Flo & Eddie Win Again

Blog Flo Eddie v Sirius MSJ order Nov 14 2014

Against Sirius XM again, and this time on the east coast. And it’s again based on state copyright law which was dormant and waiting for people with enough resources to fight the fight against much larger opponents. I wrote about Round One in California in “Flo, Eddie and Copyright Revenge of the Golden Oldies Artists” on October 17.

Here’s a reset on what’s involved. Turtles hit recordings are played on SiriusXM. Flo & Eddie own any rights that protect the recordings. SiriusXM didn’t ask permission to play the songs, and pays them nothing. This is largely the result of the history of sound technology embedded in the layers of laws called the Copyright Act.

Musical notations and song lyrics (a musical composition) were covered by the Copyright Act for 141 years before a recorded performance of the same song (a sound recording) was covered—from 1831 to 1972. When sound recordings were finally added, every one made before February 15, 1972 was denied federal protection. But states were allowed to fill the gap. Flo & Eddie’s biggest hits fell into the Copyright Act gap. Their successful lawsuit in California was based on a state statute precisely designed to fill it, California Civil code §980(a)(2).

The big difference between Judge Gutierrez’s decision in California and Judge Colleen McMahon’s new decision in favor of Flo & Eddie in New York is—New York doesn’t have a precisely designed gap-filling statute. It has no statute at all.

It has common law copyright. New York’s copyright law is a small collection of court decisions developed lawsuit by lawsuit as judges decided what the state common law does or does not protect. In theory at least, every other state lacking a statute like California’s could recognize common law copyright too.

If you made a sound recording before February 1972, like the Turtles’ hits, there was no New York state copyright registration application to fill out and file. The decision recognizes you just put in the time playing or singing the song on the recording, and common law copyright automatically came into existence.

Many creative defenses were argued and rejected one by one in the decision. SiriusXM argued that no public performance right—the right to stop them from streaming Turtle’s hits to their audience—should be recognized by the court based on the history of the state law cases there. Judge McMahon wrote that the opposite was true, not finding such a right would be contrary to the direction of New York’s common law copyright decisions which parallel the Copyright Act’s bundle of rights which include public performance of recordings by digital audio transmissions.

SiriusXM claimed it could play the Turtles songs for free because it was a “fair use.” I won’t go into that classic and complex defense to a claim of copyright infringement here, beyond saying the decision finds no “transformative use” of the recordings. And SiriusXM is the a for profit business which the court found to fail all recognized grounds under the Copyright Act for deciding if something is a fair use.

SiriusXM rightly argued that recognizing Flo & Eddie common law copyrights could mean songs are licensed state by state, a complicated and expensive mess. They argued that Congress, not a judge, should decide how a common law copyright licensing scheme should work. A different court might have taken more kindly to the argument—

“Sirius forgets that it was this court, not Congress, that, back in 1950 fashioned a consent decree that set up what became the most successful mandatory licensing and royalty scheme in the world – a system still administered by a judge of this court, which functions as a rate court for the major licensing houses like ASCAP and BMI” [emphasis added]

For those curious about how SiriusXM delivers music to your car or business, the decision is full of details on subjects like servers, technical processes, and partners.

Sirius XM has a lot at stake and probably will appeal to the Second Circuit Court of Appeals just as they are appealing the California decision to the Ninth Circuit. The difference between having a state statute and having state common law may mean that if the two federal appeals courts make different decisions that by itself would not interest the Supreme Court in having the final word.

There is one constitutional disagreement between the two decisions involving what’s called the Dormant Commerce Clause, but the end result is the same in both. SiriusXM can’t play Turtles hits without Flo & Eddie’s permission. A directly conflicting decision is possible in Florida where Flo & Eddie’s lawsuit could send that fight to the Eleventh Circuit Court of Appeals.

Meanwhile, the decision applies to analog or broadcast radio too. So pre-1972 recordings could be entitled to royalties from that industry while 1972 and later recordings still don’t get royalties. Judge McMahon recognizes the decision could “upend” both analog and digital music performing companies, traditional broadcast and internet or satellite digital radio. Unless broadcasters and streamers decide to stop fighting and make a deal, this won’t be over soon. Stay tuned!

About Craig Pinkus

Craig Pinkus is a partner in the Intellectual Property Group. He also is a member of the Litigation and the Sports, Entertainment and Media Groups. He assists clients with a broad range of disputes and transactions involving all areas of intellectual property, entertainment, and other complex business arrangements. He has conducted trials and arbitrations throughout the United States and has argued appeals before the Seventh, Sixth and Federal Circuit Courts of Appeal, the Indiana appellate courts, and United States Supreme Court.
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