Robert W. Clarida and Robert J. Bernstein
Robert W. Clarida and Robert J. Bernstein ()

In April 2016, in Flo & Eddie v. Sirius XM Radio, 821 F.3d 265 (2d Cir. 2016), the U.S. Court of Appeals for the Second Circuit certified the following question to the N.Y. 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?” On Dec. 20, 2016, the N.Y. Court of Appeals responded in an opinion concluding that there is no public performance right for sound recordings in New York. Flo & Eddie v. Sirius XM Radio, 2016 WL 7349183 (N.Y. 2016). The holding applies only to sound recordings created prior to Feb. 15, 1972, the effective date of an amendment to the U.S. Copyright Act providing federal copyright protection for sound recordings and preempting any state law copyright protection for sound recordings created after that date.

The treasure trove of pre-1972 hits (by, for example, the Beatles, the Rolling Stones, Bob Dylan, Elvis Presley and many others) has spawned a multitude of civil actions, appeals to the Second, Ninth and Eleventh Circuits, certifications to the highest courts of New York and Florida, and a complex class action settlement agreement with multiple contingencies depending primarily on whether the pending actions ultimately recognize a public performance right. This article will focus on the resolution of that issue in New York.

Background

Flo and Eddie Inc. (F&E) is a corporation formed by two founding members of the 1960s pop group The Turtles, best known for its hit “Happy Together,” which displaced the Beatles “Penny Lane” as the No. 1 song on the U.S. pop charts for three weeks in 1967. F&E acquired ownership of the common-law copyrights in the group’s sound recordings, all of which were recorded before 1972. Like other holders of pre-1972 sound recording copyrights, F&E and its predecessors have never received any public performance royalties for these recordings from any source.

On Aug. 16, 2013, F&E filed a putative class action suit in the Southern District against satellite broadcaster Sirius XM Radio, alleging that digital transmissions of the Turtles recordings, and certain reproductions made by Sirius as part of its transmission process, were infringements of F&E’s rights in those recordings under New York common law.

As noted above, federal copyright protection is not available for pre-1972 sound recordings, but post-1972 recordings do receive federal protection against unauthorized performance by means of digital transmission. Some such transmissions, including those by Sirius, are subject to the payment of statutory royalties to the copyright holders. F&E argued, in essence, that its rights under New York common law should include a right of public performance equivalent to the federal right. F&E also filed similar actions in California and Florida. F&E did not make similar claims against terrestrial (AM/FM) stations in any of the actions.

On Nov. 14, 2014, Southern District Judge Colleen McMahon denied Sirius’ motion for summary judgment1 based inter alia, on her conclusion that the N.Y. Court of Appeals would determine, if asked, that the exclusive rights of sound recording owners under New York common law include a right of public performance. Recognizing that there was no clear answer to this question based on a review of New York common law, and that the answer must be provided by New York’s highest court, McMahon certified the question for interlocutory appeal to the Second Circuit, which in turn certified the question to the New York Court of Appeals.

Decision

In its decision, the N.Y. Court of Appeals traced the history of common law copyright protection in sound recordings; examined societal expectations regarding whether there was a public performance right for sound recordings; and considered, if such a right were found to exist, what would be its scope. The court concluded that common law copyright protection for sound recordings was limited to the exclusive right of reproduction, and did not include public performance. It also found that the historical conduct of diverse sectors of the music industry reflected a consensus that state common law of copyright did not include a public performance right.

The court’s inquiry was limited to common law because New York has never provided any statutory copyright protection for sound recordings. The court viewed common law copyright in New York as quite limited, providing protection only against unauthorized reproduction and only until a work was published, at which point the nature and scope of the copyright was governed by the federal copyright statute. The court relied, inter alia, on an 1872 N.Y. Court of Appeals decision, Palmer v. De Witt, 47 N.Y. 532 (1872), in which the rights of reproduction and public performance of a play were subject to separate legal analysis. The Palmer court enforced the right of reproduction under New York common law, but did not recognize a right of public performance of a play in New York. Instead, it observed that such a right exists only under federal law, as the result of an 1856 amendment to the U.S. Copyright Act providing protection for dramatic works. Relying on Palmer, the N.Y. Court of Appeals in Sirius held that New York common law prohibits unauthorized reproduction of sound recordings, “but does not prevent someone from using a copy, once it has been lawfully procured, in any other way the purchaser sees fit.” 2016 WL 7349183, at *8.

In evaluating whether to recognize a public performance right in sound recordings today, notwithstanding its analysis of prior case law and the music industry’s contrary expectations, the court considered the respective roles of the judiciary and the legislature, emphasizing the common law tradition of incremental, evolutionary development, in contrast with the sort of sudden and sweeping changes that are more appropriate for evaluation by the legislative branch:

Simply stated, New York’s common-law copyright has never recognized a right of public performance for pre-1972 sound recordings. Because the consequences of doing so could be extensive and far-reaching, and there are many competing interests at stake, which we are not equipped to address, we decline to create such a right for the first time now.

Id. at *9.

For example, whether any such right should apply only to satellite radio broadcasters or also to terrestrial (AM-FM) stations, and how royalties would be set, collected and distributed, require consideration of issues and facts unfettered by procedural and evidentiary rules.

Further Proceedings

Upon receipt of the opinion of the N.Y. Court of Appeals, the Second Circuit ordered the parties to submit letter briefs by Jan. 16, 2017 “addressing the effect of the New York Court of Appeals’ decision on the appeal before us.” In its brief, F&E asserts that its claims under New York law for unfair competition and infringing reproduction remain viable. Sirius argues that the holding that New York law does not provide a public performance right for sound recordings necessarily disposes of these claims because (1) the violation of a recognized right of the plaintiff is a prerequisite to a claim for unfair competition in New York; and (2) the internal copying claimed to be infringing constitutes fair use because it is necessary to enable the (now-held-to-be) non-infringing broadcasts by Sirius.

Sirius also asserts in its letter brief that the provisions of the class action settlement agreement filed in the California action bind F&E to desist from further litigation concerning performance rights in sound recordings in New York, California and Florida to the extent that it is determined that no such rights exist under the laws of those states. It remains to be seen how this issue will be resolved under California and Florida law. In the Ninth Circuit, in a case F&E brought against another satellite broadcaster (Pandora) raising the same public performance issues, oral argument was held on Dec. 8, 2016. As of the publication of this article, no opinion has been issued nor has certification been made to the California Supreme Court. In the Eleventh Circuit, the question whether Florida provides a public performance right for sound recordings has been referred to the Florida Supreme Court, which has scheduled oral argument for April 6, 2017.

Conclusion

For those keeping a scorecard, the many permutations of possible results, and their potential effects on implementation of the class action settlement (which has not yet been approved), are detailed in the Class Action Settlement Agreement.2 The contemporary popularity of digitally-transmitted “blasts from the past,” and the continuation of state law protection for pre-1972 sound recordings until 2067 (when all state law protection will be preempted), no doubt will keep these multiple federal and state court actions spinning.

Endnotes:

1. 62 F. Supp. 3d 325 (S.D.N.Y. 2014). We reported on this decision in our Feb. 23, 2015 NYLJ Copyright Law Column, “A Sirius Question of Sound Recording Rights.”

2. A copy of the Class Action Settlement Agreement was submitted as Attachment A to Sirius’ Jan. 17, 2017 letter to the Second Circuit filed as Document No. 216 in Appeal No. 15-1164.