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Californian court told to consider impact of MMA on Flo & Eddie’s Pandora dispute over pre-1972 royalties

By Chris Cooke | Published on Monday 21 October 2019

While Eminem tests what America’s Music Modernization Act means for songwriters still annoyed about past non-payment of mechanical royalties by the streaming services, the Ninth Circuit appeals court has asked a lower court in California to consider what the same act means for any ongoing disputes involving unpaid digital royalties on pre-1972 recordings.

The MMA reformed US copyright law in a number of ways. Perhaps the biggest reforms related to the way the mechanical rights in songs are licensed Stateside. In theory those reforms were meant to bring to an end the long line of lawsuits being pursued against the on-demand streaming services over unpaid mechanical royalties. Although Eminem’s publisher then sued Spotify, claiming that the bit of the MMA stopping future lawsuits on past unpaid mechanicals was unconstitutional.

Another part of the MMA related to the use of recordings – rather than songs – by online and satellite radio services, including personalised radio platforms like Pandora.

Under US-wide federal copyright law AM/FM radio stations aren’t obliged to pay any royalties to artists and labels for the recordings they play, but satellite and online stations are. However, recordings released before 1972 are protected by state-level rather than federal copyright law, so digital services argued that that royalty obligation didn’t apply to pre-1972 tracks.

Various lawsuits were filed on this issue in various states, with artists and labels seeking to force the likes of satellite radio company Sirius XM and the aforementioned Pandora to pay royalties on pre-1972 as well as post-1972 recordings.

The most important of those cases were the ones pursued in the Californian courts against both Sirius and Pandora by Flo & Eddie, former members of 1960s band The Turtles. Because, at first instance, it was decided in the Californian courts that satellite and online radio services probably were obliged to pay royalties on older tracks under state law, even though said state laws didn’t specifically talk about digital services.

Pandora subsequently took the case to the Ninth Circuit appeals court. Judges there then bounced some questions upwards to the state’s Supreme Court. But while all that was ongoing the record industry successfully lobbied to have federal copyright law amended – as part of the MMA – to confirm that satellite and online radio definitely did have to pay royalties on pre-1972 as well as post-1972 sound recordings.

But while that new law removes any debate over the royalty obligations of services like Pandora moving forward, what about any royalties that were not paid in the past? The MMA does have some provisions to reduce the liabilities of digital services regarding past non-payment of royalties on older recordings, providing said services meet certain criteria. But questions remain as to quite if and how those criteria are met.

Which means questions specifically remain about the Flo & Eddie v Pandora case. Earlier this year California’s Supreme Court said it no longer needed to consider the questions previously raised because of the MMA, duly passing the matter back to the Ninth Circuit.

And now the Ninth Circuit has said that, when it comes to assessing whether Pandora still faces liabilities for past non-payment of royalties in the context of the MMA, well, that’s a matter for the district court that first considered the original lawsuit.

The appeals court said in a ruling last week: “Whether the MMA applies to and pre-empts Flo & Eddie’s claims, as Flo & Eddie note, cannot be answered on the record before us. The resolution of this issue depends on various unanswered factual questions”.

Running through some of those questions – and other issues raised by Pandora – the Ninth Circuit concluded: “Given the enactment of the MMA, the district court should address the above dispositive factual and legal issues in the first instance”.

Legal reps for Flo & Eddie welcomed the ruling, telling Law360 that it was a “great result” for their clients. It now remains to be seen what happens in what should be the very final chapter of the long running pre-1972 digital royalties debate in the US.