To be Argued by:
CAITLIN J. HALLIGAN
(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
BRIEF FOR PLAINTIFF-RESPONDENT
HENRY GRADSTEIN (pro hac vice)
MARYANN R. MARZANO (pro hac vice)
DANIEL B. LIFSCHITZ (pro hac vice pending)
GRADSTEIN & MARZANO, P.C.
6310 San Vicente Blvd., Suite 510
Los Angeles, California 90048
Tel: (323) 776-3100
Fax: (323) 776-4990
CAITLIN J. HALLIGAN
ESTER MURDUKHAYEVA
KATHRYN M. CHERRY
GIBSON, DUNN & CRUTCHER LLP
200 Park Avenue
New York, New York 10166
Tel.: (212) 351-4000
Fax: (212) 351-4035
Attorneys for Plaintiff-Respondent
Dated: September 19, 2016
i
CORPORATE DISCLOSURE STATEMENT
Pursuant to 22 N.Y.C.R.R. § 500.1(f), Plaintiff-Respondent Flo & Eddie,
Inc. hereby states that it has no parent corporation and that no publicly held
corporation owns 10% or more of its stock.
ii
TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT ............................................................................... 1
CERTIFIED QUESTION ACCEPTED FOR REVIEW ........................................... 5
STATEMENT OF FACTS ........................................................................................ 6
I. The Origins of Copyright Protection for Sound Recordings in State and
Federal Law ........................................................................................................ 6
II. The Parties and Their Role in the Music Industry ............................................. 9
A. Flo & Eddie (The Turtles) ..................................................................... 9
B. Sirius XM and Its Commercial Exploitation of Pre-1972 Sound
Recordings ...........................................................................................10
C. Market Changes in the Economics of Music Consumption ................13
III. Procedural History ............................................................................................16
A. Proceedings Below ..............................................................................16
B. Other Actions Challenging Sirius XM’s Refusal to Pay For Pre-
1972 Sound Recordings ......................................................................21
ARGUMENT ...........................................................................................................23
I. New York Law—Not Federal Law—Governs This Case .............................25
II. New York’s Common Law Protects Pre-1972 Sound Recordings
From Unauthorized Post-Sale Public Performance .......................................28
A. New York’s Common Law Copyright Protects Public
Performance of Pre-1972 Sound Recordings ......................................29
B. Sirius XM’s Post-Sale “Anti-Piracy” Argument Cannot Be
Reconciled With New York Common Law ........................................32
1. Public Sale of Sound Recordings Does Not Strip Them of
Common Law Copyright Protection .........................................33
iii
2. Whiteman Has Been Overruled and Is Irrelevant .....................40
3. Sirius XM’s Proposed Distinction Between “Copying”
and “Intended Use” Is Incoherent and Disregards Its
Blatant Commercial Exploitation of Pre-1972 Sound
Recordings ................................................................................43
III. Protecting Performance Rights in Pre-1972 Sound Recordings
Promotes Key Public Policy Goals ................................................................48
A. Artists Should Be Compensated for the Use of Their Work ..............48
B. Recognizing a Performance Right in Pre-1972 Sound
Recordings Will Not Disrupt the Music Industry ...............................51
CONCLUSION ........................................................................................................56
iv
TABLE OF AUTHORITIES
Page(s)
Cases
ABKCO Music, Inc. v. LaVere,
217 F.3d 684 (9th Cir. 2000) .............................................................................. 36
Addington v. Texas,
441 U.S. 418 (1979) ............................................................................................ 25
Brandon Films, Inc. v. Arjay Enters., Inc.,
230 N.Y.S.2d 56 (Sup. Ct. N.Y. Cnty. 1962) ............................................... 31, 47
Broad. Music, Inc. v. Columbia Broad. Sys., Inc.,
441 U.S. 1 (1979) ................................................................................................ 55
Campaign for Fiscal Equity, Inc. v. State,
8 N.Y.3d 14 (2006) ............................................................................................. 52
Capitol Records, Inc. v. Greatest Records, Inc.,
252 N.Y.S.2d 553 (Sup. Ct. N.Y. Cnty. 1964) ....................................... 29, 30, 44
Capitol Records, Inc. v. Mercury Records Corp.,
221 F.2d 657 (2d Cir. 1955) ............................................................... 4, 31, 35, 40
Capitol Records, Inc. v. Naxos of Am., Inc.,
4 N.Y.3d 540 (2005) ....................................................................................passim
Capitol Records, LLC v. Escape Media Group, Inc.,
No. 12-cv-6646 (AJN), 2015 WL 1402049 (S.D.N.Y. Mar. 25,
2015) ................................................................................................................... 32
De Mille Co. v. Casey,
201 N.Y.S. 20 (Sup. Ct. N.Y. Cnty. 1923) ......................................................... 31
Ferris v. Frohman,
223 U.S. 424 (1912) ...................................................................................... 30, 44
Flo & Eddie, Inc. v. Pandora Media Inc.,
Order Denying Pandora’s Motion to Dismiss, No. 14-cv-7648,
Dkt. 28 (C.D. Cal. Feb. 23, 2015) ....................................................................... 21
TABLE OF AUTHORITIES
(continued)
Page(s)
v
Flo & Eddie, Inc. v. Sirius XM Radio Inc.,
827 F.3d 1016 (11th Cir. 2016) .......................................................................... 22
Flo & Eddie, Inc. v. Sirius XM Radio Inc.,
No. 13-cv-23182, 2015 WL 3852692 (S.D. Fla. June 22, 2015) ....................... 22
Flo & Eddie, Inc. v. Sirius XM Radio Inc.,
No. 13-cv-5693, 2014 WL 4725382 (C.D. Cal. Sept. 22, 2014) ........................ 21
Flo & Eddie, Inc. v. Sirius XM Radio Inc.,
No. 13-cv-5693, 2015 WL 4776932 (C.D. Cal. May 27, 2015) ........................ 55
French v. Maguire,
55 How. Pr. 471 (Sup. Ct. N.Y. Cnty. 1878) ...................................................... 47
Gieseking v. Urania Records, Inc.,
155 N.Y.S.2d 171 (Sup. Ct. N.Y. Cnty. 1956) ................................................... 47
Goldstein v. California,
412 U.S. 546 (1973) ...................................................................................... 26, 34
Int’l News Service v. Associated Press,
248 U.S. 215 (1918) ...................................................................................... 44, 46
Jewelers’ Mercantile Agency v. Jeweler’s Weekly Pub. Co.,
155 N.Y. 241 (1898) ........................................................................................... 52
La Cienega Music Co. v. ZZ Top,
53 F.3d 950 (9th Cir. 1995) ................................................................................ 35
Metro. Opera Ass’n v. Wagner-Nichols Recorder Corp.,
199 Misc. 786 (Sup. Ct. N.Y. Cnty. 1950) ..................................................passim
Nutt v. Nat’l Inst. Inc. for the Imp. of Memory,
31 F.2d 236 (2d Cir. 1929) ................................................................................. 46
Palmer v. De Witt,
47 N.Y. 532 (1872) ................................................................................. 29, 31, 33
TABLE OF AUTHORITIES
(continued)
Page(s)
vi
Petrella v. Metro-Goldwyn Mayer, Inc.
134 S. Ct. 1962 (2014) ........................................................................................ 50
Radio Corp. of Am. v. Premier Albums, Inc.,
240 A.D.2d 62 (1st Dep’t 1963) ......................................................................... 46
RCA Mfg. Co. v. Whiteman,
114 F.2d 86 (2d Cir. 1940) ..........................................................................passim
Recording Indus. Ass’n of Am., Inc. v. Librarian of Congress,
608 F.3d 861 (D.C. Cir. 2010) .............................................................................. 6
Rice v. Santa Fe Elevator Corp.,
331 U.S. 218 (1947) ............................................................................................ 25
Roy Export Co. Establishment of Vaduz v. CBS, Inc.,
672 F.2d 1095 (2d Cir. 1982) ............................................................................. 33
Tams v. Witmark,
63 N.Y.S. 721 (Sup. Ct. N.Y. Cnty. 1900) ......................................................... 30
Twentieth Century Music Corp. v. Aiken,
422 U.S. 151 (1975) ............................................................................................ 46
Twentieth Century Sporting Club, Inc. v. Transradio Press Serv., Inc.,
165 Misc. 71 (Sup. Ct. N.Y. Cnty. 1937) ........................................................... 45
United States v. Western Electric Co.,
531 F. Supp. 894 (D.N.J. 1981) .......................................................................... 50
Waring v. WDAS Broadcasting Station Inc.,
327 Pa. 433 (1937) .................................................................................. 32, 38, 47
White-Smith Music Publishing Co. v. Apollo Co.,
209 U.S. 1 (1908) ................................................................................................ 33
Statutes and Rules
17 U.S.C. § 106(6) ............................................................................................... 8, 53
TABLE OF AUTHORITIES
(continued)
Page(s)
vii
17 U.S.C. § 114 .................................................................................................... 8, 53
17 U.S.C. § 301(a) ..................................................................................................... 7
17 U.S.C. § 301(c) ............................................................................................passim
17 U.S.C. § 303(b) ................................................................................................... 36
Copyright Act of 1831, Ch. 16, 4 Stat. 436 (1831) ................................................... 6
Sound Recording Act of 1971, Pub. L. 92-140, 85 Stat. 391 (1971) ................ 6, 7, 8
Copyright Act of 1976, Pub. L. No. 94-553, 90 Stat. 2572 (1976) ....................... 7, 8
Technical Amendments to Title 17, Pub. L. No. 105-80, 111 Stat.
1529 (1997) ......................................................................................................... 36
Sonny Bono Copyright Term Extension Act, Pub. L. No. 105-298,
112 Stat. 2827 (1998) ............................................................................................ 9
N.Y. Gen. Bus. Law §§ 352-359-h (McKinney 2016) ............................................ 25
22 N.Y.C.R.R. § 500.27(a) ...................................................................................... 24
Other Authorities
143 Cong. Rec. H9882 (statement of Rep. Coble) .................................................. 35
1 Melville B. Nimmer & David Nimmer,
Nimmer on Copyright (rev. ed. 2016) .................................................................. 6
2 Melville B. Nimmer & David Nimmer,
Nimmer on Copyright (rev. ed. 2016) ................................................................ 45
6 W.F. Patry, Patry on Copyright (2010) ................................................................. 26
Ben Sisario, Universal Music Posts Strong Results, and Streaming Is
a Bright Spot, N.Y. Times (Sept. 2, 2015) ......................................................... 16
TABLE OF AUTHORITIES
(continued)
Page(s)
viii
Brian T. Yeh, Copyright Licensing in Music Distribution,
Reproduction, and Public Performance, Congressional Research
Service (2015) ..................................................................................................... 13
Determination of Rates and Terms for Preexisting Subscription
Services and Satellite Digital Audio Radio Services, 78 Fed. Reg.
23,054, 23,080 (Apr. 17, 2013) .......................................................................... 13
Ed Christman, SiriusXM Attempting to License Directly From Labels,
Billboard (Aug. 11, 2011) ................................................................................... 55
GRAMMY Hall of Fame,
https://www.grammy.org/recording-academy/awards/hall-of-fame .................. 13
iHeart Radio, Get the iHeart Radio App,
http://news.iheart.com/features/get-the-iheartradio-app-240 ............................. 54
John Seabrook, The Song Machine (2015) ........................................................ 14, 15
Lois Grey et al., Cultural Capital: Challenges to New York State’s
Competitive Advantages in the Arts and Entertainment Industry,
Cornell University Industrial and Labor Relations Study (2009) ...................... 49
Nielsen, 2016 Music U.S. Mid-Year Report (July 7, 2016) ..................................... 15
Recording Indus. Ass’n of Am., Year End Statistics, 1989-2007 ........................... 14
Rolling Stone, 500 Greatest Songs of All Time (Apr. 7, 2011) ............................... 13
Music Licensing Study: Second Request for Comments,
79 Fed. Reg. 42,833, 42,834 n.3 (July 23, 2014) ............................................... 26
2 William Blackstone,
Commentaries on the Laws of England in Four Books (1766) ............................ 2
1
PRELIMINARY STATEMENT
Sound recordings fixed prior to February 15, 1972 are the historical
backbone of the music industry. These legendary recordings include the iconic hits
of The Turtles, the rights to which are owned by Flo & Eddie, Inc. (“Flo &
Eddie”). Unsurprisingly, pre-1972 sound recordings comprise a significant amount
of the music that Sirius XM Radio Inc. (“Sirius XM”) broadcasts (i.e., publicly
performs) on a daily basis to 28 million subscribers through its satellite and
Internet radio systems. Despite copying tens of thousands of pre-1972 recordings
to develop a vast library of music and build a massive, multi-billion dollar
business, Sirius XM refused to obtain licenses or pay royalties to exploit these
recordings.
In June 2015, after losing its motion for summary judgment in this case,
Sirius XM quickly settled a similar case brought by record labels seeking
compensation for its performance of pre-1972 sound recordings. Yet Sirius XM
still refuses to obtain licenses or pay royalties for exploiting pre-1972 sound
recordings owned by Flo & Eddie and similarly situated copyright holders. Sirius
XM emphasizes that pre-1972 recordings are not protected by federal copyright
law, which is true. But Congress has expressly permitted states to protect
copyright in these recordings however they see fit until 2067. See 17 U.S.C.
§ 301(c). New York has taken up that mantle and long provided common law
2
protection for sound recordings. See, e.g., Capitol Records, Inc. v. Naxos of Am.,
Inc., 4 N.Y.3d 540 (2005); Metro. Opera Ass’n v. Wagner-Nichols Recorder Corp.,
199 Misc. 786 (Sup. Ct. N.Y. Cnty. 1950), aff’d 279 A.D. 632 (1st Dep’t 1951).
More than 250 years ago, William Blackstone acknowledged the expansive
reach of common law copyright when he noted that any unauthorized use of a
person’s original work is “an invasion of his right of property.” 2 William
Blackstone, Commentaries on the Laws of England in Four Books 405-06 (1766).
New York’s common law of copyright provides robust protection against such
invasion by prohibiting the unauthorized appropriation of a creator’s skill, talent,
and hard work. It confers rights as expansive as those in tangible property,
including the right against unauthorized copying, sale, reproduction, public
performance, and dissemination. And it provides even more protection for sound
recordings than for other forms of copyrightable works.
Sirius XM now admits that New York common law copyright extends to
sound recordings, and concedes—as it must, given this Court’s seminal decision in
Capitol Records, Inc. v. Naxos—that post-sale, owners of sound recordings
maintain common law copyright protection against unauthorized “duplication and
distribution.” Appellant Br. at 15. But in Sirius XM’s view, these are the only
rights that remain post-sale: according to Sirius XM, public sale somehow
extinguishes the performance right that existed prior to the sale. See id. at 30.
3
Sirius XM’s self-serving distinctions between pre-sale and post-sale
exploitation, and between copying and performance have no support in precedent
or common sense. While other artistic works are protected under the common law
only until publication, “it has been the law in this state for over 50 years that . . .
the public sale of a sound recording otherwise unprotected by statutory copyright
does not constitute a publication sufficient to divest the owner of common-law
copyright protection.” Naxos, 4 N.Y.3d at 560. The rule Sirius XM asks this
Court to adopt also disregards the economic reality at stake here: Sirius XM wants
to broadcast pre-1972 sound recordings, reap significant profits, and pay artists
nothing.
Not surprisingly, Sirius XM has to reach far and wide to defend this
position. Rather than grappling with New York law, Sirius XM spends page after
page of its brief cataloging the development of federal protections for post-1972
sound recordings. It wants this Court to proceed as if—in contravention of federal
law and Naxos alike—the development of federal copyright protection dictates the
scope of New York common law. Exactly wrong: in fact, the federal Copyright
Act expressly preserves state common law copyright protections for sound
recordings fixed prior to 1972, 17 U.S.C. § 301(c), as this Court explained in
affirming New York’s protection for such works, Naxos, 4 N.Y.3d at 559-60.
4
Sirius XM also relies heavily on RCA Mfg. Co. v. Whiteman, 114 F.2d 86
(2d Cir. 1940), in arguing that New York does not recognize a performance right
after the public sale of a sound recording. What Sirius XM fails to disclose, let
alone reckon with—despite the fact that it has been raised on numerous
occasions—is that the very portion of Whiteman on which it relies was explicitly
overruled more than 60 years ago. See Capitol Records, Inc. v. Mercury Records
Corp., 221 F.2d 657 (2d Cir. 1955). Since then, Whiteman and the
misunderstanding of New York law on which it rested have been repeatedly
repudiated by this Court and the federal court from which it arose. Indeed, in
Naxos, this Court held that, for sound recordings, no property rights are
extinguished due to a sale.
Sirius XM wants to skirt New York’s established common law protections
by employing new technologies—digital streaming and satellite broadcasting—that
allow it to distribute music to customers who can then listen to songs without
purchasing a physical or digital copy of a record. But unauthorized dissemination
without compensation infringes on a copyright owner’s exclusive right to authorize
commercial exploitation of her property and violates her property interests, no
matter the mechanism of the infringement.
Perhaps because they have no support in the law for their position, Sirius
XM and its amici complain about “settled expectations” and the logistics of
5
compensating copyright holders. Neither expectations nor administrative details
would be reason to unravel the substantial common law copyright protections that
New York has historically given sound recordings. Even more importantly, they
can carry no weight in light of Sirius XM’s recent settlement guaranteeing royalty
payments for the vast majority of the pre-1972 recordings that it plays—a fact that
Sirius XM neglected to share with this Court.
The notion that a business can reproduce and perform sound recordings—in
exchange for hundreds of millions of dollars in subscription fees—without
compensating the recording artists whose artistic effort and originality created
those works violates the letter and the spirit of New York’s common law
copyright. This Court should reject it, answer the certified question in the
affirmative, and confirm that New York common law copyright protects public
performance of sound recordings both before and after sale.
CERTIFIED QUESTION ACCEPTED FOR REVIEW
The United States Court of Appeals for the Second Circuit certified, A-1729,
and this Court accepted, A-1740, the following 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?”
6
STATEMENT OF FACTS
I. The Origins of Copyright Protection for Sound Recordings in State and
Federal Law
Copyright law in the United States has historically consisted of a dual
system of federal and state protection. See 1 Melville B. Nimmer & David
Nimmer, Nimmer on Copyright § 2.02 (rev. ed. 2016). Under this system, any
copyrightable work had perpetual common law copyright under state law, often,
but not always, until the point of publication. When a work was divested of
protection under state common law, it became shielded—to the extent available—
by federal statutory copyright law.
Sound recordings occupy a unique space in copyright law, as this Court has
recognized. See Naxos, 4 N.Y.3d at 552-53. Every recorded song carries two
distinct copyrights—one for the musical work, or “the notes and lyrics of the song
as they appear on sheet music,” and one for the sound recording, or “the recorded
musical work performed by a specific artist” or group of artists. Recording Indus.
Ass’n of Am., Inc. v. Librarian of Congress, 608 F.3d 861, 863 (D.C. Cir. 2010).
While federal copyright law has protected musical works since 1831, see
Copyright Act of 1831, Ch. 16, 4 Stat. 436 (1831), it did not provide express
protection for sound recordings until the Sound Recording Act of 1971 (“SRA”),
see Pub. L. 92-140, 85 Stat. 391 (1971).
7
Prior to 1971, state law filled the gap left by federal law. See Naxos, 4
N.Y.3d at 553 (“Congress . . . confirmed that, although sound re-cordings were not
protected under federal law, there was nothing to prevent the states from
guaranteeing copyright protection under common law.”). When Congress adopted
federal protections for sound recordings in the SRA, it chose to preserve these state
law rights. The SRA made the new federal protection for sound recordings
applicable only to sound recordings “fixed” after February 15, 1972. See SRA,
Pub. L. 92-140, 85 Stat. 392 (1971). But Congress directed that “nothing in title
17” was to be “applied retroactively or be construed as affecting in any way any
rights with respect to sound recordings fixed before” 1972. Id. Four years later,
Congress passed the 1976 Copyright Act, which expressly preempted any state
statutory or common law protections that are also provided under federal statutory
copyright law—including for “unpublished” works. See 17 U.S.C. § 301(a)
(1976); see Pub. L. No. 94-553, 90 Stat. 2572 (1976). However, in Section 301(c)
of the Act, Congress specifically exempted certain protections from this preemptive
scheme—including by preserving the SRA’s carve-out of state common law
protections for all sound recordings fixed prior to February 15, 1972. See 17
U.S.C. § 301(c) (1976). This provision instructs that “[w]ith respect to sound
recordings fixed before February 15, 1972, any rights or remedies under the
8
common law or statutes of any State shall not be annulled or limited by this title
until February 15, 2047.” Id.
In both the SRA and the 1976 Act, Congress granted owners of copyrights in
post-1972 sound recordings protection against unauthorized reproduction and
distribution, but not against unauthorized public performance. With the advent of
digital broadcasting, Congress passed the Digital Performance Right in Sound
Recordings Act of 1995 (“DPRA”), which gives the owner of a copyright to a
sound recording the exclusive right “to perform the copyrighted work publicly by
means of a digital audio transmission.” 17 U.S.C. § 106(6) (1996). Pursuant to
this provision, any digital audio broadcaster—including, for example, Sirius XM—
that plays a sound recording that was fixed after February 15, 1972 is required to
obtain a license and pay a royalty for performing (i.e., broadcasting) that recording.
See 17 U.S.C. §§ 106(6), 114.
Congress has repeatedly made clear that it does not wish to interfere with
state common law copyright protections for pre-1972 sound recordings. As noted
above, in passing the 1976 Act, Congress preserved the dual system of copyright
with regard to sound recordings, with state protection—no matter its scope—
applying to all sound recordings fixed before February 15, 1972. When enacting
the DPRA, Congress did not amend or otherwise diminish the carve-out for these
state law protections. Three years later, Congress reaffirmed its commitment to
9
state common law copyright by passing the Sonny Bono Copyright Term
Extension Act, Pub. L. No. 105-298, 112 Stat. 2827 (1998), which amended
Section 301(c) to extend state law protection of pre-1972 recordings from 2047
until the current expiration date of 2067. In sum, Congress has spoken: federal
copyright law has no bearing on state common law protections for pre-1972 sound
recordings.
II. The Parties and Their Role in the Music Industry
A. Flo & Eddie (The Turtles)
The Turtles are a legendary American rock band originally formed in 1965
by six teenagers based in Southern California. A-1026. The band had numerous
hit records throughout the late 1960s, including a cover of Bob Dylan’s “It Ain’t
Me Babe” (1965), “You Baby” (1966), “She’d Rather Be With Me” (1967),
“Elenore” (1968), “You Showed Me” (1969), and the iconic “Happy Together”
(1967), which is broadly recognized as a quintessential 1960s recording. A-1026-
27.
In 1970, The Turtles sued their record label, White Whale, for systematic
underpayment of royalties. A-1027. That lawsuit settled in 1971, and White
Whale transferred all right, title and interest in and to the original master
recordings of The Turtles to the band members. Two of the band’s founding
members—Mark Volman and Howard Kaylan—purchased the other members’
10
interests in The Turtles’ master recordings and ultimately transferred all of the
rights in these recordings to Flo & Eddie, a corporation Mr. Volman and Mr.
Kaylan created in 1971 and still own and control. Id.
For more than 40 years, Flo & Eddie has exploited its rights to these
recordings by, among other things, licensing the rights to make and sell records,
licensing the rights for The Turtles’ recordings to be used in movies, television
shows, and commercials, and licensing the recordings to be sold digitally,
including through iTunes and Amazon. Id. Mr. Volman and Mr. Kaylan also
devote significant time and effort to promoting The Turtles and their music,
including by headlining summer tours such as the “Happy Together Tour,” which
features The Turtles and other 1960s musical groups. A-1028.
B. Sirius XM and Its Commercial Exploitation of Pre-1972 Sound
Recordings
In 2008, Sirius Satellite Radio and XM Satellite Radio merged to become
the United States’ largest radio broadcaster. A-1102. Sirius XM provides music
and other content on a subscription fee basis (with fees ranging from $9.99 to
$18.99 per month) to more than 28 million customers through its satellite and
Internet radio systems. A-1102, 1104. Sirius XM’s subscribers receive audio
content in numerous ways, including via digital radios installed in vehicles and
instant and on-demand streaming through a computer or mobile device. A-1102.
Sirius XM also broadcasts and streams recordings to partners who operate content
11
delivery networks and subscribers to Dish Network’s television services, as well as
other end users who hear Sirius XM’s broadcasts as streamed by authorized third
parties. A-1102-04, 1256-58.
Sirius XM’s satellite radio service broadcasts on hundreds of channels,
including many dedicated entirely to music. Pre-1972 recordings are played on all
types of channels broadcast by Sirius XM, including multiple music channels
devoted solely to playing pre-1972 recordings, such as “40s on 4,” “50s on 5,” and
“60s on 6.” A-1106. Sirius XM’s Internet radio service includes most of the same
channels offered by Sirius XM’s satellite service, and also offers a number of
additional channels, features, and applications not available through the satellite
service. A-1115. For example, Sirius XM’s “OnDemand” service permits Internet
subscribers to download broadcasts from a content catalog and listen to them at
any time. A-1117. And the “MySXM” feature allows subscribers to personalize
their music listening experience by providing certain genres of music on particular
stations. A-1118.
Sirius XM’s technical operation requires the creation and maintenance of
three different music libraries and databases, located in New York City and
Washington D.C. A-1155. In creating these music libraries and databases, Sirius
XM copied at least 42,000 pre-1972 recordings, including at least 85 recordings by
The Turtles. A-981, 990, 1143-44. After creating these master libraries and
12
databases, Sirius XM copied them several times over to create numerous onsite
backup libraries and databases, and multiple offsite disaster recovery libraries and
databases. A-1163-66. Sirius XM has also created copies of these libraries and
databases to share with third parties that are authorized to broadcast Sirius XM
channels. A-1169-71.
As part of its daily operations, Sirius XM regularly makes additional copies
of individual recordings contained within its libraries, including “tips and tails”
(the first and last few seconds of a recording, to facilitate voice transitions by
program hosts), full copies of recordings for “play out” servers,1 and buffer copies.
A-1177-81. Sirius XM also authorizes the creation of a regular five-hour cache of
its broadcasts for “on demand” delivery to Internet subscribers. A-1233.
Pre-1972 sound recordings are an enormously valuable part of Sirius XM’s
catalog and business. Given the broad popularity of artists as varied as the Beach
Boys, Chuck Berry, Diana Ross, and Johnny Cash, and of iconic recordings
including “Bridge Over Troubled Water” by Simon & Garfunkel, “Georgia on My
Mind” by Ray Charles, and “Respect” by Aretha Franklin, to give just a few
examples, it is unsurprising that pre-1972 recordings constitute approximately 15
1 Because Sirius XM broadcasts songs from a “play out” server, rather than directly from one
of its music libraries, Sirius XM transfers a new copy of each song to that server each time
that song is broadcast. Thus, if a particular song is broadcast one hundred times, it will be
copied to the “play out” server one hundred times. A-1177-78, 1196-99.
13
percent of all digital radio transmissions, including transmissions by Sirius XM.
See Brian T. Yeh, Congressional Research Service, Copyright Licensing in Music
Distribution, Reproduction, and Public Performance, at 19 (2015); Determination
of Rates and Terms for Preexisting Subscription Services and Satellite Digital
Audio Radio Services, 78 Fed. Reg. 23,054, 23,080 (Apr. 17, 2013) (stating that
Sirius XM conceded that pre-1972 sound recordings comprise between 10 and 15
percent of its subscription revenue).2 Prior to June 2015, Sirius XM maintained a
corporate policy that it did not have to obtain licenses or pay royalties to copy or
perform any of these recordings, A-1270-73, and Sirius XM still refuses to obtain
licenses or pay royalties to perform the iconic recordings of The Turtles and many
others not covered by its 2015 settlement.
C. Market Changes in the Economics of Music Consumption
This case, along with similar cases in California and Florida, arises amidst
significant changes in the technology and economics of music consumption that
have occurred over the past fifteen years: first, the transition from physical sales of
2 Of the Rolling Stone’s 500 Greatest Songs of All Time, 305 were recorded prior to 1972,
including 9 of the top 10. See Rolling Stone, 500 Greatest Songs of All Time (Apr. 7, 2011),
available at http://www.rollingstone.com/music/lists/the-500-greatest-songs-of-all-time-
20110407 (last visited Sept. 18, 2016). As of 2015, 83 percent of sound recordings inducted
into the GRAMMY Hall of Fame, which honors “recordings of lasting qualitative or
historical significance” and includes The Turtles’ “Happy Together,” were “fixed” prior to
1972. See GRAMMY Hall of Fame, GRAMMY.org, https://www.grammy.org/recording-
academy/awards/hall-of-fame (last visited Sept. 18, 2016).
14
albums to the digital sales of singles (largely in response to digital music piracy),
and second, the transition from digital music downloads to digital music streaming.
In the early 2000s, the advent of Napster and other peer-to-peer file sharing
programs permitted sound recordings to be copied and instantaneously
disseminated worldwide for free—i.e., pirated. These programs gutted the market
for compact discs and cassette tapes. The impact on record sales was immediate
and severe. Between 2000 and 2005, domestic sales (in physical units) of CDs fell
by nearly 25 percent, domestic sales of cassettes plummeted by 82 percent, and the
once-burgeoning market for CD singles nosedived by 91 percent. See Recording
Indus. Ass’n of Am., Year End Statistics, 1989-2007, available at
http://www.icce.rug.nl/~soundscapes/VOLUME02/Trends_and_shifts_Appendix.s
html (“RIAA’s Year End Statistics, 1989-2007”) (last visited Sept. 18, 2016).
The record industry mitigated—but never fully recovered from—this
rampant piracy by developing lawful music downloading services. These services,
which allowed a consumer to download music legally (for a price) and paid
royalties to the copyright holders, were initially successful: by 2007, sales of
digital singles and albums resulted in over $1.2 billion in revenues. See RIAA’s
Year End Statistics, 1989-2007. But by replacing the sale of albums with sales of
singles, digital music marketplaces cut record labels’ and artists’ revenues in half.
See John Seabrook, The Song Machine 134 (2015).
15
Although all recording artists, including The Turtles, had to adjust to this
new reality, digital music marketplaces compensated artists for their recordings
because they received royalties on each digital sale. But this revenue stream has
now been compromised by yet another paradigm shift—the introduction of digital
streaming services. Streaming services do not require a user to purchase any
specific song in order to play it; rather, a user pays a monthly subscription fee to a
digital radio provider, such as Sirius XM or Pandora, to listen to an Internet
channel playing any type of music she selects.3 A-905, 996. Alternatively, a user
can pay a monthly subscription fee to an “on demand” service like Spotify or
YouTube and select any song from a catalog of millions, which can be played via
an Internet or cellular connection. Seabrook, supra, at 285-86. The use of
streaming services has skyrocketed every year since they were introduced.
According to Nielsen’s SoundScan statistics, listeners “streamed” 208.9 billion
songs between January and July of 2016 alone—an increase of nearly 60 percent
over the same time period in 2015. Over the same time period, physical and digital
album sales declined by 12 percent, and 18 percent, respectively. Nielsen, 2016
Music U.S. Mid-Year Report (July 7, 2016), available at
3 Unlike its Internet service, Sirius XM’s satellite service broadcasts a digital transmission
through a satellite and is not a “streaming” service. Nevertheless, Sirius XM’s satellite
service broadcasts music to its listeners without those listeners having to pay for a digital
download of those songs. A-980-81.
16
http://www.nielsen.com/content/dam/corporate/us/en/reports-downloads/2016-
reports/us-mid-year-report-july-2016.pdf (last visited Sept. 18, 2016).
As digital streaming becomes more common, the right to license and receive
compensation for the digital public performance of music (that is, digital
“streaming” and “broadcasting”) is increasingly crucial to the livelihood of
recording artists. As explained supra at 8, the Copyright Act requires digital
streaming and broadcasting services to pay royalties for performing post-1972
records. Thus, the astronomic rise in streaming services and corresponding royalty
revenues has partially offset the declining revenue from physical and digital sales
of post-1972 sound recordings. See Ben Sisario, Universal Music Posts Strong
Results, and Streaming Is a Bright Spot, N.Y. Times (Sept. 2, 2015). But without
royalty revenues from streaming services, artists who made pre-1972 sound
recordings are left uncompensated for the use and enjoyment of their work by the
multi-billion dollar music streaming and broadcasting industry.
III. Procedural History
A. Proceedings Below
On August 16, 2013, Flo & Eddie filed this action on behalf of itself and a
class of owners of pre-1972 recordings in the United States District Court for the
Southern District of New York, bringing claims against Sirius XM for New York
state common law copyright infringement and unfair competition. A-1. On May
17
30, 2014, Sirius XM moved for summary judgment, and, as relevant to the
question certified to this Court, contended that New York common law does not
afford copyright holders a public performance right in sound recordings. See
Sirius XM Memorandum of Law in Support of Motion for Summary Judgment
(“Dkt. 54”) at 8, Flo & Eddie, Inc. v. Sirius XM Radio Inc., No. 13-cv-5784(CM)
(S.D.N.Y. May 30, 2014).
Before the District Court, Sirius XM relied almost entirely on the federal
Copyright Act, which by its express terms does not apply to pre-1972 sound
recordings, as well as on reports and studies provided to the United States
Congress by the United States Copyright Office. See id. at 8-12, 21-23. While
acknowledging that New York common law protects sound recordings, as this
Court held in Naxos, see 4 N.Y.3d at 559-60, Sirius XM contended that it did not
cover public performance of recordings because no case had yet squarely
recognized this protection. Dkt. 54 at 12-14. Sirius XM also claimed that
performance of pre-1972 sound recordings should not be protected under New
York common law because it would not create “incentives for the creation of new”
recordings. Id. at 20.
On November 14, 2014, the District Court (McMahon, J.) denied Sirius
XM’s motion and concluded that New York law protects a public performance
18
right in pre-1972 sound recordings.4 A-1666. The District Court explained that
New York common law provided an entire “bundle” of rights to copyright holders,
including a right against unauthorized reproduction, distribution, and performance,
A-1682 (citing 2 Nimmer on Copyright § 8[C][2]), and noted that in accordance
with these general principles, “New York courts have long afforded public
performance rights to holders of common law copyrights in works such as plays
and films.” A-1682 (citations omitted).
The District Court squarely rejected Sirius XM’s reliance on federal law, on
the ground that it does not preempt or limit state law protections. A-1677, 1682.
The Court further explained that federal law actually supports state protection of
public performance because it establishes that “an express carve-out is required in
order to circumscribe the bundle of rights appurtenant to copyright.” A-1685. The
District Court noted that in the SRA, Congress limited federal copyright protection
in sound recordings to unauthorized reproduction and distribution. The only
logical reason for taking this step was that “absent such an explicit limitation[],
holder[s] of sound recording copyrights would have enjoyed the entire bundle of
4 Sirius XM also moved for summary judgment on two grounds not before this Court, both of
which the District Court rejected. The District Court denied Sirius XM’s fair use defense,
concluding that Sirius XM’s “non-transformative use” of The Turtles’ recordings “for
commercial gain” could not be “fair.” A-1696. The District Court also held that the
Dormant Commerce Clause does not bar Flo & Eddie’s claims because New York State
“does not ‘regulate’ anything by recognizing common law copyright.” A-1702.
19
rights traditionally granted to copyright holders—including the right to public
performance” under federal law. A-1686. The District Court rejected Sirius XM’s
narrow reading of New York case law, finding that “[n]o New York case
recognizing a common law copyright in sound recordings has so much as
suggested that right was in some way circumscribed, or that the bundle of rights
appurtenant to that copyright was less than the bundle of rights accorded to plays
and musical compositions.” A-1685.
The District Court likewise dismissed Sirius XM’s policy-based arguments.
There is no reason, the Court explained, to believe that “either statutory or
common law copyright any longer focuses on fostering future creativity, as
opposed to rewarding past creativity.” A-1688. Nor had Sirius XM shown that
recognizing public performance rights would “unjustly punish good faith
investors.” Id. To the contrary: “New York has always protected public
performance rights in works other than sound recordings” and there is “no reason
why New York—a state traditionally protective of performers and performance
rights—would treat sound recordings differently.” A-1690.
Following this decision, Sirius XM changed counsel and filed a motion for
reconsideration. Sirius XM’s Memorandum of Law in Support of Motion for
Reconsideration (Dkt. 100), Flo & Eddie, Inc. v. Sirius XM Radio, Inc., No. 13-cv-
5784 (CM) (S.D.N.Y. Dec. 1, 2014). It claimed that its prior counsel had
20
overlooked Whiteman, which “established the longstanding rule that no public
performance right exists in sound recordings at common law.” Id. at 12. On
December 12, 2014, the District Court denied Sirius XM’s motion for
reconsideration, explaining that Whiteman had been reversed 60 years ago, and in
any event, had never stood for the proposition that New York does not recognize a
public performance right in sound recordings. A-1707-08.
On interlocutory appeal (which Flo & Eddie did not oppose), the United
States Court of Appeals for the Second Circuit recognized that “New York
common law . . . provide[s] certain rights to copyright holders in” pre-1972 sound
recordings. A-1733 (citing Naxos, 4 N.Y.3d at 563). The Second Circuit ruled
that the nature and scope of those rights presented a “significant and unresolved
issue of New York copyright law,” A-1730, “appropriately resolved by a New
York court,” A-1735. Accordingly, it certified the following question to this
Court: “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?” A-
1739.5 On May 3, 2016, this Court accepted the certified question. A-1740.
5 The Second Circuit declined to address the issues of fair use or the Dormant Commerce
Clause before this Court had clarified the parameters of the public performance right, and the
certified question does not encompass these points. A-1735 n.4, 1738.
21
B. Other Actions Challenging Sirius XM’s Refusal to Pay For Pre-
1972 Sound Recordings
Because pre-1972 sound recordings are protected on a state-by-state basis,
Flo & Eddie has filed class actions in California and Florida against Sirius XM and
other digital radio providers, such as Pandora. See Flo & Eddie, Inc. v. Sirius XM
Radio Inc., No. 13-cv-5693 (C.D. Cal. 2013); Flo & Eddie, Inc. v. Pandora Media
Inc. et al., No. 14-cv-7648 (C.D. Cal. 2014); and Flo & Eddie, Inc. v. Sirius XM
Radio Inc., No. 13-cv-23182 (S.D. Fla. 2013).
Flo & Eddie prevailed in both California actions. See Flo & Eddie, Inc. v.
Sirius XM Radio Inc., No. 13-cv-5693, 2014 WL 4725382 at *1 (C.D. Cal. Sept.
22, 2014) (granting summary judgment to Flo & Eddie “on the basis of public
performance conduct”); Order Denying Pandora’s Motion to Dismiss, Flo &
Eddie, Inc. v. Pandora Media, Inc., No. 14-cv-7648, Dkt. 28 at *18-29 (C.D. Cal.
Feb. 23, 2015) (denying Pandora’s motion to dismiss and affirming that California
state law grants “exclusive ownership” to rights holders in sound recordings,
including the right to publicly perform a recording).6 In the Florida action, the
district court recognized that “California and New York are the creative centers of
the Nation’s art world” and have “well-developed case law regarding the arts and
6 Sirius XM and Pandora, respectively, have appealed and those actions are currently pending
before the United States Court of Appeals for the Ninth Circuit.
22
related property rights,” including the public performance right at issue in these
cases, but could not identify comparable case law in Florida. See Flo & Eddie, Inc.
v. Sirius XM Radio Inc., No. 13-cv-23182, 2015 WL 3852692 (S.D. Fla. June 22,
2015) (granting Sirius XM’s motion for summary judgment). Flo & Eddie
appealed to the United States Court of Appeals for the Eleventh Circuit, which
certified the question to the Florida Supreme Court. See Flo & Eddie, Inc. v. Sirius
XM Radio Inc., 827 F.3d 1016 (11th Cir. 2016).
In addition to Flo & Eddie, a number of other copyright holders have filed
actions against Sirius XM, Pandora, and other digital radio providers for
infringement in connection with unlicensed and uncompensated use of pre-1972
recordings.7 Among them was an action filed in September 2013 by several major
record labels that hold rights to many pre-1972 sound recordings. Capitol
Records, LLC. v. Sirius XM Radio Inc., No. BC-520981 (Cal. Super. Ct. 2013). In
June 2015, Sirius XM settled that lawsuit and agreed to pay $210 million in
exchange for a covenant not to sue over use of plaintiffs’ pre-1972 sound
recordings through December 31, 2017. U.S. Securities and Exchange
Commission, Form 10-K (Feb. 2, 2016) (“Sirius XM FY 2015 10-K”) at 12,
Commission File #001-34295, Registrant: Sirius XM Holdings, Inc.,
7 See, e.g., Sheridan v. Sirius XM Radio Inc. and Pandora Media, Inc., No. 15-cv-7576 (D.N.J.
2015); Sheridan v. iHeart Media, Inc., No. 15-cv-7574 (D.N.J. 2015).
23
https://www.sec.gov/Archives/edgar/data/908937/000156459016012174/siri-
10k_20151231.htm. Sirius XM also received the right to negotiate a license with
the record labels to reproduce, perform, and broadcast the pre-1972 recordings
after January 1, 2018. See Sirius XM June 2015 10-Q at 21 (July 28, 2015),
https://www.sec.gov/Archives/edgar/data/908937/000156459015005695/siri-
10q_20150630.htm. According to Sirius XM’s annual securities filing, the
settlement purports to apply to “approximately 85% of the pre-1972 recordings
[Sirius XM] ha[s] historically played.” Sirius XM FY 2015 10-K at 18. In
addition, Sirius XM disclosed that it “entered into certain direct licenses with other
owners of pre-1972 recordings, which in many cases include releases of any claims
associated with our use of pre-1972 recordings.” Id.
ARGUMENT
Sirius XM concedes that New York’s common law applies to pre-1972
sound recordings, but inexplicably relies on the federal treatment of post-1972
sound recordings in trying to circumscribe the scope of that right. But Congress
expressly left the scope of copyright protection for pre-1972 recordings to be
resolved by state common law, see 17 U.S.C. § 301(c), and New York has filled
that gap in a line of seminal cases that ensure robust common law copyright
protection for pre-1972 sound recordings.
24
This Court’s precedent confirms that New York’s common law copyright
protection for pre-1972 sound recordings includes control over public
performance. Sirius XM nonetheless claims that public sale divests pre-1972
sound recordings of all but “core” copyright protections—according to Sirius XM,
copying and resale—the two rights that Sirius XM contends it does not infringe by
broadcasting pre-1972 sound recordings to millions of paying customers. The
federal copyright law and policy on post-1972 recordings on which Sirius XM
relies is irrelevant, and RCA Mfg. Co. v. Whiteman, the Second Circuit case on
which Sirius XM also relies, has been overruled. Moreover, this Court has already
rejected the crux of Sirius XM’s argument, holding in Naxos that public sale does
not extinguish common law copyright in sound recordings. Sirius XM’s effort to
short-circuit Naxos by concocting a “copying” versus “intended use” distinction is
incoherent and crafted only to allow it to avoid paying for the songs it broadcasts.
Sirius XM and its amici complain that New York courts have never
explicitly addressed the question presented here and resort to hyperbolic forecasts
of industry upheaval. As to the first point, while existing precedent weighs
strongly in favor of Respondent’s position here (as the District Court explained),
this precise issue has not previously been squarely presented and it is appropriate
to resolve it now. Indeed, this Court hears cases for precisely that reason. See 22
N.Y.C.R.R. § 500.27(a). As to the second point, upholding the legal rights of
25
owners of pre-1972 sound recordings will not give rise to the cataclysms that Sirius
XM and its amici prophesize. Like other industry players, Sirius XM routinely
pays to broadcast post-1972 sound recordings, and has reached a settlement to do
just that for the vast majority of the pre-1972 sound recordings it broadcasts.
Sirius XM’s effort to carve out an unprincipled and self-serving exception from
common law copyright so that it can broadcast its remaining pre-1972 recordings
without payment should be rejected.
I. New York Law—Not Federal Law—Governs This Case
The federal Copyright Act provides that recordings made prior to February
15, 1972 are protected by state law, no matter how broad that law may be. See 17
U.S.C. § 301(c); supra at 7-9. It is a hornbook principle of federalism that a state
can provide greater protections than federal law unless expressly preempted. See
Addington v. Texas, 441 U.S. 418, 431 (1979) (“The essence of federalism is that
states must be free to develop a variety of solutions to problems and not be forced
into a common, uniform mold.”); Rice v. Santa Fe Elevator Corp., 331 U.S. 218,
230 (1947) (“[T]he historic [] powers of the States [are] not . . . superseded by . . .
the Federal Act unless that [is] the clear and manifest purpose of Congress.”).8
8 New York law provides numerous protections that go beyond federal law. See, e.g., N.Y.
Gen. Bus. Law §§ 352-359-h (McKinney 2016) (New York’s Martin Act).
26
Here, Congress has not only declined to preempt state copyright protections,
but it has expressly exempted them from preemption. 17 U.S.C. § 301(c). In
Goldstein v. California, the U.S. Supreme Court unequivocally confirmed that the
Copyright Act means exactly what it says: states have the broad authority to
protect pre-1972 sound recordings in whatever way they deem fit: “Congress . . .
has left the area unattended, and no reason exists why the State should not be free
to act.” 412 U.S. 546, 570 (1973). “States are thus free to extend pre-1972
recordings the full panoply of rights granted original works of authorship by the
federal Copyright Act and beyond . . . .” 6 W.F. Patry, Patry on Copyright § 18.55
at 18-198 (2010) (emphasis added).9
Because all of the sound recordings at issue in this case were fixed prior to
February 15, 1972 and this suit was filed in New York, the only applicable
copyright law is New York state common law. Yet Sirius XM devotes nearly 20
pages of its brief to the history of federal copyright protections for post-1972 sound
recordings. See Appellant Br. at 3-4, 13-19, 21-24, 38-39, 43-44.10 Sirius XM
9 Despite Sirius XM’s reliance on an earlier statement by the U.S. Copyright Office, see
Appellant Br. at 23-24, the Office has since acknowledged that a state could “properly
interpret its law to recognize” “a public performance right in pre-1972 [sound] recordings.”
Music Licensing Study: Second Request for Comments, 79 Fed. Reg. 42,833, 42,834 n.3
(July 23, 2014). Sirius XM acknowledges this later statement, but fails to substantively
address it. See Appellant Br. at 24 n.4.
10 Nearly all of Sirius XM’s amici do the same: Pandora Br. at 13-20, 24-27; Copyright Prof.
Br. at 14-20; National Association of Broadcasters (“NAB”) Br. at 11-14; NY Broadcasters
27
details federal legislative history, as well as testimony, reports, and studies
provided to Congress by the U.S. Copyright Office, all discussing the treatment of
post-1972 sound recordings under federal law. None of this bears on the nature
and scope of New York protections for pre-1972 sound recordings.
Sirius XM also claims that statements made by record executives seeking a
federal performance right for sound recordings suggest that no such right existed
under state common law. See Appellant Br. at 22-23; see also Copyright Prof. Br.
at 17-20. While the federal Copyright Act eventually added a public performance
right for post-1972 sound recordings, it maintained the carve-out for state law
protections for pre-1972 sound recordings. See 17 U.S.C. § 301(c). The notion
that record executives wanted standardized federal legislation for all sound
recordings is unsurprising and certainly does not indicate a preference for no
protection instead of state protection for pre-1972 recordings. In any event, their
views are irrelevant to determining whether New York common law includes a
performance right.11
Br. at 28-30, 33-37; Electronic Frontier Foundation (“EFF”) Br. at 5-7; CBS Radio Br. at 3,
12-16.
11 Equally irrelevant is the motley collection of blog posts, articles, and law student notes cited
by Sirius XM purporting to identify a “consensus that state law does not provide a public
performance right for sound recordings.” See Appellant Br. at 21 n.3. These sources cite no
case law or state statutory provisions except for Whiteman, which has not been good law for
over 60 years. Much like the rest of Sirius XM’s brief, these secondary sources discuss
federal law and amount to nothing more than wishful thinking about the status of state
common law protections and the validity of Whiteman’s analysis.
28
Sirius XM’s lengthy exegesis of federal copyright law is beside the point.
The Copyright Act preempts state copyright protection of post-1972 sound
recordings, but it leaves unencumbered state protection of pre-1972 sound
recordings. As such, neither the Copyright Act itself nor its legislative history
constrains the scope of copyright protection accorded pre-1972 recordings under
the common law of New York or any other state.
II. New York’s Common Law Protects Pre-1972 Sound Recordings From
Unauthorized Post-Sale Public Performance
New York common law protection for pre-1972 sound recordings is broad
and encompasses all forms of infringement, whether through copying, selling,
reproduction, or public performance. The right to restrict unauthorized public
performance, just like the protections against duplication and distribution, remains
with the owner after publication or public sale, lasting until federal preemption
commences in 2067.
While Sirius XM acknowledges that common law copyright protection for
pre-1972 sound recordings survives public sale, it contends that this protection
shrinks after sale, leaving only a narrow “anti-piracy” right that protects what
Sirius XM deems to be the “core” of copyright—copying and selling. See
Appellant Br. at 12-13, 33-34, 38-39. That proposition lacks any support.
Recording artists, of course, consider “core” copyright rights to encompass public
performance, and New York courts have agreed. See Capitol Records, Inc. v.
29
Greatest Records, Inc., 252 N.Y.S.2d 553, 556 (Sup. Ct. N.Y. Cnty. 1964) (listing
common law rights as “protection against the unauthorized appropriation,
reproduction, or duplication” of a performance) (emphasis added). Nothing about
sale warrants extinction of a performance right, any more than it transforms the
right to control copying and distribution, which indisputably survives sale. This
Court should affirm that New York common law copyright covers performance
and reject Sirius XM’s novel theory of radically constricted post-sale “anti-piracy”
rights.
A. New York’s Common Law Copyright Protects Public
Performance of Pre-1972 Sound Recordings
Under New York law, common law copyright is a property right that allows
owners of artistic works to protect the product of intellectual labor, time, effort,
money, and skill. An artistic work “is not distinguishable from any other personal
property. It is governed by the same rules of transfer and succession, and is
protected by the same process, and has the benefit of all the remedies accorded to
other property so far as applicable.” Palmer v. De Witt, 47 N.Y. 532, 538 (1872)
(discussing common law copyright in the manuscript of a play). While the scope
of rights in artistic works, like all property rights, is limited by practicality and
other concerns, see Appellant Br. at 30-31, copyright protections are as expansive
as rights in other forms of tangible property. See Metro. Opera, 199 Misc. at 797-
98. As this Court has recognized, “[i]n the latter half of the 18th century, a
30
recognition emerged that the creation of a literary work should vest rights in its
author similar to the ownership rights in perpetuity associated with other forms of
tangible property.” Naxos, 4 N.Y.3d at 547; see also Tams v. Witmark, 63 N.Y.S.
721, 722 (Sup. Ct. N.Y. Cnty.), aff’d, 48 A.D. 632 (1st Dep’t 1900) (“The literary
property here in suit is personal property, and is governed by the same rules of
transfer as other personal property.”).
As with other species of property, an owner’s control over artistic and
intellectual property is comprised of a “bundle” of rights. Under New York law,
these rights include the ability to exclude others from unauthorized reproduction,
dissemination, public performance, copying, or sale of an artistic work. See
Greatest Records, 252 N.Y.S.2d at 556.
The right of public performance—that is, the right to prevent others from
publicly “performing” an artistic work without authorization—has long been part
of the common law bundle. One of the earliest expositions of the right was set
forth by the U.S. Supreme Court in Ferris v. Frohman, 223 U.S. 424 (1912).
There, an English playwright sought to protect his unpublished manuscript “against
its unauthorized use” in the United States, despite the unavailability of copyright
protection in England. Id. at 434. The Court held that such protection was
available, and listed among the “sticks” in the playwright’s property bundle the
right to prohibit pirating, copying, and performance. Id. at 435-36 (“where a
31
dramatic performance has been allowed by the author to be acted at a theater, no
person has a right to pirate such performance, and to publish copies of it
surreptitiously; or to act it at another theater without the consent of the author or
proprietor”) (emphasis added).
New York courts have acknowledged the validity of a public performance
right in a range of cases holding that the right can be assigned through sale or
lease. See Palmer, 47 N.Y. at 541 (plaintiff had acquired “the right to the first
publication of th[e] drama, as well as the right to represent the same upon the stage
in the United States”); Brandon Films, Inc. v. Arjay Enters., Inc., 230 N.Y.S.2d 56,
58 (Sup. Ct. N.Y. Cnty. 1962) (finding that plaintiff retained the right to control the
unauthorized exhibition of films even after leasing that right to others); De Mille
Co. v. Casey, 201 N.Y.S. 20, 28 (Sup. Ct. N.Y. Cnty. 1923) (rejecting argument
that the sale of rights to perform a photoplay upon satisfaction of certain conditions
had extinguished plaintiff’s right to terminate defendant’s license if such
conditions were not met). New York’s unambiguous recognition of the ability to
sell or assign the right to perform artistic works “presupposes” that the owner has a
performance right to sell. Mercury Records, 221 F.2d at 662.
Sound recordings are no different. The public performance right in sound
recordings has been treated as a valuable property right that merits robust
protection. For example, in Metropolitan Opera, a case concerning the copying
32
and sale of Columbia Records’ sound recordings of the Metropolitan Opera’s
orchestral performances, the Court explained that Metropolitan Opera held “[t]he
exclusive right” to the productions created by it, including “the right to license the
use of its performances and productions commercially in radio broadcasts,
recordings and in other forms” upon its terms. 199 Misc. at 798. And in Naxos,
which concerned the unauthorized sale of recorded performances, this Court cited
approvingly—and described at length—the Pennsylvania Supreme Court’s
decision in Waring v. WDAS Broadcasting Station Inc., 327 Pa. 433 (1937), which
enjoined public performances of pre-1972 sound recordings. See also Capitol
Records, LLC v. Escape Media Group, Inc., No. 12-cv-6646 (AJN), 2015 WL
1402049, at *4 (S.D.N.Y. Mar. 25, 2015) (citing Naxos as support for plaintiff’s
claim that unauthorized public performance of its pre-1972 recordings violated
common law copyright). New York courts have embraced the public performance
right in pre-1972 sound recordings as a matter of course—an integral component
of the common law copyright in those works.
B. Sirius XM’s Post-Sale “Anti-Piracy” Argument Cannot Be
Reconciled With New York Common Law
In the face of precedent stressing the importance of protecting a copyright
owner’s right to control public performances, Sirius XM concedes that New York
law provides this right, see Appellant Br. at 36 n. 6, but insists that it magically
disappears post-sale. According to Sirius XM, public sale strips down the bundle
33
of copyright protections available to a sound recording owner into a mere “anti-
piracy” right that protects against only copying and sale. Appellant Br. at 33-34.
The development of New York’s common law of copyright firmly refutes this
position and this Court should reject it.
1. Public Sale of Sound Recordings Does Not Strip Them of
Common Law Copyright Protection
As noted by Sirius XM, under American common law, copyright protection
for most artistic works originally ceased after sale, or “first publication.” See
Appellant Br. at 8; see Palmer, 47 N.Y. at 537 (describing the common law
copyright protection as “copyright before publication”). At that point, state
protection was “lost,” although the work could be protected by federal statutory
copyright law. See Roy Export Co. Establishment of Vaduz v. CBS, Inc., 672 F.2d
1095, 1101 (2d Cir. 1982).
Sirius XM points to this archaic rule in claiming that only so-called “core
rights”—the right to prevent copying and resale—remain after a sound recording’s
publication. Appellant Br. at 33. But this argument fails even at first blush: sound
recordings evolved differently than other artistic works under both federal and state
law, and the “first publication” rule never applied to them. Initially, sound
recordings were unprotected by federal copyright. See White-Smith Music
Publishing Co. v. Apollo Co., 209 U.S. 1, 10, 17 (1908) (denying copyright
protection on ground that piano rolls, as well as records, used to record musical
34
compositions were not “copies” of a copyrighted composition, but only component
“parts of the mechanism” which executed the composition). By the 1970s, as the
technology to reproduce—and pirate—sound recordings evolved, Naxos, 4 N.Y.3d
at 555, states filled in the gaps left by federal copyright law. In Goldstein, the U.S.
Supreme Court affirmed states’ authority in this regard, noting that “[n]owhere” in
the 1909 Copyright Act did Congress indicate that it “intended records, as
renderings of original artistic performance, to be free from state control.” 412 U.S.
at 566. The Court confirmed that states could protect pre-1972 sound recordings,
and laid to rest any concerns that such provisions would hamper productivity.
“[E]ven when the [state] right is unlimited in duration,” the Court concluded, “any
tendency to inhibit further progress in science or the arts is narrowly
circumscribed.” Id. at 560-61.
This Court has likewise held that New York’s copyright protection of sound
recordings can be of unlimited duration, given that “sound recordings could not be
‘published’ under federal law.” Naxos, 4 N.Y.3d at 552. As a result, while public
sale typically signaled the end of common law protection and the onset of federal
copyright protection for other artistic works, sale has no impact on the scope of
copyright protections for pre-1972 sound recordings.12 Id. As this Court
12 Public sale has no impact on artistic works that are wholly covered by federal statutory law,
such as post-1972 sound recordings.
35
explained, “[i]n the absence of protective legislation, Congress intended that the
owner of rights to a sound recording should rely on the ‘broad and flexible’ power
of the common law to protect those property rights after public dissemination of
the work.” Id. at 555. Indeed, the Second Circuit, reading the tea leaves fifty years
before Naxos, had reached the exact same conclusion and held that under New
York law, “where the originator, or the assignee of the originator, of records of
performances by musical artists puts those records on public sale, his act does not
constitute a dedication of the right to copy and sell the records.” Mercury Records,
221 F.2d at 663; see also Naxos, 4 N.Y.S.3d at 554-55 (describing Mercury
Records as “consistent with the longstanding practice of the federal Copyright
Office and [] the accepted view within the music recording industry”).
Federal law also explicitly rejects the notion that the sale of a pre-1972
sound recording negates common law copyright protection. In La Cienega Music
Co. v. ZZ Top, the U.S. Court of Appeals for the Ninth Circuit held that La Cienega
Music Company had published its recording of a song later popularized by ZZ Top
by releasing it to the general public, and thus left it unprotected by state common
law copyright. 53 F.3d 950, 952-53 (9th Cir. 1995). Congress criticized the ruling
as “overturn[ing] nearly 90 years of [precedential] decisions,” 143 Cong. Rec.
H9882 (statement of Rep. Coble), and as this Court noted in Naxos, further warned
that it would “cause musicians, composers and publishers to lose over a billion
36
dollars in annual revenue.” Naxos, 4 N.Y.3d at 558 (citing 143 Cong. Rec. H.9882
(statement of Rep. Delahunt)). Soon after the ruling, Congress enacted Section
303 of the federal Copyright Act, which provides that “[t]he distribution before
January 1, 1978, of a phonorecord shall not for any purpose constitute a
publication of the musical work embodied therein.” 17 U.S.C. § 303(b), see
Technical Amendments to Title 17, Pub. L. No. 105-80, 111 Stat. 1529 (1997); see
also ABKCO Music, Inc. v. LaVere, 217 F.3d 684, 690 (9th Cir. 2000)
(acknowledging that La Cienega was superseded by statute).
Despite this clear commitment to protecting sound recordings before and
after sale, Sirius XM asks this Court to assume that only the right to “copy and
sell” sound recordings remains with a copyright owner after sale, because those
were the rights specifically addressed in Naxos and Metropolitan Opera.
Appellant Br. at 13, 33-34, 37. Its argument completely misapprehends the nature
of common law reasoning: If a specific fact pattern is not presented to a court,
there is no reason for the court to depart from the incremental decision-making that
marks evolution of the common law. The only message that can fairly be taken
from Naxos and other New York precedent is strong support for copyright of sound
recordings and other artistic works, not some inchoate intent to exclude
performance from the rights that continue after sale.
37
Moreover, the cases on which Sirius XM relies, see Appellant Br. at 13, 33-
34, 37, provide not one bit of support for this artificial distinction. In Metropolitan
Opera, the Court found that the “defendants’ piratical conduct”—recording and
reselling broadcasts of Metropolitan Opera’s performances—“constitute[d] unfair
competition both with Metropolitan Opera and Columbia Records.” 199 Misc. at
796. The opera company “derive[d] income from . . . the broadcasting of those
productions over the radio” and from the licenses it sold to Columbia Records, and
Columbia Records held the right—purchased from Metropolitan Opera—to the
“exclusive privilege of making and selling records” of Metropolitan Opera’s
performances. Id. at 796. The Court held that “[t]o refuse to the groups who
expend time, effort, money and great skill in producing these artistic performances
the protection of giving them a ‘property right’ in the resulting artistic creation
would be contrary to existing law, inequitable, and repugnant to the public
interest.” Id. at 802. If, as Sirius XM suggests, Appellant Br. at 12-13, the only
cognizable post-sale harm to Metropolitan Opera and Columbia Records resulted
from the copying and resale of its performances, the Court would not have
mentioned as proof of “piratical conduct” the loss of the income from the
“broadcasting” of its performances, or noted that there is a property right in the
“artistic creation” embodied by the “broadcast” of performances.
38
Nor can Naxos be read as rejecting the existence of a public performance
right in post-sale, pre-1972 sound recordings. See Appellant Br. at 33-34. To the
contrary, Naxos fully supports recognition of that right.
While the Naxos Court had no reason to explicitly address public
performance, it endorsed Waring, the Pennsylvania Supreme Court’s decision
enjoining a radio station’s public broadcasting of an orchestra’s post-sale, pre-1972
sound recordings. Waring held that, unless the orchestra’s restrictions on public
broadcasting could “be imposed and enforced, it [would] be impossible for
distinguished musicians to commit their renditions to phonograph records—except
possibly for a prohibitive financial compensation—without subjecting themselves
to the disadvantages and losses which they would inevitably suffer from the use of
the records for broadcasting.” 327 Pa. at 447. Waring distinguished between a
restriction on performing the records at home (which would not be allowed) and
the orchestra’s legitimate restriction, which “works for the encouragement of art
and artists.” Id. Naxos stressed this same point, observing that “a performer who
transforms a musical composition into a sound product creates ‘something of novel
intellectual or artistic value [and] has undoubtedly participated in the creation of a
product in which he is entitled to a right of property.’” 4 N.Y.3d at 533 (quoting
Waring, 327 Pa. at 441).
39
Even more to the point, Naxos itself instructs that public sale has no
significance for the scope of common law copyright for pre-1972 recordings. It
holds that New York common law copyright protects pre-1972 sound recordings
“without regard to the limitations of ‘publication’ under the federal act,” and “[u]p
to the point that federal law governed.” Naxos, 4 N.Y.3d at 557, 559 (citing
Goldstein, 412 U.S. at 560-61). That point is 2067, the year of “federal preemption
of state law” with regard to pre-1972 sound recordings. Id. at 558. Indeed, this
Court concluded in Naxos that common law copyright applies until 2067 even if
the sound recording was made in a foreign country and the term of copyright in the
country of origin had expired. Id. at 561. Naxos represents a robust view of
common law copyright protection for sound recordings, and Sirius XM’s limitation
would be a significant and unjustified retrenchment.
In short, public sale does not divest sound recordings of any of the
protections of common law copyright, including the public performance right. In
the world of pre-1972 sound recordings, the only date that matters is the date of
federal preemption in 2067. This Court should reject Sirius XM’s attempt to
rewrite the history of New York common law to focus on the public sale of
40
recordings as triggering some “core” “anti-piracy” rule untethered from the case
law and the policy considerations expressed therein.13
2. Whiteman Has Been Overruled and Is Irrelevant
Unable to find any support in New York common law for treating post-sale
public performance rights differently from other rights in the common law
copyright bundle, Sirius XM turns to an overruled case, RCA Mfg. Co. v.
Whiteman. According to Sirius XM, Whiteman is a “seminal judicial decision”
that “established a historical consensus” that owners of pre-1972 sound recordings
were divested of the public performance right (and apparently only that right) after
public sale of the sound recordings. Appellant Br. at 19, 21. But Whiteman cannot
bear the weight Sirius XM’s new counsel places on it—in fact, it can bear no
weight at all. Whiteman is not good law, nor is it binding on this Court. See
Naxos, 4 N.Y.3d at 554-55; Mercury Records, 221 F.2d at 663 (“Our conclusion is
that the quoted statement from the RCA case is not the law of the State of New
York.”); see also A-1734 (“[W]hatever the holding of Whiteman, it is only a
13 Sirius XM argues that the common law develops at a “snail-like” pace unsuited to
recognizing a public performance right in pre-1972 sound recordings. Appellant Br. at 42,
46. But it is Sirius XM’s approach that requires such a leap, reading into supposed silences
in cases that did not address public performance the “adopt[ion]” of an “anti-piracy” right
that protects only a fraction of the copyright protections that sound recording owners and
other intellectual property owners have enjoyed for decades. Id. at 39.
41
federal court’s construction of state law, which ceases to bind us upon an
indication of adverse state authority, such as Naxos”).
In any event, Whiteman does not support Sirius XM’s argument. In
Whiteman, RCA Manufacturing Company created sound recordings of Paul
Whiteman’s orchestral performances and sold them to the public. 114 F.2d at 87.
Each of those recordings was labeled with a limitation on its further use: “Not
Licensed for Radio Broadcast” or, among other things, “Only For Non-
Commercial Use on Phonographs in Homes.” Id. Those recordings were
purchased by W.B.O. Broadcasting Corporation, which proceeded to broadcast
them over the radio notwithstanding the labels. The trial court found that
Whiteman’s common law property rights had passed to RCA, which could enjoin
the broadcasting of the records, and that Whiteman could also enjoin W.B.O. on
the ground of unfair competition. Id.
On appeal, Judge Hand held that “the ‘common-law property’ in [the
plaintiff’s] performances ended with the sale of the records.” Id. at 88. Under that
logic, an alleged infringer could do anything after sale—broadcast for profit, copy,
or resell. As noted above, this holding has been overruled. But even assuming that
parts of Whiteman somehow remained good law, Sirius XM’s distinction between
the right to copy or resell a work after public sale and the right to publicly perform
it can be found nowhere in Whiteman.
42
Sirius XM nevertheless argues that Whiteman “established a historical
consensus” that sound recording owners have no public performance right once a
work is sold. Appellant Br. at 21. It points to Judge Hand’s characterization of
common law copyright as “consist[ing] only in the power to prevent others from
reproducing the copyrighted work[s],” and his conclusion that a defendant who
“merely used” copies of a performance has not infringed a copyright. Id. at 20, 34-
35 (quoting 114 F.2d at 88). But Whiteman—even if it were still good law—
would not support a copying/use distinction. When Judge Hand observed that the
defendant merely “used … copies” of Whiteman’s performance, 114 F.2d at 88, he
was not distinguishing between public performance and copying. Instead, he was
laying out his (now overruled) holding that the defendant “never invaded any []
right of Whiteman” because plaintiffs had abandoned their common law property
right in the performance by making and distributing a copy of it. Id. The “right” at
issue in the case was the right to restrict the copying of something once sold, not
performance. See id. at 89 (“Thus, even if Whiteman and RCA Manufacturing
Company, Inc., have a ‘common-law property’ which performance does not end, it
is immaterial, unless the right to copy the rendition from the records was preserved
through the notice of the restriction.”) (emphasis added).
At bottom, Whiteman concerned only the question of whether public sale
divested a sound recording of common law copyright protection, and its answer to
43
that question is wrong. Whiteman provides no support for a post-sale “anti-piracy”
rule that would arbitrarily strip down the bundle of copyright protection afforded to
sound recordings following public sale—an event this Court has held has no
significance in pre-1972 common law sound recording copyright protection.
3. Sirius XM’s Proposed Distinction Between “Copying” and
“Intended Use” Is Incoherent and Disregards Its Blatant
Commercial Exploitation of Pre-1972 Sound Recordings
Sirius XM’s proposed distinction between “copying” and “intended use” has
no more validity than the line it tries to draw between pre-sale and post-sale uses of
artistic works. It has no basis in precedent and it ignores the reality of what Sirius
XM proposes to do: broadcast sound recordings for profit without paying a penny
to the artists that produced them.
Sirius XM claims that its technology enables it to sell access to Flo &
Eddie’s sound recordings without copying them.14 The notion that Sirius XM
broadcasts its recordings without creating copies is simply wrong. Sirius XM has
created, and continues to create, multiple copies of sound recordings to operate its
satellite broadcasting and Internet streaming services. See supra at 11-12.
14 Sirius XM defends its copying by arguing that it is a “fair use” because of its view that
performance of the copies is permitted, and the District Court rejected this argument, A-
1696. The Second Circuit declined to rule on the fair use defense until this Court has
rendered a decision on the certified question, A-1735 n.4, and the fair use defense is not
before this Court.
44
Even if Sirius XM did not copy sound recordings, its effort to evade
copyright protection lacks any support in precedent. New York courts have never
been preoccupied with the means by which copyright protections for artistic works
are infringed. See Naxos, 4 N.Y.3d at 564. The inquiry instead is context-specific;
courts look beyond the defendant’s characterization of his activities to the ultimate
result of the activity. See Ferris, 223 U.S. at 436 (noting that a claim that “the
owner of a play cannot complain if the piece is reproduced from memory” relies on
a “distinction [] without sound basis and has been repudiated”); see also Metro.
Opera, 199 Misc. at 796 (“The modern view as to the law of unfair competition”
rests “on the broader principle that property rights of commercial value are to be
and will be protected from any form of unfair invasion or infringement and from
any form of commercial immorality, and a court of equity will penetrate and
restrain every guise resorted to by the wrongdoer.”); cf. Int’l News Serv. v.
Associated Press, 248 U.S. 215, 236 (1918) (“Obviously, the question of what is
unfair competition in business must be determined with particular reference to the
character and circumstances of the business.”).
More generally, the scope of intellectual property protection does not turn on
how the infringer chooses to infringe. See Greatest Records, 252 N.Y.S.2d at 556
(holding that, with respect to music recordings, defendants could be enjoined under
New York common law “not [for] the copying of some article or goods made and
45
sold by another” but for “the use of [the] identical product for the profit of
another”) (internal quotations omitted); see also Twentieth Century Sporting Club,
Inc. v. Transradio Press Serv., Inc., 165 Misc. 71, 72-73 (Sup. Ct. N.Y. Cnty.
1937) (finding that defendants’ broadcast of a “running account of” a boxing
match arranged by plaintiffs who owned broadcasting rights “would constitute an
unlawful appropriation of the exclusive property rights of the plaintiffs”). Sirius
XM relies on a snippet from Nimmer which states that, under the federal
Copyright Act, “the performance right is not infringed unless the work is copied,”
to argue that common law copyright is also limited to the right to prevent
unauthorized copies. See Appellant Br. at 35 (quoting 2 Nimmer § 8:02[A]). This
is simply a misreading of Nimmer.15 But in any event, whatever the scope of
federal copyright for post-1972 sound recordings may be (and it undoubtedly
includes public performance), Sirius XM’s proposition that so long as “copying” is
not involved a work is fair game has no foothold in New York common law.
In short, even if technical developments allowed Sirius XM to distribute,
reproduce, and provide sound recordings to its customers without copying those
15 Nimmer explains that the term “copying” can be used both in a specific sense (when
discussing the reproduction right), as well as in a generic sense, which encompasses “the
infringing of any of the copyright owner’s five exclusive rights’” under the federal Copyright
Act—reproduction, adaptation, distribution, performance, and display. 2 Nimmer § 8.02[A].
A performance without a copy cannot infringe the reproduction right, but could obviously
infringe the performance right that undisputedly exists under federal law.
46
recordings, that would be irrelevant. The rule Sirius XM proposes would allow for
wholesale evasion of common law copyright, so long as the owner’s work could be
appropriated in some newfangled way. The result would be “[u]nrestrained
commercial exploitation” that would render an owner’s property right in a sound
recording “of little value.” Radio Corp. of Am. v. Premier Albums, Inc., 240
A.D.2d 62, 63 (1st Dep’t 1963).
Sirius XM also tries to draw a line between what it calls “core” “anti-piracy”
efforts—prevention of copying and resale—and doing what a sound recording is
“meant” to allow owners to do—play it. Appellant Br. at 15. To be sure,
prohibiting a purchaser from simply playing a recording for her own enjoyment
would be untenable under either federal or state copyright law. “No license is
required,” for example, “to sing a copyrighted lyric in the shower.” Twentieth
Century Music Corp. v. Aiken, 422 U.S. 151, 155 (1975). But Sirius XM is
“playing” these recordings publicly, for profit, to millions of listeners. “Even
where the hearers are allowed to make copies of what was said for their personal
use, they cannot later publish for profit that which they had not obtained the right
to sell.” Nutt v. Nat’l Inst. Inc. for the Imp. of Memory, 31 F.2d 236, 238 (2d Cir.
1929); see also Int’l News, 248 U.S. at 239 (comparing “[t]he right of the
purchaser of a single newspaper to spread knowledge of its contents gratuitously,
for any legitimate purpose not unreasonably interfering with complainant’s right to
47
make merchandise of it,” with “transmit[ting] that news for commercial use, in
competition with complainant”). “The title to the physical substance and the right
to the use of literary or artistic property which may be printed upon or embodied in
it are entirely distinct and independent of each other.” Waring, 327 Pa. at 448.
Sirius XM claims that an owner’s common law public performance right in a
play, film, or musical composition (which is undisputed),16 differs from a similar
right in sound recordings, on the ground that infringement of plays, films, and
compositions requires copying, but Sirius XM purports to “simply use[] the
record,” thus fulfilling “its intended purpose.” Appellant Br. at 35-36. But since
when does public performance of a film or musical composition require copying?
And since when is performance of a play not the “intended purpose” of the play?
A play can be performed without “copying” the manuscript on which it is written,
but the author’s public performance right prohibits the unauthorized “use” of the
manuscript for profit. See French v. Maguire, 55 How. Pr. 471 (Sup. Ct. N.Y.
Cnty. 1878) (granting injunction against unauthorized performances of
16 See, e.g., Brandon Films, Inc. v. Arjay Enters., Inc., 230 N.Y.S.2d 56 (Sup. Ct. N.Y. Cnty.
1962) (recognizing public performance right in films); Gieseking v. Urania Records, Inc.,
155 N.Y.S.2d 171, 172–73 (Sup. Ct. N.Y. Cnty. 1956) (musical performances); French v.
Maguire, 55 How. Pr. 471 (Sup. Ct. N.Y. Cnty. 1878) (plays).
48
unpublished play). Sirius XM’s distinction has no foothold in the common law, or
in common sense.
Under New York law, common law property rights “have been repeatedly
recognized and upheld by the courts,” and “the doctrine is a broad and flexible one.
It has allowed the courts to keep pace with constantly changing technological and
economic aspects so as to reach just and realistic results.” Metro. Opera, 199
Misc. at 799. By contrast, Sirius XM’s proposal—that so long as you can develop
the technology to play, distribute, and even broadcast a recording without copying,
you can profit off another’s work and inflict the same harms as you would from
copying and distribution—would bring about the opposite result. It is entirely
implausible that such a rule, based on meaningless distinctions that would allow
infringers to circumvent decades of common law copyright protection, is how the
New York common law “keep[s] pace with constantly changing technological and
economic aspects [] to reach just and realistic results.”
III. Protecting Performance Rights in Pre-1972 Sound Recordings Promotes
Key Public Policy Goals
A. Artists Should Be Compensated for the Use of Their Work
Musicians and singers who perform songs and the entities that produce
sound recordings are creators of art and deserve to be compensated when their
work generates value. These considerations are especially important in New York
State, which has long been the world’s leading cultural and artistic capital and
49
home to thousands of hard-working, creative, and innovative artists.17 New York’s
interest in protecting the rights of performers is reflected in the robust body of case
law protecting performance rights in plays, operas, and other artistic creations, and
the recognition of public performance rights in sound recordings flows naturally
from this jurisprudence.
Sirius XM insists that pre-1972 recordings are in the “public domain,” A-
1095, and it can use them in any manner it wants for free—including by charging
its customers subscription fees and earning substantial profits from a catalog that
contains tens of thousands of pre-1972 recordings that it has copied dozens of
times over. Sirius XM seeks to justify this high-tech piracy by arguing that “no
recording owner ever even thought to assert [a performance] right since the Second
Circuit’s decision in Whiteman.” Appellant Br. at 26. This justification is as
baseless as it is cynical.
A copyright holder’s decision not to pursue an infringement action until it is
necessary or economically sensible does not divest him of any rights held in an
17 New York State is home to the most diverse arts and entertainment community in the world,
hosting a “broad range of nonprofit and commercial organizations in live theater, music,
dance, films, sound recordings, television, interactive games, radio, new media, and cultural
organizations in the visual arts.” Lois Grey et al., Cultural Capital: Challenges to New York
State’s Competitive Advantages in the Arts and Entertainment Industry at 5, Cornell
University Industrial and Labor Relations Study (2009). New York’s role in the music
industry is particularly critical—nearly 100,000 New Yorkers work in the music industry and
make up 10% of the national music industry work force. See RIAA Amicus Br. at 1.
50
artistic work (though it may impact the start date for the damages period under the
applicable statute of limitations). As the U.S. Supreme Court recently explained in
Petrella v. Metro-Goldwyn Mayer, Inc., “[i]t is hardly incumbent on copyright
owners . . . to challenge each and every actionable infringement. And there is
nothing untoward about waiting to see whether an infringer’s exploitation
undercuts the value of the copyrighted work, has no effect on the original work, or
even complements it.” 134 S. Ct. 1962, 1976 (2014). For example, the
technological capacity to fix a particular musical performance in a tangible
medium that could be distributed and played did not exist until the late 1800s.
United States v. Western Electric Co., 531 F. Supp. 894, 913 (D.N.J. 1981) (noting
that Thomas Edison invented the phonograph in 1877). Prior to that time, musical
performances were ephemeral. Yet, no one proposes examining case law from the
mid-nineteenth century and concluding that sound recordings are not and have
never been subject to copyright at common law merely because no one asserted
such a right before technology allowed its infringement.
Similarly, the dramatic shift from sales of physical and digital copies of
records to digital streaming and broadcasting, see supra at 13-16, may have
prompted artists to assert performance rights in sound recordings. Because
technology now permits streaming services to charge subscription fees to
consumers, who may then enjoy music without purchasing it, recording artists
51
must rely on the performance right to receive any compensation for the use of their
creative works. It would be fundamentally unfair to deprive recording artists of
compensation merely because businesses have exploited new technologies for
music delivery that did not exist even ten years ago.
Several amici contend that because record labels—not recording artists—
hold the copyright to many pre-1972 sound recordings, a rule recognizing a public
performance right in sound recordings would benefit the record companies and not
the artists. CBS Radio Br. at 16-18; see also NAB Br. at 3. Of course, it is
recording artists who have brought this very case and would certainly benefit from
compensation. More broadly, the rule that Sirius XM advocates would result in no
one receiving payment for performance of a pre-1972 sound recording, and it is
hard to imagine how that would leave artists better off. (Additionally, recording
artists have contractual rights vis-à-vis their record labels, which may entitle them
to a share in any royalties received by the labels.) The arguments advanced by
Sirius XM and its amici do not seek to protect artists—they seek to protect their
own bottom lines.
B. Recognizing a Performance Right in Pre-1972 Sound Recordings
Will Not Disrupt the Music Industry
Sirius XM and multiple amici contend that the decision to “grant” a
performance right in sound recordings should be left to the Legislature, Appellant
Br. at 40-42; see also NAB Br. at 27-31; Pandora Br. at 19-27, but this argument
52
fundamentally misunderstands the nature of common law copyright and the
precedent concerning sound recordings. The notion that creators of artistic works
are entitled to be compensated for the use of that work is hardly new; rather, it is
Sirius XM’s contrary position that it can exploit the time, skill, and labor of
recording artists and producers without compensation that is novel (not to mention
unjustified). Moreover, as detailed above, see supra Part II, New York law firmly
supports common law protection of pre-1972 sound recordings and provides no
basis for excluding just post-sale performance rights for such works. Thus,
legislative action would be required to divest copyright owners of this right, not to
grant it.18
Sirius XM and its amici also contend that this Court should not disturb the
so-called “settled expectation” of entities such as Sirius XM, AM/FM broadcasters,
television broadcasters, restaurants, bars, small businesses, and public entities that
commercial exploitation of pre-1972 sound recordings should be “unqualified and
18 Sirius XM cites Jewelers’ Mercantile Agency v. Jeweler’s Weekly Pub. Co., 155 N.Y. 241
(1898), for the proposition that this Court should “defer” to the legislature’s policymaking
discretion, see Appellant Br. at 40-41, but that case is inapposite. Jewelers merely stands for
the uncontroversial notion that, under “the present state of the law,” publication divests
books of common law copyright, after which the owner may only rely on federal statutory
protections. See 155 N.Y. at 247, 254. As explained above, sound recordings are treated
differently from books: pre-1972 sound recordings are governed entirely by state law, and
this Court has already held that public sale does not divest sound recordings of any common
law copyright protection. See supra at 33-35. Sirius XM also cites Campaign for Fiscal
Equity, Inc. v. State, 8 N.Y.3d 14 (2006), for the same proposition. Campaign for Fiscal
Equity concerned a constitutional challenge to the State’s education funding scheme and is
completely irrelevant to common law copyright protection.
53
unencumbered.” Appellant Br. at 27, 42-43; see also CBS Br. at 7-16; Pandora Br.
at 28-37; NY Broadcasters Br. at 12-22; ARSC Br. at 18-25. As the District Court
noted, “expectations are rarely ‘settled’ enough to provide a justification for
declining to apply the correct legal rule.” A-1688. And in any event, there is no
reason to think that Sirius XM’s investors or the music industry writ large “would
be truly surprised” if Sirius XM or any other business that plays sound recordings
for profit “were to have to pay royalties in order to perform pre-1972 sound
recordings,” given that most of these entities already “pay royalties under federal
law in order to broadcast [those] recordings.” Id.
Appellants and Amicus National Association of Broadcasters point to a
provision in federal law that exempts AM/FM broadcasters from paying
performance royalties for post-1972 sound recordings, but that has no bearing on
this Court’s interpretation of state common law. See Appellant Br. at 44; NAB Br.
at 12-13. Moreover, the AM/FM distinction has become largely meaningless in
this regard. iHeartRadio, the largest owner of AM/FM stations in the country, see
Pandora Br. at 6, simulcasts its stations’ broadcasts over the Internet, and the
AM/FM stations owned by iHeartRadio therefore pay royalties for post-1972
sound recordings, despite the federal exemption.19 See 17 U.S.C. §§ 106(6), 114;
19 Any concerns about whether public entities such as museums or schools, or smaller
organizations such as college or religious broadcasters would be required to pay royalties,
54
iHeart Radio, Get the iHeart Radio App, http://news.iheart.com/features/get-the-
iheartradio-app-240 (last visited Sept. 18, 2016).
Sirius XM also wrings its hands about purported “unanswered” questions
and the “administrative difficulties” of negotiating licenses and royalties for pre-
1972 sound recordings (as if that is somehow substantially different than
negotiating the same thing for post-1972 sound recordings). Appellant Br. at 45.
What Sirius XM does not mention is that it entered into a June 2015 settlement
with record labels, covering the vast majority of pre-1972 sound recordings
historically played by Sirius XM. Not only does the record label settlement
resolve damages for historical nonpayment of royalties, but it provides for
negotiation of royalty rates and sets up a dispute resolution mechanism. See Sirius
XM June 2015 10-Q at 21.20 Sirius XM’s complaints about the difficulty of
resolving these same issues for other pre-1972 recordings therefore ring hollow.
Sirius XM’s amici also make much hay of the purported administrative costs
associated with recognizing performance rights in pre-1972 sound recordings. See,
e.g., Pandora Br. at 28; CBS Radio Br. at 8-11; NY Broadcasters Br. at 16-17.
see, e.g., EFF Br. at 12-13, are premature and not presented here. In any event, such entities
may well be able to negotiate collective licenses for use of pre-1972 sound recordings.
20 Sirius XM also admits that it has also negotiated licensing agreements with “other” pre-1972
rights holders in addition to those covered by the June 2015 settlement. Sirius XM FY 2015
10-K at 18.
55
Taking note of this Court’s view that “a page of history is worth a volume of
logic,” Naxos, 4 N.Y.3d at 544, it is clear that each time copyright law has
purportedly threatened to complicate the music marketplace, private enterprise has
quickly stepped up with a proposed solution. For example, AM/FM broadcasters
and all other entities who play music are required to pay royalties to the composers
of songs when they are performed. When compensation was first required,
ASCAP and BMI emerged as the entities that centralized licensing for public
performance of compositions. See Broad. Music, Inc. v. Columbia Broad. Sys.,
Inc., 441 U.S. 1, 10 (1979). More recently, private companies such as Music
Reports, Inc. have begun creating comprehensive licensing databases for
virtually all commercially relevant sound recordings, both pre- and post-1972. See
Flo & Eddie, Inc. v. Sirius XM Radio Inc., No. 13-cv-5693, 2015 WL 4776932 at
*7 (C.D. Cal. May 27, 2015). Sirius XM is not unfamiliar with these services, as it
has been utilizing them for years. See Ed Christman, SiriusXM Attempting to
License Directly From Labels, Billboard (Aug. 11, 2011), available
at http://www.billboard.com/biz/articles/news/1176559/siriusxm-attempting-to-
license-directly-from-labels (last visited Sept. 18, 2016).
It is simply disingenuous to claim that Sirius XM and other companies will
be unable to navigate the music marketplace if forced to license pre-1972
recordings—the truth of the matter is that they already are doing exactly that. In
56
any event, this Court is tasked with interpreting the scope of New York’s common
law, not divining how the broadcasting industry will negotiate licenses and royalty
schemes. And the scope of property rights has never depended on how easy it
would be for third parties to use property that someone else owns.
This case is not about Sirius XM’s inability to pay for licenses or royalties—
it is about its refusal to compensate recording artists and producers based on a
unilateral and self-serving interpretation of copyright law. Sirius XM is a global
powerhouse with annual revenues exceeding $4.5 billion. See Sirius XM FY 2015
10-K at 21. Its annual advertising budget ($228.6 million) exceeds the total
amount of the record label settlement for historical use of thousands of pre-1972
sound recordings. See id. at F-11. A ruling favorable to Flo & Eddie in this case
seems unlikely to materially impact Sirius XM’s finances. But even if it did, Sirius
XM’s financial bottom line does not take precedence over the rights and
protections endowed by New York law to copyright holders.
CONCLUSION
For the foregoing reasons, this Court should hold that New York law
protects an owner’s right to control the public performance of sound recordings.
Dated: New York, New York
September 19, 2016
Respectfully submitted,
//';
By:/ ,
(t:aitlin 1. Halli:g~n
Ester Murdukhayeva
Kathryn M. Cherry
57
GIBSON, DUNN & CRUTCHER LLP
200 Park A venue
New York, New York 10166
Telephone: (212) 351-4000
Facsimile: (212) 351-4035
CHalligan@gibsondunn.com
Henry Gradstein
Maryann R. Marzano
Daniel B. Lifschitz
GRADSTEIN & MARZANO P.C.
6310 San Vicente Blvd., Suite 510
Los Angeles, California 90048
Telephone: (323) 776-3100
Facsimile: (323) 776-4990
Attorneys for Plaintiff-
Respondent