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Sony, Warner, UMG, ABKCO v. SiriusXM

By Mark L. Belkin

On September 11, 2013, a consortium of music industry giants brought action against satellite radio leader SiriusXM in California, over the defendant's use of their back catalogs that pre-date 1972. In February 1972, the Copyright Act was amended to allow for protection of all fixed sound recordings of copyright holders, but only on those works created after February 15, 1972. SiriusXM has been using those recordings created before 1972 on its numerous channels, and the recording industry claims that it must pay royalties for such uses.

The companies involved represent the majority of the music industry, including Sony Music Entertainment, Capitol Records, Warner Music, UMG, and ABKCO, and they are not alone in bringing action against SiriusXM. Of late, there are at least four other lawsuits filed. These include $100 million dollar lawsuits from Flo and Eddie of the Turtles and SoundExchange over similar royalties issues on pre-1972 recordings - implying that more are sure to come.

At the heart of the plaintiffs' argument is that SiriusXm profits immensely from the pre-1972 recordings of many artists by using their intellectual property to attract and maintain over 25 million subscribers to its service. The plaintiffs are asking the courts to force SiriusXM to obtain licenses and pay royalties on those artists that contribute to channels which play music from 1940's, 1950's, 1960's, and up to February of 1972. SiriusXM applies the federal copyright standard to itself and does not provide royalties for pre-1972 recordings, but what about state law? A vital factor for the action being filed in Los Angeles County, is the plaintiffs' argument that for at least the last 30 years, sound recordings have been protected statutorily by Section 980 of the California Civil Code. "The author of an original work of authorship consisting of a sound recording initially fixed prior to February 15, 1972, has an exclusive ownership therein until February 15, 2047, as against all persons except one who independently makes or duplicates another sound recording that does not directly or indirectly recapture the actual sounds fixed in such prior sound recording, but consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate the sounds contained in the prior sound recording." Civil Code § 980(a)(2). Even though the 1972 amendments to the Copyright Act did not protect recordings already fixed, Congress understood that the recording industry already relied on statutes and common law to protect its intellectual property, and amended the legislation to preserve "any rights or remedies under the common law or statutes of any State" with respect to sound recordings that were fixed before February 15, 1972. 17 U.S.C. § 301(c).

In Goldstein v. California, the Supreme Court ruled on this very subject in 1973, holding that federal law did not preempt state laws for pre-1972 recordings. Finding that "[u]ntil and unless Congress takes further action with respect to recordings fixed prior to February 15, 1972, the California statute may be enforced against acts of piracy such as those which occurred in the present case." Congress did not enact a federal law on the subject and therefore state law applies.

Does the recording industry want federalization of those protections on pre-1972 recordings? The Copyright Office in 2009 released a report recommending that pre-1972 recordings be brought under federal copyright protections. (http://www.copyright.gov/docs/sound/pre-72-exec-summary.pdf). Through the RIAA, the recording industry argued that federalization would pose a problem for record companies. RIAA's Senior Vice President of Business and Legal Affairs, Susan Chertkof, stated that the cost of registering each album with the Copyright Office and other legal complications, led to the recording industry generally opposing a move by Congress to federalize pre-1972 rights. (http://www.copyright.gov/docs/sound/meeting/transcript-06-02-2011.pdf). It would seem that the recording industry has a preference for establishing precedence through the courts and maintaining state level protections for pre-1972 works. However, as anything in major industries, this is subject to change.

The complaint claims that SiriusXM earned $3.4 billion in revenue and it already pays royalties on those recordings fixed after the 1972 Amendments to the Copyright Act. The labels are asking for actual and punitive damages, as well as a preliminary and permanent injunction enjoining the defendants from infringing on all the pre-1972 fixed recordings. The precedent established would affect other music services, including digital providers like Pandora, and businesses such as bars and sports venues which currently are not obligated to pay royalties on fixed recordings outside federal protections.

The complaint is available here:
http://www.hollywoodreporter.com/sites/default/files/custom/Documents/ESQ/bc520981.pdf

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This page contains a single entry from the blog posted on September 25, 2013 3:40 PM.

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