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The New York State Court of Appeals, the state’s highest court, has ruled that there is no public performance right in pre-1972 sound recordings in the state of New York. The decision (available here in a version subject to revision) was reached after the US Court of Appeals certified the question to the state court as being necessary to resolve the appeal of a US District Court decision which had found such a right to exist in a lawsuit brought by Flo & Eddie of the band the Turtles against Sirius XM Radio. We wrote about the District Court’s decision here, and the certification to the state court here. Certifying a question from a Federal Court to a State Court is a rare matter, done when a Federal Court needs guidance as to the state’s treatment of a legal issue under state law where there is no clear precedent, and where the state law issue is central to the resolution of the case. The NY Court of Appeals did not have to accept the certification, but it did to resolve this somewhat obscure issue of state intellectual property law (most of which is governed by Federal law).

The NY Court’s decision was not unanimous, as there was one dissenting Justice who would have found that a performance right does exist. The dissenting justice thought that there should be a state performance right – but a right co-terminus with the Federal right, thus applying only to digital services and not to terrestrial radio and presumably not to retail outlets, bars and restaurants and other businesses that may play music. That Justice seemed to be motivated by a desire to keep pace with current developments in the music industry, suggesting that common law should evolve with the times and, as streaming is now becoming more important to the music industry, there should be a royalty for such streams. Another justice concurred with the decision that there is no performance royalty in noninteractive services like that offered by Sirius XM, but there should be for interactive services like that offered by Spotify and Apple Music. The majority of the court disagreed with these justices.
Continue Reading NY State’s Highest Court Finds that There is No Public Performance Right in Pre-1972 Sound Recordings

While this summer has perhaps not brought the big headlines in trade press about copyright issues involving broadcasters – particularly in the area of music rights – there still are many issues that are active. I addressed some of those issues in a presentation earlier this month at the Texas Association of Broadcasters Annual Convention. I did my presentation in conjunction with a representative of SoundExchange, where he covered the nuts and bolts of the obligations of broadcasters and webcasters to file royalties for the noninteractive digital performance of sound recordings (e.g. webcasting and Internet radio). While the rates for 2016-2020 are on appeal (see our articles here, here and here), these rates are effective pending appeal and webcasters need to be paying under them. In the Texas presentation, I covered some of the many other copyright issues that are on the horizon, many of which we have written about in the pages of this blog. The slides from my presentation are available here. They provide an outline of many of the pending matters.

The presentation covered the controversy about the Department of Justice decision on the ASCAP and BMI consent decrees, about which I wrote about here. That controversy continues, as the PROs seek judicial or legislative relief from the new DOJ requirement for 100 per cent licensing of split works (see my article for an explanation of what that means). In the interim, the radio industry is negotiating new royalties with both of these organizations, as the current license agreements expire at the end of this year (see our article here).
Continue Reading What’s Up With Music Rights for Broadcasters and Webcasters? – A Presentation on Pending Issues

The question of whether state laws about pre-1972 sound recordings could give copyright holders a claim against broadcasters for the over-the-air public performance of these recordings was answered in a novel manner in a decision rendered by a US District Court in California. The evidence before the Court showed that CBS, the broadcaster being sued, had played digitally remastered versions of the pre-1972 songs, not the original analog pre-1972 recordings. The Court, based on evidence provided by the sound engineers who remastered the digital versions of the songs, found that there was enough originality in the remastering process for the digital versions to be copyrightable as “derivative works.” A derivative work is a separate work, based on the original, which can itself be copyrighted if there is some creativity in the new work. As the remastered derivative work was created after 1972, the Court decided that it was covered under Federal law. As Federal law provides no royalty for the public performance of a sound recording by an over-the-air broadcaster, the Court granted CBS summary judgement in the suit brought against it, dismissing the claims of the copyright holders (the text of the decision is embedded in this Hollywood Reporter article about the case).

The question of whether digitized versions of old recordings are sufficiently creative to merit their own copyrights (whether they are “original works of authorship”) has been debated in copyright circles for some time. Here, the Court looked at a summary of the law that had been prepared in a Circular distributed by the Copyright Office, which listed certain criteria that could be applied in determining whether a re-recorded work had sufficient creativity to merit a copyright. The Court also looked at specific evidence offered by recording engineers that showed how they used independent creative judgment in deciding to enhance certain elements of the recording in the digital version and to suppress others. The testimony showed that the digital version was the result of more than simply hooking the analog source material to a digital recorder and distributing the result. Human intervention in deciding how to materially change the original work to produce a new digital work was found by the Court – deciding that this was a classic version of a derivative work, authorized by the Copyright holders themselves when they commissioned the digital versions of the recordings. Thus, these works were entitled to their own copyright – a copyright that arose when the work was created after 1972.

We wrote about this issue in our article here, an article that primarily dealt with pending appeals of the question of whether there really is a state law public performance right in pre-1972 sound recordings. We wrote there about the fact that Sirius XM and some webcasters have not raised the CBS defense, as they have argued that no such royalties are due on pre-1972 sound recordings and have not been making such payments to SoundExchange (the Court in the CBS case said that CBS was apparently making such payments). Of course, the issue was not raised in those cases as to whether these companies were playing analog versions of the old recordings, or new digitally remastered works that may be entitled, if the current decision is upheld, to new copyrights (in fact, as we wrote here, the Copyright Royalty Board itself has approved of Sirius XM not making payments for pre-1972 recordings, without addressing what constituted such a recording). What implications does this decision have on other cases where this issue has been raised?
Continue Reading US District Court Finds Digitally Remastered Pre-1972 Sound Recordings Are “Derivative Works” Covered By Federal Law – Dismisses Suit against Broadcaster Seeking Over-the-Air Performance Royalties

Pre-1972 sound recordings are back in the news. Yesterday, the US Court of Appeals for the Second Circuit decided to defer its consideration of an appeal of a District Court’s decision that NY law included a public performance right for pre-1972 sound recordings. The Court deferred its decision until it can get a definitive answer as to whether or not such a right exists under NY state law. To get that definitive answer, the Court of Appeals referred the question to the NY State Court of Appeals (the highest court in New York State) asking it to issue an opinion as to whether the right exists.   Reading the order referring the case to the NY state court, there are a number of interesting issues addressed, including a discussion that could help decide the ramifications for over-the-air broadcasters who play these recordings.

First, we should provide a reminder about what the case here is all about. This case was brought by Flo and Eddie, members of the 1960s band The Turtles, who alleged that Sirius XM (and Pandora in a separate case) owed them royalties for playing pre-1972 sound recordings on their music services (see our article on the filing of the suit, here). Pre-1972 sound recordings first copyrighted in the United States are not covered by Federal law (see our article here and here about a Copyright Office inquiry on whether they should be brought under Federal law). While most states have laws prohibiting the reproduction of those recordings (e.g. prohibiting bootlegging of the recordings), none has an explicit statutory grant of a public performance right such as that collected by SoundExchange for post-1972 works. Sirius XM has thus excluded performances of pre-1972 sound recordings from the royalties that it has paid to SoundExchange (with the blessing of the Copyright Royalty Board in their last proceeding, see our story here). And allegedly Pandora has done the same. In this case, Flo and Eddie argued that in fact state law did convey a public performance right in sound recordings. Many observers (including this author) suggested that this argument would not succeed given that finding that a general performance right existed would be contrary to US law, and could subject all sorts of businesses that have never paid royalties for public performances of sound recordings, from over-the-air radio stations to bars and restaurants, to a performance royalty only when they played oldies. Nevertheless, Flo and Eddie were successful with their arguments in lower Federal Courts in California and New York (see our articles here and here), but a court in Florida denied their claims, finding that there is no performance right in pre-1972 sound recordings in that state (see our article here). The Court of Appeals decision yesterday was on the appeal of the NY decision referenced above. Why did the Court of Appeals need to send this case to the NY state court system?
Continue Reading Appeal of Public Performance Rights in Pre-1972 Sound Recordings Referred to NY State Court for Interpretation – What Issues Might Radio Broadcasters Be Facing?

The legal issues surrounding the use of music in broadcast and digital media is one of those topics that is usually enough to make eyes glaze over.  The importance of understanding these issues is illustrated by this week’s request from the Department of Justice for more information about the rights of songwriters to authorize ASCAP and BMI (often referred to as Performing Rights Organizations or PROs) to license their works to services like radio stations and webcasters when there are multiple songwriters who may not all be members of the same rights organization.  While we try to provide some explanations of some of those issues on this Blog, I wanted to point to a couple of other resources available to address some of these issues and to, hopefully, help make some of those issues understandable.

First, I wanted to note that I’ll be moderating a panel on current music issues at the NAB Radio Show in Atlanta on Thursday afternoon (the panel is described here) featuring representatives of the NAB, RIAA, BMI, Pandora and the Copyright Office.  Hopefully, we’ll be able to unpack some of the motivations and directions of the music royalty debates that are going on in Washington DC.  For those of you not able to make that panel, and even those of you who are planning to attend, a new source of information that provides a very good summary of the many music licensing issues now being considered by Congress and the courts is a report prepared by the Congressional Research Service released last week, available here.  The report explains in relatively simple terms how music licensing works in the United States, and describes many of the current legislative and judicial issues that currently could affect that licensing.  While obviously not addressing all of the subtleties of the arguments of all of the parties to these proceedings, the report does at least give a relatively neutral summary of the arguments of the parties.
Continue Reading Understanding Music Royalties – Congressional Research Service Releases Summary of the Law, While DOJ Asks for More Comments on ASCAP and BMI Consent Decree Reform

The US House of Representatives has been looking at potential reform of the Copyright Act for some time, holding a number of hearings before the Committee here in Washington DC (see, for instance, our article here about one of those hearings). Yesterday, the Committee announced that it is taking its examination on the road, conducting a “listening tour” of the country, starting with a roundtable on music issues to be held in Nashville on September 22. The Committee’s announcement of the listening tour (available here), says that future dates and locations (and presumably topics) will be announced at a later date.   The announcement states:

America’s copyright industries – movies, television programming, music, books, video games and computer software – and technology sector are vitally important to our national economy.  The House Judiciary Committee’s copyright review is focused on determining whether our copyright laws are still working in the digital age to reward creativity and innovation in order to ensure these crucial industries can thrive.

So what are some of the issues that are likely to be considered? On the music side, there are many issues, including questions about the disparity between the payments from digital media companies made to songwriters as opposed to sound recording rights holders (see our article here), the amounts of the royalties themselves (with digital media companies finding many royalties to be too high to allow for a profitable operation while rights holders argue that they are too low to compensate creators for the decrease in the sale of music in a physical form – see our article on how the one-to-one nature of the digital performance complicates the discussion of the value of music when compared with analog performances), issues as to whether broadcasters should pay a performance royalty for sound recordings, and the question of pre-1972 sound recordings (see our last article on pre-1972 sound recordings, here). Many of these issues were addressed by the Copyright Office in its report on reform of the copyright laws as they relate to music (see our summary here). Some of the songwriter issues are also being considered by the Department of Justice in its review of the antitrust consent decrees governing ASCAP and BMI (see our article here).
Continue Reading House Judiciary Committee Begins Nationwide Listening Tour on Copyright Reform – First Roundtable on September 22 in Nashville Focusing on Music Issues

It’s another summer with music copyright issues hitting the press almost every day. Over the next week or two, we will try to catch up on some of the legal issues raised by all the music news. First, let’s look at the significant actions in the last ten days in the battle over whether there is a public performance right in pre-1972 sound recordings. Just a few days after there was a court decision (available here) finding that there was no common law public performance right in pre-1972 sound recordings under Florida law, Sirius XM last week announced that it had settled the case brought against it by the major record labels by agreeing to pay $210 million for nationwide public performance rights to the catalog of recordings that these labels own, said by Sirius’ SEC 8-K filing to comprise about 80% of those sound recordings. Obviously, that settlement does not appear to resolve the issues with independent sound recording owners (like Flo & Eddie who brought the actions that have resulted in NY and California decisions finding a performance right in pre-1972 recordings in those two states). But what do the settlement and Florida decision mean for other users of these recordings?

First, a review of the issue with pre-1972 sound recordings. With all of the copyright issues that have been in the news in the last few weeks, that review is necessary so that readers really understand the issues involved in this case – beyond just the headlines. Pre-1972 sound recordings (sound recordings being a song or other audio material, as recorded by a particular artist) first released in the United States are different than other sound recordings, as they do not have protections under Federal copyright law. Prior to 1972, Federal copyright law did not protect sound recordings at all, only protecting what is referred to as the “musical work” or “musical composition” (the underlying words and music of a song). The actual recording of the song was protected only under state laws, and most state laws addressed only unauthorized reproductions of those recordings (e.g. bootlegged copies), not performance rights. When copyright protections over sound recordings were federalized in 1972, states were left with the right to determine how to deal with pre-1972 recordings.
Continue Reading Understanding the Murky State of the Performance Right in Pre-1972 Sound Recordings – Florida Court Rejects the Right yet Sirius XM Settles With the Record Labels

The Copyright Office this past week released its Report following its study of music licensing in the US; a comprehensive report addressing a number of very controversial issues concerning music rights and royalties.  Whether its release during the week of the Grammy Awards was a coincidence or not, the report itself, which takes positions on many issues, is sure to initiate lots of discussion and controversy of its own.  The report was issued after two rounds of comments (the questions that were asked in each request for comments are detailed in our stories here and here) and three roundtables held in three different cities where representatives of music companies provided ideas on the questions asked (I participated in the Nashville session).  As detailed below, the report addresses some of the hot button issues in the music royalty space including the broadcast performance royalty, publisher withdrawals from ASCAP and BMI (see our article here), and pre-1972 sound recordings.

Before getting into the details of the proposals, it is important to note that the Copyright Office, unlike many other government agencies, does not itself make substantive rules.  Instead, it merely makes recommendations.  For any of the substantive proposals that it suggests in the Report to become law, Congress must act – which is never easy.  In the Copyright world, it is particularly difficult, as the rules and industry practices are so complex and often obscure, and where any change can have a very dramatic effect on some industry player or another.  Often, a simple change in the rules can take money from someone’s pocket and deposit into someone else’s.  Moreover, copyright is not an area where there are clear partisan divides.  Oftentimes, it matters more where a Congressman’s home district is than his or her party affiliation in their leanings on copyright matters.
Continue Reading Copyright Office Issues its Report on Music Licensing – Issues Include Broadcast Performance Royalties, Publisher Withdrawals from ASCAP and BMI, and Pre-1972 Sound Recordings

Last month, we wrote about the FCC issues facing broadcasters in 2015.  Today, we’ll look at decisions that may come in other venues that could affect broadcasters and media companies in the remaining 11 months of 2015.  There are many actions in courts, at government agencies and in Congress that could change law or policy and affect operations of media companies in some way.  These include not just changes in communications policies directly, but also changes in copyright and other laws that could have a significant impact on the operations of all sorts of companies operating in the media world.

Starting with FCC issues in the courts, there are two significant proceedings that could affect FCC issues. First, there is the appeal of the FCC’s order setting the rules for the incentive auction.  Both Sinclair and the NAB have filed appeals that have been consolidated into a single proceeding, and briefing on the appeals has been completed, with oral arguments to follow in March.  The appeals challenge both the computation of allowable interference after the auction and more fundamental issues as to whether an auction is even permissible when there is only one station in a market looking to give up their channel.     The Court has agreed to expedite the appeal so as to not unduly delay the auction, so we should see a decision by mid-year that could tell us whether or not the incentive auction will take place on time in early 2016.
Continue Reading What Washington Has in Store for Broadcasters and Digital Media Companies in 2015 – Part 2 – Court Cases, Congressional Communications and Copyright Reform, and Other Issues

Today is Elvis Presley’s 80th birthday, so it seems appropriate to revisit the issue of pre-1972 sound recordings, and to take a deeper look at the recent decisions by courts in New York and California finding that there is a public performance right in these recordings.  The NY decision in a case brought by Flo & Eddie of the band the Turtles, coming after the California cases, is in many ways the more interesting of the cases.  In the California case, the Court interpreted a California statute on copyright ownership as signaling that the California legislature intended to provide the entire bundle of ownership rights that would be accorded to any other piece of property, which the California Courts found would include the right to publically perform the recording.  While that may be debatable (as one does not usually think of a public performance right in connection with the ownership of tangible property – you don’t perform a house or a car), the decision at least is based on statute.  But the NY court did not find any such specific statute to which it could point to find a public performance right, instead concluding that the performance right was somehow inherent in the common law and therefore existed unless there was a specific carve-out of that right by statute.  This reasoning, to me, simply does not stand up to review.

The NY Court itself spends an entire footnote chronicling the history of the public performance right in the United States.  It notes that there was initially no public performance right at all recognized by the Copyright Act, until Congress provided one for dramatic works (e.g. plays) in 1856.  No such right was accorded to musical works (the musical composition – the words and music of a song) until 1897 when Congress specifically provided such a right by law.  For sound recordings, the public performance right did not exist in the US until 1995, when it was first extended to a limited class of digital recordings.  From these facts, the Court goes on to conclude “It was thus an accepted part of the background law that public performance rights would, absent a deliberate effort to exclude them, extend to sound recordings.”  Presumably, the Court is talking about the background law in 1972, when Congress first accorded any protection at all to sound recordings by granting a Federal right to control reproduction and distribution of such works – but Congress specifically excluded any performance right for another 23 years.
Continue Reading On Elvis’ Birthday – Looking at the Issues with Pre-1972 Sound Recordings