Trying to Determine Rights in Pre-1972 Sound Recordings

Pre-1972 sound recordings are protected by a patchwork of state criminal laws, civil statutes and common law, such as common law copyright ' which is the protection historically provided by state law to unpublished works of authorship ' and unfair competition principles. These forms of protection can vary substantially from state to state and lack the uniform treatment given to later sound recordings by federal copyright. (Of course, commercial sound recordings are in fact published (as defined in '101 of the Copyright Act) when copies are distributed to the public. But rather than let them fall into the public domain upon publication ' in the absence of federal protection to replace that common law protection ' some states like New York decided to sidestep for pre-1972 sound recordings the usual effects of publication, no matter how many copies are distributed. Other states, like California, protect published sound recordings under a different theory, such as unfair competition. Ironically, little state law is directed toward sound recordings that are actually unpublished. See, Copyright Office 2011 Report at 30-31.)

Under '301(c), the U.S. Copyright Act allows states to continue to protect pre-1972 sound recordings until Feb. 15, 2067; which is equivalent to a full 95-year term of federal copyright protection measured from 1972. Only then will state protection be preempted by federal law and pre-1972 sound recordings enter the public domain. In the meanwhile, there is virtually no public domain in the United States for sound recordings.

To put this in perspective, compare the term of copyright of a musical composition published in 1922 and a sound recording of a performance of that composition made in the same year. The musical composition entered the public domain in 1997. As the Copyright Office noted in its 2011 Report, the sound recording won't enter the public domain until 70 years later ' the same year that sound recordings made between Feb. 15 and Dec. 31, 1972, will do so.

The Naxos Case

Considered by the Copyright Office 2011 Report to be the “most notable case in recent years involving pre-1972 sound recordings,” Capitol Records Inc. v. Naxos of America Inc., 274 F. Supp. 2d 472 (2003), involved a dispute between two music labels over recordings of classical music performances by Pablo Casals, Edwin Fischer and Yehudi Menuhin made in the United Kingdom during the 1930s. Naxos took original shellac records, remastered them in a “multistep restoration process” and sold them as compact discs. Capitol Records, which had an exclusive license to exploit those recordings in the United States, had also remastered them and issued its own CDs.

Capitol brought an infringement action against Naxos in the U.S. District Court for the Southern District of New York based on the law of New York, including common law copyright and unfair competition. The district court found that Capitol's intellectual property rights in the recordings in the United States expired along with copyright protection in the United Kingdom. As for the unfair competition claim, the court held that public policy favored the preservation and “redissemination” of classical performances and that Naxos had not engaged in the type of bad faith needed to sustain that cause of action. Moreover, rather than a “duplicate” or “imitation” of the original recordings with their obsolete format and “numerous sound imperfections,” Naxos records were found to be “an entirely new and commercially viable product.” Naxos won summary judgment.

The decision was appealed to the U.S. Court of Appeals for the Second Circuit, which observed that “it is entirely up to New York to determine the scope of its common law copyright with respect to pre-1972 recordings.” Capitol Records Inc. v. Naxos of America Inc., 372 F.3d 471 (2004). The Second Circuit certified three questions of state law to the New York Court of Appeals: 1) whether expiration of the term of protection in the country of origin terminated common law copyright in New York; 2) whether a cause of action for common law copyright infringement includes some or all of the elements of unfair competition; and 3) whether a claim of common law copyright infringement is defeated by demonstration that a plaintiff's work has little market value and the defendant's work that uses components of the plaintiff's work is to be regarded as a “new product.”

The N.Y. Court of Appeals opined that “[i]n the absence of protective legislation, Congress intended that the owner of rights to a sound recording should rely on the 'broad and flexible' power of the common law to protect ' property rights [in sound recordings] after public dissemination of the work.” The state appeals court also observed that, although “publication” through the distribution of copies ordinarily divested works of protection under common-law copyright, U.S. Supreme Court precedent, Goldstein v. California, 412 U.S. 546 (1973), established that the concept has no application to categories of works, like pre-1972 sound recordings, that lie outside the scope of federal protection, and there was no barrier to a state's conferring lengthy copyright protection on a work not covered under federal copyright law.

Accordingly, the state appeals court held that New York was entitled to adapt the meaning of publication for its own purposes and protect pre-1972 sound recordings through common law copyright. Answering the certified questions, that court also held that nothing in federal statutory or constitutional law denied Capitol enforceable rights simply because the recordings had entered the public domain in the United Kingdom; that unfair competition requires “some type of malicious intent or bad faith” and competition in the marketplace (or similar actions designed for commercial benefit), but a common-law copyright claim does not; and thirdly, that neither the popularity or size of the market for a product nor “new product” analysis would stand in the way of Capitol's state common-law copyright infringement claim, to the extent Naxos used “original elements of the protected performances.”

Pre-1972 Recordings and Digital

Apart from enjoying a distinct and usually lengthier term of protection compared to what the Copyright Act provides, pre-1972 sound recordings are unaffected by other Copyright Act provisions. This disconnect between legal treatment given pre-1972 sound recordings and those recorded on or after Feb. 15, 1972, can be particularly troublesome in the digital sphere. For example, libraries and archives with historic recordings cannot take advantage of federal copyright provisions that permit dissemination without permission from their copyright owners, and digital preservation efforts also are affected. Online service providers cannot depend on safe harbor protection under the Digital Millennium Copyright Act (DMCA), 17 U.S.C. '512. And digital music stream- ing services may not avail themselves of the statutory license and royalty payment mechanism through SoundExchange that facilitate use of sound recordings within the federal copyright scheme.

The Sirius XM litigation brought by the record labels is a case in point. The plaintiffs allege that Sirius XM publicly performs on its streaming service thousands of their pre-1972 recordings but “refuses to seek authorization from [p]laintiffs or pay any royalties or other compensation” in contrast to its treatment of post-72 sound recordings that are federally protected. SoundExchange also is unhappy with Sirius XM; it alleges in its separate action that the streaming service improperly reduced its calculation of royalties due to SoundExchange for post-1972 works in part by an amount attributable to performances of pre-1972 sound recordings. A single licensing and payment scheme for all sound recordings might have avoided both disputes.

In its 2011 Report, the Copyright Office concluded that pre-1972 sound recordings should be made subject to all of the rights, limitations and exceptions that apply to other sound recordings under federal copyright law ' with some provisos to smooth the transition. (The Copyright Office recommended special provisions to address ownership issues, term of protection, transition period and registration.) The report observed that doing so would complete the work Congress began in 1976 ' when it brought most works protected by state common law copyright into the federal statutory fold ' and improve certainty and consistency.

The Copyright Office stated that federalization would best serve the interest of libraries, archives and others in preserving old sound recordings and in increasing their availability to the public. The Copyright Office did not, however, determine that the term of protection for pre-1972 sound recordings needed to be the same as that of post-1972 works; in many instances, should Congress act on its recommendations, that term still would endure until 2067.

Michael I. Rudell and Neil J. Rosini are partners in the New York City-based Franklin, Weinrib, Rudell & Vassallo.

Audio recordings of speech, musical instruments or any other sounds created before Feb. 15, 1972, are treated very differently from other recorded sounds under U.S. law. Each of the 50 states is free to apply its own rules to the protection of audio sound recordings made before Feb. 15, 1972, and may continue to do so for the next 54 years. As a consequence, the scope of protection for pre-1972 sound recordings is inconsistent from state to state, often vague and sometimes difficult to discern. In contrast, sound recordings made on and after Feb. 15, 1972, are governed by the U.S. Copyright Act, which imposes uniform treatment nationwide. The discrepancy is explained by the fact that Congress never saw fit to bring domestic pre-1972 sound recordings within the scope of federal copyright protection. (Certain pre-1972 sound recordings of foreign origin were given U.S. federal copyright protection beginning in 1996 under the 1994 Uruguay Round Agreements Act in order to comply with U.S. treaty obligations.) As a result, online radio stations, documentary film makers, archivists and others who copy, publicly perform, excerpt or adapt such sound recordings are exposed to uncertainty and confusion.

Sound Recordings'Copyright History

The history of pre-1972 sound recordings was traced at length in Capitol Records v. Naxos of America, 4 N.Y.3d 540 (2005), in which the New York Court of Appeals clarified its position on the distinct status of these works. The history was also reviewed in detail in a 2011 report by the U.S. Copyright Office, which recommends adding pre-1972 sound recordings to the system of federal copyright. See, “Federal Copyright Protection for Pre-1972 Sound Recordings.” And it stands to be revisited again and again, particularly in the context of digital media ' as in a lawsuit recently filed against the online streaming service Sirius XM by five major record labels (Capitol Records v. Sirius XM Radio, BC520981 (L.A. Sup Ct.)), and another by SoundExchange, the organization authorized to collect and distribute digital performance royalties only for sound recordings protected by U.S. copyright. (SoundExchange v. Sirius XM Radio, 1:13-cv-01290-RJL (D.C.D.C.).) Both disputes illustrate difficulties encountered by digital services in using pre-1972 sound recordings.

Pre-1972 sound recordings are protected by a patchwork of state criminal laws, civil statutes and common law, such as common law copyright ' which is the protection historically provided by state law to unpublished works of authorship ' and unfair competition principles. These forms of protection can vary substantially from state to state and lack the uniform treatment given to later sound recordings by federal copyright. (Of course, commercial sound recordings are in fact published (as defined in '101 of the Copyright Act) when copies are distributed to the public. But rather than let them fall into the public domain upon publication ' in the absence of federal protection to replace that common law protection ' some states like New York decided to sidestep for pre-1972 sound recordings the usual effects of publication, no matter how many copies are distributed. Other states, like California, protect published sound recordings under a different theory, such as unfair competition. Ironically, little state law is directed toward sound recordings that are actually unpublished. See, Copyright Office 2011 Report at 30-31.)

Under '301(c), the U.S. Copyright Act allows states to continue to protect pre-1972 sound recordings until Feb. 15, 2067; which is equivalent to a full 95-year term of federal copyright protection measured from 1972. Only then will state protection be preempted by federal law and pre-1972 sound recordings enter the public domain. In the meanwhile, there is virtually no public domain in the United States for sound recordings.

To put this in perspective, compare the term of copyright of a musical composition published in 1922 and a sound recording of a performance of that composition made in the same year. The musical composition entered the public domain in 1997. As the Copyright Office noted in its 2011 Report, the sound recording won't enter the public domain until 70 years later ' the same year that sound recordings made between Feb. 15 and Dec. 31, 1972, will do so.

The Naxos Case

Considered by the Copyright Office 2011 Report to be the “most notable case in recent years involving pre-1972 sound recordings,” Capitol Records Inc. v. Naxos of America Inc., 274 F. Supp. 2d 472 (2003), involved a dispute between two music labels over recordings of classical music performances by Pablo Casals, Edwin Fischer and Yehudi Menuhin made in the United Kingdom during the 1930s. Naxos took original shellac records, remastered them in a “multistep restoration process” and sold them as compact discs. Capitol Records, which had an exclusive license to exploit those recordings in the United States, had also remastered them and issued its own CDs.

Capitol brought an infringement action against Naxos in the U.S. District Court for the Southern District of New York based on the law of New York, including common law copyright and unfair competition. The district court found that Capitol's intellectual property rights in the recordings in the United States expired along with copyright protection in the United Kingdom. As for the unfair competition claim, the court held that public policy favored the preservation and “redissemination” of classical performances and that Naxos had not engaged in the type of bad faith needed to sustain that cause of action. Moreover, rather than a “duplicate” or “imitation” of the original recordings with their obsolete format and “numerous sound imperfections,” Naxos records were found to be “an entirely new and commercially viable product.” Naxos won summary judgment.

The decision was appealed to the U.S. Court of Appeals for the Second Circuit, which observed that “it is entirely up to New York to determine the scope of its common law copyright with respect to pre-1972 recordings.” Capitol Records Inc. v. Naxos of America Inc., 372 F.3d 471 (2004). The Second Circuit certified three questions of state law to the New York Court of Appeals: 1) whether expiration of the term of protection in the country of origin terminated common law copyright in New York; 2) whether a cause of action for common law copyright infringement includes some or all of the elements of unfair competition; and 3) whether a claim of common law copyright infringement is defeated by demonstration that a plaintiff's work has little market value and the defendant's work that uses components of the plaintiff's work is to be regarded as a “new product.”

The N.Y. Court of Appeals opined that “[i]n the absence of protective legislation, Congress intended that the owner of rights to a sound recording should rely on the 'broad and flexible' power of the common law to protect ' property rights [in sound recordings] after public dissemination of the work.” The state appeals court also observed that, although “publication” through the distribution of copies ordinarily divested works of protection under common-law copyright, U.S. Supreme Court precedent, Goldstein v. California, 412 U.S. 546 (1973), established that the concept has no application to categories of works, like pre-1972 sound recordings, that lie outside the scope of federal protection, and there was no barrier to a state's conferring lengthy copyright protection on a work not covered under federal copyright law.

Accordingly, the state appeals court held that New York was entitled to adapt the meaning of publication for its own purposes and protect pre-1972 sound recordings through common law copyright. Answering the certified questions, that court also held that nothing in federal statutory or constitutional law denied Capitol enforceable rights simply because the recordings had entered the public domain in the United Kingdom; that unfair competition requires “some type of malicious intent or bad faith” and competition in the marketplace (or similar actions designed for commercial benefit), but a common-law copyright claim does not; and thirdly, that neither the popularity or size of the market for a product nor “new product” analysis would stand in the way of Capitol's state common-law copyright infringement claim, to the extent Naxos used “original elements of the protected performances.”

Pre-1972 Recordings and Digital

Apart from enjoying a distinct and usually lengthier term of protection compared to what the Copyright Act provides, pre-1972 sound recordings are unaffected by other Copyright Act provisions. This disconnect between legal treatment given pre-1972 sound recordings and those recorded on or after Feb. 15, 1972, can be particularly troublesome in the digital sphere. For example, libraries and archives with historic recordings cannot take advantage of federal copyright provisions that permit dissemination without permission from their copyright owners, and digital preservation efforts also are affected. Online service providers cannot depend on safe harbor protection under the Digital Millennium Copyright Act (DMCA), 17 U.S.C. '512. And digital music stream- ing services may not avail themselves of the statutory license and royalty payment mechanism through SoundExchange that facilitate use of sound recordings within the federal copyright scheme.

The Sirius XM litigation brought by the record labels is a case in point. The plaintiffs allege that Sirius XM publicly performs on its streaming service thousands of their pre-1972 recordings but “refuses to seek authorization from [p]laintiffs or pay any royalties or other compensation” in contrast to its treatment of post-72 sound recordings that are federally protected. SoundExchange also is unhappy with Sirius XM; it alleges in its separate action that the streaming service improperly reduced its calculation of royalties due to SoundExchange for post-1972 works in part by an amount attributable to performances of pre-1972 sound recordings. A single licensing and payment scheme for all sound recordings might have avoided both disputes.

In its 2011 Report, the Copyright Office concluded that pre-1972 sound recordings should be made subject to all of the rights, limitations and exceptions that apply to other sound recordings under federal copyright law ' with some provisos to smooth the transition. (The Copyright Office recommended special provisions to address ownership issues, term of protection, transition period and registration.) The report observed that doing so would complete the work Congress began in 1976 ' when it brought most works protected by state common law copyright into the federal statutory fold ' and improve certainty and consistency.

The Copyright Office stated that federalization would best serve the interest of libraries, archives and others in preserving old sound recordings and in increasing their availability to the public. The Copyright Office did not, however, determine that the term of protection for pre-1972 sound recordings needed to be the same as that of post-1972 works; in many instances, should Congress act on its recommendations, that term still would endure until 2067.

Michael I. Rudell and Neil J. Rosini are partners in the New York City-based Franklin, Weinrib, Rudell & Vassallo.