Why it matters: Is there a common law exclusive right of public performance for copyright holders of pre-1972 sound recordings? Because such sound recordings are not covered by the federal copyright laws, the issue becomes one of state law, and the way that question is ultimately answered in the courts could have serious financial ramifications to both copyright holders who own pre-1972 sound recordings and broadcasters who “perform” them. Both sides of the issue are closely watching a series of class action lawsuits filed in 2013 and 2014 in three states, including California and New York, by Flo & Eddie Inc. (F&E) against digital broadcasters Sirius XM Radio Inc. (SiriusXM) and Pandora Media Inc. (Pandora). The hefty amount that SiriusXM agreed to pay in past and prospective royalties under the terms of a settlement executed in California on the eve of trial in November 2016 is subject to reduction based on the favorable outcome of the other class action litigations. Indeed, that amount already has been reduced once because of a resolution in SiriusXM’s favor in the New York litigation in February 2017. Read on for a recap of where things stand in this long-running—and potentially earth-shattering—royalties dispute.
Detailed discussion: Is there a common law exclusive right of public performance for copyright holders of pre-1972 sound recordings? Because federal copyright law doesn’t apply to such sound recordings, the question is one of state law. Federal and state courts in California, New York, and Florida have been grappling with the issue ever since F&E, a group comprised of members of the 1960s band The Turtles, simultaneously initiated a series of class action lawsuits in those states against SiriusXM in September 2013 and Pandora in October 2014. The class actions, which were filed in federal district courts, allege that digital broadcasters SiriusXM and Pandora infringe on the exclusive public performance rights of F&E and other similarly situated copyright owners of pre-1972 sound recordings when they “perform”—i.e., digitally broadcast—the copyright owners’ pre-1972 sound recordings without licensing them. F&E claimed exclusive public performance rights under the state copyright and misappropriation statutes in the states where the class action litigations were filed.
Here is a brief recap of where things currently stand with these long-running litigations:
California: Flo & Eddie Inc. v. Sirius XM Radio Inc.: F&E filed its 2013 California putative class action (later certified) against SiriusXM in the Central District of California. In September 2014, Judge Philip Gutierrez ruled in F&E’s favor, finding on summary judgment that, under Section 980(a)(2) of California’s copyright statute, copyright ownership of a pre-1972 sound recording “includes the exclusive right to publicly perform that recording” under California law. In November 2014, Judge Gutierrez denied SiriusXM’s motion for interlocutory appeal to the Ninth Circuit and set the case for trial to determine damages. In November 2016, F&E and SiriusXM settled the case on the eve of the trial, with SiriusXM agreeing to pay almost $100 million in past and future royalties, subject to reduction pending the outcome of the cases on appeal in New York, Florida and California (with respect to Pandora). The settlement amount and SiriusXM’s exposure have already been reduced once to reflect the favorable resolution of the New York lawsuit by the Second Circuit in February 2017, discussed below. Judge Gutierrez approved the revised class action settlement on May 8, 2017.
California: Flo & Eddie Inc. v. Pandora Media Inc.: F&E filed its putative class action against Pandora in the Central District of California in October 2014, and the case was again assigned to Judge Gutierrez. In February 2015, Judge Gutierrez denied Pandora’s anti-SLAPP (strategic lawsuit against public participation) motion after reiterating his earlier conclusion that Section 980(a)(2) of the California copyright statute provides copyright owners of pre-1972 sound recordings an exclusive right of public performance. Pandora appealed the denial of its motion to the Ninth Circuit. On March 15, 2017, the Ninth Circuit determined the issue to be one of state law and certified the following questions for the California Supreme Court to decide under California law: (1) whether “[u]nder Section 980(a)(2) of the California Civil Code … copyright owners of pre-1972 sound recordings that were sold to the public before 1982 possess an exclusive right of public performance,” and (2) if not, whether “California’s common law of property or tort otherwise grants copyright owners of pre-1972 sound recordings an exclusive right of public performance.” Oral argument before the California Supreme Court has not yet been scheduled, but as mentioned above, the court’s decision could potentially have an impact on the amount that SiriusXM ultimately will be required to pay under its settlement agreement with F&E.
New York: Flo & Eddie Inc. v. Sirius XM Radio Inc.: F&E filed a putative class action against SiriusXM in the Southern District of New York in 2013. In November 2014, the district court ruled in F&E’s favor, finding on summary judgment that copyright owners of pre-1972 sound recordings have the “exclusive public performance rights” in their sound recordings under New York common law. In February 2015, the district court granted SiriusXM’s motion for interlocutory appeal to the Second Circuit, which determined the question to be one of state law and certified the issue to the New York Court of Appeals. In December 2016, the New York Court of Appeals answered the certified question in the negative, holding that New York’s common law of copyright does not recognize an exclusive right of public performance for copyright holders of pre-1972 sound recordings. Shortly thereafter, on February 16, 2017, the Second Circuit directed the district court to dismiss F&E’s lawsuit with prejudice. The amount that SiriusXM was obligated to pay under the California settlement discussed above was reduced to reflect this favorable outcome for SiriusXM.
Florida: Flo & Eddie Inc. v. Sirius XM Radio Inc.: F&E filed a putative class action against SiriusXM in the Southern District of Florida in 2013. In July 2014, the district court ruled in SiriusXM’s favor, finding on summary judgment that Florida common law does not recognize an exclusive right of public performance in pre-1972 sound recordings. F&E appealed to the Eleventh Circuit, and like the Second and Ninth circuits, the Eleventh Circuit on June 29, 2016, certified the question to the Florida Supreme Court. A decision by the Florida Supreme Court is pending and, again, its decision could have an impact on the ultimate amount SiriusXM will be required to pay under its settlement with F&E in the California case.