Sirius XM's Losses In Suits on Pre-'72 Sound Recordings

Federal copyright law doesn't govern sound recordings made prior to 1972. While musical compositions have been afforded federal copyright protection since 1831, it wasn't until the Sound Recording Act of 1971 that recordings of music, spoken words or other sounds fell under the auspices of the federal Copyright Act. And it only applied to recordings made after Feb. 15, 1972.

In September 2014, U.S. District Judge Philip Gutierrez of the Central District of California ruled that Flo & Eddie could assert their copyrights and found Sirius liable for making an unauthorized public performance by airing the band's music. Flo & Eddie Inc. v. Sirius XM Radio Inc., 13-5693 (C.D.Calif. 2014). In October, Superior Court Judge Mary Strobel in Los Angeles agreed with Gutierrez's ruling, citing it in a case brought against Sirius by several recording labels. Capitol Records LLC v. Sirius XM Radio Inc., 520981 (L.A. Supt. Ct. 2014). Another similar case is still pending in Florida. Flo & Eddie Inc. v. Sirius XM Radio Inc., 2013cv23182 (S.D.Fla. 2014).

While the two California decisions were celebrated by artists and record companies, the rulings were limited to California and were based largely on interpretations of state statutes. The New York ruling, however, is based on a reading of common law and means another jurisdiction ' one vitally important to the music industry ' shares in the view that state law dictates protections for pre-1972 sound recordings.

These decisions come at a time when Congress is considering how it should rewrite antiquated copyright laws for the digital age. In the meantime, the latest ruling ' assuming it's upheld ' could have implications for music licensing at radio stations, as well as restaurants or sports arenas where recorded music is played. Gradstein & Marzano attorney Harvey Geller, who represents Flo & Eddie, said, however, that artists were interested in obtaining licenses from large infringers such as Sirius and Pandora and aren't likely to go after mom and pop operations. (In October, Flo & Eddie filed an infringement suit against Pandora Media in the Central District of California. Flo & Eddie Inc. v. Pandora Media Inc., 2014cv07648.)

Sirius, represented by Bruce Rich, Benjamin Marks, Todd Larson and John Gerba at Weil, Gotshal & Manges, and Michael Oberman at Kramer Levin Naftalis & Frankel, had argued that public performances of sound recordings aren't covered by New York common law because New York case law contains no discussion of such public performance rights. District Judge McMahon acknowledged in her opinion that not paying royalties for public performances of sound recordings “was an accepted fact of life in the broadcasting industry for the last century.” But she disagreed that this should clear the company of liability. In fact, she wrote that it is “in many ways inexplicable” that no one until now demanded royalties under common law.

“Acquiescence by participants in the recording industry in a status quo where recording artists and producers were not paid royalties while songwriters were does not show that they lacked an enforceable right under the common law ' only that they failed to act on it,” the federal judge wrote. Sirius, she added, provided no reason why New York, “a state traditionally protective of performers and performance rights,” would treat sound recordings differently from other jurisdictions.

Sirius had also warned the court that a ruling for Flo & Eddie would have harmful, far-ranging economic consequences. But District Judge McMahon wasn't swayed. “In the end, all this case presents me with is a suit between private parties seeking to vindicate private property rights,” she wrote. “The broader policy problems are not for me to consider.”

Lisa Shuchman writes for Litigation Daily, an ALM sibling of Entertainment Law & Finance.

For the third time in as many months, Sirius XM lost a court ruling over the issue of pre-1972 sound recordings. In a decision that further upsets the status quo for the music and copyright worlds, a federal judge in New York ruled that the owners of pre-1972 sound recordings have performance rights to their records, and that Sirius XM therefore infringed copyrights held by the two founding members of the 1960s rock band The Turtles. Flo & Eddie Inc. v. Sirius XM Radio Inc., 13-5784 (S.D.N.Y. 2014.)

The members of the band, which sang hits like “Happy Together,” sued Sirius through their company Flo & Eddie last year, alleging that Sirius had infringed on the group's rights under state law by playing its recordings without permission.

Sirius argued in a motion for summary judgment that New York law doesn't cover performance rights for pre-1972 sound recordings, and said its broadcasts of the Turtles' recordings constituted fair use. But U.S. District Judge Colleen McMahon in Manhattan firmly rejected Sirius' arguments and gave the company until December 5 to advise the court of any remaining disputes of fact that would require a trial. Otherwise, District Judge McMahon wrote, Sirius would be held liable for infringement and she would proceed to determine damages.

Federal copyright law doesn't govern sound recordings made prior to 1972. While musical compositions have been afforded federal copyright protection since 1831, it wasn't until the Sound Recording Act of 1971 that recordings of music, spoken words or other sounds fell under the auspices of the federal Copyright Act. And it only applied to recordings made after Feb. 15, 1972.

In September 2014, U.S. District Judge Philip Gutierrez of the Central District of California ruled that Flo & Eddie could assert their copyrights and found Sirius liable for making an unauthorized public performance by airing the band's music. Flo & Eddie Inc. v. Sirius XM Radio Inc., 13-5693 (C.D.Calif. 2014). In October, Superior Court Judge Mary Strobel in Los Angeles agreed with Gutierrez's ruling, citing it in a case brought against Sirius by several recording labels. Capitol Records LLC v. Sirius XM Radio Inc., 520981 (L.A. Supt. Ct. 2014). Another similar case is still pending in Florida. Flo & Eddie Inc. v. Sirius XM Radio Inc., 2013cv23182 (S.D.Fla. 2014).

While the two California decisions were celebrated by artists and record companies, the rulings were limited to California and were based largely on interpretations of state statutes. The New York ruling, however, is based on a reading of common law and means another jurisdiction ' one vitally important to the music industry ' shares in the view that state law dictates protections for pre-1972 sound recordings.

These decisions come at a time when Congress is considering how it should rewrite antiquated copyright laws for the digital age. In the meantime, the latest ruling ' assuming it's upheld ' could have implications for music licensing at radio stations, as well as restaurants or sports arenas where recorded music is played. Gradstein & Marzano attorney Harvey Geller, who represents Flo & Eddie, said, however, that artists were interested in obtaining licenses from large infringers such as Sirius and Pandora and aren't likely to go after mom and pop operations. (In October, Flo & Eddie filed an infringement suit against Pandora Media in the Central District of California. Flo & Eddie Inc. v. Pandora Media Inc., 2014cv07648.)

Sirius, represented by Bruce Rich, Benjamin Marks, Todd Larson and John Gerba at Weil, Gotshal & Manges, and Michael Oberman at Kramer Levin Naftalis & Frankel, had argued that public performances of sound recordings aren't covered by New York common law because New York case law contains no discussion of such public performance rights. District Judge McMahon acknowledged in her opinion that not paying royalties for public performances of sound recordings “was an accepted fact of life in the broadcasting industry for the last century.” But she disagreed that this should clear the company of liability. In fact, she wrote that it is “in many ways inexplicable” that no one until now demanded royalties under common law.

“Acquiescence by participants in the recording industry in a status quo where recording artists and producers were not paid royalties while songwriters were does not show that they lacked an enforceable right under the common law ' only that they failed to act on it,” the federal judge wrote. Sirius, she added, provided no reason why New York, “a state traditionally protective of performers and performance rights,” would treat sound recordings differently from other jurisdictions.

Sirius had also warned the court that a ruling for Flo & Eddie would have harmful, far-ranging economic consequences. But District Judge McMahon wasn't swayed. “In the end, all this case presents me with is a suit between private parties seeking to vindicate private property rights,” she wrote. “The broader policy problems are not for me to consider.”

Lisa Shuchman writes for Litigation Daily, an ALM sibling of Entertainment Law & Finance.