Pandora isn’t required to fork over extra royalties for streaming comedy routines by Robin Williams, Lewis Black and others, according to a new report in a closely-watched lawsuit over how comedians are paid by digital platforms.

The report, made public on Tuesday (July 22), says the comedians gave Pandora an “implied license” to the spoken-word material in their sets — the jokes themselves — by allowing the company to stream sound recordings of their comedy shows for years without protest.

“All plaintiffs undisputedly knew for years that their routines were streaming on Pandora,” writes Suzanne H. Segal, a former federal magistrate judge appointed to weigh in on the case. “Nevertheless, for nearly a decade … they never objected.”

“Plaintiffs did not just sit idly by for years while Pandora used their routines,” Segal adds later in the report. “Several actively encouraged it, knowing they stood to reap substantial monetary and promotional benefits.”

The new report is not a final decision, and lawyers for the comics are already challenging it. In court filings, they say Segal’s report should be rejected because she clearly misinterpreted case law and got key questions wrong.

An attorney for the comedians and a spokesperson for Pandora parent SiriusXM both declined to comment on the new report.

While not final, Wednesday’s report is a key development in a closely-watched legal dispute over how comedians are paid by streaming services. That’s a crucial question as social media, podcasts and Netflix have pushed comedy to boom in popularity over the past decade.

The stakes are big, but the issue is technical. When it comes to music, streamers like Pandora pay for both the sound recording (masters) and the underlying written music (publishing). But for comedy sets, they’ve historically only paid for the recordings, and not for the underlying spoken words that are captured on the tape.

Some comedians want that to change. In 2021, pushed by new rights groups like Word Collections and Spoken Giants, some comics started demanding that streaming services pay the equivalent of publishing royalties for their sets, prompting Spotify to pull down comedy records from Kevin Hart, Tiffany Haddish and hundreds of others.

Months later, a slew of comics filed lawsuits against Pandora, claiming the company was infringing copyrights by failing to pay those additional licensing fees. The cases, filed by Williams’ estate, Bill Engvall, Andrew Dice Clay, Nick Di Paolo, George Lopez and others, alleged that the streamer knew it needed to pay for spoken-word content and had simply chosen not to do so.

But in Tuesday’s report, Segal thoroughly rejects those claims. She cites repeated testimony from the comics themselves that they knew their routines were being streamed on Pandora, received payment for them under the existing record licenses, and never objected to that arrangement. In fact, she says they sometimes encouraged it.

“On November 18, 2020, Bill Engvall … shared a post from Pandora congratulating him on six hundred million Pandora streams to thank his fans for the support,” Segal writes. “On September 22, 2020, plaintiff Black’s official Facebook page promoted his album [by] stating it was ‘streaming exclusively on Pandora right now!’”

The report also says that several comics testified that they intended to “convey” all rights necessary for their record companies to sell their sets to streamers — meaning Pandora’s payments to those companies should have covered any additional spoken-word licenses.

According to the report, such conduct either granted Pandora the “implied” license to stream the sets or represents the kind of unreasonable delay that triggers “equitable estoppel” — a legal doctrine that bars someone from taking contradictory positions.

“Plaintiffs did more than remain silent for years, but instead expressly encouraged Pandora to stream their routines,” Segal writes regarding estoppel. “Pandora detrimentally relied on plaintiffs’ prolonged silence, believing that plaintiffs agreed to streaming the routines, only to face this litigation long after the streaming began.”

Segal is a “special master” — a neutral arbiter appointed by judges in some complex cases to handle certain elements of litigation. Her report is not a final ruling, and must be adopted by the judge himself before it carries any official weight. But such reports are influential, and judges often follow the recommendations.

Even before the report was made public, the comedians were already urging Judge Mark C. Scarsi to reject it. In a detailed opposition filing, attorney Richard Busch argues that Segal’s report had ignored key evidence, misapplied legal precedents and created an unworkable approach.

“Taken to its logical conclusion, the position adopted in the report would mean a statutory payment for one copyright from any source could create an implied license on a completely different and separate unlicensed copyright,” Busch writes.

Attorneys for Pandora will file their own brief in the weeks ahead, arguing that the report should be adopted by the judge. In his eventual final ruling, the judge could ultimately adopt portions of the report and reject others.