United States: "Flo & Eddie, Inc. V. Sirius XM Radio, Inc.:" The New York Court Of Appeals Conducts An Inquiry Into The Past And The Future Of State Copyright Law

Sirius XM Radio received an early present for the holidays: On Dec. 20, the New York Court of Appeals issued an opinion addressing a question certified by the U.S. 2d Circuit Court of Appeals regarding whether "there is a right of public performance for creators of sound recordings under New York law and, if so, what is the nature and scope of that right?" (Opinion at 1) The New York court ruled that "New York common law does not recognize a right of public performance for creators of sound recordings." (Opinion at 1-2) The decision was not unanimous, and two judges joined in a lengthy dissent. As a result of the New York court's ruling, the plaintiffs in the federal class action lawsuit against Sirius XM Radio brought by two of the original members of the 1960s rock band The Turtles will not be able to pursue their claim that Sirius XM's unlicensed broadcasts of their pre-1972 sound recordings infringed New York's state copyright law.

The plaintiffs were pursuing state law copyright claims because federal copyright law provides limited public performance protection to copyright owners of sound recordings. As the New York Court of Appeals summarized the scope of federal copyright protection: "Essentially, the right to control performance [of a sound recording under federal copyright law] is now limited to digital radio services, and does not apply to AM/FM radio stations, nor to bars, restaurants or stores that play music in their establishments." (Opinion at 7) As a result, led by the named plaintiffs here, lawsuits were initiated in California, New York and Florida seeking recognition of a public performance right for pre-1972 sound recordings under state copyright law. 

The decision by New York's highest court rejecting a public performance right under state law marks an important chapter in the nationwide battle between artists and broadcasters over pre-1972 recordings. Initially, the plaintiffs had won a stunning victory before a Los Angeles federal court, which ruled for the first time that California's state common law of copyright encompassed a public performance right for copyright owners and/or performers of sound recordings. Since then, the courts in Florida [Go to Law 360 for CITE] and now New York have each rejected similar arguments and have found no compelling evidence that state law ever recognized a public performance right for creators of sound recordings. Why have the different courts as well as judges within the same court reached such opposing conclusions about the scope of state copyright law? Do these different results reflect the progression of the law in each jurisdiction? Or is something else going on?

In New York's case, there was a body of case law that had developed over the years that provided some protection to copyright owners of sound recordings. As a result of this case law, the New York Court of Appeals had responded to a previous certified question from the Second Circuit by stating that New York common law copyright protections applied to pre-1972 recordings. This response certainly buoyed the plaintiffs' hopes that they could obtain another victory in New York. [Go to Law 360 for CITE]

Unfortunately for plaintiffs, the New York court's response to the Second Circuit's latest certified question clarified that state common law protection for sound recordings only extended to unauthorized copying or record piracy and that New York law has never recognized that copyright protection extends to the public performance of the artist's sound recording.

The court also found that the reason that no case law had developed in this area was "that stakeholders in this arena have not understood New York common law copyright to provide a right of public performance to the copyright holders of sound recordings." (Opinion at 26)  Based on this record, "it would be illogical to conclude that the right of public performance would have existed for decades without the courts recognizing such a right as a matter of state common law, and in the absence of any artist or record company attempting to enforce that right in this state until now." (Id.)

Having determined that existing New York common law does not grant public performance rights to copyright owners of sound recordings, the majority concluded it would be unwise to change the law at this juncture. The court offered a variety of reasons, including principles of judicial deference to the legislative branches. Thus, the court highlighted Congress' superior role and experience in adjusting the rights of copyright holders under federal copyright law (Id. at 30-31) and concluded that at the state level, "such line-drawing is best left to the legislature." (Id. at 32) Finally, the court noted that although its decision had foreclosed any claim for violation of New York state copyright law, "sound recording copyright holders may have other causes of action, such as unfair competition, which are not directly tied to copyright law," which created the possibility that "even in the absence of a common-law right of public performance, plaintiff has other potential avenues of recovery."

Perhaps not surprisingly, the dissent interpreted the historical record quite differently.  While acknowledging that New York common law may not have expressly recognized a public performance right applicable to pre-1972 recordings, the dissent emphasized that "since no New York state court has rejected the right of public performance, there is also no basis to exclude such a right from the copyright holder's protections." (Dissent at 23) In the dissent's view, a state common law public performance right derives from "the doctrinal foundations of private rights of ownership," which includes "the creator's interests in receiving compensation for labor that produce the sound recording" as well as "society's interest in avoiding exploitation of artists and their creative works." (Id. at 6-7) The dissent argued that recognition of a public performance right was warranted in order to respond "to the exploitative practices of today's music industry made possible by technological advances and that, as a consequence, excludes from our common-law copyright in sound recordings a quintessential property interest in the use of these works, and limits a creator's opportunity to derive financial benefit from their performance." (Id. at 7) Without recognition of a state copyright public performance right, the dissent argued that "digital audio broadcasters [will be allowed] to reap the exclusive profits from performing the musical recordings by a means that diminishes potential compensation for copyright holders" and that such a result was "a particularly unjust outcome given that the companies were not part of the creative process, and do little to maintain the demand for the creator's traditional revenue source – purchase of an ownership right in a reproduction of the sound recording." (Id. at 16, n.7)

Naively, one might have thought that answering the question regarding whether state copyright law recognized that owners of pre-1972 sound recordings had the right to control public performances of their works would have been a fairly straightforward and non-controversial task. In reality, the opposite has proven to be closer to the truth. As the New York court's majority and dissenting opinions illustrate, the issue is controversial because it has more to do with shaping the future of state copyright law than just inquiring into its past.

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