Spotify, the digital music streaming giant, is in a bit of hot water for failing to properly pay for many of the songs on the service. Bluewater, a company that manages music publishing rights, and Robert Gaudio, a songwriter and member of Frankie Valli and the Four Seasons, have sued Spotify, claiming that Spotify did not properly license many songs that stream on the service.

In part, the case concerns what are called “compulsory” licenses for musical works under 17 U.S.C.  § 115. Music is a funny thing under US copyright law. Whenever you hear a song, there are two copyrights that protect that piece of music. First, there is the “musical work” which is the composition of the song: that is, the written down notes and any accompanying words. Then, there is the “sound recording” which is the embodiment of those words and notes: that is, the thing you actually listen to. In order to properly use a song you hear, you need to get permission for both the musical work as well as the sound recording. Notably, that could easily be two different people. Say, for instance, I wrote a song and then gave it to a band to record. In this situation, I would own the copyright to just the musical work and the band would own the sound recording.

17 U.S.C § 115 provides a way that people can get licenses to use musical works without directly asking for permission from the owner, if they follow some rules. First, this section only covers works that have previously been legally distributed to the public. So, you can’t get a compulsory license over a work just because it leaks out before it is published by the author. Next, you have to file a notice of your intent to use the musical work with the owner of the copyright. The law doesn’t say exactly what must be in this notice, but it does say you have to do it at least 30 days before you use the work. Finally, you have to pay royalties to the owner for using the work.

Bluewater and Gaudio both claim that, even though Spotify may have locked down some licenses for the sound recordings it streams, it has not properly obtained licenses for many musical works. What is more, they argue that Spotify doesn’t even have a structure in the company to handle these issues. “Spotify’s apparent business model from the outset was to commit willful copyright infringement first, ask questions later, and try to settle on the cheap when inevitably sued.” Ouch. Accordingly, they want maximum damages of $150,000 per infringement.

Without having seen Spotify’s answer yet, it’s hard to evaluate how bad this case is for the company. Still, Bluewater and Gaudio make compelling arguments that Spotify is up to no good. If nothing else, Spotify could be in for some serious monetary damages, and that is never good. As a Spotify user myself, I’ve always felt good about having a legal way to listen to the music I want to listen to, whenever I want to listen to it. So, I hope the company gets this issue resolved quickly and makes sure artists are getting the money they deserve.

If you want to know more about compulsory licenses, you can check out this helpful circular from the Copyright office.