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.
The decision of the New York Court resolves the question as to whether there is a performance royalty under New York state law. But it does not necessarily end the case, as case goes back to the federal Second Circuit Court of Appeals, where there are other claims made by Flo & Eddie that need to be resolved, including the claim that there are unauthorized digital reproductions of songs made by Sirius XM in the digital transmission process. However, if the Federal Court follows the logic that same Court applied in the Cartoon Network case dealing with Cablevision’s remote DVR (about which we wrote here), it is likely to find that these temporary buffer and cache copies that do nothing but facilitate the public performance have no independent value and need not be licensed. So it seems likely that Flo & Eddie will not prevail in New York State.
But this is not the last we will be hearing about pre-1972 recordings, as this decision is only binding in the state of New York. Cases are now pending certifying the same question to the highest state courts in California and Florida (see our summaries of the decisions on appeal here for California and here for Florida), who could follow the reasoning of the New York Court, or could theoretically go in a different direction altogether. In addition, there is a recent appeal to the Supreme Court in a case called Capitol Records, Inc. v Vimeo LLC where record companies essentially raise the opposite argument – contending that the fact that pre-1972 recordings are covered by state law means that they should be excluded from coverage under Section 512 safe harbor for user-generated content (see our articles here and here about the safe harbor). In that argument, the record companies are contending that they should be able to sue services that host user-generated content containing pre-1972 recordings, as Section 512 gives the host immunity against copyright claims, and such copyright claims should be interpreted as being only those that arise under Federal law. See our article here about a case several years ago where the same issue was raised.
There have also been legislative attempts to bring these recordings under Federal law that could be considered in the next Congress as part of Copyright reform (see our post here) – but there are debates as to whether that Federal right should be limited to a performance right (which the recording industry seems to favor) or more broadly (which the recording industry seems to oppose as it would clearly bring these recordings under Section 512, and allegedly for other contractual reasons). This remains a controversial issue that will no doubt be debated around the country for several years to come.