French court denies preliminary injunction against a music streaming service on grounds of a potential abusive termination of a copyright license agreement

In a summary judgment (available in French only) issued on 5 September 2011, the Tribunal of First Instance of Paris (“Tribunal de Grande Instance” or “TGI”) dismissed Universal’s motion for a preliminary injunction against French streaming music service Deezer on the grounds that Universal may have abused its dominant position when it terminated its license agreement with Deezer.

In this case, the record company Universal France (Universal) and Blogmusik, the publisher of the French streaming music service Deezer, entered into a license agreement that was supposed to expire on 31 December  2010. In October 2010, the parties decided to renew the contract. However, since discussions on the new terms of the contract were still ongoing after the expiration date, Universal agreed to extend the former license until after the signing of a new agreement. In April 2011, Universal sent Deezer a draft license agreement featuring new licensing terms aimed at enhancing the conversion rate of free users to paying subscribers.

After Blogmusik refused to agree to Universal’s conditions, Universal terminated the license and brought summary proceedings against Blogmusik to prevent it from using the Universal catalogue.

In response, Blogmusik argued that Universal could not claim that continuing to allow streaming of Universal’s catalogue presented a manifestly illicit character—a condition necessary to obtain a preliminary injunction under French law—since: (1) Universal held a dominant position in the French online music market by owning more than 30% of the market share and 50% of the top 100 songs, and (2) the unilateral termination by Universal of the license would constitute an abuse of this dominant position.

The court held that, at this preliminary stage, Deezer adequately alleged that Universal may be abusing its dominant position. Thus, the court denied Universal’s motion for summary judgment. [Béatrice Martinet Farano]