(CN) - Cell phone carriers do not have to pay copyright royalties each time a customer's phone plays a ringtone, a federal judge in Manhattan ruled.
The American Society of Composers, Authors and Publishers (ASCAP) sought additional royalties from Verizon, arguing that that the playing of ringtones constitutes the public performance of music.
"When a ringtone plays on a cellular telephone, even when it occurs in public, the user is exempt from copyright liability, and Verizon is not liable either secondarily or directly," U.S. District Judge Denise Cote decided.
The music association filed a similar lawsuit against AT&T. Its members include more than 360,000 composers, songwriters, lyricists and music publishers.
The ruling marks another blow to an industry that continues to search for new revenue streams in the age of digital music.
The association claimed that Verizon was "directly and secondarily liable for public performances of music works." It said Verizon violated the music's copyrights because it controls the technical process that allows a song to be played in public on a cell phone.
The association also accused cell phone subscribers of infringement, and wanted Verizon to be held responsible for its customers.
But Judge Cote ruled that the playing of ringtones "fits comfortably" within copyright law exemptions, namely because customers in general "do not exhibit any expectation of profit when they permit the telephones to ring in public."
It's not a public performance to let a ringtone play in the presence of a person's "normal circle of family and social acquaintances," the judge ruled. And even if a broader audience hears the ring, she said there's no "commercial advantage" because "they do not charge admission."
She also shot down ASCAP's assertion that Verizon was directly infringing on copyrighted material.
"Verizon does not 'recite, render, play, dance or act [the ringtone] either directly or by means of any device,' and thus does not 'perform' the music," she wrote.
In essence, the industry sought to charge cell phone companies twice for the same service, the judge said.
"Despite the accusation that Verizon enjoys revenue from publicly played ringtones, Verizon makes no revenue from the playing of ringtones, in public or elsewhere," Judge Cote wrote. "It makes revenue from selling ringtones, and it already pays a mechanical licensing fee in connection with those sales."
U.S. ringtone sales in 2008 generated $541 million, down from $714 million in 2007, according to research firm SNL Kagan. But it reported that ringback tones rose to $199 million in 2008 from $77 million in 2005.
A ringback tone is a song that plays for the caller after they dial the number of a participating subscriber.
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