To be Argued by:
DANIEL M. PETROCELLI
(Time Requested: 30 Minutes)
CTQ-2016-00001
Court of Appeals
of the
State of New York
FLO & EDDIE, INC., a California Corporation,
individually and on behalf of all others similarly situated,
Plaintiff-Respondent,
– against –
SIRIUS XM RADIO INC., a Delaware Corporation,
Defendant-Appellant,
DOES, 1 THROUGH 10,
Defendants.
––––––––––––––––––––––––––––––
ON APPEAL FROM THE QUESTION CERTIFIED BY THE UNITED STATES
COURT OF APPEALS FOR THE SECOND CIRCUIT IN DOCKET NO. 15-1164-CV
BRIEF FOR DEFENDANT-APPELLANT
JONATHAN D. HACKER (pro hac vice)
O’MELVENY & MYERS LLP
1625 Eye Street, NW
Washington, DC 20006
Tel.: (202) 383-5300
Fax: (202) 383-5414
DANIEL M. PETROCELLI (pro hac vice)
CASSANDRA L. SETO (pro hac vice)
O’MELVENY & MYERS LLP
1999 Avenue of the Stars, 8th Floor
Los Angeles, California 90067
Tel.: (310) 553-6700
Fax: (310) 246-6779
ANTON METLITSKY
O’MELVENY & MYERS LLP
Times Square Tower
Seven Times Square
New York, New York 10036
Tel.: (212) 326-2000
Fax: (212) 326-2061
Attorneys for Defendant-Appellant
Date Completed: July 5, 2016
RULE 500.1(f) CORPORATE DISCLOSURE STATEMENT
Appellant Sirius XM Radio Inc. (“Sirius XM”) is a corporation organized
under the laws of the State of Delaware. Sirius XM is a wholly owned subsidiary
of Sirius XM Holdings Inc., a publicly held corporation. Liberty Media
Corporation possesses, directly or indirectly, an ownership interest of 10 percent or
more in Sirius XM Holdings Inc.
In addition to Sirius XM, the following entities are subsidiaries of Sirius XM
Holdings Inc., as reflected in its most recent annual report filed with the Securities
and Exchange Commission: Satellite CD Radio LLC; Sirius XM Connected
Vehicles Services Inc.; Sirius XM Connected Vehicle Services Holdings Inc.;
SXM CVS Canada Inc.; XM Emall Inc.; XM 1500 Eckington LLC; XM
Investment LLC; XM Radio LLC. See Sirius XM Holdings Inc. (Form 10-K Ex.
21.1) (Feb. 2, 2016).
The following additional entities are subsidiaries of Liberty Media
Corporation, as reflected in its most recent annual report filed with the Securities
and Exchange Commission: Atlanta Braves, Inc.; Atlanta National League
Baseball Club, Inc.; Barefoot Acquisition, LLC; BDC Collateral, LLC;
BDC/Fuqua Retail, LLC; BDC Holdco, LLC; BDC Hotel I, LLC; BDC Office I,
LLC; BDC Parking I, LLC; BDC/PS Residential, LLC; BDC Residential I, LLC;
BDC Retail I, LLC; Braves Baseball Holdco, LLC; Braves Construction Company,
LLC; Braves Development Company, LLC; Braves Entertainment Company, LLC;
Braves Holdings, LLC; Braves Productions, Inc.; Braves Stadium Company, LLC;
Braves Stadium Parking Company, LLC; BRED Co., LLC; Circle 75 Master
Residential Association, Inc.; Georgia Ballpark Hotel Company, LLC; LBTW I,
LLC; LCAP Investments, LLC; LDIG 2, LLC; LDIG Cars, Inc.; LDIG Financing
LLC; Liberty Aero, LLC; Liberty AGI, LLC; Liberty Animal Planet, LLC; Liberty
Asset Management, LLC; Liberty Associated Holdings LLC; Liberty Associated,
Inc.; Liberty ATCL, Inc.; Liberty BC Capital, LLC; Liberty Centennial Holdings,
Inc.; Liberty Challenger, LLC; Liberty Citation, Inc.; Liberty CM, Inc.; Liberty
Crown, Inc.; Liberty CTL Marginco, LLC; Liberty Denver Arena LLC; Liberty
Fun Assets, LLC; Liberty GI II, Inc.; Liberty GI, Inc.; Liberty GIC, Inc.; Liberty
IATV Holdings, Inc.; Liberty IATV, Inc.; Liberty IB2, LLC; Liberty Israel
Venture Fund, LLC; Liberty Java, Inc.; Liberty KV, LLC; Liberty LYV Marginco,
LLC; Liberty MCNS Holdings, Inc.; Liberty MLP, Inc.; Liberty NC, LLC; Liberty
NEA, Inc.; Liberty PL2, Inc.; Liberty PL3, LLC; Liberty Programming Company
LLC; Liberty Property Holdings, Inc.; Liberty Radio, LLC; Liberty Radio, 2, LLC;
Liberty Satellite Radio, Inc.; Liberty SGH, LLC; Liberty SIRI Marginco, LLC;
Liberty Sling, Inc.; Liberty Sports Interactive, Inc.; Liberty Telematics 2, LLC;
Liberty Telematics , LLC; Liberty TM, Inc.; Liberty Tower, Inc.; Liberty TWC
Marginco, LLC; Liberty TWX Marginco, LLC; Liberty VIA Marginco, LLC;
Liberty Virtual Pets, LLC; Liberty WDIG, Inc.; LMC BET, LLC; LMC Brazil,
LLC; LMC Denver Arena, Inc.; LMC Events, LLC; LMC IATV Events, LLC;
LMC Israel Investment, LLC; LMC VIV LOC, Inc.; LSAT Astro LLC; LSR
Foreign Holdings 2, LLC; LSR Foreign Holdings, LLC; LTWX I, LLC; LTWX V,
Inc.; The Battery Atlanta Association, Inc. (fka Ballpark Village Association, Inc.)
(fka Circle 75 Maintenance Association, Inc.); The Stadium Club, Inc.; TSAT
Holding 2, Inc. See Liberty Media Corporation (10-K Ex. 21) (Feb. 26, 2016).
TABLE OF CONTENTS
Page
-i-
PRELIMINARY STATEMENT .............................................................................. 1
CERTIFIED QUESTION ACCEPTED FOR REVIEW .......................................... 5
STATEMENT OF JURISDICTION......................................................................... 6
STATEMENT OF THE CASE ................................................................................. 6
A. Background Of Common Law Copyright ............................................ 7
B. History Of Common Law And Statutory Copyright Protection
For Sound Recordings ........................................................................ 10
1. Anti-Piracy Protection Against Unauthorized Duplication
Of Sound Recordings ............................................................... 11
2. Copyright Protection For Performance Of Sound
Recordings ............................................................................... 15
C. Decisions Below ................................................................................. 24
ARGUMENT .......................................................................................................... 26
I. NEW YORK COMMON LAW HAS NEVER GRANTED
RECORDING OWNERS A RIGHT TO CONTROL THE
PERFORMANCE OF RECORDINGS AFTER THEY ARE SOLD .......... 28
A. No New York Court Has Ever Recognized A Post-Sale
“Performance” Right For Sound Recordings, And Every
Relevant Authority And Stakeholder Has Recognized No Such
Right Exists ........................................................................................ 28
B. The Common Law Anti-Piracy Right Does Not Support The
Existence Of A “Performance” Right ................................................ 30
II. ONLY THE LEGISLATURE CAN RECOGNIZE A NEW RIGHT
TO CONTROL PUBLIC PERFORMANCES OF SOUND
RECORDINGS ............................................................................................. 40
CONCLUSION ....................................................................................................... 47
TABLE OF AUTHORITIES
Page(s)
-ii-
CASES
Brandon Films, Inc. v. Arjay Enters., Inc.,
230 N.Y.S.2d 56 (Sup. Ct. 1962) ........................................................................ 35
Campaign for Fiscal Equity, Inc. v. New York,
8 N.Y.3d 14 (2006) ............................................................................................. 40
Capitol Records, Inc. v. Mercury Records Corp.,
221 F.2d 657 (2d Cir. 1955) ........................................................................ 13, 37
Capitol Records, Inc. v. Naxos of Am., Inc.,
4 N.Y.3d 540 (2005) ................................................................................... passim
Caronia v. Phillip Morris USA, Inc.,
22 N.Y.3d 439 (2013) ......................................................................................... 42
Casanova Entm’t Grp., Inc. v. City of New Rochelle,
375 F. Supp. 2d 321 (S.D.N.Y. 2005) ................................................................ 31
Chamberlain v. Feldman,
300 N.Y. 135 (1949) ................................................................................ 5, 40, 42
Coates v. Mayor of New York,
7 Cow. 585 (N.Y. Sup. Ct. 1827) ....................................................................... 31
Dowling v. U.S.,
473 U.S. 207 (1985) ............................................................................................ 31
Eldred v. Ashcroft,
537 U.S. 186 (2003) .............................................................................................. 9
EMI Records Ltd. v. Premise Media Corp. L.P.,
2008 WL 5027245 (N.Y. Sup. Ct. Aug. 8, 2008) ................................................. 9
Estate of Hemingway v. Random House, Inc.,
279 N.Y.S.2d 51 (Sup. Ct. 1967) .......................................................................... 9
Flo & Eddie, Inc. v. Sirius XM Radio Inc.,
2015 WL 3852692 (S.D. Fla. June 22, 2015) ..................................................... 25
TABLE OF AUTHORITIES
(continued)
Flo & Eddie, Inc. v. Sirius XM Radio Inc. ,
Page(s)
201 6 WL 3546433 (11th Cir. June 29, 201 6) .................. ............................. ...... 25
French v. Maguire,
55 How. Pr. 471 (N.Y. Sup. Ct. 1878) ............................ ............................... ..... 35
Gieseking v. Urania Records, Inc.,
17 Misc. 2d 1034 (N.Y. Sup. Ct. 1956) ......................... ............................... ...... 13
Golan v. Holder,
132 S. Ct. 873 (2012) ... ............................. ............................ ............................. ... 9
Halstead v. Grinnan,
152 U.S. 41 2 (1894) ......... .......................... .......................... ........................... .... 29
Houston Realty Corp. v. Castro,
404 N.Y.S.2d 796 (Civ. Ct. 1978) ........ ............................ ............................. .... .42
In re NY State Inspection v. Cuomo,
64 N.Y.2d 233 (1984) ........ ........................ ......................... ........................ ....... .40
Jewelers ' Mercantile Agency v. Jewelers ' Weekly Publ 'g Co. ,
155 N.Y. 241 (1898) .......... ............................ ............................. ........... 10, 41 , 42
Metropolitan Opera Ass 'n v. Wagner-Nichols Recorder Corp. ,
101 N.Y.S.2d 483 (N.Y. Sup. Ct. 1950) ......................... .............................. ...... 12
Norcon Power Partners, L.P. v. Niagara Mohawk Power Corp. ,
92 N.Y.2d 458 (1998) .......... .......................... .......................... .................... 40, 42
Palmer v. De Witt,
47 N.Y. 532 (1872) ............. ........................... .......................... .................... 31, 33
RCA Mfg. Co. v. Whiteman,
114 F.2d 86 (2d Cir. 1940) .. ............................ ............................. ..... 2, 20, 28, 35
Roberts v. Petrova,
213 N.Y.S. 434 (Sup. Ct. 1925) .................. ........................ ......................... ....... 36
-111-
TABLE OF AUTHORITIES
(continued)
Roy Export Co. v. Columbia Broad. Sys. , Inc. ,
Page(s)
672 F.2d 1095 (2d Cir. 1982) ............... ............................ ............................. ..... 36
Sony Corp. of Am. v. Universal City Studios, Inc. ,
464 U.S. 41 7 (1984) ......... ........................... .......................... .......................... .... 31
Victory v. Baker,
67 N .Y. 366 (1876) ........... .......................... .......................... ........................... ... 30
Waring v. WDAS Broad. Station, Inc. ,
327 Pa. 433 (1 937) ............. ........................ ......................... ........................ ........ 20
Wheaton v. Peters,
33 U.S. 591 (1834) .............. .......................... ........................... ......................... 8, 9
White-Smith Music Publ 'g Co. v Apollo Co.,
209 U.S. 1 (1908) ............ .......................... .......................... ........................... ..... 11
STATUTES
17 U.S. C. § 102 ...................... .......................... ........................... .......................... ..... 7
17 U.S.C. § 106 ...................... .......................... ........................... .......................... ... 14
17 U.S.C. § 114 .......................... .......................... .......................... ................... 14, 19
17 U.S.C. § 301 .......................... .......................... .......................... ..................... 7, 14
22 N.Y.C.R.R. § 500.27 ............ .......................... .......................... ........................... .. 6
28 U.S.C. § 1292 .................. .......................... .......................... ........................... ..... 25
N .Y. ARTS & CULT. A FF. LAW§ 31.03 (Consol. 2016) ............ ........................... .... 36
N .Y. PENAL LAW§ 275 (Consol. 201 6) ..... ............................. ............................ ..... 39
Pub. L. No. 104-39 § 2(3), 109 Stat. 336 (1995) ................... ............................. ..... 19
Pub. L. No. 92-140, 85 Stat. 39 1 (1 971) .......... ........................... .......................... ... 14
-IV-
TABLE OF AUTHORITIES
(continued)
CONSTITUTIONAL PROVISIONS
Page(s)
U.S. Const. Art. I § 8 cl. 8 ..... ............................ ............................ ............................. 9
LEGISLATIVE IDSTORY
120 CONG. REc. 30,405 (1974) .......................... ........................... .................... 23, 28
141 CONG. REc. S945-02,
(Dailyed. Jan.1 3, 1995) ..................... ............................. ............................ ....... 44
Copyright Law Revision: Hearings Before Subcomm. No.3 of the H.
Comm. on the Judiciary, Part 3,
89th Cong. 1863 (Comm. Print 1965) ........................... ............................... ...... 23
Copyright Law Revision: Hearings Before the Subcomm. on Patents,
Trademarks & Copyrights of the Sen. Comm. on the Judiciary,
Part 2, 90th Cong. 496 (1967) ............... .......................... ........................... ........ 22
Digital Performance Right in Sound Recordings Act of 1995:
Hearings Before the Subcomm. on Courts & Intel!. Prop. of the H
Comm. on the Judiciary, 1 04th Cong. 31 (1995) ............ ............................. ...... 23
H.R. REP. 94-1476, reprinted in 1976 U.S.C.C.A.N. 5659 (1 976) .................. 14, 18
H.R. REP. No. 104-274 (1995) ........................ .......................... ........................ 43, 44
H.R. REP. No. 60-2222 (1909) ........................ .......................... ........................... .... 16
Performance Rights in Sound Recordings: Subcomm. on Courts, Civ.
Liberties, & the Admin. of Justice of the H. Comm. on the
Judiciary, 95th Cong. 29 (Comm. Print 1978) .................. .................... 16, 17, 19
Revision of Copyright Laws: Hearings Before the H. Comm. on
Patents, 74th Cong. 639 (Comm. Print 1936) ................... .................... 15, 22, 38
S. REP. No . 104-128 (1995) ... .......................... .......................... ........................... ... .44
-v-
TABLE OF AUTHORITIES
(continued)
OTHER AUTHORITIES
1 MELVILLE B. NIMMER& DAVID NIMMER,
Page(s)
NIMMER ON COPYRIGHT (rev. ed. 2016) ............................ .......................... passim
2 MELVILLE B. NIMMER& DAVID NIMMER,
NIMMERONCOPYRIGHT(rev. ed. 2016) .............................. ................... 34, 35, 36
COPYRIGHT OFFICE, FEDERAL COPYRIGHT PROTECTION FOR PRE-1972
SOUND RECORDINGS: A REPORT OF THE REGISTER OF COPYRIGHTS
(201 1) ... .......................... .......................... ........................... .......................... ...... 24
Douglas Baird,
Common Law Intellectual Property & the Legacy of Int'l News
Serv. v. Assoc. Press, 50 U. CHI. L. REv. 411 (1983) ........... ......................... ..... 21
Gary Pulsinelli,
Happy Together? The Uneasy Coexistence of Federal and State
Protection for Sound Recordings, 82 TENN. L. REv. 167 (2014) ................. ...... 24
Joseph Singer, PROPERTY § 1.1.2 (4th ed. 2014) .................... ............................. .... 31
June Besek & Eva Subotnik,
Constitutional Obstacles? Reconsidering Copyright Protection for
Pre-1972 Sound Recordings, 37 COLUM. J.L. & ARTS 327 (2014) ........... ......... 22
Lauren Kilgore,
Guerrilla Radio: Has the Time Come for a Full Performance Right
in Sound Recordings?, 12 VAND. J. ENT. & TECH. L. 549 (2010) .............. ........ 22
Music Licensing Study: Second Request for Comments,
79 Fed. Reg. 42,834 (July 23, 2014) .............. .......................... .................... 24, 46
Ralph Brown, Symposium,
The Semiconductor Chip Protection Act of 1984 and its Lessons:
Eligibility for Copyright Protection: A Search for Principled
Standards, 70 Minn. L. Rev. 579 (1986) ........................ .............................. ...... 21
-VI-
TABLE OF AUTHORITIES
(continued)
Page(s)
-vii-
Richard Posell,
‘60s on 6’ May Be in Sirius Trouble, Daily Journal (Apr. 29, 2015) ................. 22
Richard Posner,
ECONOMIC ANALYSIS OF LAW § 3.6 (8th ed. 2011) ............................................ 31
Steven Seidenberg,
Pay to Play: State Copyright Law Now Gives Musicians
Performance Rights, A.B.A.J. (Apr. 1, 2015) .................................................... 22
Steven Seidenberg,
US Perspectives: Courts Recognise New Performers’ Rights,
Intell. Prop. Watch (Nov. 24, 2014), http://www.ip-watch.org ................... 21, 28
SUPP. REGISTER’S REP. ON THE GENERAL REV. OF U.S. COPYRIGHT
LAW 38 (Comm. Print 1965) ....................................................................... 18, 39
Tyler Ochoa,
A Seismic Ruling on Pre-1972 Sound Recordings & State
Copyright Law, Technology & Marketing Blog (Oct. 1, 2014),
http://blog.ericgoldman.org ................................................................................ 21
U.S. Copyright Office,
Copyright & the Music Marketplace 53-55 (2015) ............................................ 46
William Landes & Richard Posner,
Trademark Law: An Economic Perspective, 30 J.L. & ECON. 265
(1987) .................................................................................................................. 31
PRELIMINARY STATEMENT
Plaintiff Flo & Eddie, Inc. is a corporation that claims to own recordings of
songs by a musical group known as The Turtles. Defendant Sirius XM is a
satellite radio broadcaster that—like AM/FM radio broadcasters, club DJs, sports
arenas, and others for many decades—has publicly performed (i.e., played) tens of
thousands of legally-acquired recordings, including recordings that plaintiff claims
to own. Sirius XM, like others who perform music for the public, has always paid
royalties to the owners of musical compositions, because the federal Copyright Act
grants composers the right to receive compensation for public performances of
their songs. But Sirius XM, like others who perform music for the public, has
never paid royalties to the purported owners of sound recordings fixed prior to
February 15, 1972 (“pre-1972 recordings”), because no law—federal or state—
gives those owners the right to control or demand payment for public performances
of their recordings. Recording owners receive compensation mainly from the sale
of their records to the public. But since the dawn of the recording industry, pre-
1972 recordings have been freely and widely performed without restriction.
Until now. The United States District Court’s decision in this case is the
first in history to hold that under New York common law, record companies and
other owners of pre-1972 recordings have an unfettered, unconditional right to
control all public performances of those recordings after they are sold—i.e., when
2
and where they are played, by whom, and for how much. In the stroke of a pen,
the court’s ruling converted thousands of broadcasters, DJs, and other entities—
everyone who plays in public any record fixed before February 15, 1972—into
serial infringers, miring the broadcasting industry in chaos and uncertainty.
The district court’s ruling fundamentally misunderstands the nature of
common law copyright generally, and this State’s common law in particular. New
York common law has never recognized the right created by the district court.
Indeed, since the Second Circuit in 1940 rejected a suit by a record company and
orchestra leader to bar free broadcasts of their recordings over the radio, see RCA
Manufacturing Co. v. Whiteman, 114 F.2d 86 (2d Cir. 1940), every relevant
authority—including commentators, federal officials, and Congress itself—has
recognized that sound recording owners have no right under the common law to
control the performance of records they sell to the public. So too have the relevant
stakeholders. For decades, radio broadcasters have played pre-1972 recordings
every day without paying royalties to record companies. And for decades, record
companies themselves begged Congress for a special new federal statutory right to
control whether and how their recordings are performed after sale—precisely
because they lacked any such right under state common law. There is no
reasonable dispute, in short, that New York common law does not grant them a
public performance right, and never has.
3
Plaintiff, of course, cites nothing recognizing such a right, but instead relies
on a very different right that has been long recognized, viz., the common law “anti-
piracy” right to prevent record purchasers from copying and distributing records
after their sale. See Capitol Records, Inc. v. Naxos of Am., Inc., 4 N.Y.3d 540
(2005). That right to control post-sale copying of records, however, has nothing to
do with the asserted right to control post-sale performances of records. Just the
opposite. The same principles that this Court in Naxos held to justify the anti-
piracy right strongly militate against granting recording owners the right to control
whether and how their records are played after they are sold:
• The anti-piracy right exists to enforce the historical core of common law
copyright, which protects the owner’s right to prevent others from
copying his work. By contrast, the “performance” right urged by plaintiff
would not restrict copying, but would prevent a record purchaser from
using the record for its only intended purpose, i.e., to play music.
• The anti-piracy right is an exception to the traditional American common
law rule that an author’s sale of his work relinquishes his copyright—an
exception justified on the ground that the purpose of a record sale is to
allow the records to be played, not copied and resold. But precisely
because the purpose of a record sale is to allow the record to be played, a
public sale does divest the seller’s interest in controlling its performance.
• Finally, the anti-piracy right recognizes that no relevant stakeholder has a
legitimate interest in unauthorized post-sale duplication and distribution
of sound recordings. By contrast, many stakeholders—including artists,
broadcasters, and consumers—have strong legitimate interests in the
unrestricted public performance of lawfully acquired recordings.
The third point, in particular, is reflected in the history of federal copyright
protection for sound recording “performances.” The federal Copyright Act
4
currently governs rights in post-1972 recordings—Congress left rights in pre-1972
recordings to state law. For nearly a century, Congress repeatedly rejected record
companies’ requests to grant them a federal right to control post-sale performances
of their records, because doing so would harm composers (by reducing
performances of their songs and thus their royalties), broadcasters (by increasing
costs), and the public (by decreasing access to music).
Congress included a federal anti-piracy right for sound recordings in 1971
without adding a performance right, and when Congress revamped the federal
Copyright Act in 1976, it retained the anti-piracy right but concluded that the
question whether to recognize a performance right was too complex and required
further study by the Register of Copyrights. The Register responded two years
later with a nearly 1,000-page legal, economic, policy, and historical analysis,
concluding that Congress should adopt a limited performance right, but Congress
did not enact such a right until 1995, and even then restricted it to certain digital
performances of post-1972 recordings. Moreover, Congress balanced that limited
right with the interests of other stakeholders by exempting certain broadcasters
(AM/FM radio) and establishing a compulsory licensing scheme and rate-setting
process to ensure that record companies could not exert unilateral control over the
public performance of lawfully obtained post-1972 recordings. By contrast, a
common law right in pre-1972 recordings would necessarily be categorical, and
5
could not include any of the policy-based, interest-balancing limitations Congress
carefully built into the statutory right for post-1972 recordings.
This Court has long recognized that where creating a new right would
dramatically alter the common law and profoundly affect the interests of
competing stakeholders, the creation of that right should be a matter of legislative
judgment and discretion, not judicial will. See, e.g., Chamberlain v. Feldman, 300
N.Y. 135, 139-40 (1949). That rule applies with full force here. The district court
itself recognized that its “unprecedented” ruling would “upset . . . settled
expectations,” have “significant economic consequences” that could “upend the
analog and digital industries,” and create huge “administrative difficulties in the
imposition and collection of royalties,” which would ultimately increase consumer
costs, shut down many broadcasters, and decrease access to pre-1972 recordings.
A-1689, 1704-05. Only a legislature can balance the many competing interests and
address the difficult regulatory issues and policy problems inherent in creating a
right to control performances of pre-1972 recordings.
For these reasons, which are elaborated in this brief, the certified question
should be answered in the negative.
CERTIFIED QUESTION ACCEPTED FOR REVIEW
Question: The United States Court of Appeals for the Second Circuit
certified, A-1728, and this Court accepted, A-1740, the following certified
6
question: “Is there a right of public performance for creators of sound recordings
under New York law and, if so, what is the nature and scope of that right?”
Short Answer: No New York court has ever recognized, and there is no
basis for now recognizing, a common law right of a recording owner who sells the
recording to the public to prevent others from “performing”—i.e., playing—it.
STATEMENT OF JURISDICTION
This Court has jurisdiction under 22 N.Y.C.R.R. § 500.27.
STATEMENT OF THE CASE
As with all sound recordings since the inception of the music and broadcast
industries, the pre-1972 recordings plaintiff claims to own have been freely played
on the radio without any need for consent or demand for compensation from the
recording owners (as opposed to authors/composers). A-1011-12 ¶¶ 46-49; A-
1018 ¶ 69; A-84-85; A-99. In 2013, plaintiff filed lawsuits in California, New
York, and Florida claiming, for the first time, that it has an absolute right to control
all performances of its recordings by anybody, anywhere. In this action, plaintiff
alleged (as relevant here) that Sirius XM violated New York common law by
playing—i.e., broadcasting on its satellite and internet radio services—pre-1972
recordings owned by plaintiff. A-23 ¶ 17.
This suit was brought under New York common law, rather than federal
copyright law, because it involves sound recordings—i.e., the fixation of a
7
particular performance of a song—fixed before February 15, 1972. Unlike musical
compositions (i.e., the notes and lyrics written by a song’s composer), which are
protected by the federal Copyright Act, 17 U.S.C. § 102(a)(2), sound recordings
are governed by a hybrid copyright regime. Sound recordings fixed on or after
February 15, 1972 are governed by the Copyright Act. Id. § 102(a)(7). Sound
recordings fixed before that date—like the recordings at issue here—are currently
governed by state law. Id. § 301(c); see Naxos, 4 N.Y.3d at 555-56.1
New York has, since at least the middle of the last century, recognized that
the owner of a sound recording who sells the recording to the public has a common
law copyright to prevent its unauthorized duplication, i.e., a right against record
piracy. See Naxos, 4 N.Y.3d at 554-55. The question here, however, is whether
New York common law also affords the owner of a sound recording a right to
prevent the performance—or playing—of the recording. Answering that question
requires understanding the history of copyright protection for sound recordings,
both under the common law and the federal Copyright Act.
A. Background Of Common Law Copyright
Common law copyright, as it emerged in England, was originally understood
to give the author an “exclusive right to reproduce works,” a right that English
1 State common law protection for pre-1972 recordings extends through
February 2067, at which point any state law rights will be preempted by the
Copyright Act. 17 U.S.C. § 301(c); Naxos, 4 N.Y.3d at 560.
8
courts eventually “extended beyond first publication” of a work to give the author
a right to control its copying “into perpetuity.” Naxos, 4 N.Y.3d at 546-49.
The early American common law of copyright rejected the extension of the
author’s property interest beyond first publication. In the seminal case of Wheaton
v. Peters, 33 U.S. 591 (1834), the official reporter of U.S. Supreme Court decisions
sought common law copyright protection to prevent his successor from “copying
and republishing” the content of his already published reporter volumes. Naxos, 4
N.Y.3d at 551. The Supreme Court rejected his claim, applying Pennsylvania
common law and holding that while an author has a common law property interest
in an unpublished manuscript that can be invoked to prevent its unauthorized
publication, the common law does not grant an author “a perpetual and exclusive
property in the future publication of the work, after the author shall have published
it to the world.” Wheaton, 33 U.S. at 657. According to the Wheaton majority,
only a statute, and not the common law, could grant the author any property
interest in his work after its publication. Id.
A dissenting opinion by Justice Thompson took a different view: that the
common law does confer on the author property rights that may persist after
publication, depending on “[t]he nature of the property, and the general purposes
for which it is published and sold.” Id. at 674 (Thompson, J., dissenting). Because
the “usual and common” purpose for which a book is sold is solely “for the
9
instruction, information or entertainment to be derived from it, and not for
republication of the work,” the Wheaton dissent concluded that a book’s sale
generally does not relinquish the author’s property interest in its republication after
sale. Id. at 674-75 (the “purchaser of the book has a right to all the benefit
resulting from the information or amusement he can derive from it . . . [b]ut this is
a very different use . . . from the taking and publishing the very language and
sentiment of the author”).
The competing opinions in Wheaton reflect not only a formal disagreement
over the substance of the common law, but also a practical dispute over how to
balance the competing interests involved in recognizing a common law copyright.
Unlike statutory copyright, which must be limited in duration, U.S. Const. Art. I
§ 8 cl. 8, and can be limited in scope based on a balancing of competing
stakeholder interests, common law copyright is necessarily perpetual and absolute,
see Eldred v. Ashcroft, 537 U.S. 186, 230 (2003); 1 MELVILLE B. NIMMER &
DAVID NIMMER, NIMMER ON COPYRIGHT (“Nimmer I”) § 4.04 (rev. ed. 2016),
subject only to traditional, quasi-constitutional exceptions such as fair use.2 Courts
2 The fair use defense “serve[s] as built-in First Amendment
accommodation[]”—meaning that it applies to both state and federal copyrights.
Golan v. Holder, 132 S. Ct. 873, 876 (2012). New York courts have long applied
the fair use defense to common law copyright claims. See, e.g., EMI Records Ltd.
v. Premise Media Corp. L.P., 2008 WL 5027245 (N.Y. Sup. Ct. Aug. 8, 2008)
(“fair use exists at common law”); Estate of Hemingway v. Random House, Inc.,
10
accordingly have recognized that any common law copyright must be narrow in
scope to achieve a fair balance between “the interest of authors in the fruits of their
labor,” on the one hand, and “the interest of the public in ultimately claiming free
access to the materials essential to the development of society,” on the other.
Nimmer I, supra, § 4.04. The Wheaton majority struck this balance by holding
that upon “publication,” the common law copyright was terminated, “and the
author was required to look to the federal [copyright] statute for the limited form of
monopoly there available.” Id. The dissent suggested a different balance,
reflecting the view that even after publication and sale of a book, the public lacks
any legitimate interest in the unauthorized copying and sale of the author’s work.
B. History Of Common Law And Statutory Copyright Protection
For Sound Recordings
The Wheaton majority rule that publication divests all common law rights
became the law of New York for literary works, which, once published, were
protected solely by the federal copyright statute. Naxos, 4 N.Y.3d at 552 (citing
Jewelers’ Mercantile Agency v. Jewelers’ Weekly Publ’g Co., 155 N.Y. 241, 247
(1898)). But as for sound recordings not covered by the federal Copyright Act—
i.e., pre-1972 recordings—this Court essentially adopted the Wheaton dissent’s
rule, holding that even after a recording is sold, the owner retains a common law
279 N.Y.S.2d 51, 57 (Sup. Ct. 1967) (noting that federal and state law concerning
fair use “are in accord”).
11
right to prevent its unauthorized duplication and distribution. Understanding that
post-sale anti-piracy right is crucial to understanding the very different post-sale
“performance” right that plaintiff claims here.
1. Anti-Piracy Protection Against Unauthorized Duplication Of Sound
Recordings
a. “With the dawn of the 20th century, courts throughout the country were
confronted with issues regarding the application of copyright statutes, which were
created with sole reference to the written word, to new forms of communication”
in general, and music recordings in particular. Naxos, 4 N.Y.3d at 552. The first
major case was White-Smith Music Publ’g Co. v Apollo Co., 209 U.S. 1 (1908), in
which the Supreme Court held that perforated music rolls used in player pianos
were not subject to the federal copyright statute because they could not be seen or
read, id. at 17-18.
Congress enacted the Copyright Act of 1909 the next year, but it did not
include any protection for sound recordings, apparently in the belief that under
White-Smith, sound recordings could not be “published,” and thus were not subject
to federal copyright protection. Naxos, 4 N.Y.3d at 552. But the 1909 Act
preserved states’ ability to protect “unpublished” works under the common law.
Id. at 553. Thus, “although sound recordings were not protected under federal law,
there was nothing to prevent the states from guaranteeing copyright protection
under common law.” Id.
12
b. Pursuant to that authority, New York courts have recognized only one
common law property interest in sound recordings that survives their sale: the
right to prevent unauthorized duplication and distribution. This “anti-piracy” right
rests essentially on the Wheaton dissent’s theory that a common law property
interest can survive the public sale of a work depending on its nature and purpose.
Because a recording is not sold for the purpose of copying and re-selling it, the sale
does not relinquish the owner’s right to prevent its duplication and distribution.
The first major New York anti-piracy case was Metropolitan Opera Ass’n v.
Wagner-Nichols Recorder Corp., 101 N.Y.S.2d 483 (N.Y. Sup. Ct. 1950). The
“plaintiff’s operatic performances had been broadcast on radio and records of the
performances were sold to the public,” and the “defendant copied those
performances and created its own records for sale.” Naxos, 4 N.Y.3d at 554. The
plaintiff, invoking common law copyright, sought to “restrain the defendants from
recording, advertising, selling or distributing” these recordings. Metro. Opera, 101
N.Y.S.2d at 789. The court recognized and enforced the plaintiff’s claimed
copyright, because the plaintiff had granted only “limited” rights to another record
company to record the performance, id., and thus “show[ed] ‘clearly no intent to
abandon but, on the contrary, an attempt to retain effective control over the . . .
recording of its performances.’” Naxos, 4 N.Y.3d at 554 (quoting Metro. Opera,
101 N.Y.S.2d at 799).
13
While Metropolitan Opera’s anti-piracy ruling rested on the specific
“limited” grant of rights involved in that case, the Second Circuit interpreted New
York law more broadly five years later to include a general common law copyright
against the post-sale duplication and distribution of sound recordings. Capitol
Records, Inc. v. Mercury Records Corp., 221 F.2d 657 (2d Cir. 1955). Echoing the
Wheaton dissent’s view that post-sale property interests depend on the property’s
intended purpose, the Second Circuit explained that because recordings are not
intended to be copied and resold, the sale “does not constitute a dedication of the
right to copy and sell the records.” Id. at 663; see Gieseking v. Urania Records,
Inc., 17 Misc. 2d 1034, 1035 (N.Y. Sup. Ct. 1956) (record sale “does not . . .
dedicate the right to copy or sell the record,” because a “performer has a property
right in his performance that it shall not be used for a purpose not intended”).
This Court in Naxos ratified the foregoing line of cases as establishing “the
appropriate governing principle.” 4 N.Y.3d at 554. Under that principle, the sale
of a sound recording does not authorize the purchaser or others to use it for the
unintended purpose of copying it and reselling the copies. Id.
c. Despite the common law anti-piracy right, by the 1970s music piracy had
become “widespread” because of “the technological ease of reproducing existing
recordings for resale without securing authorization.” Id. at 555. Numerous states,
including New York, “adopt[ed] criminal statutes prohibiting such piracy,” id., and
14
in 1971, Congress enacted a federal anti-piracy law as well. The federal law
created “a limited copyright in sound recordings for the purpose of protecting
against unauthorized duplication and piracy of sound recording[s]” fixed after
February 15, 1972 (the Act’s effective date). 1971 Sound Recording Act, Pub. L.
No. 92-140, 85 Stat. 391 (1971) (A-248). Congress reaffirmed this anti-piracy
right when it revamped the Copyright Act in 1976. 17 U.S.C. §§ 106, 114.
The 1976 Act included a sweeping preemption provision, id. § 301(a),
intended to “preempt and abolish any rights under the common law or statutes of a
State that are equivalent to copyright and that extend to works coming within the
scope of the Federal copyright law.” H.R. REP. 94-1476, 130, reprinted in 1976
U.S.C.C.A.N. 5659, 5746 (1976). But Congress expressly excluded pre-1972
recordings from the scope of this provision, concluding that those recordings
would be governed by state law anti-piracy protections until 2047 (later extended
to 2067). Id. § 301(c); Naxos, 4 N.Y.3d at 557-58. Congress chose that course
because it “recognize[d] that, under recent court decisions, pre-1972 recordings are
protected by State statute or common law,” and without a specific carveout for
such sound recordings, the Act’s preemption provision “could be read as
abrogating the anti-piracy laws now existing in 29 states relating to pre-February
15, 1972” recordings without any federal replacement. H.R. REP. 94-1476, 133,
reprinted in 1976 U.S.C.C.A.N. 5659, 5749 (1976). Congress therefore decided
15
that “existing state common-law copyright protection for pre-1972 recordings
would not be preempted by the new federal statute until February 15, 2047.”
Naxos, 4 N.Y.3d at 556; see id. at 558 (recognizing that federal preemption date
for pre-1972 recordings was later extended until 2067).
2. Copyright Protection For Performance Of Sound Recordings
The question in this case is not whether New York common law restricts the
unauthorized post-sale duplication and distribution of sound recordings. It does.
The question is whether New York law should be revised and extended to also
restrict unauthorized post-sale performances of sound recordings. These questions
plainly are different: while a sound recording is not sold for the purpose of being
copied and resold, it is meant to be performed. Record companies themselves have
recognized for many decades the distinction between pirating a record and playing
it: “the duplication of a phonograph record and the selling of that record is an act
of unfair competition,” but “it would be going a long way for any court to say …
that the playing of a record over the air, the mere use of a record in that manner, is
an act of unfair competition.” Revision of Copyright Laws: Hearings Before the H.
Comm. on Patents, 74th Cong. 639 (Comm. Print 1936) (representative of
Brunswick Record Corp. and Columbia Phonograph Co.).
Given the obvious distinction between pirating a record and performing it,
the history of judicial and legislative efforts to restrict post-sale performances bears
16
little resemblance to the legal restriction of post-sale piracy. As discussed above,
anti-piracy rights were recognized early and often by courts, and then by state
legislatures and Congress when piracy spread despite common-law restrictions.
No comparable prohibition against post-sale performance has ever been recognized
by any court, legislature, or Congress. To the contrary, radio stations, taverns, DJs,
and many others have been playing records without payment to recording owners
for nearly a century, and courts, commentators, Congress, and record executives
themselves have repeatedly recognized the absence of any common-law protection
against those performances. When Congress in 1995 finally did create such
protection for post-1972 recordings, the protection was sharply limited and
carefully balanced—a far cry from the absolute property right plaintiff seeks here.
a. From the time sound recordings were invented in the late 1800s until
1971, Congress declined to recognize any rights in sound recordings at all,
expressly rejecting proposals by the recording industry to extend copyright
protection to sound recordings in 1909, 1925, 1926, 1930, 1932, 1936, 1937, 1939,
1940, 1942, 1943, 1945, 1947, and 1951. See H.R. REP. NO. 60-2222, at 9 (1909);
Performance Rights in Sound Recordings: Subcomm. on Courts, Civ. Liberties, &
the Admin. of Justice of the H. Comm. on the Judiciary, 95th Cong., 29-37 (Comm.
Print 1978) (“1978 Report”).
17
In the 1930s and 1940s, as the popularity of radio grew, the recording
industry recognized the enormous promotional benefits of radio airplay. All
stakeholders benefitted from the unrestricted public performance of sound
recordings, which increased record sales, music royalties, and advertising revenue,
popularized performing artists, and gave the public widespread access to music.
By the 1950s, the recording industry ceased its efforts to exert unilateral control
over the performance of sound recordings through federal copyright protection.
See 1978 Report at 35-36.
The advent of new duplication technology in the 1950s and 1960s severely
heightened the risk and consequences of record piracy, which adversely affected
all stakeholders in the record industry, since piracy undermines quality control
without generating any record sales, music royalties, or advertising revenue.
Consequently, there was widespread support for protection against unauthorized
copying. By contrast, the record companies’ proposal to also control public
performances after sale was “explosively controversial,” because it would grant a
windfall to recording owners (mainly record companies) at the expense of (i)
composers and performing artists, since restrictions on post-sale performances
would decrease the exposure of their songs and the consequent publishing royalties
and publicity they receive, (ii) broadcasters, who would face increased costs, and
18
(iii) consumers, who would suffer reduced access to music. SUPP. REGISTER’S REP.
ON THE GENERAL REV. OF U.S. COPYRIGHT LAW 38 (Comm. Print 1965) (A185).
When Congress finally recognized a federal anti-piracy right in 1971, see
supra at 14, it did not create a separate right to restrict the playing of sound
recordings. In the Copyright Act of 1976, Congress retained this anti-piracy right,
but specifically rebuffed record companies’ attempts to grant them (and other
recording owners) a post-sale “performance” right. As the committee report
accompanying the Act observed, it “specifie[d] that the exclusive rights of the
owner of copyright in a sound recording are limited to the rights to reproduce the
sound recording in copies or phonorecords, to prepare derivative works based on
the copyrighted sound recording, and to distribute copies or phonorecords of the
sound recording to the public,” while stating “explicitly that the owner’s rights ‘do
not include any right of performance.’” H.R. REP. 94-1476, 106, reprinted in 1976
U.S.C.C.A.N. 5659, 5721 (1976) (emphasis added). Congress instead “considered
at length the arguments in favor of establishing a limited performance right, in the
form of a compulsory license, for copyrighted sound recordings, but concluded that
the problem requires further study,” and directed the Register of Copyrights to
submit a report on the matter in 1978. Id.
The resulting 1978 Report, which was nearly 1,000 pages in length and
included detailed historical, economic, policy, and domestic and international legal
19
analyses, ultimately recommended that Congress enact a limited right to control
post-sale performances of sound recordings. See generally 1978 Report. Congress
declined to do so until nearly 20 years later, when it enacted the Digital
Performance Right in Sound Recordings Act (“DPRA”) in 1995. That statute
created, for the first time, a new and highly limited digital “performance” right for
post-1972 recordings. Pub. L. No. 104-39 § 2(3), 109 Stat. 336 (1995). The
DPRA includes key exemptions, including a carve-out for AM/FM radio, and a
compulsory licensing scheme and rate-setting process designed to balance the
interests of recording owners with the interests of composers and performing artists
in having their songs widely heard, the interests of broadcasters and others in
performing music with minimal restrictions, and the interests of the public in
widespread access to music. 17 U.S.C. § 114; see also infra at 43-44.
b. Throughout this decades-long effort to convince Congress to enact a
federal “performance” right, there was one constant: the unanimous recognition by
stakeholders, Congress, courts, and commentators that state common law does not
already provide such a right. Unlike for unauthorized post-sale copying, the
common law does not confer on recording owners any right to control whether and
how recordings are played after sale.
The seminal judicial decision was Judge Learned Hand’s opinion in
Whiteman. In that case, a record company and orchestra director brought an
20
infringement claim in federal district court under New York common law against a
radio network that broadcast their records. The district court enjoined the
broadcasts, but the Second Circuit reversed. The court addressed the question
whether the performer or record company possessed “any musical property at
common-law in the records” that was infringed when the records were played on
air. The court surveyed the common law across the United States and found only
one case—Waring v. WDAS Broad. Station, Inc., 327 Pa. 433 (1937)—that had
ever recognized any right to control the post-sale performance of a sound
recording, and then only because the records had been sold with a label explicitly
prohibiting public performances.
The court rejected Waring and concluded that the radio performance of
records did not infringe any protected property interest, because common law
rights in a recording “consist[] only in the power to prevent others from
reproducing the copyrighted work.” 114 F.2d at 88 (emphasis added). By simply
playing a recording, the radio network “never invaded any such right”—indeed, it
“never copied [Whiteman’s] performances at all,” but “merely used those copies
which he and the [record company] made and distributed.” Id. (emphases added).
For this and other reasons, the court held that the radio network was not liable
under New York common law for broadcasting the lawfully purchased records.
21
The Second Circuit’s opinion in this case states that Whiteman’s conclusion
about the existence of a common law performance right was uncertain, likely dicta,
and not binding on this Court in any event, A-1734 at n.3, but that is beside the
point. The significance of Whiteman here is not its actual holding or that it is
binding, but the fact that it established a historical consensus that the common law
does not grant recording owners the right to control performances of a record after
it has been sold. Until now, every relevant authority and stakeholder since
Whiteman has acknowledged that.
Academic commentators universally recognized the nationwide “consensus
that state law does not provide a public performance right for sound recordings.”
Prof. Tyler Ochoa, A Seismic Ruling on Pre-1972 Sound Recordings & State
Copyright Law, Technology & Marketing Blog (Oct. 1, 2014),
http://blog.ericgoldman.org.3 Radio stations “playe[ed] records without
3 See Steven Seidenberg, US Perspectives: Courts Recognise New
Performers’ Rights, Intell. Prop. Watch (Nov. 24, 2014), http://www.ip-watch.org
(“Seidenberg I”) (“it has been settled since 1940 that there is no performance right
in a sound recording”); Ralph Brown, Symposium, The Semiconductor Chip
Protection Act of 1984 and its Lessons: Eligibility for Copyright Protection: A
Search for Principled Standards, 70 Minn. L. Rev. 579, 585-86 (1986) (Whiteman
“turned the tide against judges creating” a “common law performers’ right”);
Douglas Baird, Common Law Intellectual Property & the Legacy of Int’l News
Serv. v. Assoc. Press, 50 U. CHI. L. REV. 411, 419 n.35 (1983) (the common “law
did not (and in fact still does not) give a performer the right to control radio
broadcasts of his performances”); June Besek & Eva Subotnik, Constitutional
Obstacles? Reconsidering Copyright Protection for Pre-1972 Sound Recordings,
37 COLUM. J.L. & ARTS 327, 338 (2014) (“states do not appear to recognize a right
22
compensating performers for the next seventy years” after Whiteman. Lauren
Kilgore, Guerrilla Radio: Has the Time Come for a Full Performance Right in
Sound Recordings?, 12 VAND. J. ENT. & TECH. L. 549, 559-60 (2010).
And record companies themselves pushed Congress to create a right to
control post-sale performances precisely because, in their view, the common law
itself provided no such protection. As early as 1936, a record executive explained
to Congress that the “law up to date has not granted” protection against radio
stations’ “indiscriminate use of phonograph records.” Revision of Copyright Laws:
Hearings Before the H. Comm. on Patents, 74th Cong. 622 (Comm. Print 1936)
(A144). Thirty years later, Capitol Records similarly bemoaned the lack of
common-law protection against post-sale performances: “The record company
receives nothing from the widespread performance-for-profit of its products . . . .
There is no clearly established legal remedy available to stop this unauthorized
use.” Copyright Law Revision: Hearings Before the Subcomm. on Patents,
Trademarks & Copyrights of the Sen. Comm. on the Judiciary, Part 2, 90th Cong.
496, 502 (1967) (A1634, 1640). As late as 1995, the Recording Industry
of public performance in pre-1972 sound recordings”); Steven Seidenberg, Pay to
Play: State Copyright Law Now Gives Musicians Performance Rights, A.B.A.J.
(Apr. 1, 2015) (state law “did not provide performers or record labels with public
performance rights . . . according to the seminal case of [Whiteman]”); Richard
Posell, ‘60s on 6’ May Be in Sirius Trouble, Daily Journal (Apr. 29, 2015) (district
court’s ruling “challenges the common understanding of state copyrights since at
least 1940”).
23
Association of America, the principal trade group representing recording owners,
advised Congress that “[u]nder existing law, record companies . . . have no rights
to authorize or be compensated for the broadcast or other public performance of
their works.” Digital Performance Right in Sound Recordings Act of 1995:
Hearings Before the Subcomm. on Courts & Intell. Prop. of the H. Comm. on the
Judiciary, 104th Cong. 31 (1995) (A-313).
Government officials agreed with all these stakeholders. The Register of
Copyrights observed in 1965 that a proposed bill “denying [record companies]
rights of public performance . . . reflects—accurately, I think—the present state of
thinking on this subject in the United States.” Copyright Law Revision: Hearings
Before Subcomm. No. 3 of the H. Comm. on the Judiciary, Part 3, 89th Cong. 1863
(Comm. Print 1965) (A-202). When Congress declined to create a performance
right in the 1976 Copyright Act, the Congressional Record confirmed that the
statute “merely states what has been the law and the widely accepted fact for many
years—namely, there is no compensable property right in sound recordings and no
. . . performance royalty for broadcasters because they play records for profit.”
120 CONG. REC. 30,405 (1974). And in a comprehensive 2011 report concerning
federal protections for pre-1972 recordings, the Register of Copyrights again
explained that “state law does not appear to recognize a performance right in sound
24
recordings.” COPYRIGHT OFFICE, FEDERAL COPYRIGHT PROTECTION FOR PRE-1972
SOUND RECORDINGS: A REPORT OF THE REGISTER OF COPYRIGHTS 44-45 (2011).4
Moreover, before the district court decision in this case and the related
California case, no court had “ever before recognized” a right of record companies
to control the performance of records after their sale—a right that would subject
“an enormous number of parties to unexpected liability.” Gary Pulsinelli, Happy
Together? The Uneasy Coexistence of Federal and State Protection for Sound
Recordings, 82 TENN. L. REV. 167, 239 (2014).
C. Decisions Below
1. In response to plaintiff’s complaint, Sirius XM sought summary
judgment on the ground that New York common law does not grant recording
owners the right to control post-sale performances of their records. The district
court agreed that no New York court had ever recognized such a right, but also
found that no New York court had explicitly rejected such a right, and interpreted
the supposed “judicial silence” as supporting the existence of the performance
right plaintiff claimed. A-1682-83. The court nevertheless recognized that its
ruling was “unprecedented,” would “upset . . . settled expectations,” and would
4 After this lawsuit was filed, the Copyright Office reiterated this conclusion,
but added that: “[w]hile, as a factual matter, a state may not have affirmatively
acknowledged a public performance right in pre-1972 recordings as of the Office’s
2011 report, the language in the report should not be read to suggest that a state
could not properly interpret its law to recognize such a right.” Music Licensing
Study: Second Request for Comments, 79 Fed. Reg. 42,834 n.3 (July 23, 2014).
25
have “significant economic consequences” that could “upend the analog and digital
broadcasting industries,” and create enormous “administrative difficulties in the
imposition and collection of royalties,” which would ultimately increase consumer
costs, shut down many broadcasters, and decrease access to pre-1972 recordings.
A-1689; A-1704-05. The district court subsequently granted Sirius XM’s motion
to certify its order for interlocutory appeal under 28 U.S.C. § 1292(b). A-1718.5
2. The Second Circuit accepted the district court’s certified appeal, and the
parties fully briefed and argued the question presented here to that court. On April
13, 2016, the Second Circuit concluded that it is “in doubt as to whether New York
common law” grants owners of pre-1972 recordings a right to control or demand
payment for post-sale performances of those recordings, and certified that question
to this Court because it is “important, its answer is unclear, and its resolution
5 As explained earlier, plaintiff filed similar complaints against Sirius XM in
California and Florida district courts. In the California case, the district court held
that California Civil Code Section 980(a) provides a performance right to pre-1972
recording owners, and granted partial summary judgment in plaintiff’s favor. A-
1608. The performance-right issue is currently on appeal before the Ninth Circuit
in a parallel case. Pandora Media, Inc. v. Flo & Eddie, Inc., Appeal No. 15-55287
(9th Cir.). In the Florida case, the district court held that Florida common law does
not provide a performance right, and granted Sirius XM’s motion for summary
judgment. 2015 WL 3852692, at *5. The Eleventh Circuit, following the Second
Circuit here, subsequently certified the state-law question to the Florida Supreme
Court. 2016 WL 3546433 (11th Cir. June 29, 2016).
Several other copycat lawsuits are pending around the country, two of which
are stayed pending the outcome of this appeal. Sheridan v. Sirius XM Radio Inc.,
Case 1:15-cv-07056 (S.D.N.Y.), Dkt. 33; Sheridan v. Sirius XM Radio Inc. &
Pandora Media, Inc., Case No. 2:15-cv-07576 (D.N.J.), Dkt. Nos. 42, 43.
26
controls the [Flo & Eddie New York] appeal.” A-1730; A-1734. This Court
accepted the certified question on May 3, 2016. A-1740.
ARGUMENT
New York common law does not grant, and never has granted, record
companies and other recording owners the right to control whether, when, where,
and how a record is played after it has been lawfully obtained. No case has ever
recognized such a right. Every relevant actor—including courts, commentators,
federal copyright officials, Congress, and record companies themselves—has
agreed that no such right exists. Indeed, this fact was so obvious to any interested
party that, although the supposed “performance” right that plaintiff now invokes
was violated around the clock for decades by every radio station in the nation, no
recording owner ever even thought to assert such a right since the Second Circuit’s
decision in Whiteman.
Plaintiff does not and cannot disagree with any of this. Plaintiff instead
contends that New York’s longstanding common law right to control post-sale
copying and distribution of records has always carried with it an unnoticed, sub
silentio right to also control all post-sale performances of the records. That
argument rests on a fundamental misunderstanding of common law copyright.
Plaintiff assumes that because a recording owner can control the post-sale use of
the record in one respect—its copying—it necessarily can control all uses in all
27
respects. That absolutist view is not true of any kind of property interest, and it is
certainly not true of common law copyright. Indeed, the very principles that
support the New York common law anti-piracy right to control post-sale copying
and resale preclude recognizing a right to control post-sale performances.
Ultimately, plaintiff is not really asking this Court to recognize a heretofore
unnoticed common law right in the “performance” of sound recordings. Plaintiff
actually is asking the Court to create a new, entirely unprecedented right out of
whole cloth. This kind of dramatic expansion of a property right—which would
undo nearly a century of established practice and expectations in the music
industry—is inconsistent with this Court’s common law approach. Rather, as the
congressional history concerning the sound recording “performance” right shows,
recognizing such a right requires the kind of careful policy balancing and
compromise in which only the Legislature is competent to engage. This Court
should decline plaintiff’s invitation to create a novel, absolute right of recording
owners to prevent the performance of recordings they have sold, and leave the
decision whether and to what extent to recognize such a right to the Legislature.
28
I. NEW YORK COMMON LAW HAS NEVER GRANTED
RECORDING OWNERS A RIGHT TO CONTROL THE
PERFORMANCE OF RECORDINGS AFTER THEY ARE SOLD
A. No New York Court Has Ever Recognized A Post-Sale
“Performance” Right For Sound Recordings, And Every Relevant
Authority And Stakeholder Has Recognized No Such Right Exists
Ever since the advent of the radio, sound recordings have been publicly
performed in broadcasts every minute of every day. And yet no New York court
has ever suggested that the owner of a sound recording has a right to prohibit the
purchaser from playing it, whether in the home, at a party, in a bar, or on the radio.
To the contrary, every relevant authority and stakeholder has affirmatively
recognized that no such right exists. Ever since the Second Circuit concluded in
Whiteman that the owner of a sound recording has no post-sale right to control its
“performance,” see 114 F.2d at 88; supra at 20, commentators have widely
recognized that “it has been settled . . . that there is no performance right in a
sound recording.” Seidenberg I, supra; see supra at 21-22 & n.3. So too has the
Register of Copyrights, who has twice explicitly observed that no such right
appears to exist under state common law. See supra at 23-24 & n.4. And
Congress likewise confirmed in 1976 that it had “been the law and the widely
accepted fact for many years [that] there is no compensable property right in sound
recordings and no … performance royalty for broadcasters because they play
records for profit.” 120 CONG. REC. 30,405 (1974); see supra at 23.
29
Perhaps most important, however, is record companies’ own repeated
admissions that no such state common law right exists, as they continuously
insisted when seeking to convince Congress to fill that gap by creating such a right
under federal law. See supra at 22-23. This was no mere advocacy position—
record companies clearly believed that no common law “performance” right
existed, because they never even attempted to enforce such a right after Whiteman.
The U.S. Supreme Court long ago recognized that “so strong is the desire of every
man to have the full enjoyment of all that is his, that, when a party comes into
court and asserts that he has been for many years the owner of certain rights, of
whose existence he has had full knowledge and yet has never attempted to enforce
them, there is a strong persuasion that, if all the facts were known, it would be
found his alleged rights either never existed, or had long since ceased.” Halstead
v. Grinnan, 152 U.S. 412, 416 (1894). That principle applies with particular force
here, because if the “performance” right that plaintiff now seeks has actually
existed all along, then radio stations throughout the country have been violating it
continuously for decades. The fact that nobody even attempted to enforce this
supposed right is conclusive evidence that nobody thought it existed.
In Naxos, this Court recognized an anti-piracy right against post-sale
copying in part because prohibiting that conduct “was consistent with the long-
standing practice of the federal Copyright Office and became the accepted view
30
within the music recording industry.” 4 N.Y.3d at 554-55. Exactly the opposite is
true here: the Register of Copyrights has never recognized or enforced the post-
sale performance right plaintiff seeks—and indeed has twice denied its existence
under common law—and the “accepted view within the music industry” for
decades has been that record companies cannot control post-sale performances
under common law. Courts, commentators, and Congress agree. The common law
in New York does not grant, and has never granted, recording owners the right to
control the performance of those recordings after they are sold.
B. The Common Law Anti-Piracy Right Does Not Support The
Existence Of A “Performance” Right
1. Plaintiff’s principal contention in favor of recognizing this unprecedented
“performance” right has been that because New York common law recognizes a
right to prevent the unauthorized reproduction of a recording, the recording
owner’s rights in that property must extend to every other conceivable use of the
recording, including its performance by lawful purchasers, because a property right
necessarily encompasses every conceivable property interest.
That argument is unfounded. Plaintiff relies for its absolutist view of
property rights on precedents involving tangible property, but even in that context
it is decidedly wrong to say that a property owner’s rights extend to every
conceivable use of the property, as every first-year law student learns. See, e.g.,
Victory v. Baker, 67 N.Y. 366, 368 (1876) (property ownership “cannot be an
31
absolute right” because it is always limited by interests of other stakeholders);
Palmer v. De Witt, 47 N.Y. 532, 542 (1872) (common-law rights in literary works
limited); Joseph Singer, PROPERTY § 1.1.2 (4th ed. 2014) (rights of property owner
are limited by “the legitimate interests of others”). A landowner, for example,
does not have an inherent right to operate an exotic dance club, drill for precious
minerals, or build a towering skyscraper on his property. See Coates v. Mayor of
New York, 7 Cow. 585, 604-05 (N.Y. Sup. Ct. 1827) (right to build structure on
land may be restricted to protect public welfare); Casanova Entm’t Grp., Inc. v.
City of New Rochelle, 375 F. Supp. 2d 321, 342 (S.D.N.Y. 2005). Indeed, “[t]ruly
exclusive (absolute, unqualified) property rights would be a contradiction in
terms.” Richard Posner, ECONOMIC ANALYSIS OF LAW § 3.6 (8th ed. 2011).
Rights in tangible property in any event afford little guidance here because
copyright is “no ordinary chattel”—the “property rights of a copyright holder have
a character distinct from the possessory interest” of a real-property owner.
Dowling v. U.S., 473 U.S. 207, 216-17 (1985). Indeed, ownership of a copyright
“has never accorded . . . complete control over all possible uses of [the] work,” id.
(emphasis added), and instead “comprises a series of carefully defined and
carefully delimited interests to which the law affords correspondingly exact
protections.” Id.; accord Sony Corp. of Am. v. Universal City Studios, Inc., 464
U.S. 417, 431-33 (1984); see William Landes & Richard Posner, Trademark Law:
32
An Economic Perspective, 30 J.L. & ECON. 265, 268 (1987) (intellectual property
is “limited in ways that physical property is not”).
Plaintiff has argued that federal precedents describing the difference
between tangible and intellectual property have no bearing on New York common
law, but if anything, the principle that copyrights are necessarily more limited in
scope applies a fortiori to the common law. Far from granting a copyright owner
an absolute right to control every use of his work, common law copyright was
generally understood in the United States to extend only to the “right of first
publication,” and expired completely after the work was sold to the public. See
supra at 8. This significant restriction on common law copyright was necessary to
balance “the interest of authors in the fruits of their labor” with the “interest of the
public in ultimately claiming free access to the materials essential to the
development of society.” Nimmer I, supra, § 4.04; see supra at 9-10. Because a
common law copyright, to the extent it was recognized, applied absolutely and in
perpetuity, the common law right itself had to be limited in scope to protect the
public’s legitimate interest in access to creative works. The common law
historically struck this balance by holding that upon “publication,” “perpetual
common law rights ceased, and the author was required to look to the federal
[copyright] statute for the limited form of monopoly there available.” Id.
33
To be sure, this Court in Naxos struck that balance in a manner that extended
anti-piracy protection for sound recordings beyond the date of sale, see supra at 13,
but that does not alter the more fundamental point that the owner of a common law
copyright does not (and, consistent with the policy balancing described above,
cannot) have absolute and perpetual control over his work under the common law.
That fundamental principle extends not only to the duration of the common law
copyright, but also to its scope. For example, this Court explained over a century
ago, in the context of a dramatic work, that the “right publicly to represent a
dramatic composition for profit, and the right to print and publish the same
composition to the exclusion of others, are entirely distinct, and the one may exist
without the other.” Palmer, 47 N.Y. at 542. Indeed, at common law in England,
the owner of a copyright in a play had no right to prevent that play’s public
performance; such a right was eventually created via statute. Id. at 542-44.
In other words, the common law has reached and protected core rights that
are necessary to safeguard “the interest of authors in the fruits of their labor,”
Nimmer I, supra, § 4.04, but that do not simultaneously infringe the public’s
interest in access to creative works. But when it comes to other rights involving
the competing interests between extending an author monopoly protection and
assuring legitimate public access, courts have required the more limited and
balanced protection reflected in the federal copyright statute.
34
2. Under the principles just described, plaintiff’s reliance on this Court’s
recognition of an anti-piracy right for recording owners to support a so-called
“performance” right lacks merit. While an anti-piracy right fits squarely within the
historical scope of, and justification for, common law copyright, the very same
principles require rejecting the so-called “performance” right that plaintiff asks this
Court to adopt, for at least three reasons.
First, the common law anti-piracy right reflects the fundamental core that
copyright has always protected—“[a]s the label ‘copyright’ suggests, it is the act of
copying that is essential to, and constitutes the very essence of all copyright
infringement.” 2 MELVILLE B. NIMMER & DAVID NIMMER, NIMMER ON COPYRIGHT
(“Nimmer II”) § 8.02[A] (rev. ed. 2016); see also Naxos, 4 N.Y.3d at 547 (core of
English common law copyright “include[d] the ability of an author to decide
whether a literary work would be published and disseminated to the public . . . and,
if distributed, how the work would be reproduced in the future”) (emphasis added).
This Court’s decision in Naxos, and the earlier New York decisions that Naxos
reaffirmed, gave effect to this common law core by assuring a recording owner’s
“right to copy and sell the records.” Naxos, 4 N.Y.3d at 554.
The “performance” right plaintiff invokes here, in contrast, has nothing to do
with this core common law protection against “the act of copying.” Whereas
common law rights in a recording consist “in the power to prevent others from
35
reproducing the copyrighted work,” a radio network that plays a recording “never
invade[s] any such right,” because it “never copie[s] [the] performances at all,” but
“merely use[s] those copies which [the owner and record company] made and
distributed.” Whiteman, 114 F.2d at 88 (emphasis added). In short, when someone
plays a sound recording, he uses it exactly as it was intended to be used.
The “performance” right that plaintiff seeks here is fundamentally different
from the legitimate and long-recognized performance right held by authors of
musical or dramatic compositions. See Nimmer II, supra, § 8.14[A]; id. (“The
disallowance of sound recordings . . . from performance rights should not be
confused with the performance right that has always been accorded to musical
works”). To whatever extent the common law recognized the right of an author to
prevent the unauthorized public performance of his play, film, or musical
composition, see, e.g., French v. Maguire, 55 How. Pr. 471 (N.Y. Sup. Ct. 1878)
(play); Brandon Films, Inc. v. Arjay Enters., Inc., 230 N.Y.S.2d 56 (Sup. Ct. 1962)
(film),6 that right directly implements common law copyright’s core anti-copying
6 The district court relied on French, which it said recognized a New York
common law performance right in plays. Even if that case recognized such a right,
it is fundamentally different from the sound recording performance right plaintiff
seeks, for the reason just explained. In any event, the right that French protected
was not a “performance” right at all, but instead the common law “right of first
publication.” French involved performances of plays based on unpublished
manuscripts obtained unlawfully by the defendant, 5 How. Pr. at 478-79; see also
Brandon Films, 230 N.Y.S.2d at 57-58 (recognizing right to prevent performance
of unpublished film); Roberts v. Petrova, 213 N.Y.S. 434, 434-35 (Sup. Ct. 1925)
36
principle, because “the performance right is not infringed unless the defendant’s
performance is copied from the plaintiff’s work,” Nimmer II, supra, § 8.02[A]. A
record-purchaser, by contrast, does not copy the record when he plays it (as
opposed to the song itself, which is subject to copyright protection)—he simply
uses the record for its intended purpose. This distinction is reflected in New
York’s criminal law, which has since 1899 included a prohibition against the
unauthorized performance of plays and operas, see N.Y. ARTS & CULT. AFF. LAW
§ 31.03 (Consol. 2016), but has never purported to prevent the performance of
sound recordings.
Second, the principle underlying New York’s anti-piracy right to control
post-sale duplication and distribution of sound recordings does not justify, and
indeed firmly undermines, any right to control post-sale performances of the
recordings. The New York anti-piracy cases reflect the Wheaton dissent’s view
that an author’s post-sale property interest in a work depends on the nature of the
work and the purpose for which it was intended, and because a record is intended
(recognizing right to prevent unauthorized performance of unpublished play); Roy
Export Co. v. Columbia Broad. Sys., Inc., 672 F.2d 1095, 1098, 1104 (2d Cir.
1982) (enjoining performance of unlawfully obtained and unpublished compilation
of film clips), which under the common law meant the manuscript’s owner retained
absolute control of the manuscript’s use until the manuscript was sold to the
public. See supra at 8. The question here is whether a recording owner retains a
right to control the performance of a recording that it has already sold to the public
and that has been lawfully obtained by the defendant.
37
to be played, but not to be copied and resold, the recording owner retains a right
after sale to prevent copying and sale of the pirated copies. As this Court observed
in Naxos, “the appropriate governing principle” (4 N.Y.3d at 554) was expressed in
Mercury Records’ holding that a recording owner possesses a common law right
against post-sale copying because the sale “does not constitute a dedication of the
right to copy and sell the records.” Mercury Records, 221 F.2d at 663.
But that conception of the post-sale property interest in preventing record
copying, which is based entirely on the purpose of the property, compels the
opposite result with respect to any claimed post-sale property interest in controlling
record playing: because the purpose of a record is for the purchaser and others
who lawfully obtain the recording to play it, the recording owner cannot claim a
post-sale property interest in controlling when and how it is played. In other
words, under the same Naxos/Capitol Records/Wheaton-dissent theory that
justifies the post-sale anti-piracy right, the sale of a record to be performed does
relinquish any property interest in its performance. After sale, other legitimate
public interests in the performance of the recording—including the artist’s interest
in spreading his music and consumers’ interest in enjoying the music—become
paramount, and any further protection can only be afforded by statute. See
Nimmer I, supra, § 4.04 (once recording owner “elect[s] to surrender the privacy
of [the recording], preferring the more worldly rewards that come from
38
exploitation of his work, he ha[s] to accept the limitations on his monopoly
imposed by the public interest”).
Third, the post-sale anti-piracy right is based on a balance of interests that
comes nowhere close to justifying a post-sale performance right. Just the opposite:
whereas courts, state legislatures, and Congress have long recognized that there is
no legitimate public interest in allowing non-owners to duplicate and resell copies
of a sound recording, policymakers have long understood that numerous
stakeholders—including artists, broadcasters, and music consumers—have strong
interests in unrestricted performance of records after their sale, which is precisely
why legislative efforts to grant record companies the right to control post-sale
performances have been so profoundly controversial.
Record companies themselves recognized this distinction from the outset.
Industry executives testified in 1936 that while “the duplication of a phonograph
record and the selling of that record is an act of unfair competition . . . , it would be
going a long way for any court to say . . . that the playing of a record over the air,
the mere use of a record in that manner, is an act of unfair competition.” Revision
of Copyright Laws: Hearings Before the H. Comm. on Patents, 74th Cong. 639
(Comm. Print 1936) (representative of Brunswick Record Corp. and Columbia
Phonograph Co.). The New York Legislature implicitly recognized the same
distinction when it criminalized the unauthorized post-sale copying of sound
39
recordings, N.Y. PENAL LAW § 275 (Consol. 2016), without criminalizing
unauthorized post-sale performances. Congress recognized the distinction
repeatedly, adopting an anti-piracy rule without significant objection, while
(i) time and again rejecting a “performance” right as “explosively controversial,”
SUPP. REGISTER’S REP. ON THE GENERAL REV. OF U.S. COPYRIGHT LAW 38
(Comm. Print 1965) (A-185), (ii) concluding in 1976 that an in-depth study was
required before such a right could even be considered, see supra at 18,
(iii) delaying enactment of such a right until 1995, see supra at 19, and (iv) even
then limiting that right significantly, including by enacting a highly reticulated
compulsory licensing scheme and expressly excluding AM/FM radio broadcasts,
see id.; infra at 43-44.
As the regulatory history shows, the balance of interests that justifies the
common law right to control the post-sale copying of records does nothing to
justify a comparable right to control the performance of records after their sale. As
discussed, the principles that justify the post-sale anti-piracy right affirmatively
disfavor a post-sale performance right. It is thus no surprise that no New York
court has ever recognized such a right. And doing so now would require a careful
balancing of competing policy interests, which is an inherently legislative task.
40
II. ONLY THE LEGISLATURE CAN RECOGNIZE A NEW RIGHT TO
CONTROL PUBLIC PERFORMANCES OF SOUND RECORDINGS
This Court has recognized that the common law, by its nature, evolves
incrementally to avoid “encroachment on the legislative branch.” Norcon Power
Partners, L.P. v. Niagara Mohawk Power Corp., 92 N.Y.2d, 458, 467-68 (1998).
In particular, “the manner by which the State addresses complex societal . . . issues
is a subject left to the discretion of the political branches of government.”
Campaign for Fiscal Equity, Inc. v. New York, 8 N.Y.3d 14, 28 (2006). That
principle applies fully here. Granting recording owners the right to control how
and when records are played would upend decades-old practices in the music
industry and fundamentally alter complex economic and legal relationships
involving many stakeholders, including parties not before the Court such as
composers, performing artists, and consumers. The decision whether and how to
recognize such a right “must be the doing of the Legislature.” Chamberlain, 300
N.Y. at 139-40; accord In re N.Y. State Inspection v. Cuomo, 64 N.Y.2d 233, 240
(1984) (where “policy matters have demonstrably and textually been committed to
a coordinate, political branch of government, any consideration of such matters by
a [different] branch or body” would “constitute an ultra vires act.”).
In Jewelers’, this Court deferred to the legislature’s superior policymaking
discretion in rejecting a proposed expansion of common law copyright. The
plaintiff in that case published a reference book to subscribers under stipulation
41
that the book was furnished as a loan, not as a sale, and that it should not be
transferred to others. The plaintiff argued that the publication accordingly should
not count as a sale divesting the copyright owner of its common-law protection.
155 N.Y. at 246 (cited by Naxos, 4 N.Y.3d at 552).
This Court rejected plaintiff’s novel claim, concluding that “the present state
of the law is that if a book be put within reach of the general public, so that all may
have access to it, no matter what limitations be put upon the use of it by the
individual subscriber or lessee, it is published, and what is known as the common-
law copyright, or right of first publication, is gone.” Id. at 254. More to the
present point, the Court emphasized that “[i]f the plaintiff’s interests are of so
important a character, and the public interest would be best subserved were the law
such as plaintiff insists it to be, then is presented a proper subject for legislative
action.” Id. By contrast, if the Court itself adopted plaintiff’s position, then it
“will have obtained judicial legislation of far broader scope and much greater value
to authors and others than that offered by the copyright statute.” Id. at 248.
That analysis applies equally here. Plaintiff seeks to expand common law
copyright to grant record companies and other recording owners unlimited rights to
control the public performance of their recordings in perpetuity, even after they
have been sold. That right would provide recording owners with far broader rights
than the limited and balanced rights provided by federal copyright law. This Court
42
should again decline the invitation to take a “very long step” in the expansion of
common law copyright. Id. at 254; see also Chamberlain, 300 N.Y. at 139-40
(rejecting proposed change in common law copyright concerning transfer of
unpublished manuscripts because any “change of public policy must be the doing
of the Legislature”).
This is not to say that rights cannot evolve under the common law—of
course they can. But by its very nature, the common law develops incrementally,
“at a snail-like pace,” to avoid usurping the legislative function. Norcon, 92
N.Y.2d at 468. This Court has made clear that a sudden, dramatic expansion of
common law rights would “clash with [the] customary incremental common-law
developmental process” and “encroach[] on the legislative branch.” Id. at 467-68;
accord Caronia v. Phillip Morris USA, Inc., 22 N.Y.3d 439, 451 (2013) (declining
to recognize new tort claim, despite “significant policy reasons” for doing so,
given “potential systemic effects of creating a new, full-blown” claim); Houston
Realty Corp. v. Castro, 404 N.Y.S.2d 796, 798 (Civ. Ct. 1978) (“Significant
changes in common-law doctrine are generally the product of legislation.”). And
here, there is no plausible dispute that recognizing an unprecedented and unlimited
sound recording “performance” right would fundamentally alter the existing
music-industry landscape, unsettle long-settled expectations allowing the
43
unqualified and unencumbered broadcast of sound recordings, and limit the
public’s access to pre-1972 recordings.
That much is obvious from the federal experience with statutory regulation.
As explained above, record companies lobbied Congress to enact a sound
recording “performance” right for decades, but Congress repeatedly refused to do
so because such a right was deemed “explosively controversial.” Indeed, the
Congress that revamped the entire Copyright Act in 1976 did not believe itself
competent to evaluate the costs and benefits of recognizing such a right, and
mandated that the Register of Copyrights study the question. See supra at 18. The
Register responded two years later with a nearly-thousand-page analysis
recommending a limited performance right for post-1972 recordings. See supra at
18-19. And even then, Congress did not recognize such a right until 1995.
When Congress finally did recognize a “performance” right in the DPRA, it
looked nothing like the absolute right plaintiff asserts here. Rather, the final
legislation reflected a compromise reached only after Congress heard from dozens
of witnesses about the competing policy considerations, after committees produced
multiple reports detailing their findings, and after Congress revised the proposed
legislation to address each issue. See H.R. REP. NO. 104-274 (1995) (A-264-65); S.
REP. NO. 104-128 (1995).
44
On the one hand, Congress sought to protect recording owners, who claimed
that the advent of new digital technologies cut into their profits. See S. REP. NO.
104-128, at 15 (1995); H.R. REP. NO. 104-274, at 13-14 (1995) (A-264-65). On the
other hand, Congress sought to protect broadcasters and maintain their symbiotic
relationship with the recording industry. See S. REP. NO. 104-128, at 15 (intent to
avoid “imposing new and unreasonable burdens on . . . broadcasters, which often
promote, and appear to pose no threat to, the distribution of sound recordings”); id.
at 16 (intent to avoid making it “economically infeasible for some transmitters to
continue certain current uses of sound recordings”); 141 CONG. REC. S945-02, at
948 (Daily ed. Jan. 13, 1995) (A-356) (DPRA’s sponsor rejecting unlimited
performance right because the “long-established business practices within the
music and broadcasting industries represent a highly complex system of
interlocking relationships . . . and should not be lightly upset”).
As a result, the DPRA includes an exemption for AM/FM radio, as well as a
compulsory licensing scheme, which ensures that digital and satellite broadcasters
like Sirius XM can obtain a statutory license to perform a post-1972 recording at a
reasonable royalty rate to be set by the Copyright Royalty Board. S. REP. NO. 104-
128, at 15-16. The DPRA also includes a requirement that the recording owner
share one-half of the compulsory license fees with performing artists, instead of
pocketing the money for itself. H.R. REP. NO. 104-274, at 24 (A-272-73).
45
The fact that the record industry’s six-decade-long effort to achieve a sound
recording performance right resulted in such a limited and carefully reticulated
statute should be conclusive evidence that recognizing an absolute and (barring
federal preemption) perpetual common law right would be unwarranted, not to
mention unprecedented. The right that plaintiff asserts includes no such
limitations—it would apply to AM/FM radio, would not include any compulsory
licensing scheme or rate-setting process, and would not have any fee-sharing
provisions, since by nature of the common law, if the court recognizes such a right,
it would allow plaintiff to simply prevent anyone from playing the sound
recordings they purchase, forever (or at least until preempted by federal law).
It would also leave many questions unanswered. For example, how will a
broadcaster identify the recording owner with whom a license must be negotiated?
Who will resolve ownership disputes? What happens if the parties are unable to
agree on a royalty rate? Even if they are, how will royalties be distributed? Must a
recording owner share the royalties with the performing artists? As the district
court conceded, these and other “administrative difficulties . . . would ultimately
increase the costs consumers pay to hear broadcasts, and possibly make broadcasts
of pre-1972 recordings altogether unavailable.” A-1689.
Indeed, the district court’s ruling in this case has already set off alarm bells.
For example, the Copyright Office recently issued a report discussing this case,
46
noting the policy problems that would result from recognition of a common-law
performance right, and advocating for federal regulation, which can offer “uniform
protection . . . as well as appropriate exceptions and limitations for the benefit of
users.” U.S. Copyright Office, Copyright & the Music Marketplace 53-55, 85-87
(2015). Similarly, SoundExchange, the organization that administers royalties
under the DPRA, has noted to the Copyright Office that the district court’s ruling
“will not lead to a sensible regime for licensing,” “do[es] not provide the simplicity
and efficiency that Congress contemplated when enacting the statutory licenses,”
and is “not the regime that Congress had in mind when it created the [DPRA] in
1995.” Music Licensing Study: Notice and Request for Public Comment,
Comments of SoundExchange, Inc. 12 (May 20, 2014) (A-607).
This sort of abrupt, widespread upheaval is completely inconsistent with the
common law method, which is measured and incremental. See supra at 40-42. If
New York law is to grant record companies a right to control how and when pre-
1972 recordings are played after they are sold, policymakers must evaluate and
balance the interests of all relevant stakeholders and adopt nuanced protections, as
Congress did in the DPRA. That kind of policymaking is fundamentally a non-
judicial, legislative function. The certified question should be answered in the
negative—there is no “right of public performance for creators of sound recordings
under New York law," A-1728, and such a right could only be created (if at all) by
the Legislature.
CONCLUSION
For the foregoing reasons, this Court should hold that New York law does
not give owners of sound recordings a right to control or demand payment for the
public performances of their recordings after they are sold.
Dated July 5, 2016
JONATHAN D. HACKER
(PRO HAC VICE)
O'MELVENY & MYERS LLP
1625 Eye Street, N.W.
Washington, D.C. 20006
Tel.: (202) 383-5300
Fax: (202) 383-5414
Respectfully submitted,
(PRO HAC VICE)
CASSANDRA L. SETO
(PRO f!AC VICE)
O'MELVENY & MYERS LLP
1999 A venue of the Stars, 8th Floor
Los Angeles, Cal. 90067
Tel: (31 0) 553-6700
(31 0) 246-6779
ANTON METLITSKY
O'MELVENY & LLP
Times Square Tower
Seven Times Square
New York, New York 10036
Tel.: (212) 326-2000
Fax: (212) 326-2061
Attorneys for Appellant Sirius XM Radio Inc.
47