(Photo via GAB Archive/Redferns)
After a string of courtroom losses in copyright litigation over pre-1972 musical recordings, Sirius XM Radio Inc. hoped a fresh sound and a new front man would give it a hit. Instead, the new release bombed.
This fall, as a federal court in New York found that Sirius had infringed copyrights held by the two founding members of the 1960s rock band The Turtles, the satellite radio company fired its law firms and brought in O’Melveny & Myers. The O’Melveny team launched a new offensive based on a 74-year-old ruling that it said was directly on point—even though its predecessors never mentioned it in their briefs.
With good reason. On Dec. 12 U.S. District Judge Colleen McMahon found that the precedent trumpeted by O’Melveny had been overruled 60 years ago. “The only clear error in this case is O’Melveny’s,” she wrote.
The founders of The Turtles, known for hits like “Happy Together” and “Elenore,” had sued Sirius for copyright infringement in New York, California and Florida through their company Flo & Eddie, alleging that Sirius infringed their rights under state law by playing their songs without permission.
So far, several courts have agreed. In September, U.S. District Judge Philip Gutierrez of the Central District of California ruled that The Turtles could assert their copyrights and found Sirius liable for making an unauthorized public performance by airing their music. In October, Superior Court Judge Mary Strobel in Los Angeles agreed with Gutierrez, citing it in a case brought against Sirius by several recording labels. A similar case is pending in the Southern District of Florida.
A Nov. 14 decision by McMahon in New York has been the biggest setback yet for Sirius. The two earlier decisions were based largely on interpretations of state statutes and were limited to California. The New York ruling, however, is based on a reading of common law and means that another jurisdiction—one considered vitally important to the music industry—shares the view that state law and common law dictate protections for pre-1972 sound recordings. (Federal copyright law doesn’t govern sound recordings made before 1972; it wasn’t until the Sound Recording Act of 1971 that recordings of music, spoken words or other sounds fell under the auspices of the federal Copyright Act.)
Assuming that the New York ruling is upheld, it could have implications for music licensing at radio stations, as well as in restaurants, sports arenas and other venues where recorded music is played.
In its motion for summary judgment, Sirius, then represented by Bruce Rich, Benjamin Marks, Todd Larson and John Gerba at Weil, Gotshal & Manges, and Michael Oberman at Kramer Levin Naftalis & Frankel, had argued that public performances of sound recordings aren’t covered by New York common law because New York case law contains no discussion of such public performance rights.
McMahon acknowledged in her Nov. 14 opinion that not paying royalties for public performances of sound recordings “was an accepted fact of life in the broadcasting industry.” However, she found it “in many ways inexplicable” that no one until now had demanded royalties under common law.
“Acquiescence by participants in the recording industry in a status quo where recording artists and producers were not paid royalties while songwriters were does not show that they lacked an enforceable right under the common law—only that they failed to act on it,” the judge wrote. Sirius, she added, provided no reason why New York, “a state traditionally protective of performers and performance rights,” would treat sound recordings differently from other jurisdictions.
Sirius had warned the court that a ruling for Flo & Eddie would have harmful, far-ranging economic consequences. But McMahon wrote that her task was to decide the case at hand: “The broader policy problems are not for me to consider.”
As its losses mounted, Sirius opted to completely replace its legal team with lawyers from O’Melveny & Myers, led by Daniel Petrocelli. Gone are Weil; Sheppard, Mullin, Richter & Hampton; and Kramer Levin. The substitutions of counsel were noted in federal court filings starting at the end of October, and in November, Sirius informed McMahon that O’Melveny was taking over the defense in New York. The company didn’t cite a reason in the notices. O’Melveny and Weil declined to comment; Sirius, Sheppard Mullin and Kramer Levin did not respond to requests for comment.
The chair of O’Melveny’s business trial and litigation department, Petrocelli comes to The Turtles litigation after winning a long campaign to preserve Warner Bros. Entertainment Inc.’s control of Superman copyrights against claims from the heirs of the character’s creators.
Petrocelli moved quickly to try to undo McMahon’s ruling. In a Dec. 1 motion for reconsideration, O’Melveny argued that its predecessors and the judge had neglected to consider RCA Manufacturing v. Whiteman—a decision authored by Judge Learned Hand for the U.S. Court of Appeals for the Second Circuit back in 1940. Whiteman completely undermined the Turtles’ case, they maintained, since it established that New York doesn’t recognize a public performance right as part of the common law copyright in sound recordings.
McMahon was sufficiently impressed to order further briefing on Whiteman’s impact. But she wasn’t at all impressed by what she learned. Not only did she rule on Dec. 12 that she disagreed with O’Melveny’s interpretation of the decision, but, she wrote, “so does every other court and authority that has considered the issue.”
As The Turtles’ attorneys pointed out in a Dec. 10 brief, Whiteman was overturned by the Second Circuit just a few years after it was issued, McMahon wrote. “Even if Whiteman stood for the proposition that Sirius asserts—and it does not—Sirius’ motion for reconsideration fails for a second reason: Whiteman has been overruled, so it stands for nothing at all,” she wrote.
She blasted O’Melveny for “deliberately missing the point” and “doing nothing but raise red herrings” since its initial appearance in the case.
Harvey Geller and Henry Gradstein of Los Angeles-based Gradstein & Marzano, who represent The Turtles’ founders, say that they were surprised by O’Melveny’s apparent blunder. Whiteman, they said, hasn’t been good law for over 60 years.
“At some point Sirius XM will decide the issue is not their lawyers, but their failure to comply with the law,” Geller says.
Petrocelli and O’Melveny attorney Marc Pensabene didn’t respond to a request for comment.
In addition to their motion for reconsideration, Sirius’ lawyers have asked the court to certify an interlocutory appeal. McMahon said that first she will determine whether to enter judgment against Sirius on liability.