“Copyright and the Music Marketplace” Released Today

The US Copyright office released the 200+ page report a few hours ago. It tries to put today’s broken system of copyright protection of music into historical context and proposes compromises intended to be fair to all interested parties. You can click to read, download, and question the report and executive summary on the landing page of copyright.gov.

The news and blogosphere will give you the summaries provided by the Copyright Office. They will list its four guiding principles and mention some of the many recommendations under each. Then the subject will go quiet for a while as the major players do what they do behind the scenes.

Instead of leaving it at that, I’m going to write about the report one chunk at a time. Because I’ve been commenting on the Flo & Eddie class action lawsuits seeking compensation for pre-1972 sound recordings, I’m starting there.

The headline recommendation is “Fully federalize pre‐1972 sound recordings.” This is not new. The Copyright Office first made the recommendation in 2011. Since then, there have been three Flo & Eddie victories at the trial court level saying state copyright law in California and New York cover sound recordings made before the first day federal law protected them, 43 years and 10 days ago.

The report recognizes each of the Flo & Eddie cases and cites them as “further complicating the licensing landscape.” Besides the key goal of getting sound recording royalties from streaming services, the report explains how recent legal decisions support the Copyright Office view since 2011 that internet service providers have no safe harbor from liability for pre-1972 sound recordings their users store on their sites.

This means services from YouTube on down no longer are protected from liability by federal law so long as they provide “takedown” procedures which allow rights owners to demand the removal of infringing videos. Under this view, they get to answer copyright infringement lawsuits in state courts in California and New York. They also could be in front of a federal court which must apply the state copyright laws if there is “diversity” jurisdiction based on plaintiffs and defendants from different states.

Flo & Eddie’s cases also are recognized by the report on the hotly contested issue of forcing terrestrial radio stations—the ones with licensed broadcast towers and space on a radio dial—to pay sound recording royalties. Terrestrial radio stations throughout broadcast history have only had to pay royalties to the composers or publishers who own the musical compositions performed on a sound recording. The performers got nothing.

The report advocates a unified approach—put sound recording royalties and musical composition royalties on the same playing field by requiring terrestrial radio to pay both. Footnotes are sometimes where big points are made in small print. The Copyright Office cites the Flo & Eddie decisions in one, saying “Although those cases were brought against digital providers, the courts’ reasoning does not appear to be limited to digital performance rights.”

There is no way to know what will take longer to play out, the pre-1972 state law copyright class actions or major changes in the Copyright Act. Either could easily take several years. Meanwhile “Copyright and the Music Marketplace” offers a comprehensive view of the issues , and I’ll talk about more of them in the coming days.

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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