Flo and Eddie Goes for the Two Coast Punch Against Sirius XM

I posted on Flo & Eddie’s California lawsuit against Sirius XM last week.  This week’s post discusses Flo & Eddie’s New York lawsuit against Sirius XM. 

Flo & Eddie owns all rights to The Turtles’ master sound recordings.  Sirius XM makes multiple copies of the songs it plays through its database creation, digital broadcasting and streaming activities.  Sirius SX does not allow its users to download or store songs or select which songs the user wants to listen to.  Flo & Eddie claimed that Sirius XM infringed its common law copyright under New York state law by copying (reproducing) copies of the master recordings and by publicly performing those recordings without permission.

Flo & Eddie argued that New York common law applies to pre-1972 sound recordings and prohibits the reproduction and public performance of those recordings.  Sirius XM brought a motion for summary judgment.  Sirius XM argued that common law copyright does not provide an exclusive public performance right, that Sirius XM’s use is a fair use and that Flo & Eddie’s action is barred by laches.  The district court denied Sirius XM’s motion for summary judgment and further ordered Sirius XM to show cause why summary judgment should not be entered in favor of Flo & Eddie on liability.

Limited Copyright Rights in Sound Recordings

Authors and composers have owned the rights to their musical compositions since 1831.  Radio stations pay royalties to the copyright owners of musical compositions when the radio stations broadcast (publicly perform) the copyrighted songs. 

The copyright to a sound recording is not the same as the copyright to a musical composition.  “A copyright in a sound recording is a copyright in the performance – not in the work being performed.”  (Opinion pdf page 11). 

Congress only made sound recordings eligible for federal statutory copyright protection in 1971. Furthermore, that protection was limited in two important ways. First, Congress did not originally provide sound recording copyright holders with an exclusive right to publicly perform their works.  Thus, the owners of copyrights in sound recordings, unlike copyright holders in musical compositions were not entitled to compensation under federal law when radio stations broadcast their recordings between 1972 and 1995.  In 1995, Congress added a limited public performance right for sound recordings, giving holders of sound recording copyrights the ‘exclusive right to perform the copyrighted work publicly by means of a digital audio transmission.’ 17 U.S.C. § 106. Federal copyright law still provides no exclusive right to public performance of sound recordings by any other means.

The second important limitation of the 1971 Act was that it operated prospectively. Recordings “fixed” (recorded) prior to February 15, 1972 were not, and still are not, eligible for federal copyright protection. See 17 U.S.C. § 301(c). The Turtles recordings were all fixed before February 15, 1972. Therefore, none is eligible for federal copyright protection.

(Opinion pdf pages 11 – 12). 

Congress left it to the states to provide copyright protection for pre-1972 sound recordings.  When it finally provided limited copyright protection to sound recordings, Congress clearly did not intend to do away with or limit rights under state common law or statutory state law.

Flo and Eddie’s Common Law Copyright Provides Exclusive Rights to Reproduce and Publicly Perform Turtles Recordings

When Congress passed the sound recording provision in 1971, New York state had a body of copyright common law that applied to pre-1972 sound recordings. 

Under that law, artists can acquire a common law copyright in ‘any original material product of intellectual labor’ – including sound recordings – by expending ‘time, effort, money, and great skill’ in its creation. The term ‘any original material product of intellectual labor’ includes sound recordings.

(Opinion pdf page 15).

The district court ruled that The Turtles obtained a common law copyright in their sound recordings by expending time, effort, money and skill to create those recordings.  That common law copyright was transferred to others, then to Flo & Eddie.  Sirius XM did not dispute Flo & Eddie’s possession of a common law copyright in the Turtles recordings.  Sirius XM claimed that the common law copyright in the sound recordings did not give Flo & Eddie the exclusive right to publicly perform the songs.

The issue of whether New York common law provides common law copyright holders with the exclusive right to publicly perform those recordings was an issue of first impression in this case.  First impression means that a court in this jurisdiction has not decided this precise issue before.  Since this was a federal court case, the district court had to determine how a New York state court would rule.  The federal district court ruled that the New York Court of Appeals would recognize the exclusive right to publicly perform a sound recording as one of the rights belonging to the common law copyright of a sound recording.

The district court looked to the background principles and history of New York copyright common law to reach its decision.

When examining copyright law, a page of history is worth a volume of logic.

The common law typically protects against unauthorized reproduction of copies or phonorecords, unauthorized distribution by publishing or vending, and unauthorized performances. New York courts have long afforded public performance rights to holders of common law copyrights in works such as plays and films. The Second Circuit concluded over three decades ago that New York would recognize a public performance right in compilations of film clips.

(Opinion pdf page 17).

In examining the relevant history, the district court also stated that

An arguably stronger argument can be made that years of judicial silence implies exactly the opposite of what Sirius contends – not that common law copyright in sound recordings carries no right of public performance, but rather that common law copyright in sound recordings comes with the entire bundle of rights that holders of copyright in other works enjoy. No New York case recognizing a common law copyright in sound recordings has so much as suggested that right was in some way circumscribed, or that the bundle of rights appurtenant to that copyright was less than the bundle of rights accorded to plays and musical compositions. The expansive nature of New York’s common law protection for artistic works that do not enjoy federal statutory copyright protection was announced over fifty years ago, in Metropolitan Opera Association v. Wagner-Nichols Recorder Corp. – a case protecting property rights in sound recordings. There, the court said, ‘The law has protected the creative element in intellectual productions-that is, the form or sequence of expression, the new combination of colors, sounds or words presented by the production against appropriation by others.

(Opinion pdf page 20).

In short, general principles of common law copyright dictate that public performance rights in pre-1972 sound recordings do exist. New York has always protected public performance rights in works other than sound recordings that enjoy the protection of common law copyright. Sirius suggests no reason why New York – a state traditionally protective of performers and performance rights – would treat sound recordings differently.

(Opinion pdf page 25).

The district court ruled that Sirius XM infringed Flo & Eddie’s copyright by making copies without authorization.

Sirius’s Creation of Multiple Complete Copies of Flo and Eddie’s Sound Recordings Cannot Be Considered Fair Use

New York recognizes fair use as a defense to copyright infringement, but has little case law on the issue.  The district court applied the federal fair use four factor analysis to this case.  The district court ruled that “on all four factors, Sirius’s creation of the unauthorized copies fails to qualify as fair use.” (Opinion pdf page 29).

Regarding the second fair use factor, the nature of the copyrighted work, the district court stated:

Even Sirius recognizes that the Turtles works are ‘creative.’ Sirius claims that the second factor does not favor Flo and Eddie because the Turtles’ sound recordings have been widely disseminated for decades. This is a nonsequitur; widespread distribution does nothing to alter the creative character of a copyrighted work. The cases Sirius cites do not hold to the contrary.

(Opinion pdf page 30).

Laches Does Not Apply to Flo & Eddie’s Claims

Sirius XM argued that Flo & Eddie’s claims were barred by laches.  Laches cannot be used as a defense when the action is brought before the statute of limitations expires.  Sirius XM did not argue that Flo & Eddie brought its claims after the statute of limitations expired.  Flo & Eddie’s claims cannot be barred by laches.  Laches also did not bar Flo & Eddie’s request for an injunction.

This post does not discuss Flo & Eddie’s unfair competition claim or Sirius XM’s Dormant Commerce Clause argument.

This case is Flo & Eddie, Inc. v. Sirius XM Radio, Inc., No. 13 Civ. 5784 (CM), U.S. District Court, Sothern District of New York.

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