On Friday, the US District Court in the Southern District of NY found that there is a public performance right in pre-1972 sound recordings in that state, following two decisions from California finding a similar right under California law (though on different grounds).  Like the first decision in California (about which we wrote here), this decision was the result of a law suit by Flo and Eddie of the Turtles against Sirius XM, arguing that Sirius XM was infringing on their rights by playing old Turtles songs without paying the duo (who now own the Turtles’ copyrights) any compensation.  Unlike the California decision which looked to specific language in the California statute about ownership of pre-1972 sound recordings, the NY Court reaches a decision in some ways broader than the California decision, but potentially also in some ways narrower.  What does it mean for the many businesses that play such recordings?

There is no public performance right in sound recordings generally in the United States, with the limited exception of the public performance of such recordings in a digital medium.  Sound recordings had not been covered by Federal copyright law at all until 1972, when they were covered for purposes of protecting reproductions and distributions and other general rights, but Federal law specifically did not include this public performance right in sound recordings until the 1990s.  When sound recordings were added to Federal law in 1972, the regulation of pre-1972 sound recordings was specifically left to state regulation (where it had been prior to Federalization).  The limited digital performance right was adopted in a series of laws enacted in the late 1990s, as fears of digital piracy based on Internet and other digital transmissions grew.  So webcasters, satellite radio, digital cable radio and other digital users of sound recordings have paid a royalty for the performance of such recordings.  That royalty is set by the Copyright Royalty Board (see our article here about the most recent CRB proceeding to set rates), paid by noninteractive services to SoundExchange, and distributed by SoundExchange to copyright holders and artists. For interactive services (like Spotify or iTunes or Rhapsody), the performance rights have to be directly negotiated with the copyright holder, leading to disputes like the recent decision of Taylor Swift to pull her new album from Spotify (see our article here about the difference between interactive and noninteractive services).  As the 1990s adoption of the limited public performance right in sound recordings was a Federal act, most observers believed that there was no public performance right in sound recordings for pre-1972 recordings, as there never had been one prior to Federalization (despite many attempts by artists and labels to have one included in the law)(see our article here when the Flo and Eddie suit was first filed). 

Friday’s decision (a copy of which can be found at the end of this article from the Hollywood Reporter), on top of the California decision (and another California state court decision that followed the US District Court case against Sirius), raises questions about this conventional wisdom.  The decision on Friday does not rely on a specific New York statute that says that there is a public performance right in pre-1972 sound recordings.  Instead, the court determination was premised on the reasoning that it could see no reason that such sound recordings should be treated differently than any other intellectual property right in NY, and that the NY Courts have found a general public performance right that IP owners have in their creations. 

But the District Court also looked at Federal law for post-1972 sound recordings, and its creation of the limited public performance right in sound recordings in the digital media.  When addressing the argument that there has never been a right in the public performance of pre-1972 sound recordings asserted before these recent suits, there is no collection mechanism for any royalties that are claimed for pre-1972 sound recordings, and that there have been no rates set for the use of such recordings, the Judge suggests that rules for the payment processes can be created by the Courts themselves, and that any payment right might even include some exceptions.  Specifically, the decision states:

New York courts are capable of fashioning appropriate relief – and even of recognizing only such public performance rights in pre-1972 sound recordings as conform to rights statutorily conferred on holders of statutory copyright in post-1972 recordings.

This suggests that the federal District Court, which is ruling on New York law, expects that state courts will become involved in determining the extent of the public performance right.  The Court is saying that any public performance right for pre-1972 sound recordings may be as limited as those covered by Federal law.  If that was the case, the ruling could be seen as not necessarily applying to over-the-air radio stations and retail establishments – businesses that don’t pay a public performance royalty for sound recordings currently.  If the pre-1972 right was read broadly, these traditional businesses might be swept up in the state ruling to the extent that they play “oldies” of any sort.

While there is this language suggesting that the ruling should not be read as necessarily being read to apply to radio and retail, there is other language in the decision that indicates that the question of whether radio and retail are covered remains open.  The Court states that the fact that copyright owners have never asserted a performance right in pre-1972 sound recordings in the past does not mean that they have waived the rights to assert such rights now.  So, with these contradictory strains in the decision, the impact of the ruling on businesses exempt from the performance royalty for Federally covered sound recordings is still very much up in the air. 

The decision is somewhat surprising as it does not address the rejection of the many attempts to create a sound recording performance royalty – attempts both before and after 1972.  And it seems to assume the need for more decisions to flesh out the right that it is recognizing – which would suggest that the ambiguity of the right is such that it really should be one created by legislative actions if it is to exist, rather than by judicial decision.

The Judge herself seems to be conflicted about the decision and its potential impact if read broadly.  In the closing paragraphs, the Court suggests that this all may need to be clarified by legislation –that this decision is simply ruling on a dispute between two parties, not one dealing with the broader policy issues. 

Legislation that could clear up some of these issues is in fact pending.  The RESPECT Act was introduced in Congress earlier this year.  It would create a Federal performance right in pre-1972 sound recordings, and allow SoundExchange to collect such royalties. This New York decision may revive the consideration of that bill.

Friday’s decision is just a trial court decision on a summary decision motion which will, no doubt, be appealed because of the broad issues that it raises. But all music users that play oldies – big band jazz and standards, early rock and roll, and much other music – whether the businesses be digital music services, radio stations, bars and restaurants or retail outlets, need to be carefully following the action in this case, and those cases that are going on in California and other states, as they could certainly upset some very settled expectations about music use.