IP Law Daily Sirius XM not required to pay for performances of pre-1972 recordings
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Tuesday, December 20, 2016

Sirius XM not required to pay for performances of pre-1972 recordings

By Jody Coultas, J.D.

New York common law does not recognize a right of public performance for creators of pre-1972 sound recordings, according to the New York Court of Appeals. The court determined that the issue raised by a copyright infringement suit filed by a company owned by two of the founding members of the 1960s rock group The Turtles against satellite and Internet broadcaster Sirius XM Radio, Inc., was best decided by the legislature. New York common-law copyright protection prevented only the unauthorized reproduction of a copyrighted work, not ordinary use, such as playing it (Flo & Eddie, Inc. v Sirius XM Radio, Inc., December 20, 2016, Stein, L.).

Flo & Eddie filed a putative class-action lawsuit in federal court against 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 federal district court in New York City 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 later held that Flo & Eddie was entitled to summary judgment of copyright infringement individually, but not as class representatives.

Acknowledging 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 Second Circuit Court of Appeals certified the question to the court: "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?"

With respect to sound recordings fixed before February 15, 1972, Congress expressly stated that any rights or remedies under state statutes or common law may be applied until February 15, 2067. States can regulate areas of copyright not covered by federal statutes, including recordings of musical performances fixed prior to 1972. While Congress permitted the states to regulate unaddressed areas of copyright law until 2067, it neither indicated that such rights existed, nor required states to recognize or create new or additional rights.

New York common-law copyright protection prevents only the unauthorized reproduction of the copyrighted work, but permits a purchaser to use copies of sound recordings for their intended purpose, namely, to play them. Copyright law prevents copying of a work, but does not prevent someone from using a copy, once it has been lawfully procured, in any other way the purchaser sees fit.

New York’s common-law copyright never recognized a right of public performance for pre-1972 sound recordings, and the court declined to recognize such a right for the first time. Flo & Eddie argued that the right of public performance should apply when a sound recording is used for "commercial purposes," but the scope of that term remains undefined. It was unclear whether the right would apply to AM/FM radio broadcasting, whether the right would extend only to situations in which someone is charged directly for the music, or whether the right would also apply where payment is indirect, such as to a bar that imposes a cover charge when it has a DJ who plays music. The public performance right might also apply to public entities, such as museums or schools.

The recognition of such a right should be left to the legislature, according to the court. Recognizing new rights in this complex area of law would involve a delicate balancing of numerous competing interests, requiring an intricate regulatory scheme that can be crafted only by a legislative body. The court noted that it would be necessary to have a central agency or clearinghouse to maintain a record of ownership rights in sound recordings. Also, a number of difficulties would arise if the New York court, and other state courts across the country, were to separately determine the existence and scope of a common-law right of public performance for sound recordings and were to reach different results in neighboring jurisdictions that may share radio airwaves.

The court noted that copyright holders, such as Flo & Eddie, have other potential avenues of recovery. In fact, Flo & Eddie prevailed on its causes of action alleging unfair competition and unauthorized copying of sound recordings.

Concurring opinion. Judge Eugene M. Fahey concurred with the majority that the common law of New York does not recognize a right of public performance, but wrote separately to answer the pertinent part of the certified question in the negative with this caveat: "public performance" does not include the act of allowing members of the public to receive the "on-demand" transmission of particular sound recordings specifically selected by those listeners.

Dissenting opinion. New York’s broad and flexible common-law copyright protections for sound recordings encompass a public performance right that extends to the outer boundaries of current federal law, and ceases upon preemption by Congress, according to Judge Jenny Rivera’s dissent.

"I reject a parochialism that justifies turning a blind eye to the exploitative practices of today’s music industry made possible by technological advances and that, as a consequence, excludes from our common-law copyright in sound recordings a quintessential property interest in the use of these works, and limits a creator’s opportunity to derive financial benefit from their performance," said Judge Rivera.

The common law right of public performance protects against technologies like streaming radio that benefit from using the musical works and that jeopardize prior revenue streams of copyright holders, while also allowing the copyright holder to share in the profits. Moreover, the court clearly has the power to develop the common law when the legislature has failed to act but justice demands a change, according to the dissent.

The case is No. 172.

Attorneys: Daniel M. Petrocelli (O’Melveny & Myers) for Sirius XM Radio, Inc. Caitlin Halligan (Caitlin Halligan) for Flo & Eddie, Inc.

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

MainStory: TopStory Copyright TechnologyInternet NewYorkNews

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