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New York’s highest court ruled Dec. 20 that music services like Sirius XM satellite radio don’t have to pay royalties for playing pre-1972 sound recordings ( Flo & Eddie, Inc. v. Sirius XM Radio, Inc. , N.Y., No. 172, 12/20/16 ).
The New York Court of Appeals, in a split ruling, said state law doesn’t give rightsholders in older recordings the right to collect royalties when their works are played on such services.
The lawyer for the Turtles, who are fighting court battles in various states over royalties for their 1960s hits, told Bloomberg BNA that he would continue fighting for public performance royalties in every state.
The New York outcome would seem to reduce a settlement of as much as $99 million reached by the Turtles and Sirius XM Radio Inc. earlier this month. The full amount was contingent on future courtroom successes. Sirius declined a request for comment from Bloomberg BNA.
Recordings made before Feb. 15, 1972, are not covered by federal copyright law. The owners of Turtles’ hits like “Happy Together” are arguing that they can demand payment when a service plays their songs under state law.
A federal trial court ruled that New York common law does provide such a right, but an appeals court passed the question to the state’s highest court.
Composers and songwriters have long held a public performance right and collect royalties when their works are played on traditional AM-FM radio or on newer digital platforms. Recording artists and others who hold rights in a particular recording of a composition only get royalties when their records are played on digital services—but that doesn’t apply to pre-1972 recordings.
Two of the original Turtles members—who now perform as Flo & Eddie—began bringing lawsuits against Sirius XM and Pandora Media Inc., arguing that state laws gave them a right to claim royalties based on their holding rights in their old records.
Proceedings are ongoing in California, Florida and New York. The California proceeding resulted in the settlement worth up to $99 million if Flo & Eddie won their appeals in New York and Florida. With the New York loss, they still have their base settlement of $25 million from Sirius XM.
“The fight rages on,” Flo & Eddie’s counsel, Henry Gradstein of Gradstein & Marzano PC, told Bloomberg BNA. “I have 49 other states to fight in.”
Other state courts might not see things the same way, Gradstein said, especially considering that two of the six New York high court judges dissented, saying they would have found a public performance right for sound recordings under state common law.
The court suggested that Flo & Eddie might have non-copyright-based causes of action, such as unfair competition. Gradstein also said that the ruling didn’t address whether there might be a claim for unauthorized ripping of compact discs to make files for a streaming service.
Judge Leslie E. Stein wrote the court’s opinion and was joined by Judges Eugene F. Pigott Jr., Eugene M. Fahey and Michael J. Garcia. Fahey also filed a separate concurring opinion. Judge Jenny Rivera filed a dissenting opinion joined by Judge Sheila Abdus-Salaam. Chief Judge Janet DiFiore did not take part in the court’s decision.
Lori Landew, a copyright lawyer with Fox Rothschild LLP, Philadelphia, said that the New York court seemed to lean heavily on the consideration that industry practice has not provided for paying royalties to artists and labels for publicly performing records.
“To the extent that anything needed to be remedied or addressed, the court took the view that it should happen on the federal level and not on the state level,” Landew said.
O’Melveny & Myers LLP represented Sirius XM. Gibson, Dunn & Crutcher LLP, Gradstein & Marzano P.C. and Goldberg Rimberg & Weg PLLC represented the Turtles.
To contact the reporter on this story: Anandashankar Mazumdar in Washington at AMazumdar@bna.com
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