On December 20, 2016, the New York Court of Appeals (New York’s highest court) issued a landmark state copyright law decision, holding in response to a certified question from the Second Circuit in Flo & Eddie, Inc. v. Sirius XM Radio, Inc., that New York law does not recognize a right of public performance for creators of sound recordings fixed before February 15, 1972.

The History of the Copyright Act and Pre-1972 Sound Recordings

A sound recording results from the fixation of a series of musical, spoken, or other sounds. A sound recording is different than—and not a substitute for—an underlying musical composition. Unlike musical compositions, which have long been given all exclusive rights provided to works under the Copyright Act, sound recordings were not covered by the Copyright Act until enactment of the Sound Recording Amendment of 1971. In an effort to combat piracy, that amendment added rights for sound recordings fixed after February 15, 1972 and limited to the rights to reproduce, prepare derivative works, and distribute copies. Public performance rights were later added, as a result of the enactment of the Digital Performance Right in Sound Recording Act of 1995. But, that amendment only added that right for recordings fixed after February 15, 1972 and was limited to the right to control performances by “means of a digital audio transmission” (applying to digital radio services and not to AM/FM radio stations). A number of exceptions to that right were also added.

Sound recordings fixed prior to February 15, 1972 are governed by various state statutory and common laws. In New York, there is a common law right of “reproduction” that protects the owners of pre-February 15, 1972 sound recordings from unauthorized reproductions. The question of whether owners of sound recordings had a right to control performances of their recordings had never been addressed.

Flo & Eddie v. Sirius XM

Flo & Eddie, which is owned by two of the original members of the Turtles (known for No. 1 hit “Happy Together”) controls master recordings of around 100 songs that were recorded before February 15, 1972. Flo & Eddie, on behalf of a putative class, commenced litigation in New York against Sirius XM, the nation’s largest satellite digital radio service, alleging claims including common law copyright infringement and unfair competition.[1]

On interlocutory appeal from the Southern District of New York, the Second Circuit certified the following questions 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?

New York Court of Appeals: NO

The Court of Appeals answered the certified question in the negative, 4-2, with Chief Judge DiFiore not participating. In reaching that decision, the Court of Appeals reviewed New York precedent on common law copyright claims. For example, it reviewed that in Palmer v. De Witt 47 N.Y. 532 (1872), which involved the copyright of a play, the Palmer court recognized that the rights of an author of a drama in his composition included the entirely distinct rights of (i) deciding whether to publish the work and (ii) copying and performing. The court noted that the former was based on common law, but that the right to control performance and copying existed by statute.

The Court of Appeals also reviewed Pushman v. New York Graphic Socy., 287 N.Y. 302 (1942), where the court recognized the right to make copies, a right which was separate from, and did not necessarily pass with, the sale of a painting. In doing so, the Pushman court distinguished the right to make copies and the right to the physical object itself.

Pushman reviewed RCA Mfg. Co., Inc. v. Whiteman, 114 F.2d 86 (2d Cir. 1940), cert. denied, 311 U.S. 712 (1940), where the court examined the reproduction right applied to records where the copyright owner added a restriction stating that they were not licensed for radio. The Whiteman court rejected the copyright owners’ attempt to control the performance of its records, finding that the common law property rights ended with the sale of the records despite the restriction. The Court of Appeals noted that the holding of Whiteman was overruled by Capitol Records, Inc. v. Mercury Records Corp., 221 F.2d 657 (2d Cir. 1955), where the Second Circuit held that selling a record does not divest the copyright owner of its exclusive interest in the right to copy and distribute the protected recording. The Court of Appeals found, however, that the following premise was not overturned: “common-law copyright for sound recordings ‘consists only in the power to prevent others from reproducing the copyrighted work’; that limited right does not include control over other rights in the work, such as public performance.”

The Court in Flo & Eddie also considered that Congress had studied the nature and scope of the performance right for sound recordings “for nearly 2 decades” before revising the federal statutes to include a limited right to control public performances for post-1972 sound recordings. A delicate balancing of interests, it noted, would be observed if a new right of performance were created. In recognizing this, the Court found that it would be “ill-equipped” or “unable” to “create a structure of rules to properly guide the application of that right.” The legislature, however, is uniquely qualified to do so.

Based on the foregoing, the Court held that New York’s common-law copyright law does not recognize a right of public performance for creators of pre-1972 sound recordings.

In a concurring opinion, Judge Fahey agreed that New York common law did not recognize a right of public performance, but noted in depth that what constituted a public performance needed definition. Judge Fahey explained that, in a technologically simpler time, the distinction between performance and publication was easy to define, but that was no longer true. Instead, there is a continuum ranging from public performance to publication, beginning with AM/FM radio broadcasters (public performance) and ending with consumer purchase of compact discs or other hard copies of sound recordings (publication).

Judge Fahey described the continuum in five steps:

  1. AM/FM radio – sometimes called “terrestrial” radio. These broadcasters rely on advertising; access is free.
  2. Internet “radio” operations (such as Pandora) – these broadcasters also have advertisers and are free.
  3. Subscription broadcast services (such as defendant) – where consumers pay a monthly fee and are provided with commercial-free content in genres selected by the user (i.e., sports radio, 60’s music, etc.). The service is available over the Internet and by satellite.
  4. Interactive/“on-demand” services (such as Apple Music) – where, for a monthly subscription fee, consumers are provided access to an almost unlimited music library that is available at any time on multiple platforms (i.e., phone, iPad, computer). This service, in essence, rents the sound recording to the listener as long as the monthly fee is paid.
  5. Purchase of a sound recording, either digital (i.e., through iTunes or Google Play) or hard copy (i.e., CD, vinyl, tape).

Judge Fahey concluded that, while he agreed with the conclusion that New York common law does not recognize a right of public performance for creators of pre-1972 sound recordings, he would add the following 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. Rather, such uses are the result of a copy or publication. As a result, Judge Fahey would grant creators control over such uses.

In a detailed dissenting opinion, Judge Rivera, joined by Judge Abdus-Salaam, argued that 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 only upon preemption by Congress.

The case is not over for Flo & Eddie in New York, even in the absence of common law copyright protection of public performance for pre-1972 sound recordings. Flo & Eddie’s claims based upon the New York common law right to control unauthorized reproductions and unfair competition, and Sirius XM’s defenses, remain to be adjudged and/or tried.