The CLASSICS (Compensating Legacy Artists for their Songs, Service and Important Contributions to Society) Act was introduced in Congress last week to try to clear up some of the ongoing disputes over the public performance rights of pre-1972 sound recordings. Through litigation, certain copyright holders (including, most notably, Flo and Eddie of the 1960’s band The Turtles) have been seeking compensation from digital and analog music services for the public performance of pre-1972 sound recordings. These sound recordings are not covered by Federal law. As the obligation to pay SoundExchange only applies to recordings covered by Federal law, some digital services were not paying for the performance of these songs. The artists that have brought suit have contended that state laws did create an obligation to pay for the public performance of these recordings, even though there were no specific statutory provisions establishing those rights. Thus far, New York, Florida, Georgia and Illinois have found there to be no right of compensation under state laws (though some of these cases are on appeal). By contrast, California found that there was a right for compensation, though that case, too, is on appeal.

The CLASSICS Act looks to resolve these issues by pre-empting state lawsuits and establishing that services cannot play these recordings without either getting a direct license from the copyright holder to do so, or by paying SoundExchange royalties under the statutory license at the fees set by the Copyright Royalty Board. If a digital music service pays SoundExchange royalties and obeys the rules that apply to such royalties, it is not infringing on the rights of the copyright holder. It can also directly license these rights, but must pay half the license fee to SoundExchange to be distributed to the artists who performed on the recording (in the same manner that half the fees paid under the statutory license are distributed to the artists).

The CLASSICS Act would certainly seem to be welcome news for those digital services that have found themselves subject to state lawsuits. But that law stops short of full Federalization of pre-1972 sound recordings. Even if adopted, this statute would not address all issues raised by the state litigation over the pre-1972 recordings. The state applies only to digital services. Thus, analog broadcasters, who have themselves been subject to pre-1972 lawsuits, are not included in the coverage of the act, and could still presumably be sued under state laws (the Act specifically leaving in place all state laws not specifically addressed by the statue). While the state suits against broadcasters have generally been unsuccessful, this litigation continues in some jurisdictions. The draft legislation specifically states that, except as set forth in the legislation, it is not meant to abridge public performance rights in pre-1972 sound recordings except as specifically set forth. Thus, were a state to determine that there is a public performance right in pre-1972 sound recordings, applying that performance right to analog transmissions, and even performances in places like retail establishments and bars and restaurants (where no Federal performance right exists) could be possible.

There have also been issues over whether pre-1972 sound recordings are intellectual property rights that are covered by the DMCA safe harbor for user generated content (see our article here). Record companies have argued that, while an Internet service is exempt from liability for content containing post-1972 sound recordings placed on the service by a third-party, pre-1972 sound recordings, not being covered by Federal law, should not be covered by the safe-harbor for user generated content. While many courts have disagreed with that analysis, some have not, and this would seem to be an issue that should be addressed by this legislation. The CLASSICS Act legislation has a somewhat confusing section that appears to recognize that rights in pre-1972 sound recordings are intellectual property rights for purposes of the Communications Decency Act Section 230 (where Internet service providers are exempted from liability for third party conduct except for those involving intellectual property issues), but it does not seem to extend those rights to the DMCA safe harbor in Section 512(c) of the Copyright Act.

The law also seems to potentially provide longer protection to pre-1972 sound recordings than provided to other works under the Copyright Act. Most copyrighted material reverts to the public domain after 99 years. Pre-1972 sound recordings are not defined or limited by the act, and could conceivably extend back to every recording made since Edison’s wax cylinders. As these copyrights are not federalized, unless a state has a shorter period of protection, the potential for pre-1972 sound recordings to enjoy protection for an unlimited time – a period longer than applicable to other copyrighted material.

Obviously, this legislation has just been introduced and will no doubt be subject to more scrutiny. Issues that are identified here may not have been considered, or my reading may not be the one that was intended by the drafters. If this legislation moves forward, we will likely see more discussion of these issues before the bill becomes law.