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Labels look set to win pre-1972 lawsuit against Sirius after Flo & Eddie ruling

By | Published on Thursday 16 October 2014

Sirius XM

The recent court win for songwriters Flo & Eddie in their royalties dispute with US satellite radio firm Sirius XM has had an impact on a very similar case being pursued by the record companies.

As much previously reported, there is some dispute over whether or not American online and satellite radio services are obliged to pay royalties to record companies for recordings they play that pre-date 1972. The date is significant because US-wide federal law – that says such services do have to pay royalties – only specifically applies to recordings made since 1972. Tracks recorded prior to then are protected by state-level copyright laws.

Sirius and others have therefore assumed that that means they can play recordings from before 1972, including the all important 1950s and 1960s rock n roll catalogue, without paying royalties to the labels. Needless to say, the record industry does not approve.

It has led to some debate over whether or not some principles of federal copyright law should apply to all recordings, to avoid extra complexities in the copyright system. Though the labels’ legal action on the matter has more focused on the argument that state law also requires royalties to be paid.

That argument needs to be considered on a state-by-state level, of course. Various lawsuits have been filed, with both Flo & Eddie, previously of the band The Turtles, and the major record companies filing some litigation in California. In their case, the labels urged the judge to provide instruction to any jury to the effect that Californian law should indeed be interpreted as putting a royalty obligation on companies like Sirius.

It was an ambitious request that would have pretty much settled that court battle before it had even started, so it wasn’t surprising when, in August, judge Mary Strobel said she was hesitant to grant the labels their wish in terms of the jury instructions. But then Flo & Eddie won in their legal battle, and Strobel now seems pretty convinced by the judgement made in that case, even though she’s not obliged to follow the ruling in her courtroom.

According to The Hollywood Reporter, Strobel’s analysis of the Flo & Eddie case throws some more light on that ruling. The crucial piece of Californian copyright law, dating from 1982, makes no specific reference to public performance rights – the element of the copyright that usually covers broadcasters – hence the confusion over whether or not public performance is in fact an ‘act restricted by the copyright’.

Sirius would argue that, because that bit of law doesn’t specifically give the labels an exclusive public performance right, it has no such right, and therefore no royalty is due. But the judge in the Flo & Eddie case points out that the law in question does exclude a different element of the copyright (relating to cover versions), leading to the conclusion that if that rule did not intend the labels to have a public performance right it would have explicitly said so.

And Strobel now seems to share that viewpoint, in doing so making it very likely the labels will win its litigation against Sirius too. Strobel wrote: “As the district court found significant, this court finds significant that the California legislature specifically adopted one exception … but did not specifically adopt the other exception found in that law for public performance rights. The court concludes that the exclusive ownership right in pre-1972 recordings includes a public performance right, as not specifically excluded”.

Federal copyright law is explicit that while there is a public performance right for lyrics and musical score, it doesn’t extend to sound recordings unless the performance is “by means of a digital audio transmission” (ie satellite or online). Because of that labels haven’t generally collected public performance royalties in the US.

Of course, the Flo & Eddie ruling is basically saying that, in California at least, they could collect that royalty for pre-1972 recordings. But they haven’t, mainly because until recently public performance royalties were very much a side income for the labels, who were primarily in the business of selling records. This means that, even if Sirius has to accept an unfavourable (to the broadcaster) interpretation of Californian law in both the Flo & Eddie and labels case, they are bound to ask, ‘Well, why haven’t the labels been collecting these royalties from everyone else since 1982?’

So, basically, things are looking good for the labels in this one, though there is likely plenty of lively debate on the issue still to come.