Sirius XM loses on public performance claims for pre-1972 sound recordings … again.

I’ve already written about two lawsuits – both in California – based on infringement claims arising from Sirius XM’s public performance of sound recordings created before February 15, 1972. (You can read those two posts here and here.) In both cases Sirius XM suffered adverse rulings. It remained to be seen, however, whether Sirius XM (and other potential defendants engaged in the digital transmission of “pre-1972” sound recordings) might be in trouble elsewhere.

The answer is (drum roll, please) “YES”.

The plaintiffs in one of the California cases – former Turtles Mark Volman and Howard Kaylan, better known to many by their noms de disque, Flo and Eddie – also sued Sirius XM in New York. And now Judge Colleen McMahon of the U.S. District Court of the Southern District of New York has joined her West Coast colleagues by taking a big step toward granting Flo and Eddie summary judgment on the liability element of their claim against Sirius XM. (If she concludes that summary judgment is the way to go, the case will proceed to a damages phase where a dollar figure can be attached to that liability.)

But Judge McMahon went a bit beyond the California decisions: her opinion may pave the way for judges in other states to hop on the bandwagon more easily, and it may also include a veiled warning for broadcasters as well.

To recap briefly, when Congress created a “public performance” copyright interest for the benefit of sound recording artists, Congress did so only for recordings created after February 15, 1972. So there is no federal “public performance” right for earlier recordings. That means that if pre-1972 artists want to claim such rights for their works, they have to look to state law.

The trouble, however, is that most state copyright statutes don’t address “public performance” rights one way or the other. Pre-1972 artists must therefore satisfy a judge that in fact somewhere in the law of the judge’s state – whether between the lines of statutes or lurking in court rulings – the notion of “public performance” rights is recognized. As I described in my earlier posts, the judges in California were able to tease out such rights from a California state statute.

But there is no truly equivalent New York state statute. Instead, for more than 50 years New York courts have developed a body of copyright-related “common law” relative to sound recordings. So if there’s a public performance right to be found in New York law, Judge McMahon had to find it in the court opinions that comprise the state’s “common law”. She did so, and her opinion is probably the scariest from the perspective of Sirius XM, Pandora and other digital streamers because it is the opinion least grounded in the particulars of the available state laws. In other words, her analysis is pretty “generalist” and should be easy for judges in other states to adapt to their own jurisdictions.

Looking at other New York copyright decisions, McMahon found that there was no explicit recognition of public performance rights for pre-1972 sound recordings. BUT – and this is a big but – she did find plenty of support for the notion that public performance rights are part of the overall bundle of rights encompassed by copyright ownership in any creative work. In particular, New York courts had historically protected public performance rights in other artistic areas, such as plays and compilations of film clips.

Sirius XM argued, though, that while some such creations might have been protected, there is no indication in the case law that similar protections had been extended to sound recordings. True enough, answered McMahon, but that doesn’t prove that the protections didn’t exist; rather, it only proves that sound recording copyright holders failed to avail themselves of those protections. (By way of analogy, she point to the fact that the Supreme Court “failed to grapple with many fundamental constitutional questions for the first 150 years of the Constitution’s existence.”)

Moreover, expanding on her view that ownership of a copyright brings with it a comprehensive bundle of rights, she found that a copyright holder is normally deemed to hold the entire bundle of rights unless state law – statutory or common law – has provided some specific “carve-out” of one or more of those rights. Since no such carve-out for public performance rights for pre-1972 sound recordings is evident in New York law, Judge McMahon rejected Sirius XM’s claims.

This aspect of McMahon’s analysis is perhaps the worst news for Sirius XM, Pandora and other digital streamers because it seems to stack the deck in favor of copyright holders in pretty much any state. Under this approach, the lack of express statutory or common law for public performance rights for pre-1972 sound recordings is immaterial as long as the state has (a) previously recognized copyright interests generally and (b) not explicitly declared that public performance rights are not part of a copyright owner’s bundle of rights. That analysis is likely to come down in favor of copyright holders in the vast majority, if not all, of the states.

This is a variation of the analysis applied in the California cases – but the difference here is that California had a copyright statute that provided useful guidance; in New York, Judge McMahon was left to interpret historical silence, which she did in favor of the copyright holder. To the extent that such silence on the topic of public performance rights is likely to be found in most other states, judges in those states now have Judge McMahon’s guidelines to follow. (Of course, those guidelines are not binding on courts in other states, but other states’ judges can certainly choose to follow McMahon’s lead if they are persuaded by her analysis.)

Judge McMahon also rejected a number of other Sirius XM arguments – alleging unfair competition, fair use, even a constitutional claim based on the “dormant commerce clause” effect – but her “public performance” rights analysis is likely to have the greatest impact. McMahon herself acknowledged that her decision is unprecedented (other than the companion California litigation) and that it will have “significant economic consequences”. In that vein she observed that

[r]adio broadcasters – terrestrial and satellite – have adapted to an environment in which they do not pay royalties for broadcasting pre-1972 sound recordings. Flo and Eddie’s suit threatens to upset those settled expectations. Other broadcasters, including those who publicly perform media other than sound recordings, will undoubtedly be sued in follow-on actions, exposing them to significant liability. And if different states adopt varying regulatory schemes for pre-1972 sound recordings, or if holders of common law copyrights insist on licensing performance rights on a state-by-state basis (admittedly, an unlikely result, since such behavior could well cause broadcaster to lose interest in playing their recordings) it could upend the analog and digital broadcasting industries.

Her references to “broadcasters” – especially “analog and digital broadcasting industries” – got my attention. Clearly, Judge McMahon is no dummy. She didn’t throw those terms in by mistake. I’ve talked in my previously posts about whether these cases could be building momentum for an actual public performance right in over-the-air broadcasting. Could she be implying that this already exists? (For the record, my answer to this obvious click-bait question is that no such right already exists, but I’m pretty sure Judge McMahon thinks it should).

Judge McMahon has ordered Sirius to advise the court by December 5 of “any remaining disputes of material fact that would require a trial”. If Sirius XM can’t find any such material facts – and I’m going to go ahead and say they’ll at least try to raise something – the court will enter summary judgment in favor of Flo and Eddie as to liability and proceed to exactly how much to award in damages. Check back here for updates.