Radio Giant, Streamers Avoid Royalties for Illinois Oldies

Access practice tools, as well as industry leading news, customizable alerts, dockets, and primary content, including a comprehensive collection of case law, dockets, and regulations. Leverage...

By Anandashankar Mazumdar

Radio giant iHeartMedia Inc., Sirius XM Radio Inc., and Pandora Media Inc., won a victory June 5 when a federal court ruled that they don’t need to pay owners of rights in oldies recordings for playing them over the radio or internet in Illinois ( Sheridan v. iHeartMedia, Inc. , 2017 BL 188042, N.D. Ill., No. 15-CV-09229, 6/5/17 ; Sheridan v. Sirius XM Radio, Inc., N.D. Ill., No. 15-9236, 6/5/17 ).

Records made after 1972 are covered by federal copyright law, and rightsowners are owed a royalty every time someone streams one over the internet. However, pre-1972 records are only covered by state law, and legal battles have sprung up across the country over whether individual states give public performance rights for streamed recordings.

The U.S. District Court for the Northern District of Illinois ruled that there is nothing under Illinois state law that gives rightsowners that kind of right—not under common law or the Uniform Deceptive Trade Practices Act, or under theories of conversion or unjust enrichment.

IHeartMedia owns 850 radio stations across the country, including seven in Chicago, most of which stream their broadcasts. In 2016, the company reported $6.3 billion in revenue. Satellite radio service Sirius XM Holdings Inc. reported $5 billion in revenue last year. Internet music streaming service Pandora’s annual revenue was $1.4 billion.

Under federal law, digital music services must pay royalties to recording artists or their record labels —and to composers or their publishing companies—for playing music. Traditional radio stations must pay composers or publishers but aren’t required to pay royalties to recording artists—no matter when a recording was made.

In this case, the plaintiffs sought payment under Illinois law from both radio stations and internet streaming services for playing their oldies recordings.

Doo-Wop Record Rights

Plaintiffs Arthur and Barbara Sheridan own rights in numerous 1950s and 1960s doo-wop records that are also known as master recording rights.

The ruling “failed to recognize the importance of protecting artists’ rights in their creative efforts as technology evolves,” the Sheridans’ counsel, John DeStefano of Hagens Berman Sobol Shapiro LLP, in Phoenix, told Bloomberg BNA in an email.

The Sheridans have also brought class action claims against iHeartMedia, Pandora, and Sirius XM in California and New Jersey. Those actions are on hold pending the outcome of the other lawsuits over pre-1972 recordings.

The highest profile litigation over pre-1972 master recording rights involves the founding members of the 1960s band the Turtles and hits such as “Happy Together.” They have lost court battles in New York but are fighting on in California and Florida.

New York’s highest court has ruled that its state laws don’t provide for the kind of rights that the Sheridans and the Turtles are seeking. In Florida, a federal district court also found no such rights, but the Florida Supreme Court is in the process of considering the question.

The California Supreme Court is also preparing to consider the question, after a federal district court in that state said that a pre-1972 master recording performance right does exist.

Judge John J. Tharp Jr. issued the court’s ruling. Hagens Berman Sobol Shapiro LLP and Abner & Fullerton represented the Sheridans.

Latham & Watkins LLP represented iHeartMedia, which didn’t respond immediately to a request for comment.

To contact the reporter on this story: Anandashankar Mazumdar in Washington at AMazumdar@bna.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bna.com

For More Information

Text is available at: http://src.bna.com/pxx

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Intellectual Property on Bloomberg Law