust laws are intended to prevent and substantially foreclosing competition.”
US District Judge Jacqueline Scott Corley
LyricFind also claims that Musixmatch and TPG engaged in a “buy or bury” scheme against LyricFind. According to LyricFind’s complaint, Musixmatch attempted to acquire its rival, but when that didn’t pan out, it switched strategies to focus on exclusive contracts that would undermine LyricFind’s position in the marketplace.
LyricFind also alleged that Musixmatch violated a non-disclosure agreement signed while it explored acquiring LyricFind, and leaked confidential information to Spotify “in the hopes that doing so would help them avoid competing on price or quality.”
Notably, the court dismissed that part of LyricFind’s complaint.
“LyricFind does not allege what information was disclosed and the circumstances of the disclosure,” Judge Corley wrote.
However, the judge did allow LyricFind’s complaint against TPG over the alleged “buy-or-bury” conspiracy to go forward, concluding that LyricFind “plausibly alleges TPG independently participated in the… scheme.”
“This decision shows just how weak Musixmatch and TPG’s arguments to dismiss were, and highlights how desperate they are to sweep their anticompetitive scheme under the rug,” LyricFind Founder and CEO Darryl Ballantyne said in a statement.
“The court saw right through their frivolous arguments, and the case will now proceed. We are eager to dive into discovery and see exactly how deep this rabbit hole goes.”
LyricFind has until September 20 to amend the parts of its complaint that the court dismissed, and the case will move to discovery in the meantime, the judge ruled.Music Business Worldwide
