To be Argued by:
JONATHAN D. HACKER
(Time Requested: 30 Minutes)
CTQ-2016-00001
Court of Appeals
of the
State of New York
FLO & EDDIE, INC., a California Corporation,
individually and on behalf of all others similarly situated,
Plaintiff-Respondent,
– against –
SIRIUS XM RADIO INC., a Delaware Corporation,
Defendant-Appellant,
DOES, 1 THROUGH 10,
Defendants.
––––––––––––––––––––––––––––––
ON APPEAL FROM THE QUESTION CERTIFIED BY THE UNITED STATES
COURT OF APPEALS FOR THE SECOND CIRCUIT IN DOCKET NO. 15-1164-CV
REPLY BRIEF FOR DEFENDANT-APPELLANT
JONATHAN D. HACKER (pro hac vice)
O’MELVENY & MYERS LLP
1625 Eye Street, N.W.
Washington, D.C. 20006
Tel.: (202) 383-5300
Fax: (202) 383-5414
DANIEL M. PETROCELLI (pro hac vice)
CASSANDRA L. SETO (pro hac vice)
O’MELVENY & MYERS LLP
1999 Avenue of the Stars, 8th Floor
Los Angeles, California 90067
Tel.: (310) 553-6700
Fax: (310) 246-6779
ANTON METLITSKY
O’MELVENY & MYERS LLP
Times Square Tower
Seven Times Square
New York, New York 10036
Tel.: (212) 326-2000
Fax: (212) 326-2061
Attorneys for Defendant-Appellant
Date Completed: October 6, 2016
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RULE 500.1(f) CORPORATE DISCLOSURE STATEMENT
Appellant Sirius XM Radio Inc. (“Sirius XM”) is a corporation organized
under the laws of the State of Delaware. Sirius XM is a wholly owned subsidiary
of Sirius XM Holdings Inc., a publicly held corporation. Liberty Media
Corporation possesses, directly or indirectly, an ownership interest of 10 percent or
more in Sirius XM Holdings Inc.
In addition to Sirius XM, the following entities are subsidiaries of Sirius XM
Holdings Inc., as reflected in its most recent annual report filed with the Securities
and Exchange Commission: Satellite CD Radio LLC; Sirius XM Connected
Vehicles Services Inc.; Sirius XM Connected Vehicle Services Holdings Inc.;
SXM CVS Canada Inc.; XM Emall Inc.; XM 1500 Eckington LLC; XM
Investment LLC; XM Radio LLC. See Sirius XM Holdings Inc. (Form 10-K
Ex. 21.1) (Feb. 2, 2016).
The following additional entities are subsidiaries of Liberty Media
Corporation, as reflected in its most recent annual report filed with the Securities
and Exchange Commission: Atlanta Braves, Inc.; Atlanta National League
Baseball Club, Inc.; Barefoot Acquisition, LLC; BDC Collateral, LLC;
BDC/Fuqua Retail, LLC; BDC Holdco, LLC; BDC Hotel I, LLC; BDC Office I,
LLC; BDC Parking I, LLC; BDC/PS Residential, LLC; BDC Residential I, LLC;
BDC Retail I, LLC; Braves Baseball Holdco, LLC; Braves Construction Company,
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LLC; Braves Development Company, LLC; Braves Entertainment Company, LLC;
Braves Holdings, LLC; Braves Productions, Inc.; Braves Stadium Company, LLC;
Braves Stadium Parking Company, LLC; BRED Co., LLC; Circle 75 Master
Residential Association, Inc.; Georgia Ballpark Hotel Company, LLC; LBTW I,
LLC; LCAP Investments, LLC; LDIG 2, LLC; LDIG Cars, Inc.; LDIG Financing
LLC; Liberty Aero, LLC; Liberty AGI, LLC; Liberty Animal Planet, LLC; Liberty
Asset Management, LLC; Liberty Associated Holdings LLC; Liberty Associated,
Inc.; Liberty ATCL, Inc.; Liberty BC Capital, LLC; Liberty Centennial Holdings,
Inc.; Liberty Challenger, LLC; Liberty Citation, Inc.; Liberty CM, Inc.; Liberty
Crown, Inc.; Liberty CTL Marginco, LLC; Liberty Denver Arena LLC; Liberty
Fun Assets, LLC; Liberty GI II, Inc.; Liberty GI, Inc.; Liberty GIC, Inc.; Liberty
IATV Holdings, Inc.; Liberty IATV, Inc.; Liberty IB2, LLC; Liberty Israel
Venture Fund, LLC; Liberty Java, Inc.; Liberty KV, LLC; Liberty LYV Marginco,
LLC; Liberty MCNS Holdings, Inc.; Liberty MLP, Inc.; Liberty NC, LLC; Liberty
NEA, Inc.; Liberty PL2, Inc.; Liberty PL3, LLC; Liberty Programming Company
LLC; Liberty Property Holdings, Inc.; Liberty Radio, LLC; Liberty Radio, 2, LLC;
Liberty Satellite Radio, Inc.; Liberty SGH, LLC; Liberty SIRI Marginco, LLC;
Liberty Sling, Inc.; Liberty Sports Interactive, Inc.; Liberty Telematics 2, LLC;
Liberty Telematics , LLC; Liberty TM, Inc.; Liberty Tower, Inc.; Liberty TWC
Marginco, LLC; Liberty TWX Marginco, LLC; Liberty VIA Marginco, LLC;
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Liberty Virtual Pets, LLC; Liberty WDIG, Inc.; LMC BET, LLC; LMC Brazil,
LLC; LMC Denver Arena, Inc.; LMC Events, LLC; LMC IATV Events, LLC;
LMC Israel Investment, LLC; LMC VIV LOC, Inc.; LSAT Astro LLC; LSR
Foreign Holdings 2, LLC; LSR Foreign Holdings, LLC; LTWX I, LLC; LTWX V,
Inc.; The Battery Atlanta Association, Inc. (fka Ballpark Village Association, Inc.)
(fka Circle 75 Maintenance Association, Inc.); The Stadium Club, Inc.; TSAT
Holding 2, Inc. See Liberty Media Corporation (10-K Ex. 21) (Feb. 26, 2016).
TABLE OF CONTENTS
Page
-iv-
PRELIMINARY STATEMENT .............................................................................. 1
ARGUMENT ............................................................................................................ 4
I. NEW YORK COMMON LAW DOES NOT AND HAS NEVER
GRANTED RECORDING OWNERS A RIGHT TO CONTROL
THE PERFORMANCE OF RECORDINGS AFTER THEY ARE
SOLD .............................................................................................................. 4
A. No New York Court Has Ever Recognized A Sound-Recording
Performance Right, And Every Relevant Stakeholder Has
Recognized That No Such Common Law Right Exists ....................... 5
B. The Doctrinal And Policy Justifications For The Anti-Piracy
Right, And For Common Law Copyright Itself, Preclude
Recognizing A Performance Right In Sound Recordings ................. 14
II. ONLY THE LEGISLATURE CAN RECOGNIZE A NEW RIGHT
TO CONTROL PUBLIC PERFORMANCES OF SOUND
RECORDINGS ............................................................................................. 24
CONCLUSION ....................................................................................................... 30
TABLE OF AUTHORITIES
Page(s)
-v-
CASES
Campaign for Fiscal Equity, Inc. v. New York,
8 N.Y.3d 14 (2006) ............................................................................................. 24
Capitol Records, Inc. v. Mercury Records Corp.,
221 F.2d 657 (2d Cir. 1955) .......................................................................... 6, 19
Capitol Records, Inc. v. Naxos of Am., Inc.,
4 N.Y.3d 540 (2005) ................................................................................... passim
Dowling v. United States,
473 U.S. 207 (1985) ............................................................................................ 15
Gieseking v. Urania Records, Inc.,
17 Misc. 2d 1034 (N.Y. Sup. Ct. 1956) .............................................................. 20
Halstead v. Grinnan,
152 U.S. 412 (1894) ............................................................................................ 10
Jewelers’ Mercantile Agency v. Jeweler’s Weekly Publ’g Co.,
155 N.Y. 241 (1898) .................................................................................... 24, 25
Metro. Opera Ass’n v. Wagner-Nichols Recorder Corp.,
199 Misc. 786 (Sup. Ct. 1950) ............................................................... 13, 21, 22
Norcon Power Partners, L.P. v. Niagara Mohawk Power Corp.,
92 N.Y.2d 458 (1998) ............................................................................ 12, 24, 25
Palmer v. De Witt,
47 N.Y. 532 (1872) ...................................................................................... 14, 15
Petrella v. Metro-Goldwyn Mayer, Inc.,
134 S. Ct. 1962 (2014) ........................................................................................ 10
Pushman v. New York,
287 N.Y. 302 (1942) ........................................................................................... 17
RCA Mfg. Co. v. Whiteman,
114 F.2d 86 (2d Cir. 1940) .................................................................... 5, 6, 7, 19
Waring v. WDAS Broad. Station Inc.,
327 Pa. 433 (1937) ................................................................................................ 7
TABLE OF AUTHORITIES
(continued)
Page(s)
-vi-
Wheaton v. Peters,
33 U.S. 591 (1834) .............................................................................................. 20
STATUTES
17 U.S.C. § 114 ........................................................................................................ 27
LEGISLATIVE MATERIALS
120 CONG. REC. 30,405 (1974) ............................................................................... 8
Revision of Copyright Laws: Hearings Before the H. Comm. on
Patents, 74th Cong. 639 (Comm. Print 1936) .................................................... 23
SUPP. REGISTER’S REP. ON THE GENERAL REV. OF U.S. COPYRIGHT
LAW (Comm. Print 1965) ................................................................................... 22
OTHER AUTHORITIES
1 MELVILLE B. NIMMER & DAVID NIMMER, NIMMER ON COPYRIGHT
(rev. ed. 2016) ..................................................................................................... 16
2 MELVILLE B. NIMMER & DAVID NIMMER, NIMMER ON COPYRIGHT
(rev. ed. 2016) ........................................................................................ 17, 18, 19
Gary Pulsinelli, Happy Together? The Uneasy Coexistence of Federal
and State Protection for Sound Recordings, 82 TENN. L. REV. 167
(2014) .................................................................................................................... 7
PRELIMINARY STATEMENT
As Sirius XM’s opening brief demonstrated, the district court’s ruling
shattered decades of legal, industry, and political consensus that state common law
does not grant record companies and other owners of pre-1972 recordings the
unfettered, unconditional right to control performances of records that they sold to
the public. The central premise of Plaintiff’s response brief is that no such
consensus existed and that pre-1972 recording owners in fact always possessed
such rights under New York common law.
That argument is at odds with precedent, to be sure, but it is also belied by
simple reality. If such a right existed, recording owners would not have waited a
century to assert it. They would not have repeatedly insisted to Congress that no
such right exists under state law. And they certainly would not have stood idly by
while their rights were trampled by AM/FM radio stations, club DJs, restaurants,
and thousands of others, on a daily and even hourly basis.
Make no mistake: the district court’s ruling was “unprecedented,” as even
the court itself recognized. A-1704. Before now, no court has ever held that pre-
1972 recording owners have an unfettered right to control when and where their
records are played or to demand royalties when they are. Courts instead have
recognized only a right to prevent unauthorized copying and distribution of pre-
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1972 recordings—i.e., record piracy. Plaintiff’s entire argument rests on a non
sequitur based on that anti-piracy right.
According to Plaintiff, because record owners have a common law right to
control post-sale copying of their records, they necessarily must also have a
common law right to control post-sale performances of the records. That argument
simply misunderstands the nature of the anti-piracy right. That right from its
beginning has been based explicitly on the premise that record owners sell records
expecting them to be performed, not reproduced and resold in direct competition
with the record owner. That principle on its face explains why the right to control
post-sale copying does not encompass the right to control post-sale performance,
which does not “copy” the record in any respect, but instead merely uses it for the
very purpose for which it was sold. For this reason, while courts in New York and
elsewhere have long granted protection against piracy, no court anywhere has ever
allowed record companies to prevent record-purchasers (including broadcasters)
from performing lawfully obtained records. And New York law is clear that
where, as here, creating a new right would dramatically expand existing law and
adversely affect recording artists and other stakeholders, the decision whether to
establish that right, and how to craft it, must be left to the policymaking branches.
Plaintiff also misunderstands the relevance of federal copyright law and the
background of Congress’s enactment of a limited performance right in post-1972
-3-
recordings. According to Plaintiff, Section 301(c) of the Copyright Act prohibits
courts from even considering the Act and its background in determining the scope
of rights in pre-1972 recordings. But Section 301(c) merely authorizes states to
make (or not make) laws concerning pre-1972 recordings. Nothing in the
provision bars courts from considering federal law to understand the scope of the
common law copyrights against which the federal law was enacted. The simple
point here is that the terms and history of federal copyright law confirm that no
common law performance right existed before a very limited federal right was
created in 1995, because recording owners themselves repeatedly complained that
no such common law right existed, and for that reason implored Congress to create
a federal statutory right. Congress eventually did so, but it created only a carefully
circumscribed right, and only for post-1972 recordings. That federal enactment
exemplifies the nuanced policy balancing among various stakeholders that is
required in this area, which shows why creating controversial new rights is a
quintessential legislative act, not a task for courts construing the common law.
A record company or other recording owner has no right under New York
law to control where and when the lawful purchaser of a record plays the record.
The certified question should be answered in the negative.
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ARGUMENT
I. NEW YORK COMMON LAW DOES NOT AND HAS NEVER
GRANTED RECORDING OWNERS A RIGHT TO CONTROL THE
PERFORMANCE OF RECORDINGS AFTER THEY ARE SOLD
Plaintiff readily admits that no New York court has ever held that record
companies and other sound recording owners have a right to control how and when
their records are played after they are sold to the public. Pl. Br. 36. Indeed, the
only court that has ever recognized such a “performance” right under New York
law—the federal district court in this case—admitted that its holding was
“unprecedented.” A-1704. Plaintiff nevertheless argues that because New York
common law recognizes a right to prevent the unauthorized reproduction of a
recording—i.e., an anti-piracy right—the recording owner’s rights in that property
must extend to every other conceivable use of the recording, including its
“performance” by lawful purchasers. Pl. Br. 28-48.
Plaintiff’s argument fails at its premise, because the fact that New York law
recognizes a right to control post-sale copying of sound recordings does not mean,
or even suggest, that the law also recognizes a right to control post-sale
performances of those recordings. That is why every relevant stakeholder has
acknowledged for a century that there is no performance right in sound recordings,
even while New York courts routinely recognized an anti-piracy right. Indeed, the
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very principles that justified creating a common law anti-piracy right in the first
place preclude its application to post-sale performance of sound recordings.
A. No New York Court Has Ever Recognized A Sound-Recording
Performance Right, And Every Relevant Stakeholder Has
Recognized That No Such Common Law Right Exists
1. Plaintiff’s position that a performance right in sound recordings exists
under New York common law begins at a decided disadvantage, because as
Plaintiff itself admits, no New York court has ever recognized such a right. See Pl.
Br. 36. But even more important, every relevant actor—courts, commentators, and
recording owners—have repeatedly expressed their affirmative understanding that
there is no such right. Sirius Br. 15-24, 28-30.
That has been the generally shared understanding at least since the Second
Circuit’s decision in RCA Manufacturing Co. v. Whiteman, 114 F.2d 86 (2d Cir.
1940), which held that a radio broadcast of records did not violate common law
copyright because common law rights in a recording “consist[] only in the power
to prevent others from reproducing the copyrighted work.” Id. at 88. The court
explained that the radio network “never invaded any such right” by merely playing
the record, since it “never copied [Whiteman’s] performances at all,” but “merely
used those copies which he and the [record company] made and distributed.” Id.
The court also went on to state separately that after the record was sold, the sound
recording owner also lost protection against unauthorized copying, in which
-6-
circumstance “anyone may copy it who chances to hear it, and may use it as he
pleases.” Id. at 89.
Plaintiff argues that Whiteman’s rejection of a performance right was
overruled by a later Second Circuit case, Capitol Records, Inc. v. Mercury Records
Corp., 221 F.2d 657 (2d Cir. 1955), but that is both wrong and irrelevant. It is
wrong because Mercury Records did not consider a performance right at all—it
rejected only Judge Hand’s separate “statement” that the sale of a record
extinguishes the right against copying. Id. at 663. Mercury Records thus
recognized an anti-piracy right, id., but nothing in its holding or analysis casts any
doubt on Whiteman’s distinct holding that a recording owner’s rights are limited to
control over copying and do not encompass control over performance.
More important, the precise holdings of Whiteman and Mercury Records are
not even directly relevant here—as both parties acknowledge, neither decision is
binding on this Court. Sirius Br. 21; Pl. Br. 40. What does matter, though, is that
after Whiteman, literally every commentator, government actor, and record
industry stakeholder who considered the issue concluded that recording owners
who sell records to the public have no right to control the performance of those
records after their sale.
Plaintiff, for example, fails to cite even a single post-Whiteman case
conferring on record companies a general right to control the performance of
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records after their public sale.1 And indeed, before the federal district court’s
decision in this case (and the related California action), no court had “ever before
recognized” such a right—a right that would subject “an enormous number of
parties to unexpected liability.” Gary Pulsinelli, Happy Together? The Uneasy
Coexistence of Federal and State Protection for Sound Recordings, 82 TENN. L.
REV. 167, 239 (2014).
Nor does plaintiff dispute that academic commentators have for decades and
apparently without exception understood there to be no such right after Whiteman.
Sirius Br. 21-22. Plaintiff writes off as “irrelevant” this unbroken understanding,
Pl. Br. 27 n.11, but it fails to cite a single academic article or opinion setting forth a
different view. This unanimity among learned commentators on the question
1 The only case Plaintiff cites as recognizing a performance right is Waring
v. WDAS Broadcasting Station Inc., 327 Pa. 433 (1937), which Whiteman
considered and rejected, see 114 F.2d at 89-90. Waring in any event differs
significantly from this case because the recording owner there (i) specifically
reserved post-sale performance rights through a label on the sound recording, and
(ii) there was “an understanding between [plaintiff and the record company] that
[the record company] would seek to prevent [unauthorized public broadcasting] so
far as lay within its power.” Waring, 327 Pa. at 447-48. Waring thus does not
support Plaintiff’s much more radical argument that performance rights always
survive the sale of a record even without a label and explicit understanding
concerning post-sale performance.
Plaintiff correctly states that this Court in Naxos cited Waring, but only for
the general proposition that Waring recognized a property right in sound
recordings. See Capitol Records, Inc. v. Naxos of Am., Inc., 4 N.Y.3d 540, 553
(2005). Naxos did not consider the Waring’s specific holding concerning a sound-
recording owner’s limited right to prevent broadcast of a sound without a license,
since that issue was not before this Court.
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presented in this case is extraordinary, and by itself demonstrates beyond all doubt
that no common law right to control post-sale performance of sound recordings
had ever been thought to exist before this litigation.
There is more. The Congressional Record reflects that Congress’s 1976
decision to exclude a sound-recording “performance” right from federal protection
“merely states what has been the law and the widely accepted fact for many
years—namely, that there is no compensable property right in sound recordings
and no . . . performance royalty for broadcasters because they play records for
profit.” 120 CONG. REC. 30,405 (1974). The Register of Copyrights has also
twice reaffirmed that no state has recognized such a right. Sirius Br. 23-24 & n.4.
Plaintiff correctly notes that the second of these reports—issued after this lawsuit
was filed—warns that while no state has yet recognized a right to control post-sale
performance of sound recordings, a state could someday create such a right. Pl.
Br. 26 n.9. But even if so, the fact that a state could recognize such a right does
exactly nothing to establish that this State (or any other) ever has, which is the
relevant question here.
Maybe most important, record company executives themselves repeatedly
testified before Congress that they had no legal right to prevent lawful purchasers
of their sound recordings from performing them. Sirius Br. 22-23. Plaintiff
responds that these statements against interest by “record executives seeking a
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federal performance right for sound recordings” say nothing about whether the
right existed under the common law. Pl. Br. 27. Of course they do. Plaintiff
willfully ignores the actual record, which makes clear that these record executives
were seeking federal protection because they understood that they did not have
common law protection. Sirius Br. 22-23, 29.
2. This uniform understanding among all stakeholders that record
companies and other sound recording owners have no right to prevent lawful
purchasers from playing records is fatal to Plaintiff’s case, for at least three
reasons.
a. First, this unanimous understanding explains why, before this case, no
recording owner since Whiteman had ever attempted to invoke a common law
“performance” right in the recording. After all, if such a right existed, it would
have been violated every day for a century by every radio broadcaster and disc
jockey, and even most restaurants, who routinely play (i.e., “perform”) lawfully
purchased recordings for the public. Sirius Br. 28-30. Yet no recording owner
attempted to protect a “performance” right in court, precisely because they (and
everyone else) understood that there was no such right. As the U.S. Supreme
Court has recognized, “so strong is the desire of every man to have the full
enjoyment of all that is his, when a party comes into court and asserts that he has
been for many years the owner of certain rights, of whose existence he has had full
-10-
knowledge, and yet has never attempted to enforce them, there is a strong
persuasion that, if all the facts were known, it would be found his alleged rights
either never existed or had long since ceased.” Halstead v. Grinnan, 152 U.S. 412,
416 (1894).
Plaintiff urges this Court to ignore the lack of any recording-owner
enforcement attempt despite constant, decades-long alleged infringement because 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,” Pl. Br.
49-50, citing the Supreme Court’s recent decision in Petrella v. Metro-Goldwyn
Mayer, Inc., 134 S. Ct. 1962 (2014). Petrella is inapposite—that case concerned
whether a plaintiff that failed to assert a known copyright claim can be held to have
lost his right to assert it through laches, and the Court held that he could not
because Congress had displaced the equitable doctrine of laches through the
Copyright Act’s statute-of-limitations provision. Id. at 1972-79. Here, the
question is not whether Plaintiff or any other sound recording owner has sat on a
known right, but whether such a right exists in the first place, and the fact that no
recording owner had attempted to invoke it for a century is good evidence that the
newly-claimed right “never existed.” Halstead, 152 U.S. at 416.
Moreover, and more to the point, Plaintiff’s explanation for the lack of any
attempt on the part of sound recording owners to protect their supposed common
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law “performance” right is both implausible and contradicted by the historical
record. Plaintiff speculates that recording owners had no incentive to invoke this
right until the recent “dramatic shift from sales of physical and digital copies of
records to digital streaming and broadcasting.” Pl. Br. 50. But there is no question
that even before this shift, sound recordings would have been significantly more
valuable if they carried with them a perpetual right to control whether and how
they are played after sale. Plaintiff’s position—that record companies simply
chose to leave money on the table for no reason—is about as likely as it sounds.
Moreover, many decades before this market adjustment occurred, record
companies were investing substantial resources in repeatedly and unsuccessfully
lobbying Congress to recognize a performance right in sound recordings. Those
efforts began in 1909, continued through the rejection of such a right in the 1976
Copyright Act, and finally culminated in the limited, balanced recognition of such
right in post-1972 recordings in 1995. Sirius Br. 16-18. That longstanding record
shows that record companies had ample incentive to assert a common law
performance right in court, if they believed that such a right existed. They plainly
did not.
b. Second, the fact that every relevant actor and stakeholder understood that
there is no common law “performance” right in sound recordings means that
Plaintiff is not merely asking this Court to recognize an existing right, but to create
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an entirely new right inconsistent with the industry custom and practice since the
advent of radio. Plaintiff’s position would thus “clash with [the] customary
incremental common-law developmental process.” Norcon Power Partners, L.P.
v. Niagara Mohawk Power Corp., 92 N.Y.2d 458, 467-68 (1998). This Court
recognized a common law anti-piracy copyright in part because the common law’s
protection against unauthorized reproduction of sound recordings “was consistent
with the long-standing practice of the federal Copyright Office and became the
accepted view within the music recording industry.” Naxos, 4 N.Y.3d at 554-55
(citation omitted). Recognizing the “performance” right that Plaintiff presses
would, in contrast, contradict accepted practice and industry understanding.
Plaintiff barely even acknowledges this fundamental point, responding in a
footnote that Sirius XM’s position “read[s] into supposed silences in cases” the
non-existence of a “performance” right. Pl. Br. 40 n.13. Plaintiff mischaracterizes
Sirius XM’s argument, which is based not on silence but on repeated, affirmative
conduct and representations by industry stakeholders, academic commentators, and
government agencies, which together demonstrate an unmistakable and entirely
unrebutted consensus that recording owners did not possess the right to control
where and when lawful purchasers of their recordings could play them. Plaintiff is
asking this Court to conjure such a right out of thin air, and thereby to upend the
recording industry entirely. If New York law is to recognize such a right, it is for
-13-
the Legislature, not a common law court, to say so. See Sirius Br. 40-47; infra Part
II.
c. Third, the long and consistent historical understanding that sound
recording owners cannot control the performance of lawfully purchased recordings
definitively refutes the essential premise of Plaintiff’s argument. According to
Plaintiff, because the common law recognizes a right to control copying of lawfully
purchased recordings—i.e., the anti-piracy right—the law also must recognize the
right to control performances of lawfully purchased recordings. See supra at 4.
But the historical record shows that courts, commentators, and industry
stakeholders never considered a performance right as inherent in the anti-piracy
right. After all, New York courts had expressly and repeatedly recognized
common law anti-piracy protection since at least 1950, see Metro. Opera Ass’n v.
Wagner-Nichols Recorder Corp., 199 Misc. 786 (Sup. Ct. 1950); Sirius Br. 12-13,
and the anti-piracy right was generally consistent with industry practice for
decades, Naxos, 4 N.Y.3d at 554-55. Yet every relevant actor—including the
record companies themselves—understood that while the common law protects
recording owners against unauthorized reproduction, it does not allow a recording
owner to prevent a lawful purchaser from playing the recording.
Plaintiff’s position that a “performance” right must go hand in glove with an
anti-piracy right is simply wrong as a practical matter. Moreover, as explained in
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the next section, it is wrong as a legal matter as well: the distinction between anti-
piracy rights and performance rights derives from fundamental common law
principles ignored by Plaintiff but long recognized by New York courts.
B. The Doctrinal And Policy Justifications For The Anti-Piracy
Right, And For Common Law Copyright Itself, Preclude
Recognizing A Performance Right In Sound Recordings
Unable to plausibly explain the historical record just described, Plaintiff’s
principal argument is the same simple, doctrinal argument it has always pressed in
this litigation, viz., because New York law recognizes a common law right to
prevent the unauthorized reproduction and sale of a record after its sale, the law
also must necessarily recognize a right to prevent any other type of post-sale use of
the record, including where and when it is played. But as Sirius XM has
explained, that argument misunderstands the nature of and principles underlying
common law copyright generally, and the anti-piracy right specifically. Sirius Br.
30-39. Plaintiff’s responses to these arguments range from meritless to non-
existent.
1. The doctrinal premise of Plaintiff’s argument is the unexceptional
observation in Palmer v. De Witt, 47 N.Y. 532 (1872), that a copyrighted work “is
not distinguishable from any other personal property,” id. at 538, which Plaintiff
takes to mean that “copyright protections are as expansive as rights in other forms
of tangible property,” Pl. Br. 29. Of course, Plaintiff itself recognizes that even
-15-
personal property rights are far from absolute. Id.; see Sirius Br. 30-31. Moreover,
Palmer does not say that common law copyrights are fully commensurate with
personal property rights, but only “so far as applicable.” Palmer, 47 N.Y. at 538.
And copyright in fact “has never accorded … complete control over all possible
uses of [the] work,” but instead “comprises a series of carefully defined and
carefully delimited interests to which the law affords correspondingly exact
protections.” Dowling v. United States, 473 U.S. 207, 216-17 (1985) (quotations
and citations omitted).
That is true not only under federal law, but also under the common law.
Palmer, for example, held that a copyright holder does not necessarily possess the
right to prevent all uses of the art: the “right publicly to represent a dramatic
composition for profit, and the right to print and publish the same composition to
the exclusion of others, are entirely distinct, and the one may exist without the
other,” 47 N.Y. at 542; see also Sirius Br. 32-33.
To be sure, it is true that, insofar as a common law copyright is “applicable,”
Palmer, 47 N.Y. at 538, it “vest[s] rights in its author similar to the ownership
rights in perpetuity associated with other forms of tangible property.” Pl. Br. 30
(quoting Naxos, 4 N.Y.3d at 547). But Plaintiff draws the wrong lesson from that
proposition. It is precisely because common law copyright (when it applies) vests
a perpetual right in the owner that the scope of common law copyright—i.e., when
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it applies in the first place—is necessarily narrow. After all, a copyright differs
from a personal property right because a copyright deprives the public access of
socially useful art. Thus, as Sirius XM explained in its opening brief, Sirius Br.
9-10, 32-33, 37-39—and as Plaintiff does not even acknowledge, let alone
address—courts articulating the scope of common law copyright have attempted to
achieve a fair balance between “the interest of authors in the fruits of their labor,”
on the one hand, and “the interest of the public in ultimately claiming free access
to the materials essential to the development of society,” on the other. 1 MELVILLE
B. NIMMER & DAVID NIMMER, NIMMER ON COPYRIGHT (“Nimmer I”) § 4.04 (rev.
ed. 2016). Courts, in other words, have construed the scope of perpetual common
law copyrights narrowly to protect an artist’s core rights in his or her work, and
have otherwise left to state legislatures or Congress to determine the proper
balance between the artist’s interest and the public’s. Id.; Sirius Br. 33.
2. The fact that the common law protects against the unauthorized
reproduction and sale of sound recordings does not remotely suggest that it also
authorizes recording owners to prevent lawful purchasers from playing those
recordings. Certainly, nothing in this Court’s decision in Naxos, which considered
only whether New York law recognized an anti-piracy right, see 4 N.Y.3d at
544-46, supports that result. To the contrary, the nature of common law copyright,
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along with the principles on which Naxos rested, affirmatively preclude
recognizing the “performance” right Plaintiff presses.
a. It is well-established that, “[a]s the label ‘copyright’ suggests, it is the act
of copying that is essential to, and constitutes the very essence of all copyright
infringement.” 2 MELVILLE B. NIMMER & DAVID NIMMER, NIMMER ON COPYRIGHT
(“Nimmer II”) § 8.02[A] (rev. ed. 2016). Plaintiff says that this is only true of
federal copyright law, Pl. Br. 45, but Plaintiff is wrong—this Court has made clear
that “the separate common law copyright” is the “control of the right to
reproduce,” Pushman v. New York, 287 N.Y. 302, 307 (1942) (emphasis added);
see Naxos, 4 N.Y.3d at 547 (core of English common law copyright “include[d]
the ability of an author to decide whether a literary work would be published and
disseminated to the public . . . and, if distributed, how the work would be
reproduced in the future” (emphasis added)).
The right recognized in Naxos—i.e., the “right to copy and sell the records,”
Naxos, 4 N.Y.3d at 554 (quotations and citations omitted)—falls squarely within
that core copyright protection. The “performance” right does not, because it does
not involve any copying at all.2 The “performance” right, as Plaintiff defines it, is
2 Plaintiff argues that Sirius XM does make incidental copies of sound
recordings “to operate its satellite broadcasting and Internet streaming services.”
Pl. Br. 43. But the record is undisputed that Sirius XM only makes internal
“temporary copies in order to facilitate the public performance of . . . sound
recordings.” A-1720. And as Plaintiff acknowledges, the question whether such
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the right to prevent a lawful purchaser from playing a record. Playing a record
does reproduce the song’s composition, which is why public broadcast of a sound
recording implicates the artist’s copyright in the work itself. But playing the
record in no way reproduces the sound recording—it merely uses the sound
recording for its intended purpose. For this reason, the claimed right to control the
performance of sound recordings “should not be confused with the performance
right that has always been accorded to musical works.” Nimmer II, supra,
§ 8.14[A].
Plaintiff insists that the right to control performance of lawfully purchased
recordings is one right in the “bundle” that makes up a common law copyright. Pl.
Br. 30, 45 n.15. That assertion is based on a category error. Plaintiff relies on
cases it reads as finding a “public performance” right in plays and films. Pl. Br.
31. But the right to control the performance of plays and films is not the same as
the right to control the performance of a sound recording: the performance of a
play or film copies the underlying work just like performance of a song does,
whereas performance of a record copies nothing. See Nimmer II, supra, § 8.02[A].
incidental, temporary copying is itself infringing turns on whether such copying is
“fair use”—a question before the Second Circuit that the court declined to consider
“until this Court has rendered a decision on the certified question.” Pl. Br. 43 n.14.
Thus, that question “is not before this Court.” Id.
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Plaintiff finds this distinction “incoherent,” Pl. Br. 43, on the remarkable
ground that performance of a film, play, or song, does not require copying because
the written words or notes are not reproduced in permanent material form, id. at 47.
Plaintiff simply misunderstands the “copying” rights protected by traditional
copyright. Those rights protect against not only the reproduction of a permanent
“material object,” but also the reenactment of the author’s words, music, or stage
directions. See Nimmer II, supra, § 8.02[A] (“There may be copying in the
generic sense that does not result in any such material object.”). “Performing” a
sound recording, in contrast, does not replicate, reconstruct, or reenact the
recording itself in any way—the broadcaster “never copie[s] [the] performances at
all,” Whiteman, 114 F.2d at 88, but simply uses the recording for its intended
purpose. For that reason, the common law protection against the copying of a play
or song through its public performance has never been understood as also
protecting against the non-copying performance of a recording. See supra at 5-9.
b. Recognizing a “performance” right in sound recordings is also
inconsistent with the principles underlying this Court’s recognition of an anti-
piracy right in Naxos. That Court recognized that the “appropriate governing
principle” justifying the recognition of an anti-piracy right was that sale of the
recording “does not constitute a dedication of the right to copy and sell the
records.” Naxos, 4 N.Y.3d at 554 (quoting Mercury Records, 221 F.2d at 663). In
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other words, record sale “does not . . . dedicate the right to copy or sell the record,”
because a “performer has a property right in his performance that it shall not be
used for a purpose not intended.” Gieseking v. Urania Records, Inc., 17 Misc. 2d
1034, 1035 (N.Y. Sup. Ct. 1956); see Wheaton v. Peters, 33 U.S. 591, 674-75
(1834) (Thompson, J., dissenting); Sirius Br. 36-38.
Plaintiff cites Naxos’s holding that a common law anti-piracy right in sound
recordings exists “without regard to the limitations of ‘publication’ under the
federal act,” Pl. Br. 39 (quoting Naxos, 4 N.Y. 3d at 557), and concludes from this
that “sale has no impact on the scope of copyright protection for pre-1972 sound
recordings,” Pl. Br. 34. But Plaintiff’s contention divorces Naxos’s holding from
the “appropriate governing principle” that compelled that holding. See Naxos, 4
N.Y.3d at 560 (“The evolution of copyright law reveals that the term ‘publication’
is a term of art that has distinct meanings in different contexts.”). Under Naxos, a
record’s sale does not divest the owner of the right to prevent unauthorized
copying because copying and reselling is not a recording’s intended use, and
selling the recording thus does not vest in the buyer the right to copy and sell. That
principle has no application to the “performance” right, because playing a record is
the record’s intended use. Sirius Br. 37-38. Thus, while sale does not constitute a
divestment of a common law anti-piracy right, it does constitute divestment of any
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“performance” right that might otherwise exist, as has been widely understood for
decades. See supra at 5-9.
Plaintiff attributes to Sirius XM the argument that this Court should not
recognize a right to control the post-sale performance of sound recordings simply
because that right was not specifically addressed in Naxos and the cases on which
it relies. Pl. Br. 36. But that is not Sirius XM’s position. The problem for Plaintiff
is not just that Naxos did not consider the right Plaintiff asserts—it is that the
reason Naxos recognized a right to control post-sale copying (i.e., because records
are not sold for that purpose) is affirmatively inconsistent with recognizing a right
to control post-sale performance (i.e., because records are sold for exactly that
purpose).3
3 Plaintiff appears to argue that Metropolitan Opera supports a
“performance” right because it noted that the opera company derived its income, in
part, from the “broadcasting” of its performances over the radio. Pl. Br. 37
(quoting Metro. Opera, 199 Misc. at 796). But Metropolitan Opera does not
consider a “performance” right; as Naxos recognized, the dispute in that case
derived from the fact that the “plaintiff’s operatic performances had been broadcast
on radio and records of the performances were sold to the public,” and the
“defendant copied those performances and created its own records for sale.”
Naxos, 4 N.Y.3d at 554 (emphasis added). The Metropolitan Opera court’s
mention of “broadcasting” came in the context of describing the three ways in
which the opera made money—(i) from live audience performance, (ii) from “the
broadcasting of those productions over the radio,” and (iii) “from the licensing to
the record company of the exclusive privilege of making and selling records of its
own performances.” 199 Misc. at 796. The question at issue in Metropolitan
Opera concerned only the third of those interests—both the opera and Columbia
Records were plaintiffs, and sued the defendant because it “offer[ed] to the public
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c. Finally, Plaintiff fails even to acknowledge that determining the scope of
common law copyright requires balancing the interest of artists in their work with
the public’s interest in gaining access to socially useful art. See supra at 16. And
as Sirius XM has demonstrated, a proper balancing overwhelmingly weighs against
recognizing an unfettered, perpetual common law “performance” right in sound
recordings, because numerous stakeholders—including artists, broadcasters, and
music consumers—have strong interests in unrestricted performance of records
after their sale. Sirius Br. 38-39. That much is clear from the federal experience,
in which Congress recognized a relatively uncontroversial anti-piracy right, while
at the same time refusing to acknowledge even a limited “performance” right for
decades because it was “explosively controversial,” SUPP. REGISTER’S REP. ON THE
GENERAL REV. OF U.S. COPYRIGHT LAW 51 (Comm. Print 1965) (A-185), and only
then after exhaustive study and interest balancing, Sirius Br. 15-24. Plaintiff does
not dispute any of this, instead arguing that the federal experience is irrelevant to
the scope of state common law. Pl. Br. 25-28. But the long and controversial
history of the federal performance right, particularly compared to the anti-piracy
right, demonstrates (among other things) that the balance of interests justifying an
anti-piracy right does nothing to justify a “performance” right. Sirius Br. 38-39.
recordings of Metropolitan Opera’s broadcast performances” without paying either
plaintiff. Id. (emphasis added).
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Ignoring this well-recognized distinction and the extensive history
confirming it, Plaintiff insists that the unauthorized reproduction and resale of
sound recordings “inflict[s] the same harms as” the recording’s public
performance. Pl. Br. 48. That is obviously wrong—piracy places the pirate in
direct and unfair competition with the sound recording owner, whereas a purchaser
that plays a record is using the record as intended after compensating the owner.
That is why the recording industry itself has recognized the existence of an anti-
piracy right for decades, even while radio stations freely broadcasted lawfully
purchased recordings, and recording executives not only did not seek to enforce a
“performance” right, but acknowledged the fact that no such right existed. See
supra at 5-9. And it is why record companies themselves explained to Congress
that while “the duplication of a phonograph record and the selling of that record is
an act of unfair competition,” “the playing of a record over the air, the mere use of
a record in that manner,” is not. Revision of Copyright Laws: Hearings Before the
H. Comm. on Patents, 74th Cong. 639 (Comm. Print 1936). One right simply does
not follow from the other, and determining the proper scope of a “performance”
right, if any, requires a careful balance of competing stakeholder interests. That is
a task for the Legislature, not a common law court.
-24-
II. ONLY THE LEGISLATURE CAN RECOGNIZE A NEW RIGHT TO
CONTROL PUBLIC PERFORMANCES OF SOUND RECORDINGS
As Sirius XM has shown, to the extent any “performance” right is
recognized under New York law, it should be by the Legislature, which is able to
engage in the careful balancing of interests required to properly determine the
contours of such a right. Sirius Br. 40-47. Again, Congress’s extensive, labored
history that for years rejected a “performance” right and finally accepted a limited
one for post-1972 recordings, shows that striking the right balance in this area is an
especially complex exercise, and entirely inconsistent with the blunt tool of a
perpetual common law right. Sirius Br. 43-47. Particularly with respect to areas
requiring complex interest balancing among multiple stakeholders, a sudden,
dramatic expansion of common law rights would “clash with [the] customary
incremental common-law developmental process” and “encroach[] on the
legislative branch.” Norcon, 92 N.Y.2d at 467-68; see Sirius Br. 40-43.
Plaintiff does not seriously dispute that established proposition,4 but
principally responds that New York law in fact already recognizes a “performance”
4 Plaintiff does observe that one of the many cases emphasizing that courts
are not well-suited for complex policymaking, Campaign for Fiscal Equity, Inc. v.
New York, 8 N.Y.3d 14 (2006), does not concern common law copyright. Pl. Br.
52 n.18. That observation is irrelevant to the incontestable proposition for which
Sirius XM cited the case: “[T]he manner by which the State addresses complex
societal . . . issues is a subject left to the discretion of the political branches of
government.” Sirius Br. 40 (quoting Campaign for Fiscal Equity, 8 N.Y.3d at 28).
It is likewise beside the point that Jewelers’ Mercantile Agency v. Jeweler’s
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right in sound recordings, such that “legislative action would be required to divest
copyright owners of this right, not to grant it.” Pl. Br. 52. That contention is
wrong for all the reasons already explained. See supra Part I. Plaintiff also
gamely argues that recognizing a “performance” right in this case “will not disrupt
the music industry,” Pl. Br. 51, but as even the federal district court in this case
agreed, such a decision would be “unprecedented,” A-1407, and would by
definition unsettle decades of industry practice and expectations. See supra at 5-
14.
Plaintiff’s (and its amicus’s) policy arguments demonstrate the point.
Plaintiff contends that recording owners “are creators of art and deserve to be
compensated when their work generates value.” Pl. Br. 48. But recording owners
are compensated for their pre-1972 recordings, when people and entities purchase
their records. Plaintiff’s position is that record companies and the few other
owners of pre-1972 recording are no longer compensated enough because of
changed market conditions. Pl. Br. 49-51. Even if true, it does not follow that the
proper level of compensation can be achieved only by granting them a perpetual
Weekly Publishing Co., 155 N.Y. 241 (1898), involved books, which are treated
differently from sound recordings for copyright purposes. See Pl. Br. 52 n.18. The
relevant point is that claimed “interests . . . of so important a character” are “a
proper subject for legislative action,” 155 N.Y. at 254, a principle not disputed by
Plaintiff and reaffirmed in this Court’s other cases, e.g., Norcon, 92 N.Y.2d at
467-68.
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right to control when their recordings are played. After all, when Congress
exhaustively studied this issue for post-1972 recordings, Congress rejected such a
categorical rule, and instead determined that a proper balance of stakeholder
interests supports only a limited performance right, including a mandatory
licensing scheme and a complete exemptions for broadcast radio. Sirius Br. 18-19,
43-47. This Court has no means by which to craft a similarly limited and balanced
rights structure for pre-1972 recordings. Determining the correct level of record-
owner compensation required to create the proper record-company incentives,
balanced against the interests of artists, broadcasters, and public consumers, is an
inherently legislative task.
Plaintiff’s amicus the Recording Industry Association of America (“RIAA”)
similarly argues at length that New York has an interest in supporting its vibrant
recording industry, and that in RIAA’s judgment, a perpetual common law
performance right is the best way to do so. RIAA Br. 5-24. It is hardly surprising
that a recording-industry trade group would elevate the interests of the recording
industry over the interests of artists who want their music played, the interests of
broadcasters who want to play the artists’ music, and the public’s interest in
listening to that music. But as shown by the much larger and more diverse
collection of amici supporting Sirius XM, the interests of the recording industry are
-27-
not the only relevant interests. Only the policymaking branches can properly
balance those many competing interests.
Those competing interests include those of the “musicians and singers who
perform songs.” Pl. Br. 48. Plaintiff says they too “deserve to be compensated,”
id., but this case is not about compensation for musicians and singers—it is about
compensation for recording owners. More precisely, the case is about windfall
compensation for record companies, who own most pre-1972 sound recordings
and who already received compensation for the sale of their records. If anything,
conferring on record companies the right to restrict performance of their pre-1972
records would undermine the interests of musicians and singers because it would
allow record companies to limit public access to their music. While record
companies might negotiate licenses to play their pre-1972 sound recordings, the
companies would have no legal obligation and no practical incentive to share
license revenues with musicians and singers. Congress recognized that concern
when it crafted a performance right for post-1972 recordings, and addressed it by
requiring record companies to share 50% of digital performance royalties with the
performing artists. 17 U.S.C. § 114(g)(2)(B)-(D). The common law right now
claimed by Plaintiff would not and could not accomplish such legislative balancing
and line drawing.
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Finally, Plaintiff cites Sirius XM’s settlement with the four largest record
companies as evidence that all broadcasters could easily negotiate individual
licensing agreements with all pre-1972 recording owners to play their recordings.
Pl. Br. 54. Plaintiff is obviously wrong. The ability of one broadcaster to settle
active litigation with four large plaintiffs says nothing about the administrative
difficulties that would arise if this Court suddenly announced that all pre-1972
recording owners possess the right to control all performances of their recordings
by all lawful purchasers.5 Even the federal district court here rejected Plaintiff’s
view, expressly finding that “administrative difficulties . . . would ultimately
increase the costs consumers pay to hear broadcasts, and possibly make broadcasts
of pre-1972 recordings altogether unavailable.” A-1689. Avoiding that inevitable
outcome is precisely why Congress adopted a reticulated, mandatory licensing
scheme. Sirius Br. 43-47.
In any event, even if the market could eventually adjust through negotiations
between every individual broadcaster and every individual recording owner, the
5 Plaintiff suggests that it claims only a right to control public or for-profit
performances (Pl. Br. 46), but the limitation makes no sense on Plaintiff’s own
“property rights” theory: if the creation of a record necessarily includes a
categorical property right in performance of the record, the location or nature of
the performance is irrelevant. Moreover, artificially limiting the property right to
control over “public” or “for profit” performances would only create additional
confusion over what performances qualify—what about a DJ being paid to spin
records at a birthday party or legal aid fundraiser?—and would do nothing to solve
the administrative difficulties inherent in licensing.
-29-
relevant question presented in this case concerns the proper background legal rules,
which necessarily affect how the relevant stakeholders’ interests would ultimately
be balanced through such bargaining. The complexities involved in determining
how to allocate legal rights under which parties bargain in this area requires the
kind of policymaking reserved for the legislative branches, as the federal
experience shows. Sirius Br. 40-47.
There is, in short, no “right of public performance for creators of sound
recordings under New York law.” A-1728. The certified question should thus be
answered in the negative.
CONCLUSION
For the foregoing reasons, this Court should hold that New York law does
not give owners of sound recordings a right to control or demand payment for the
public performances of their recordings after they are sold.
Dated October 6, 2016
JONATHAN D. HACKER
(PRO HAC VICE)
O 'MELVENY & MYERS LLP
1625 Eye Street, N.W.
Washington, D.C. 20006
Tel.: (202) 383-5300
Fax: (202) 383-5414
Respectfully submitted,
DANIEL M. PETROCELLI
(PRO HAC VICE)
CASSANDRA L. SETO
(PRO HAC VICE)
O 'MEL VENY & MYERS LLP
1999 A venue of the Stars, 8th Floor
Los Angeles, Cal. 90067
Tel: (31 0) 553-6700
Fax: (310) 246-6779
ANTON METLITSKY
O ' MELVENY & MYERS LLP
Times Square Tower
Seven Times Square
New York, New York 10036
Tel.: (212) 326-2000
Fax: (212) 326-2061
Attorneys for Appellant Sirius XM Radio Inc.
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