IP Law Daily N.Y.’s highest court asked whether state law protects performance rights in pre-1972 sound recordings
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Wednesday, April 13, 2016

N.Y.’s highest court asked whether state law protects performance rights in pre-1972 sound recordings

By Cheryl Beise, J.D.

The U.S. Court of Appeals for the Second Circuit has requested New York’s highest court to provide guidance on the question of whether there a right of public performance for creators of sound recordings under New York common law. In November 2014, the federal district court in New York City had ruled that Sirius XM Radio engaged in copyright infringement under New York law by publicly performing pre-1972 sound recordings owned by Flo & Eddie, a company owned by two of the founding members of the 1960’s rock group The Turtles. However, acknowledging that case presented a novel legal issue, the district court stayed the action and certified its ruling for interlocutory appeal (Flo & Eddie, Inc. v. Sirius XM Radio, Inc., April 13, 2016, Judge, J.).

In 2013, Flo & Eddie filed a putative class-action lawsuit against Sirius in the federal district court in New York City. Flo & Eddie accused Sirius of engaging in common law copyright infringement and unfair competition by reproducing and publicly performing, without authorization, sound recordings that were owned by Flo & Eddie. The recordings were not eligible for federal copyright protection because they had been “fixed” before February 15, 1972, and thus were not governed by the Copyright Act.

On November 14, 2014, the court granted summary judgment as to liability to Flo & Eddie, finding had the right to exclusively reproduce the recording at issue under New York law. The court concluded that the New York Court of Appeals would recognize the exclusive right to the public performance of a sound recording as one of the appurtenant rights to the common law copyright in a sound recording. On January 15, 2015, the court held that Flo & Eddie was entitled to summary judgment of copyright infringement individually, but not as class representatives.

On February 9, 2015, the district granted Sirius’s alternate motion asking the court to certify its ruling for interlocutory appeal. The court acknowledged that “there is substantial ground for difference of opinion” regarding whether the right to publicly perform sound recordings is part of the bundle of rights associated with common law copyrights under New York law.” The court stayed the case pending appeal.

Certified legal question. The Second Circuit agreed that the case presented a significant and unresolved issue of New York law that was determinative of the outcome of the case.

The Second Circuit reasoned that certification was warranted because: (1) the New York Court of Appeals had not addressed whether copyright holders in sound recordings have a public-performance right in their works, nor was there sufficient other guidance to predict how the Court of Appeals would resolve this issue; (2) Flo & Eddie’s claims of infringement depended on the question’s resolution; and (3) the recognition of such a right of public performance was essentially a “public policy choice[]” appropriately resolved by a New York court.

Default property rights. Both parties argued that New York maintains a default legal rule as to the scope of property rights that settled the dispute. Flo & Eddie asserted that property rights in New York are all-encompassing unless specifically limited, whereas Sirius contended that property rights under New York law are inherently limited. The Second Circuit, however, was unable to find that a clear default rule existed with respect to the scope of property rights under New York common law, thus further necessitating guidance from New York courts.

Dormant Commerce Clause. Sirius also argued that any law that would grant a public performance right to copyright holders would violate the dormant Commerce Clause of the U.S. Constitution, which limits the power of states to enact laws imposing substantial burdens on interstate commerce. However, “[not] all rights of this sort violate the dormant Commerce Clause; some might, some might not,” the court said. The court explained that the constitutional issue “could not be adjudicated without knowing what, if any, limitations New York places on such rights, if they do exist.”

Certified legal question. The court accordingly reserved judgment and certified the following question to the New York Court of Appeals: “Is there a right of public performance for creators of sound recordings under New York law and, if so, what is the nature and scope of that right?” The court also invited the New York high court to “reformulate or expand” the question as appropriate and to provide “guidance on any other pertinent questions that it wishes to address.”

The case is No. 15-1164-cv.

Attorneys: Harvey Geller and Henry Gradstein (Gradstein & Marzano PC) and Evan S. Cohan for Flo & Eddie, Inc. Daniel M. Petrocelli, Cassandra L. Seto, and Jonathan D. Hacker (O’Melveny & Myers LLP) for Sirius XM Radio, Inc.

Companies: Flo & Eddie, Inc.; Sirius XM Radio, Inc.

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