Hank's IP Brew — Issue #31

Howdy, y'all.

This week: Sony just filed its second copyright lawsuit against an AI music company — after a judge blocked it from adding 30,000 recordings to the first one. And 18 Nebraska football players learned the hard way that $7.5 million in NIL deals can vanish if the company writing the checks looks too much like the school.

Two stories about enforcement. Let's get into it.

Everyone else cut a deal. Sony filed another lawsuit.

On July 20, Sony Music Entertainment filed a second copyright infringement case against Udio in federal court in Manhattan, asserting 30,117 additional sound recordings — recordings that a judge had barred Sony from adding to its original 2024 case against the AI music generator. Sony's response to being told it couldn't expand the first lawsuit was immediate: open a second one.

The new suit is brought by Sony and nine affiliated labels, including Arista Records and LaFace. It arrives at an interesting moment: Udio has now struck licensing deals with Universal Music Group, Warner Music Group, Merlin, Kobalt, Believe, and the National Music Publishers' Association. Sony is the only major that has not settled or licensed. While its competitors have moved from litigation to licensing partnerships, Sony is expanding its litigation footprint.

How this happened

The original label lawsuits against Suno and Udio were filed in June 2024, coordinated by the RIAA. Discovery in Sony's original case allowed Sony's attorneys to inspect Udio's training data using audio fingerprinting — and they found what the complaint describes as "hundreds of thousands" of Sony recordings in Udio's training set. The 30,117 works in the new suit are described as "only a small portion" of the recordings Udio allegedly infringed.

Sony tried to add those recordings to the original case. On June 29, 2026, the court said no — there was no procedural basis to expand the case that broadly at that stage. But the court was careful to note that "Plaintiffs have the right to seek to stop infringement of, and recover damages for, all copyrighted works." The door was open. Sony walked through it three weeks later.

The new complaint also adds a wrinkle: it alleges Udio obtained many of the recordings by stream-ripping YouTube using a tool called YT-DLP, which circumvents YouTube's technological protections. That's a separate legal theory from the core fair use dispute — it implicates the DMCA's anti-circumvention provisions, not just copyright infringement. Udio has acknowledged scraping YouTube audio for training data while arguing the use was fair use.

In its original answer, Udio admitted its models were "constructed by showing the program a vast amount of different kinds of sound recordings" and that those recordings "presumably included recordings whose rights are owned by the Plaintiffs." That concession is now cited in the second complaint.

What the settlement map tells you

The music AI litigation has largely resolved itself through deals — each carrying different terms but sharing a basic structure: AI company pays a settlement, agrees to ongoing licensing, and gains access to catalog going forward. UMG got per-generation royalties estimated at $0.002 to $0.005 per track when it settled with Udio. Warner got a licensing partnership when it settled with both Suno and Udio. BMG settled with Suno in August.

Sony's refusal to join that pattern is worth noting. One interpretation is leverage: the ongoing litigation and the threat of a second case forces Udio toward settlement on Sony's terms rather than the market rate established by earlier deals. Another interpretation is principle: Sony may believe a court ruling on fair use is ultimately more valuable to the industry than any licensing revenue, and is willing to absorb litigation costs to get there.

What neither interpretation supports is the view that the litigation is winding down. Fact discovery in the original Massachusetts Suno case closes September 30. Dispositive motions aren't due until April 2027. No US fair-use ruling on generative AI music is coming before 2027 at the earliest. Sony just ensured there's a second active case when that ruling does arrive.

What it means for creators

The Sony/Udio dynamic illustrates something important about how AI copyright enforcement actually works in practice: it's not a single case with a clean outcome. It's a portfolio of lawsuits, settlements, and licensing deals that are being resolved case by case, company by company, catalog by catalog. The labels that settled got money and licenses. Sony is holding out for something else — either more money, better terms, or a precedent.

For independent creators without Sony's litigation budget, the practical lesson is different: your leverage is highest before a company has already settled with others and established a market rate for your type of content. Once the settlement template exists, individual claims become easier to value and easier to lowball. The time to establish your rights — through registration, documentation, and early legal counsel — is before the template gets set for your category.

One more detail worth watching: the SDNY status conference in Sony's original Udio case was scheduled for September 18. That conference may produce developments that land between this issue going out and your next one. We'll stay tuned.

The first major test of the College Sports Commission's enforcement authority just produced a result that every athlete, agent, and brand partner in college football needed to see.

In May, an arbitrator upheld the CSC's decision to deny NIL deals worth a combined $7.5 million to 18 Nebraska football players. The deals were with PlayFly Sports — a multimedia rights company that has partnerships with Nebraska and dozens of other athletic departments. The CSC had classified PlayFly as an "associated entity" of Nebraska, meaning the deals were treated like booster-funded collective payments rather than independent brand deals — and therefore subject to the $20.5 million revenue-sharing cap.

The players challenged the ruling in arbitration, as required by the House settlement process. The arbitrator sided with the CSC.

What the arbitrator actually said

The ruling, written by arbitrator Andrew M. Strongin, is worth reading closely because it lays out exactly how the CSC's "valid business purpose" standard works in practice:

"Playfly appears to be guaranteeing certain payments to each student-athlete in exchange for performance of as-yet unspecified services that it hopes to sell in the future to some as-yet unidentified sponsor on an as-yet unidentified date, in promotion of an unidentified good or service for sale to the general public."

In plain terms: the deal structure didn't have a real commercial purpose attached to it at the time it was made. PlayFly was promising to find sponsors later. The arbitrator treated that as a pass-through — a mechanism for routing school money to players while making it look like a third-party brand deal.

The arbitrator went on: "In effect, Playfly functions as a pass-through for University payments to its student-athletes in a way that was designed to bypass the (revenue-sharing) cap."

That language is the key to understanding the ruling. It wasn't a close call on the merits of multimedia rights deals generally. It was a finding that this specific deal, as structured, was designed to circumvent the cap rather than to serve a genuine commercial purpose. The CSC CEO Bryan Seeley called it "a good day" for enforcement and said he expects the ruling to be influential even though it's not technically precedential.

Why PlayFly is different from a typical brand deal

PlayFly occupies an unusual position in college athletics. It's a for-profit multimedia rights company — not a booster collective — but it holds official partnerships with athletic departments at Nebraska and many other schools. It sells sponsorships, manages broadcast rights, and runs game-day activations. In that sense it looks like a legitimate commercial entity.

The problem, as the CSC and arbitrator saw it, is structural: because PlayFly already has a financial relationship with the school, payments from PlayFly to that school's athletes look functionally like payments from the school, routed through an intermediary. The players' attorneys argued PlayFly isn't a recruiting tool because it works with multiple competing schools. The arbitrator disagreed — he found that NIL payments "at least generally" assist in recruiting and retention regardless of whether the paying company also works with competitors.

The Nebraska attorney general's office was asked to comment and declined. Under Nebraska law, no organization can penalize an athlete for receiving NIL compensation. Whether the AG will take action to block CSC enforcement against Nebraska athletes is still an open question.

What happens next

The CSC agreed to expedite review of new deals that the Nebraska players submit — deals structured to pass the valid business purpose test. Seeley indicated he believes the players will be able to get paid under compliant deal structures without more litigation.

But there are 21 deals consolidated into three other pending arbitration cases as of the spring. And a federal magistrate judge was scheduled to address a motion seeking to exempt multimedia rights companies from the associated entity classification entirely — which would change the legal landscape for PlayFly and companies like it across all schools.

The practical guide for athletes and advisors

The Nebraska ruling gives you a clear picture of what the CSC will look for when reviewing a deal:

Who is the counterparty, really? If the company paying the athlete has a direct financial relationship with the athlete's school — an official partnership, a multimedia rights contract, a sponsorship arrangement — expect the deal to face associated entity scrutiny regardless of how it's labeled.

What is the service, specifically? The arbitrator found that "as-yet unspecified services" for "as-yet unidentified sponsors" don't constitute a valid business purpose. The deal needs to describe what the athlete is actually doing, for whom, promoting what, and when. Vague future obligations are a red flag.

Is the payment guaranteed regardless of performance? Guarantee structures that pay athletes up front without tying payment to the delivery of specific, documented services look like salary substitutes. CSC reviewers and arbitrators notice this.

Does the deal make economic sense for the paying company? The fundamental test is whether a legitimate business would pay this amount for this athlete's NIL in this context, independent of any connection to the school. If the answer requires the school relationship to make sense, the deal likely fails the test.

The lesson from Nebraska isn't that multimedia rights companies can't do NIL deals. It's that the deal has to be a real deal — real services, real commercial purpose, real value to the paying party independent of the school relationship. When it isn't, $7.5 million and 18 players can disappear in an arbitrator's ruling.

See you next time,

Hank

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About Hank's IP Brew

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