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Sirius wins in the final chapter of Flo & Eddie’s big battle for pre-1972 radio royalties

By | Published on Wednesday 25 August 2021

American satellite broadcaster Sirius XM has won one last legal skirmish over the good old pre-1972 technicality of American copyright law, depriving a class of artists led by Flo & Eddie an extra $5 million pay out.

This all related to the long-running debate over whether or not online and satellite radio services in the US were obliged to pay royalties to artists and labels when they play recordings released prior to 1972. That debate, in turn, centred on two quirks of American copyright law.

The first quirk is that, under US-wide federal copyright law, there is no general performing right for sound recordings, meaning AM/FM radio stations do not have to get licences from or pay any royalties to the record industry for the recordings they play.

However, online and satellite radio stations – like Sirius – do need to get such a licence, although they can rely on the compulsory licence administered by SoundExchange.

Quirk number two is that federal copyright law in the US only applies to recordings released after 1972. Recordings that pre-date that year get protection from state-level laws. Which meant that the federal rule that forced online and satellite radio services to get licences from the record industry arguably didn’t apply to pre-1972 music.

However, some labels and artists argued, maybe there was – in fact – an obligation for online and satellite services to license pre-1972 recordings under state-level laws.

Except, state-level laws didn’t specifically talk about online and satellite radio. Which means for labels and artists to be due royalties, there’d need to be the kind of general performing right for sound recordings at a state level that doesn’t exist at a federal level.

It was Flo & Eddie – both former members of the 1960s outfit The Turtles – who first went legal on this point, arguing in three states that there was, in fact, a performing right for recordings in state law. Even though the record industry had never previously sought to enforce any such right on pre-1972 tracks, with AM/FM radio stations always assuming that the federal principle that they weren’t obliged to pay any royalties to the American record industry applied at the state level too.

Flo & Eddie sued in Florida, New York and California. The Florida courts said there was no performing right for recordings under that state’s copyright laws. The New York courts first said there might be, and then said there wasn’t. But in California, at first instance, the courts ruled there was, in fact, a state-level performing right. Meaning the likes of Sirius did need to pay royalties when they played pre-1972 tracks, in that state at least.

In the midst of all that litigation, this whole debate shifted from the courts of Florida, New York and California to Washington DC, where it was proposed that the federal level obligation for online and satellite radio stations to license recordings be amended so that it explicitly covered all recordings still in copyright, not just those released since 1972. And that proposal then became law as part of the 2018 Music Modernization Act.

That change to federal law basically brought to an end most of the ongoing litigation on this issue – there were also lawsuits involving Pandora and the majors.

Except that Sirius had reached a settlement with the class led by Flo & Eddie in 2016. Under that settlement, the satellite broadcaster committed to pay $25 million in damages upfront, and an additional $5 million per lawsuit if Flo & Eddie prevailed on appeal in Florida, New York or California. The deal also included provisions for future royalties – the MMA still being two years away at this point – up to a total of settlement sum of $99 million.

Which meant that the Ninth Circuit appeals court’s opinion on the lower court ruling in California in Flo & Eddie’s favour still had relevance. Because – while the musicians ultimately lost on appeal in Florida and New York – a win on appeal in California would get them another $5 million in damages from Sirius.

However, on Monday the Ninth Circuit ruled that Californian law did not, in fact, provide a general performing right for recordings.

The appeal judges concluded that, although the wording of the relevant Californian law could technically be interpreted to provide a copyright owner in the state with a general performing right, that almost certainly was not the intent when said law was first written all the way back in 1872.

The state level rights, therefore, only referred to the rights to copy and distribute a work, not to control any performance of said work.

Obviously, none of that changes Sirius’s on-going royalty obligations, as a result of the Music Modernization Act. But it does save the broadcaster that $5 million in extra damages.

And it also means that AM/FM radio stations in California are off the hook – given that if there was a general performing right for sound recordings in Californian law, then arguably all broadcasters in the state would need licences from the record industry when playing pre-1972 music.

Legal reps for Sirius told Reuters that they were “gratified that this important issue has been finally and correctly resolved”. Meanwhile attorneys working for Flo & Eddie said that, while disappointed about the ruling, they were “glad class members received the benefits of the $25 million cash settlement and several years’ worth of royalty payments” while the appeal was pending.