After suffering a loss in California federal court, Sirius XM Radio, Inc. (“Sirius”) has now lost a summary judgment ruling in the United State District Court for the Southern District of New York and may soon find itself liable to Flo & Eddie Inc. (“F&E”) under New York common law for publicly performing pre-1972 sound recordings owned by F&E.  As we have previously reported, while federal copyright law exclusively governs rights attendant to works of authorship in many areas, it explicitly leaves certain segments of copyright law open to state regulation.  One of those segments involves “sound recordings fixed before February 15, 1972.”  In its ruling, the Southern District of New York stated, “[w]hether New York provides holders of common law copyrights in sound recordings with an exclusive right to publicly perform those recordings . . . [is] one of first impression, and one that has profound economic consequences for the recording industry and both the analog and digital broadcast industries.”

The Facts

F&E is a corporation created and owned by two founding members of the music group “The Turtles.”  F&E owns all rights in and to The Turtles master sound recordings.  Over the last four decades, F&E has licensed The Turtles master sound recordings for public performances to a number of media outlets, but never to a radio station, whether online, digital or otherwise.  Nevertheless, because The Turtles’ songs were recorded in the 1960s and early 1970s, radio stations have played their songs without obtaining a license from F&E, believing that they did not have to pay a royalty for such use under applicable law.  F&E has been aware of public performances of The Turtles songs on terrestrial, satellite and streaming radio, yet has never sent cease and desist letters or sued in an effort to enforce its rights.  That is, until last year, when F&E sued Sirius for violating its copyrights in and to The Turtles’ songs.

The Law Applicable to Pre-1972 Sound Recordings

In 1976, the United States Congress passed the Federal Copyright Act (the “Act”).  The Act generally governs all copyrights in the United States.  However, the law contains a provision which states: “[w]ith respect to sound recordings fixed before February 15, 1972, any rights or remedies under the common law or statutes of any state shall not be annulled or limited by this title until February 15, 2067 . . . .  [N]o sound recording fixed before February 15, 1972 shall be subject to copyright under this title[.]”  Loosely translated, this means that any music recorded prior to 1972 is not protected by the Act.  However, to the extent that states wish to or have afforded copyright protection to such sound recordings, entities may be subject to damage awards granted to copyright holders under applicable state law.

The Sirius Ruling

In interpreting New York State law, the Southern District of New York held that “the New York Court of Appeals would recognize the exclusive right to public performance of a sound recording as one of the rights appurtenant to common law copyright in such a recording.”  The Court noted that New York State courts have long afforded public performance rights under the common law for plays, and that the Second Circuit recognized those same rights in compilations of film clips over three decades ago.

Sirius argued that no New York State court has ever recognized an exclusive right to public performance of sound recordings and, thus, New York State law did not give F&E such rights.  However, the Court rebuked this argument and stated that the lack of caselaw strongly suggests that “common law copyright in sound recordings comes with the entire bundle of rights that holders of copyright in other works enjoy.”  The Court not only denied Sirius’ motion for summary judgment, it also ordered Sirius to show cause (by December 5, 2014) why summary judgment should not be entered in favor of F&E.

Impact of the Sirius Ruling

Sirius has lost to F&E in California, and appears to be on the road to losing to F&E in New York as well.  F&E has one other similar lawsuit pending against Sirius in the United States District Court for the Southern District of Florida.  F&E has filed a motion for summary judgment in that action.  If Florida follows in line with the California and New York federal courts, it may open the door to more litigation against other digital music providers for use of pre-1972 recordings.