Sirius XM Urges Ninth Circuit to Dump Judgment on Pre-1972 Music Royalties

Sirius argued no state has recognized an artist’s right to control how and where their music is played after the recording is sold.

The Richard H. Chambers Courthouse, home of the Ninth Circuit. (Courthouse News photo / Bill Girdner)

(CN) — An attorney for members of the band The Turtles told the Ninth Circuit on Monday that satellite radio broadcaster Sirius XM Radio has “cannibalized” record sales by skirting royalties for decades.

Sirius XM says in court papers it follows federal copyright law in that it digitally broadcasts tens of thousands of recordings it has acquired legally. In exchange for playing the songs, the company pays royalties to owners of musical compositions, just as any FM radio broadcaster or sporting arena has for decades.

But the company also says that just like any entity that broadcasts or “performs” music for the public, it hasn’t paid royalties to owners of sound recordings.

That’s because federal copyright law does not protect sound recordings made before 1972.

Mark Volman and Howard Kaylan, two members of the 1960s band The Turtles, filed a federal lawsuit against Sirius XM in 2013 over the issue.

Major music labels filed a similar complaint against the satellite broadcaster in 2013, claiming it has reaped hundreds of millions in profits by playing songs without a license.

Volman and Kaylan, suing as Flo & Eddie Inc., claim the company owed $100 million in damages for failing to seek authorization for the “public performance” or broadcast of their pre-1972 recordings.

Some of the songs that the duo claimed Sirius XM broadcast without a license include their recordings of “Happy Together,” “It Ain’t Me, Babe” and “She’d Rather Be with Me.”

U.S. District Judge Philip S. Gutierrez granted summary judgment to Flo & Eddie in 2014, finding Sirius’ public performance or satellite broadcast of their music violated the artists’ public performance rights.

The parties reached a $25 million settlement ahead of a trial in the Central District of California that would have determined the amount the company would have to pay the artists.

On appeal, attorneys for Sirius XM said that the case — and Judge Gutierrez’s decision — sought to unfairly overturn a relationship that had played out over decades between owners of compositions and radio stations.

“That decision is the first ever to hold that under California law, record companies and other owners of pre-1972 recordings have an unfettered, unconditional right to control all public performances of those recordings after they are sold — i.e., when and where they are played, by whom, and for how much,” the attorneys wrote in a brief. “In a single stroke, the court’s ruling converted thousands of broadcasters, DJs, and other entities into serial copyright infringers, upending more than a century of accepted radio broadcasting practices and miring the industry in chaos and uncertainty.”

Anton Metlitsky of O’Melveny & Myers, an attorney representing Sirius, told a Ninth Circuit panel on Monday that Flo & Eddie hold no performance rights for their sound recordings.

Recent decisions in the New York Court of Appeals and the Florida Supreme Court show no state has ever recognized an artist’s common-law right to control post-sale performances of their songs, Metlitsky said.

U.S. Circuit Judge Consuelo M. Callahan, a George W. Bush appointee, asked Metlitsky whether his argument holds weight only if the panel finds that a 1982 California copyright law was ambiguous as to whether music authors have “exclusive ownership” of recordings.

Judge Gutierrez’s ruling interpreted that with the 1982 statute, California lawmakers intended to expand artists’ ownership rights, not limit them.

Metlitsky told Callahan that interpretation of the statute must be in the context of the law and conditions at the time.

“The question is, ‘What was the law?’ Ownership meant a right against unauthorized duplication,” Metlitsky said. “Piracy right is not a performance right.”

Attorneys for Sirius said in a brief that Gutierrez’s reading of the 1982 California statute would mean the amendment violates the U.S. Constitution’s Commerce Clause.

“Because Sirius XM is required by the FCC to broadcast on a nationwide basis without tailoring its satellite broadcasts by state, a California law restricting Sirius XM’s performance of lawfully acquired recordings would effectively restrict performance of those recordings in every state,” the brief said.

In court papers, attorneys for Flo & Eddie said the 1982 amendment was clear: authors of a sound recording made before Feb. 15, 1972, have exclusive ownership of the work until Feb. 15, 2047.

“Other than the cover-song exception, the California Legislature excluded no other rights in the bundle of sticks, and thus its grant of ‘exclusive ownership’ includes ownership of the right to publicly perform pre-1972 recordings,” the attorneys wrote in a brief.

Kalpana Srinivasan of the firm Susman Godfrey, representing Flo & Eddie, told the panel Sirius XM’s model of digitally streaming the artists’ songs without licensed authorization undercut the value of the work.

“It has cannibalized what their sales would be,” Srinivasan told the panel. “The value is in the ability to perform. There’s intrinsic value in that.”

U.S. Senior Circuit Judge Richard C. Tallman, a Bill Clinton appointee, asked Srinivasan why it’s taken recording artists so long to bring relevant claims before the court.

“What took your client so long to bring this claim if everyone knew that far back that the law changed,” Tallman asked. “Why are we just seeing this in 2021?”

Srinivasan noted technological advancements widened the audience that Sirius can stream music to without authorization.

“What Sirius can do is stream perfect digital sound to subscribers,” Srinivasan told Tallman. “That undercuts Flo & Eddie’s value to license them. The technology has changed it dramatically.”

Tallman asked why Flo & Eddie would challenge or disrupt the distribution of their recordings to millions of listeners.

“Doesn’t it benefit your client if the recording is reaching a larger share of listeners?” Tallman asked.

“Not if they don’t ultimately buy a recording,” Srinivasan said of satellite radio listeners.

U.S. Circuit Judge Kenneth Kiyul Lee, a Donald Trump appointee, rounded out the panel, which took the matter under submission.

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