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,
– v. –
SIRIUS XM RADIO, INC., a Delaware Corporation,
Defendant-Appellant. ___________________________
ON CERTIFICATION OF QUESTION BY THE
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
BRIEF OF PANDORA MEDIA, INC., iHEARTMEDIA, INC., THE
COMPUTER & COMMUNICATIONS INDUSTRY ASSOCIATION,
NEW YORK STATE RESTAURANT ASSOCIATION AND
NATIONAL RESTAURANT ASSOCIATION AS AMICI CURIAE IN
SUPPORT OF DEFENDANT-APPELLANT SIRIUS XM RADIO, INC.
ON THE CERTIFIED QUESTION FROM THE UNITED STATES
COURT OF APPEALS FOR THE SECOND CIRCUIT
JAMES K. LYNCH (PRO HAC VICE PENDING)
ANDREW M. GASS (PRO HAC VICE PENDING)
LATHAM & WATKINS LLP
505 Montgomery Street, Suite 2000
San Francisco, California 94111
Tel.: (415) 391-0600
Fax: (415) 391-8095
– and –
JONATHAN Y. ELLIS (PRO HAC VICE PENDING)
LATHAM & WATKINS LLP
555 Eleventh Street, NW, Suite 1000
Washington, D.C. 20004
Tel.: (202) 637-2145
Fax: (202) 637-2200
Attorneys for Amicus Curiae iHeartMedia, Inc.
BENJAMIN E. MARKS
GREGORY SILBERT
KAMI LIZARRAGA
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
Tel.: (212) 310-8000
Fax: (212) 310-8007
Attorneys for Amici Curiae
Pandora Media, Inc., The Computer &
Communications Industry Association,
New York State Restaurant Association
and National Restaurant Association
CORPORATE DISCLOSURE STATEMENT
Pursuant to Rule 500.l(t) of the Rules of Practice of the Court of Appeals:
1. Pandora Media, Inc. states that it is a publicly owned corporation and that
it has no parent corporation and that its subsidiaries include: Pandora FM LLC,
Pandora Media California, LLC, Next Big Sound LLC, Pandora Cayman Limited,
Pandora Media UK Ltd., Pandora Hong Kong Limited, Pandora Media Australia
Pty Limited, Pandora New Zealand, Pandora Media HK LLC, Ticketfly, LLC, and
Ticketfly Canada Service Inc.
2. iHeart Media, Inc. states that it is a publicly owned corporation and that it
has no parent corporation and that its subsidiaries include the entities listed in
Exhibit 1.
3. The Computer & Communications Industry Association states that it does
not have a parent corporation or any corporate affiliates or subsidiaries.
4. The New York State Restaurant Association states that it does not have a
parent corporation and that its subsidiary is New York State Restaurant Services
and that its affiliate is New York State Restaurant Association Educational
Foundation.
5. The National Restaurant Association is a not-for-profit organization
under 26 U.S.C. § 501(c)(6), incorporated in the State of Illinois. Its subsidiaries
are Alliance Business Solutions, LLC; ARN 2055, LLC; Environmental Health
1
Testing, LLC; The National Restaurant Association Educational Foundation;
National Restaurant Association Services, LLC; and National Restaurant
Association Solutions, LLC.
11
TABLE OF CONTENTS
PRELIMINARY STATEMENT ............................................................................... 1
CERTIFIED QUESTION PRESENTED .................................................................. 5
INTERESTS OF AMICI ........................................................................................... 6
SUMMARY OF ARGUMENT ................................................................................ 8
ARGUMENT .......................................................................................................... 13
I. The Extensive History Of Legislative Efforts To Secure A Federal
Performance Right For Sound Recordings Reflects The Uniform
Consensus Over Many Decades That No Common Law Right Exists ........ 13
II. The Legislature, Not The Courts, Must Balance The Competing
Interests And Make The Policy Judgments Involved In Creating
An Exclusive Right Of Public Performance For Pre-1972 Recordings ....... 19
III. The Declaration Of An Unqualified Common Law Performance Right
Would Unleash Widespread, Inequitable Burdens On Numerous
Industries ....................................................................................................... 28
A. Satellite And Internet Radio Services ................................................. 29
B. Traditional Radio Broadcasters .......................................................... 32
C. Restaurants, Bars, And Other Small Businesses ................................ 34
D. Local Television Broadcasters and Cable Television System
Operators ............................................................................................. 35
CONCLUSION ....................................................................................................... 38
111
TABLE OF AUTHORITIES
Page(s)
Cases
Campaign for Fiscal Equity, Inc. v. State,
8 N.Y.3d 14 (2006) ............................................................................................ 19
Capitol Records, Inc. v. Naxos of Am., Inc.,
4 N.Y.3d 540 (2005) .................................................................................... 12, 13
Flo & Eddie, Inc. v. Sirius XM Radio, Inc.,
62 F. Supp. 3d 325 (S.D.N.Y. 2014) ................................................ 22, 28, 32, 33
Flo & Eddie, Inc. v. Sirius XM Radio, Inc., ,
821 F.3d 265 (2d Cir. 2016) ........................................................................ passim
Flo & Eddie, Inc. v. Sirius XM Radio, Inc.,
Case No. 15-1164, Doc. No. 198 (May 5, 2016) ................................................. 6
Flo & Eddie, Inc. v. Sirius XM Radio, Inc.,
No. 13-23182-CIV, 2015 WL 3852692 (S.D. Fla. June 22, 2015) ................... 31
Flo & Eddie, Inc. v. Sirius XM, Inc.,
--- F.3d ----, 2016 WL 3546433 (11th Cir. 2016) .............................................. 31
Hall v. United Parcel Serv. of Am., Inc.,
76 N.Y.2d 27 (1990) .................................................................................... 19, 20
Kisling v. Rothschild,
388 So. 2d 1310 (Fla. Dist. Ct. App. 1980) ....................................................... 11
Klosterman v. Cuomo,
61 N.Y.2d 525 (1984) ........................................................................................ 19
Meredith Corp. v. SESAC LLC,
1 F. Supp. 3d 180 (S.D.N.Y. 2014) .................................................................... 35
MGM Studios, Inc. v. Grokster Ltd.,
545 u.s. 913 (2005) ........................................................................................... 21
lV
TABLE OF AUTHORITIES
(CONT'D)
Murphy v. Am. Home Prods. Corp.,
Page(s)
58 N.Y.2d 293 (1983) ................................................................................. passim
Norcon Power Partners, L.P. v. Niagara Mohawk Power Corp.,
92 N.Y.2d 458 (1998) ........................................................................................ 20
Sears, Roebuck & Co. v. Stiffel Co.,
376U.S.225(1964) ........................................................................................... 18
Twentieth Century Music Corp. v. Aiken,
422U.S. 151 (1975) ........................................................................................... 21
Statutes
17 U.S.C. § 106 ................................................................................................ passim
17 u.s.c. § 110 ....................................................................................................... 34
17U.S.C. § 112 ....................................................................................................... 29
17 U.S.C. § 114 ................................................................................................ passim
17 u.s.c. § 301 ................................................................................................... 2, 18
17 u.s.c. §§ 801-805 .................................................................................. 24, 25,26
22 N.Y.C.R.R. § 500.1 ............................................................................................... i
22 N.Y.C.R.R. § 500.23 ............................................................................................ 1
Act of Feb. 3, 1831, ch. 16, Stat. 436 ...................................................................... 14
Digital Performance Right in Sound Recordings Act of 1995, Pub. L. No. 104-39,
109 Stat 336 .......................................................................................................... 2
N.C. Gen. Stat.§ 66-28 (2015) ......................................................................... 11, 31
S.C. Code Ann.§ 39-3-510 (2015) ................................................................... 11,31
v
TABLE OF AUTHORITIES
(CONT'D)
Page(s)
Sound Recording Act of 1971, Pub. L. No. 92-140, 85 Stat. 391 .................... 17,25
Other Authorities
37 C.P.R. § 380 (2014) ............................................................................................ 26
37 C.P.R. §§ 382-84 (2014) .................................................................................... 26
93 Cong. Rec. 0406 (daily ed. July 21, 1947) ........................................................ 15
117 Cong. Rec. 2002 (daily ed. Feb. 8, 1971) ........................................................ 17
Authorizing a Composer's Royalty in Revenues from Coin-operated Machines and
to Establish a Right of Copyright in Artistic Interpretations: Hearings Before
Subcomm. on Patents, Trade-marks, and Copyrights of the H. Comm. on the
Judiciary on H.R. 1269, H.R. 1270, and H.R. 2570 (Comm. Print 1947) ... 14, 15
Charles D. Breital, The Lawmakers, 2 Benjamin N. Cardozo Memorial Lectures
761 (1965) .......................................................................................................... 20
"Comments of Recording Industry of America (RIAA) and American Association
of Independent Music (A21M)," In the Matter of: Fed. Copyright Protection of
Sound Recordings Fixed Before Feb. 15, 1972, Dkt. No. 2010-4, U.S.
Copyright Office (Jan. 31, 2011) ....................................................................... 30
Complaint, Sheridan v. iHeartMedia, Inc., No 1:15-cv-6747, Dkt. No. 1 (S.D.N.Y.
filed Aug. 25, 2015) ........................................................................................... 26
Complaint, Sheridan v. Sirius XM Radio, Inc., No. 2:15-cv-7576, Dkt. No.1
(D.N.J. filed Oct. 19, 2015) ................................................................................ 26
Flo & Eddie's Mem. of Law in Opp'n to Sirius XM's Mot. for Summ. J., Flo &
Eddie, Inc. v. Sirius XM Radio, Inc., 62 F. Supp. 3d 325 (S.D.N.Y. 2014) (No.
13 Civ. 57684 (CM)) .......................................................................................... 27
General Revision of the Copyright Law: Hearings on H.R. 10976 Before the H.
Comm. on Patents, 72nd Cong. (1932) .............................................................. 14
Vl
TABLE OF AUTHORITIES
(CONT'D)
Page(s)
GEOFFREY C. WARD, JAZZ: A HISTORY OF AMERICA'S MUSIC (2012) .................... 15
H.R. 1270, 80th Cong. (1947) ................................................................................. 14
H.R. 4347, 89th Cong. (1965) ................................................................................. 16
H.R. 10434, 69th Cong., 1st Sess. (1926) ............................................................... 13
H.R. Rep. No. 83 (1967) ......................................................................................... 16
H.R. Rep. No. 92-487 (1971) .................................................................................. 17
H.R. Rep. No. 104-274 (1995) ......................................................................... passim
http://www.ccianet.org/about/members/ ................................................................... 7
MICHAEL JAMES ROBERTS, TELL TCHAIKOVSKY THE NEWS: ROCK 'N' ROLL, THE
LABOR QUESTION, AND THE MUSICIANS' UNION (Duke Univ. Press 2014) ....... 15
Revised Master Complaint, In re iHeartMedia Pre-1972 Sound Recording
Litigation, No. 2:15-cv-4067, Dkt. No. 45 (C.D. Cal. filed Apr. 7, 2016) ........ 26
Robert A. Gorman, The Recording Musician and Union Power: A Case Study of
the American Federation of Musicians, 37 Sw. L.J. 697 (1983-1984) ............. 15
S. 1006, 89th Cong. (1965) ..................................................................................... 16
S. Rep. No. 92-72 (1971) ........................................................................................ 17
S. Rep. No. 104-128 (1995) .................................................................. 23, 24, 32, 33
Supplementary Register's Report on the General Revision of the U.S. Copyright
Law (1965), available at 9 Melville B. Nimmer & David Nimmer, Nimmer on
Copyright, App. 15 (Lexis 2013) ................................................................. 15, 16
Pandora Form 10-Q filed Jul. 26, 2016, available at
https://www.sec.gov/ix?doc=/Archives/edgar/data/1230276/
000123027 616000085/p-063020 16x 1 Oq.htm ...................................................... 6
Vll
TABLE OF AUTHORITIES
(CONT'D)
Page(s)
Testimony of the NAB Before the H. Judiciary Comm. Subcomm. on Courts &
Intellectual Property: Hearing on H.R. 1506 (June 21, 1995) .......................... 32
The Digital Performance Right in Sound Recordings Act of 1995: Hearing on H.R.
1506 Before the H. Judiciary Subcomm. on Courts & Intellectual Property,
104th Cong. (1995), 1995 WL 371088 .............................................................. 18
UNITED STATES COPYRIGHT OFFICE, REPORT OF REGISTER OF COPYRIGHTS,
FEDERAL COPYRIGHT PROTECTION FOR PRE-1972 SOUND RECORDINGS (Dec.
2011) ................................................................................................................... 19
Vlll
Pandora Media, Inc. ("Pandora"), iHeartMedia, Inc. ("iHeartMedia"), the
Computer & Communications Industry Association ("CCIA"), the New York State
Restaurant Association ("NYSRA"), and the National Restaurant Association
("NRA") (collectively, "Amici") respectfully submit this brief as amici curiae in
support of Appellant Sirius XM Radio Inc. ("Sirius XM") to explain why this
Court should answer the certified question in the negative and confirm that there is
no right of public performance for creators of sound recordings under New York
law. Pursuant to Rule 500.23(a) of this Court's Rules of Practice, Amici submit
this brief together with a motion for leave to file.
PRELIMINARY STATEMENT
Respondent Flo & Eddie Inc. ("Flo & Eddie"), the owner of sound
recordings made nearly fifty years ago and publicly performed widely ever since,
seeks a radical expansion of the scope of protection accorded to sound recordings
under New York common law. Amici respectfully urge this Court to reject Flo &
Eddie's attempt to transform New York law and to answer "No" to the certified
question presented.
Until this case and a spate of follow-on actions, there was a long-standing
and uniform consensus that neither New York common law nor the law of any
other State provided record labels with the right to control public performances of
the sound recordings they create and sell. The legal regime governing public
performances of sound recordings-a practice on which entire industries are
based-has been understood for decades to be the exclusive province of Congress,
to which all legal and policy arguments concerning the issue have been addressed.
Congress's carefully calibrated responses over the better part of a century, in tum,
have set the legal parameters that have guided day-to-day practice by countless
businesses nationwide. The result urged here by Flo & Eddie, namely that New
York independently recognizes-though has never enforced-a common law right
of public performance in sound recordings, would contravene all prior experience,
undermine settled commercial expectations, and be deeply destabilizing for
thousands of businesses, educational institutions, and governmental entities that
publicly perform music in New York. Because of the numerous competing public
and private interests that must be balanced, the choice to establish such a right
should be made, if at all, by the Legislature.
Most of the sound recordings that Pandora, iHeartMedia, and members of
CCIA, NYSRA, and NRA perform were created on or after February 15, 1972
("post-1972 recordings") and are governed exclusively by federal copyright law.
See 17 U.S.C. §§ 106(6), 301. Congress granted post-1972 recordings a carefully
circumscribed right of public performance for the first time in 1995. See Digital
Performance Right in Sound Recordings Act of 1995 ("DPRA"), Pub. L. No. 104-
39, 109 Stat 336. The right applies only to digital performances ofpost-1972
2
recordings, such as those made by Pandora and iHeartMedia in connection with
their Internet radio service offerings, and therefore does not apply at all to most
public performances of sound recordings, such as those made by traditional
AMIFM radio broadcasters as part of their "terrestrial" broadcasts or those made
by restaurants, bars, retail stores, or thousands of other businesses that play music
for their customers to enjoy. The DPRA entitles digital radio broadcasters to a
compulsory license at a rate set by a specialized federal tribunal for their digital
radio transmissions and related, ancillary reproductions. 1
Pandora, iHeartMedia, and members of CCIA, NYSRA, and NRA also
perform sound recordings fixed before February 15, 1972 ("pre-1972 recordings").
Congress deliberately left these sound recordings unprotected by federal copyright
law, despite decades of complaints by the recording industry that radio
broadcasters and others were performing the recordings for profit without
compensation to record labels or performing artists. For nearly a century, federal
legislators, the U.S. Copyright Office, the recording industry, and broadcasters
alike uniformly understood that performances ofpre-1972 recordings did not
require a license under either state or federal law. Terrestrial radio broadcasters
1 Digital services that offer "on-demand" listening that allows subscribers to
choose which songs they will hear and the order in which they will hear them are
not afforded a compulsory license for their use of copyrighted sound recordings
and must acquire the rights directly from rightsholders. Pandora has announced its
intention to add an on-demand product to its suite of offerings.
3
have never sought permission from, nor paid royalties to, record labels or
performing artists to broadcast their recordings.
A determination that New York state law provides a public performance
right for pre-1972 recordings would instantly expose thousands of entities doing
business in New York-including AMIFM broadcasters, restaurants, bars, bowling
alleys, hotels, health clubs, and public and private educational institutions-to
copyright infringement liability. The result urged by Flo & Eddie here would be
devoid of any of the careful balancing of competing interests that infuses federal
copyright law's complex and nuanced treatment of the scope and degree of
exclusive rights in the performance of sound recordings for post-1972 recordings.
Indeed, Flo & Eddie seeks a far broader scope of rights in pre-1972 recordings
under New York law than Congress granted to post-1972 recordings.
Absent the kind of careful tailoring that the legislative branch is uniquely
capable of providing, a common law right of public performance would give
owners of pre-1972 recordings the unfettered discretion to prevent New York
consumers' access to pre-1972 recordings, or to condition such access upon
payment of potentially confiscatory license fees. Given the age of pre-1972
recordings, ownership information for many is either unknown or unclear, and fear
of infringement liability would further stifle public access to performances of those
works. In the interests of promoting digital commerce, as well as in furtherance of
4
copyright law's paramount interest in fostering wide dissemination of works of
creative expression, federal copyright law protects digital radio services, AMIFM
broadcasters, restaurants and other businesses that play music for their customers,
and the listening public from precisely such barriers.
All prior experience in this field counsels judicial caution in declaring a new
and unexpected property right that will directly and adversely affect the operations
of thousands of New York entities. The Legislature, rather than a court sitting in
common law, is uniquely equipped to balance the competing public policy interests
implicated by a performance right ill pre-1972 recordings, to determine whether
such a significant change in the law is warranted and, if so, to create standards that
will protect the interests of all affected parties and industries. Because history,
federal law, and common law all indicate that no performance right in pre-1972
sound recordings exists, and because creation of such a right is properly the
province of the Legislature, this Court's answer to the certified question should be
"No."
CERTIFIED QUESTION PRESENTED
On April13, 2016, the United States Court of Appeals for the Second
Circuit certified the following "significant and unresolved issue of New York
copyright law" 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
5
that right?" Flo & Eddie, Inc. v. Sirius XM Radio, Inc., 821 F.3d 265, 267 (2d Cir.
2016); Flo & Eddie, Inc. v. Sirius XM Radio, Inc., Case No. 15-1164, Doc. No. 198
(May 5, 2016) (accepting certified question).
INTERESTS OF AMICI
Pandora. Pandora is the world's most powerful music discovery platform
and the largest provider of Internet radio service in the United States. See Pandora
Form 10-Q filed Jul. 26, 2016 at 7.Z Pandora's nearly 80 million active users can
access digital streams of the stations they create throughout the United States
through Internet-connected devices, such as computers, tablets, smartphones,
consumer electronic devices, and, increasingly, automobiles. /d. at 22-23.
Pandora also owns a terrestrial radio station, KXMZ, which serves the Rapid City,
South Dakota market. Pandora is a defendant is several pending cases in which
various plaintiffs, including Flo & Eddie, purport to assert state law claims arising
out of Pandora's performances ofpre-1972 recordings.
iHeartMedia. iHeartMedia operates a popular digital music streaming
business and is the largest owner of terrestrial radio stations in the United States.
iHeartMedia is a defendant in seven pending federal court actions asserting the
2 Available at https://www.sec.gov/ix?doc=/Archives/edgar/data/1230276/
000123027 616000085/p-063020 16x 1 Oq.htm.
6
same or similar state law claims related to broadcasting pre-1972 recordings as
those asserted by Flo & Eddie in this case.
CCIA. CCIA is an international, not-for-profit membership organization
dedicated to innovation and enhancing society's access to information and
communications. CCIA promotes open markets, open systems, open networks,
national uniformity in intellectual property regulation, and full, fair, and open
competition in the computer, telecommunications, and Internet industries. Its
members include some of the world's largest technology and media companies and
collectively offer a wide variety of products and services affected by copyright
law, including search engines, digital streaming, e-commerce platforms, and social
media platforms, to name just a few. 3
NYSRA. The NYSRA, founded in 1935, is the leading business association
for the restaurant and hospitality industry in New York State. Comprised of
56,000 establishments, 628,000 employees, and sales of more than $27 billion; it is
the cornerstone of the New York State economy, career opportunities, and
community involvement. The NYSRA along with its chapters and the NYSRA
Educational Foundation work to "Help Restaurateurs Succeed" by offering cost
saving benefits, education and advocacy. Many NYSRA members play recorded
music for their customers to enjoy while dining.
3 A list of CCIA members is available at http://www.ccianet.org/about/members/.
7
NRA. NRA is the leading business association for the restaurant and
foodservice industry. Its mission is to help members build customer loyalty,
rewarding careers, and fmancial success. Nationally, the industry is made up of
one million restaurant and foodservice outlets with many of its members in the
State of New York. Despite being an industry of mostly small businesses, the
restaurant industry is the nation's second-largest private-sector employer. Many
NRA members also play recorded music for their customers to enjoy while dining.
* * *
Amici thus have significant interests in the resolution of the legal questions
in this case, as they affect decisions that they or their members routinely confront
in the ordinary course of their businesses and, as to Pandora and iHeartMedia,
potential defenses in the various suits against them involving identical or similar
claims. Amici submit this brief to provide their perspective on the deleterious
consequences that creating an unqualified state common law right of public
performance for sound recordings would have for the public's access to the range
of music that New York law, like federal copyright law and policy, heretofore has
enabled.
SUMMARYOFARGUMENT
I. The extensive history of legislative efforts to secure federal
performance rights in sound recordings reflects the uniform consensus--{)f the
8
recording industry, broadcasters, policymakers, and legislators alike-over many
decades that no equivalent rights ever existed under state common law. Indeed, it
was precisely because the states afforded no protection to sound recordings that
proponents of performance rights pursued them before Congress, as early as the
1920s. For more than seventy years, until1995, Congress declined to create a
sound recording performance right of any kind in light of the adverse impact it
would have on the entire entertainment industry, throughout which public
performances of sound recordings had never been licensed. In light of that history,
the suggestion that Flo & Eddie owned an "all-encompassing" public performance
right under New York law all along is implausible.
II. The eventual creation in 1995 of a limited federal sound recording
performance right illustrates precisely why creating a new state common law
performance right would be inappropriate. The tasks of assessing the wide-
reaching policy implications and costs of creating a new performance right for
sound recordings, determining whether any such right is nonetheless warranted,
and, if so, shaping the contours of any such right are ones that must be left to the
Legislature. This Court has long held that the complex public policy decisions
involved in making significant changes to state law are the exclusive province of
the legislative branch. Courts simply are not the proper forum for balancing the
competing policy interests at stake in a change of this magnitude.
9
When Congress ultimately created a digital performance right in 1995 to
address the effects of modem technological advances on the recording industry, the
new right was carefully circumscribed and applied only prospectively, so as to
avoid undue burdens and unnecessary disruption of long-settled industry
expectations. Congress limited the new right to "digital audio transmissions," 17
U.S.C. § 106(6), exempting traditional terrestrial radio broadcasters and
transmitters of audio-visual fare such as films and television programs. Even as to
digital radio providers, Congress accompanied the limited new right with a
statutory compulsory license to guarantee continued access to covered works. This
compulsory licensing scheme established a centralized rate-setting process and
vested authority in an industry-wide clearinghouse to administer the license. A
specialized tribunal of administrative law judges has exclusive jurisdiction to
adjudicate disputes over rates and licensing terms.
In sharp contrast, the common law right sought by Flo & Eddie is
completely undefmed. The unqualified right Flo & Eddie asks this Court to create
would not guarantee public access, exempt traditional users, or accommodate long-
established industry practices. Nor, as a practical matter, could these or similar
types of balances be achieved through evolution of the common law.
Ill. If a new common law right of public performance in pre-1972
recordings is announced, numerous constituencies throughout the State will suffer
10
significant harm without any corresponding benefit to the public in the form of
increased access to sound recordings. The raison d 'etre for copyright protection is
to spur the creation of new works, but there can be no such benefit here: creating a
new state law right of public performance will not lead to the creation of a single
new pre-1972 recording, as that category has been closed for more than four
decades. Instead, a new common law performance right will operate only to
reduce public access to music. Amici and their members, which heretofore have
relied on the guaranteed access to sound recordings afforded by the federal
copyright statute, may need to remove pre-1972 recordings from their music
offerings, to the detriment of listeners. This restriction of access caused by a
change in New York law would extend outside New York. For example, Pandora
and iHeartMedia operate their Internet radio services nationwide, but neither has
the technological capability to identify and screen subscribers located in New York
at the moment of a given performance. Accordingly, the removal of pre-1972
recordings to avoid liability under New York law will impact listeners in all states,
including states that have expressly rejected the claimed existence of a public
performance right in pre-1972 recordings by statute or judicial decision.4
4 See, e.g., N.C. Gen. Stat. § 66-28 (2015); S.C. Code Ann. § 39-3-510 (2015).
Indeed, outside of New York, although unfair competition and similar doctrines
protect against illicit record piracy, state law affords no copyright protection at all
to published works under the generally applicable copyright doctrine of "divestive
publication." See, e.g., Kisling v. Rothschild, 388 So. 2d 1310, 1312 (Fla. Dist. Ct.
11
Many other constituencies whose day-to-day business in New York involves
the performance of sound recordings likewise will be impaired. The unqualified
common law right sought by Respondent does not distinguish between digital radio
services like Pandora, iHeartMedia, and Sirius XM, and the traditional radio
broadcasters historically exempt from the scope of existing performance rights (nor
is there any basis to do so in the record of this dispute). Thus, were this Court to
answer the certified question in the affirmative, terrestrial AMIFM broadcasters
may also require a license to play pre-1972 recordings for the first time in the
history of the broadcasting industry. Thousands-perhaps millions-of other
entities that operate in New York may also be required to obtain licenses, although
many of these small businesses lack the resources even to attempt to license the
rights to play pre-1972 recordings for their customers. While the federal copyright
law facilitates administratively feasible means of licensing sound recording
performing rights by affording an express antitrust exemption to collective
licensing, see 17 U.S.C. § 114(e), there is no judicial mechanism available to
facilitate lawful joint licensing by rights owners here.
App. 1980) ("The umbrella of protection afforded by a common law copyright
folds up and vanishes when the owner of the product 'publishes' it."). But see
Capitol Records, Inc., v. Naxos of Am., Inc., 4 N.Y.3d 540 (2005).
12
ARGUMENT
I. The Extensive History Of Legislative Efforts To Secure A Federal
Performance Right For Sound Recordings Reflects The Uniform
Consensus Over Many Decades That No Common Law Right Exists
This Court has observed that, "[ w ]hen examining copyright law, a page of
history is worth a volume of logic." Capitol Records, Inc. v. Naxos of Am., Inc., 4
N.Y.3d 540, 546 (2005). A page of history eviscerates Flo & Eddie's contention
that sound recording owners possess an exclusive, "all-encompassing" right of
public performance. Flo & Eddie, 821 F.3d at 271. Flo & Eddie has no answer for
why such a right, if it existed at all, went unenforced for the better part of a
century. Nor can Flo & Eddie explain why its record industry brethren devoted
countless efforts over many decades to lobbying Congress to create a performance
right as a matter of federal law if they already possessed an unused state law right.
It was precisely because New York and other states did not recognize performance
rights in sound recordings that recording industry and performing artist proponents
pursued them before Congress for decades.
Record companies began to pursue performance rights in sound recordings
before Congress as early as the 1920s, without success. H.R. Rep. No. 104-274, at
10 (1995); see, e.g., H.R. 10434 § 37, 69th Cong., 1st Sess. (1926). From the
outset, these efforts were met with strenuous opposition from traditional
broadcasters, which explained the adverse effects that such rights would have on
13
their industry. For example, during the 1932 general revision hearings, the
National Association of Broadcasters ("NAB") opposed performing rights by
observing that, at the time, "a station [that] broadcasts a phonograph record" is
"responsible" to the composer "but not to the manufacturer of the phonograph
record."5 General Revision of the Copyright Law: Hearings on H.R. 10976 Before
the H. Comm. on Patents, 72nd Cong. 193 (1932) (statement of Louis G. Caldwell,
Chairman, NAB). The NAB testified that the extension of performing rights to
sound recordings "would be very prejudicial to the smaller broadcasting stations,"
which would become subject to "two license fees" or "may find that he is
forbidden to play phonograph records altogether." /d. The bill was not passed.
As another example, in 1947, a bill was introduced that would have
extended copyright, including performing rights, to sound recordings. H.R. 1270,
80th Cong. (1947). Performers again bemoaned the absence of any public
performance right under existing law by arguing that "use of records ... has
become standard practice with hundreds of radio stations," to which the performer
"has no rights at all beyond an original agreement with the manufacturer."
Authorizing a Composer's Royalty in Revenues from Coin-operated Machines and
to Establish a Right of Copyright in Artistic Interpretations: Hearings Before
5 Federal copyright law for centuries has afforded a right of public performance to
the compositions underlying sound recordings. See, e.g., Act of Feb. 3, 1831, ch.
16, § 1, 4 Stat. 436.
14
Subcomm. on Patents, Trade-marks, and Copyrights of the H. Comm. on the
Judiciary on H.R. 1269, H.R. 1270, and H.R. 2570, at 6 (Comm. Print 1947)
(emphasis added).6 Broadcasters and author-composers, on the other hand,
vigorously opposed the bill because it "would make the control go away entirely
from the creator and ... put it into the hands of the maker of the record," who
"would then be in a position to control whether it was played or not played in a
juke box ... [or] in recorded form over the air.'? /d. at 49. The bill was "adversely
reported." 93 Cong. Rec. D406 (daily ed. July 21, 1947).
Almost two decades later, in 1965, the Register of Copyrights submitted to
Congress a Supplementary Register's Report explaining the latest bill seeking
sound recording copyright. See Supplementary Register's Report on the General
Revision of the U.S. Copyright Law (1965), available at 9 Melville B. Nimmer &
David Nimmer, Nimmer on Copyright, App. 15 (Lexis 2013) ("Supplementary
6 Indeed, because performing artists were well aware that there were no
performance rights in sound recordings under state or federal law, the American
Federation of Musicians organized boycotts against the recording of new music in
an effort to force broadcasters, bars, and hotels to pay such fees when their music
was played or to hire live performers who were otherwise being displaced by
uncompensated performances of recorded music. See GEOFFREY C. WARD, JAZZ:
A HISTORY OF AMERICA'S MUSIC 310 (2012); MICHAEL JAMES ROBERTS, TELL
TCHAIKOVSKY THE NEWS: ROCK 'N' ROLL, THE LABOR QUESTION, AND THE
MUSICIANS' UNION, 1942-1968 (Duke Univ. Press 2014). Eventually, every major
recording company agreed to pay royalties to the union for each record sold, but
recording artists continued not to be paid for radio "spins." Robert A. Gorman,
The Recording Musician and Union Power: A Case Study of the American
Federation of Musicians, 37 Sw. L.J. 697,704 (1983-1984).
15
Register's Report"); H.R. 4347, 89th Cong. (1965); S. 1006, 89th Cong. (1965).
The Register explained that although there was "little dispute" that sound
recordings should be afforded exclusive reproduction and distribution rights, the
extension of any "exclusive rights of public performance" in sound recordings
remained "explosively controversial." Supplementary Register's Report, at 51.
The Report concluded:
[W]e cannot close our eyes to the tremendous impact a performing
right in sound recordings would have throughout the entire
entertainment industry. We are convinced that, under the situation
now existing in the United States, the recognition of a right of public
performance in sound recordings would make the general revision bill
so controversial that the chances of its passage would be seriously
impaired.
/d. at 51-52 (emphasis added).
In 1967, the House Judiciary Committee, when reporting the latest sound
recording copyright bill, echoed the Register's sentiments on the prevailing
consensus against the extension of performing rights to sound recordings. H.R.
Rep. No. 83, at 65 (1967). The Committee explained that it "believe[d] that the
bill, ... in denying rights of public performance, represents the present thinking of
other groups on that subject in the U.S. and that further expansion of the scope of
protection for sound recordings is impracticable." !d.
Finally, in 1971, in line with this prevailing consensus, Congress extended
limited copyright protection to sound recordings for the first time, on a prospective
16
basis, but declined to include a right of public performance. Sound Recording Act
of 1971, Pub. L. No. 92-140 § 1(a), 85 Stat. 391 ("SRA of 1971"). As Congress
explained, the purpose of the new "limited copyright" for post -1972 recordings
was "protecting against unauthorized duplication and piracy .... " 117 Cong. Rec.
2002 (daily ed. Feb. 8, 1971). In the preceding years, advances in duplicating
technology had led to a "rapid increase" in sound recording piracy. /d. A few
states had enacted statutes "intended to suppress record piracy," while other states
fell back on common law unfair competition theories to provide relief for piracy.
S. Rep. No. 92-72, at 4 (1971). By extending federal copyright to sound
recordings, Congress sought to unify the law against record piracy and eliminate
the confusion between proliferating state laws on the issue. See id.; H.R. Rep. No.
92-487, at 2-3 (1971). As Congress later observed, it did "not grant[] the rights of
public performance [in 1971], on the presumption that the granted rights would
suffice to protect against record piracy." H.R. Rep. No. 104-274, at 11 (1995).
No doubt, if state law had extended public performance rights to sound
recordings at the time, Congress would have had no qualms about extending those
same rights to post-1972 recordings. Indeed, Congress similarly would have
sought to unify the law on the topic of performance rights, just as it did with
reproduction rights. Moreover, if performance rights had existed at state law in
1971, Congress's decision not to extend the performance right to post-1972
17
recordings would have dramatically diminished the rights of record owners going
forward. Recent Supreme Court precedent had suggested that the extension of
federal copyright protection would preempt (and extinguish) any existing state-law
protection, see Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 229 (1964), and
five years later, Congress made that preemption explicit, see 17 U.S.C. § 301(a).
And yet the legislative record is devoid of any outcry by recording industry
representatives over such diminishment because they shared the uniformly held
view that there were no state law performance rights for sound recordings.
Notwithstanding the creation in 1995 of a federal performance right for post-
1972 recordings, see Point II infra, and literally billions of unchallenged public
performances of pre-1972 recordings by radio broadcasters, digital services, and
others, there was no suggestion that state law provided a right of public
performance for those older recordings. In fact, during the lead-up to the DPRA in
1995, the Chairman and CEO of the Recording Industry Association of America
testified before Congress that "[ u ]nder existing law, record companies and
performers ... have no rights to authorize or be compensated for the broadcast or
other public performance of their works." See The Digital Performance Right in
Sound Recordings Act of 1995: Hearing on H.R. 1506 Before the H. Judiciary
Subcomm. on Courts & Intellectual Property, 104th Cong. (1995), 1995 WL
371088 (testimony of Jason S. Berman, Chairman and CEO, RIAA) (emphasis
18
added). As recently as 2011, the Register of Copyrights reported that, "[i]n
general, state law does not appear to recognize a performance right in sound
recordings." UNITED STATES COPYRIGHT OFFICE, REPORT OF REGISTER OF
COPYRIGHTS, FEDERAL COPYRIGHT PROTECTION FOR PRE-1972 SOUND RECORDINGS
44 (Dec. 2011) ("2011 REGISTER'S REPORT ON PRE-1972 RECORDINGS").
Recognizing an exclusive right of public performance in New York for these
older recordings now would be nothing short of a seismic change in the common
law.
II. The Legislature, Not The Courts, Must Balance The Competing
Interests And Make The Policy Judgments Involved In Creating
An Exclusive Right Of Public Performance For Pre-1972 Recordings
This Court, when faced with analogous requests to create or change the
common law, has repeatedly held that "some social problems 'are best and more
appropriately explored and resolved by the legislative branch of our government."'
Hall v. United Parcel Serv. of Am., Inc., 76 N.Y.2d 27, 34 (1990); accord Murphy
v. Am. Home Prods. Corp., 58 N.Y.2d 293, 302 (1983). The resolution of
"complex societal and governmental issues" involves '"policy-making and
discretionary decisions that are reserved to the legislative and executive
branches."' Campaign for Fiscal Equity, Inc. v. State, 8 N.Y.3d 14, 28 (2006)
(quoting Klostermann v. Cuomo, 61 N.Y.2d 525, 541 (1984)). Particularly where
there are competing interests at stake, the decision whether to make "a significant
19
change in our law is best left to the Legislature." Murphy, 58 N.Y.2d at 301; see
Hall, 76 N.Y.2d at 34. To be sure, the courts develop the common law. But they
usually do so by "deciding cases and settling the law more modestly," not by
"dramatic promulgation[s]" that effect a "sweeping[] change" in the law. Norcon
Power Partners, L.P. v. Niagara Mohawk Power Corp., 92 N.Y.2d 458, 467
(1998).
The difference is one of institutional competence, as this Court has
explained. "Procedurally, courts are limited to viewing the problem as presented
in a litigated case within the four comers of its record," as further "confined by the
rules of procedure, legal relevance, and evidence." Norcon, 92 N.Y.2d at 467
(quoting Charles D. Breital, The Lawmakers, 2 Benjamin N. Cardozo Memorial
Lectures 761, 788 (1965)). In contrast, "[t]he Legislature has infinitely greater
resources and procedural means to discern the public will, to examine the variety
of pertinent considerations, to elicit the views of the various segments of the
community that would be directly affected, and in any event critically interested,
and to investigate and anticipate the impact of imposition of [ ] liability." Murphy,
58 N.Y.2d at 302. Thus, "drastic" "law creation" by courts is "often said and
thought to be an invalid encroachment on the legislative branch." Norcon, 92
N.Y.2d at 468 (citation omitted).
20
Measured against these well-established parameters, the decision whether to
announce a New York right of public performance in pre-1972 recordings falls
squarely within the province of the Legislature for at least three reasons. First,
deference to the Legislature is appropriate here because the law of copyright has
always "reflect[ed] a balance of competing claims upon the public interest."
Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975); see also MGM
Studios, Inc. v. Grokster Ltd., 545 U.S. 913, 928 (2005) ("The more artistic
protection is favored, the more technological innovation may be discouraged; the
administration of copyright law is an exercise in managing the trade-off."). In
Twentieth Century Music Corp., the U.S. Supreme Court rejected an effort to
expand the exclusive performance rights of owners of musical works. /d. at 162.
In deferring to legislative action, the Court observed: "Creative work is to be
encouraged and rewarded, but private motivation must ultimately serve the cause
of promoting broad public availability of literature, music, and the other arts ....
The sole interest of the United States and the primary object in conferring the
monopoly ... lie in the general benefits derived by the public .... " /d. at 155-56
(quotation omitted). In certifying the question to this Court, the Second Circuit
recognized that similar concerns are at issue here. "New York's interest in
compensating copyright holders" must be balanced against the "clear costs" that
would be imposed by announcing a performance right. Flo & Eddie, 821 F.3d at
21
270. The resolution of these competing interests is a "value judgment" and a
"public policy choice." /d. at 270-71; see also Flo & Eddie, Inc. v. Sirius XM
Radio, Inc., 62 F. Supp. 3d 325, 353 (S.D.N.Y. 2014) (acknowledging the "broader
policy problems" presented). Such an "issue, involving perception and declaration
of relevant public policy ... [is] best and more appropriately explored and resolved
by the legislative branch of our government." Murphy, 58 N.Y.2d at 302.
Second, the announcement of a New York performance right is a task "best
left to the Legislature" because it would be "a significant change in our law."
Murphy, 58 N.Y.2d at 301. New York has never imposed liability for unlicensed
public performances ofpre-1972 recordings. See Flo & Eddie, 821 F.3d at 269-70.
As such, users "have 'adapted to an environment in which they do not pay for
broadcasting pre-1972 sound recordings,'" and recognizing a performance right in
pre-1972 recordings would '"upset those settled expectations' of radio
broadcasters" and numerous other industries. /d. at 270 (quoting Flo & Eddie, 62
F. Supp. 3d at 352). A new public performance right would not only disrupt
reasonable, investment-backed expectations but also, as the District Court
acknowledged, potentially subject companies to retroactive damages
notwithstanding decades of acquiescence by Flo & Eddie and the rest of the
recording industry. See Flo & Eddie, 62 F. Supp. 3d at 352 (recognizing that a
New York common law public performance right would "upend the analog and
22
digital broadcast industries" and "expos[e] [other broadcasters] to significant
liability").
Third, legislative deference is required for the creation of a new, exclusive
right of public performance for pre-1972 sound recordings because, as in Murphy
v. American Home Products, "the defmition of its configuration if it is to be
recognized" is "of no less practical importance" than the "the fundamental question
whether such liability should be recognized in New York" at all. 58 N.Y.2d at
301. The narrow performance right that Congress ultimately granted to owners of
post-1972 recordings in 1995 demonstrates why a sound recording performance
right is ill-suited to development as a matter of common law and must be crafted, if
at all, by the legislative branch. After seventy years of declining to extend
performance rights to sound recordings, Congress altered its course in the mid-
1990s specifically to alleviate the "effects" that "new technologies" like digital
radio broadcasting were beginning to have on the recording industry. H.R. Rep.
No. 104-274, at 12 (1995). As the Senate assured in reporting the legislation, the
new right would "do nothing to change or jeopardize the mutually beneficial
economic relationship between the recording and traditional broadcasting
industries," which had "grown and prospered with the availability and use of
prerecorded music." S. Rep. No. 104-128, at 15 (1995). Instead, the "legislation
[was] a narrowly crafted response to one of the concerns expressed by
23
representatives of the music community, namely that certain types of subscription
and interactive audio services might adversely affect sales of sound recordings and
erode copyright owners' ability to control and be paid for use of their work." /d.
(emphasis added).
Congress carefully tailored the new right to precisely target these "concerns
of record producers and performers regarding the effects that new digital
technology and distribution systems might have on their core business without
upsetting the longstanding business and contractual relationships among record
producers and performers, music composers and publishers and broadcasters that
have served all of these industries well for decades." S. Rep. 104-128, at 13
(1995); see also H.R. Rep. No. 104-274, at 12 (1995). As the Senate Report
explained: "In deciding to grant a new exclusive right to perform copyrighted
sound recordings publicly by means of digital audio transmission, the Committee
was mindful of the need to strike a balance among all of the interests affected
thereby." S. Rep. No. 104-128, at 15 (1995) (emphasis added). The Senate noted
that the "balance [struck] is reflected in the various limitations on the new
performance right." /d. at 16; see 17 U.S.C. §§ 106(6), 114(d), 114(t), 801-805.
Thus, the complex statutory system that today governs the administration of
the narrow federal performance right was the result of a number of considered
policy judgments by Congress to limit and regulate the new right to protect the
24
various interests at stake. 17 U.S.C. §§ 106(6), 114, 801-805. First, the new right
applied prospectively only, affording the many affected industries the opportunity
to bring their businesses into compliance with the new law without punishing them
for past, lawful conduct. See SRA of 1971, at§§ 2(3), 6. Second, Congress
exempted a number of long-settled industries that historically performed records
from the scope of the right-including traditional radio broadcasts, whether digital
or analog, and transmissions "within a business establishment, confined to the
premises or the immediately surrounding vicinity." 17 U.S.C. § 114(d)(l)(A),
(C)(ii). Third, Congress simultaneously enacted a comprehensive compulsory
licensing system to facilitate administration of the new right. See U.S.C. §
114(d)(2). The compulsory license guarantees public access to covered sound
recordings and centrally regulates the applicable rates and other terms. /d.; see
H.R. Rep. No. 104-274, at 14, 22-23 (1995). These licensing provisions prevent a
rights-holder from unilaterally foreclosing access to previously available works,
and thereby guarantee the public's continued access to digital radio. See 17 U.S.C.
§ 114(d)(2), (f). The compulsory license scheme also establishes detailed
procedures by which "reasonable rates and terms of royalty payments" for the
licensed transmissions will be determined. 17 U.S.C. § 114(f). And it addresses a
host of other complex considerations involved in the licensing process, such as the
antitrust implications of collective negotiation, 17 U.S.C. § 114(e); the division of
25
licensing proceeds among the various rights-holders that may hold interests in a
recording, id. at§ 114(g); and the terms of licensing a sound recording to an
affiliated entity, id. at§ 114(h).
Congress additionally established an intricate system of oversight for the
new federal performing rights. It vested authority in the Copyright Royalty Board
("CRB") to adjudicate disputes over licensing rates and terms. See 17 U.S.C. §§
114(f), 801-805. The CRB in turn designated SoundExchange as the sole
organization authorized to collect and distribute royalties for exclusive rights in
sound recordings. See generally 31 C.P.R. §§ 380, 382-84 (2014).7 And, the U.S.
·Copyright Office maintains a central registry of copyright holders, through which
the relevant rights-owners for post-1972 recordings may be identified.
In stark contrast to this comprehensive federal statutory scheme, the
common law public performance right sought by Respondent lacks any structure or
limitation whatsoever. Respondent purports to possess natural property rights in
its sound recordings that are "all-encompassing." Flo & Eddie, 821 F.3d at 271;
7 In the recent spate of cases over the use of pre-1972 sound recordings, plaintiffs
have repeatedly argued that SoundExchange is not authorized to collect and
allocate royalties for such recordings. See, e.g., Complaint at 6, Sheridan v.
iHeartMedia, Inc., No 1:15-cv-6747, Dkt. No.1 (S.D.N.Y. filed Aug. 25, 2015);
Complaint at 6, Sheridan v. Sirius XM Radio, Inc., No. 2:15-cv-7576, Dkt. No. 1
(D.N.J. filed Oct. 19, 2015); Revised Master Complaint at 10, In re iHeartMedia
Pre-1972 Sound Recording Litigation, No. 2:15-cv-4067, Dkt. No. 45 (C.D. Cal.
filed Apr. 7, 2016).
26
see also Flo & Eddie's Mem. of Law in Opp'n to Sirius XM's Mot. for Summ. J. at
12, Flo & Eddie, Inc. v. Sirius XM Radio, Inc., 62 F. Supp. 3d 325 (S.D.N.Y. 2014)
(No. 13 Civ. 57684 (CM)) (arguing that "under New York law ... the right and
ability to exclude others from profiting from a recording is unqualified"). This
entirely unrestricted right would contravene all prior experience under the existing
federal performing rights system. There would be no exemptions for traditional
industries like AMIFM broadcasters and small businesses. No compulsory
licensing scheme to ensure continued access for emerging, innovative platforms.
No specialized deliberative body to hold hearings and tailor the right to
accommodate the competing interests of different constituencies. No specified
organization to facilitate licensing or collect royalties. And no protection from
federal antitrust scrutiny to allow such a private organization or other private
solutions to emerge. See 17 U.S.C. § 114(e) (granting an antitrust law exemption
for the collective negotiations of license terms and rates for sound recordings
covered by the DPRA).
All of these costs and uncertainties that would result from the announcement
of a common law public performance right illustrate precisely why this is not the
kind of right to be announced by judicial fiat. The formidable task of creating any
new right, while accommodating long settled industry expectations, appropriately
addressing the varied circumstances of public performance, and creating the
27
necessary administrative infrastructure, is one for the Legislature alone. Murphy,
58 N.Y.2d at 301.
III. The Declaration Of An Unqualified Common Law Performance Right
Would Unleash Widespread, Inequitable Burdens On Numerous
Industries
As the District Court acknowledged in this case, the common law public
performance right in pre-1972 recordings sought by Respondent is simply
"unprecedented ... and will have significant economic consequences." Flo &
Eddie, 62 F. Supp. 3d at 352. Common law performance rights "raise[] the specter
of administrative difficulties in the imposition and collection of royalties, which
would ultimately increase the costs consumers pay to hear broadcasts, and possibly
make broadcasts of pre-1972 recordings altogether unavailable." /d. at 344.
Further, "[ o ]ther broadcasters, including those who publicly perform media other
than sound recordings, will undoubtedly be sued in follow-on actions, exposing
them to significant liability." /d. at 352. If other states follow suit "or if holders of
common law copyrights insist on licensing performance rights on a state-by-state
basis ... it could upend the analog and digital broadcasting industries," altogether.
/d.
The unqualified performance right in pre-1972 recordings that Flo & Eddie
seeks would overturn a century's worth of accepted industry practice, carefully
preserved by Congress, overnight. Entire industries, developed over decades
28
according to reasonable and justifiable expectations, should not face this kind of
upheaval and the threat of significant retroactive liability because of a judicially
created common law right. Below, we address a mere sampling of the deleterious
and impractical consequences that would flow from the announcement of a new
common law performance right, and the resulting self-censorship that no doubt
would restrict public access to performances of pre-1972 recordings across a
variety of industries.
A. Satellite And Internet Radio Services
To date, digital radio service providers like Pandora and iHeartMedia have
been assured access to sound recordings for performance over their services.
Although post-1972 recordings have been vested with the performance right since
1995, Pandora, iHeartMedia, and similar services are guaranteed access to those
recordings pursuant to the compulsory license provisions of Sections 112 and 114
of the Copyright Act. See Part II supra. As a result, satellite and Internet radio
providers have structured their business models on the assumption that they will
not be required to individually negotiate a license for each of the millions of
records available as part of their radio offerings.
A New York common law public performance right would come without
any comparable guarantee of access to records by satellite and Internet radio
services. Instead, Amici Pandora and iHeart Media and similar companies would
29
be required to identify and negotiate with the owner of each pre-1972 recording on
its service. The recording industry itself has acknowledged the infeasibility of
broadcast services negotiating individual licensing rates with each sound recording
owner. See "Comments of Recording Industry of America (RIAA) and American
Association of Independent Music (A21M)," at 24-28, In the Matter of: Fed.
Copyright Protection of Sound Recordings Fixed Before Feb. 15, 1972, Dkt. No.
2010-4, U.S. Copyright Office (Jan. 31, 2011). Pre-1972 recordings are, by now,
at least forty-four years old. Discerning who, if anyone, continues to own rights in
them will be a near impossible task. Record labels go out of business. Artists and
bandleaders die without clear heirs. There is no central registry of sound recording
owners, nor is there any organization authorized to administer state law rights
collectively, like SoundExchange is authorized to do at the federal level. Users
could expend significant time and resources obtaining licenses and still face
infringement liability when a new party comes along and claims to be the rightful
owner. The potentially prohibitive transaction and compliance costs of
individually licensing the rights to myriad records at least four-decades old will
force digital radio providers to reduce or, in some cases, eliminate the transmission
of pre-1972 recordings, which will be a loss to service providers, rightsholders in
the recording, rightsholders in the underlying composition, and the public alike.
30
Further, because Pandora and iHeartMedia operate their services on a
nationwide basis, a New York public performance right will impair these services
in all fifty states. Any digital broadcasts of pre-1972 recordings received in New
York will be rendered unlawful-even if those broadcasts are lawful where made.
Digital broadcasters will be required to either develop technology that will allow
them to identify in which states their millions of subscribers are located and block
subscribers located in New York from hearing pre-1972 recordings (to the extent
such technology is even possible) or pull pre-1972 recordings from their services
altogether, even in those states that have expressly rejected the existence of the
right Respondent asserts. See, e.g., Flo & Eddie, Inc. v. Sirius XM Radio, Inc., No.
13-23182-CIV, 2015 WL 3852692, at *5 (S.D. Fla. June 22, 2015) ("[T]he Court
finds that Florida common law does not provide Flo & Eddie with an exclusive
right of public performance in The Turtles' sound recordings."), question certified
by Flo & Eddie, Inc. v. Sirius XM, Inc.,--- F.3d ----, 2016 WL 3546433, at *6
(11th Cir. 2016); N.C. Gen. Stat.§ 66-28 (2015); S.C. Code Ann.§ 39-3-510
(2015). In this way, a common law public performance right threatens to
substantially restrict the public's access to pre-1972 recordings not only in New
York but nationwide.
31
B. Traditional Radio Broadcasters
In contrast to the carefully circumscribed federal digital performance right,
Flo & Eddie seeks a common law performance right that would apply equally to
traditional radio broadcasters. Flo & Eddie, 62 F. Supp. 3d at 338, 352. But, as
the District Court noted below, "not paying royalties for public performance of
sound recordings was an accepted fact of life in the broadcasting industry for the
last century." /d. at 340. Indeed, far from demanding license fees for radio
broadcasts, record labels have historically encouraged them because "[ e ]xposure of
music recordings to the buying public through free broadcasting [was] a critical
part of the promotion of records, tapes, CDs, music videos, and concert tickets
.... " Testimony of the NAB Before the H. Judiciary Comm. Subcomm. on Courts
& Intellectual Property: Hearing on H.R. 1506, §A (June 21, 1995). In fact, "[t]he
recording industry spen[t] mi[ll]ions of dollars promoting their product to
broadcasters" because airplay drove sales. Id. at§§ A, C (June 21, 1995)
(emphasis added).
In recognition of these historical relationships and practices, Congress
extended a performance right solely to sound recordings performed by "digital
audio transmission" and not to performances by terrestrial radio broadcasters. S.
Rep. No. 104-128, at 15 (1995); see 17 U.S.C. § 106(6). As a policy matter,
traditional broadcasting simply did not present the problems that the federal
32
performance right was designed to address. S. Rep. No. 104-128, at 15 (1995)
(Congress intended to extend copyright only to "digital transmissions" of sound
recordings, "without imposing new and unreasonable burdens on radio and
television broadcasters, which often promote and appear to pose no threat to, the
distribution of sound recordings") (emphasis added).
To this day, traditional broadcasters do not pay for the public performance of
any record. Indeed, the record in this case confirms that Flo & Eddie never even
asked terrestrial radio stations to pay royalties or ask its permission to play its pre-
1972 recordings, despite being well aware that its records have been broadcast for
decades. Nevertheless, Flo & Eddie indiscriminately demands an unqualified
common law performance right that would apply to terrestrial broadcasters as well.
Flo & Eddie, 62 F. Supp. 3d at 338.
The declaration of such a right would "upend the ... broadcasting
industr[y]" and trigger "profound economic consequences." /d. at 338, 352. Radio
stations, having never been required to license the record play that is their sole
business, will not have allocated the resources or built the infrastructure necessary
to do so now. Broadcasters would be forced to choose between attempting to
identify and negotiate with individual rights-holders for each record-an
enormously burdensome task-or face wholly uncertain liability in defending
33
against lawsuits premised on an entirely undefined right. Faced with such options,
broadcasters may choose to stop playing pre-1972 records altogether.
C. Restaurants, Bars, And Other Small Businesses
A third group of traditional record users-which the District Court did not
even acknowledge-includes the many thousands (perhaps millions) of New York
small business owners that routinely play records for their customers' enjoyment.
Restaurants, bars, retail establishments, and other businesses do not pay a royalty
to perform sound recordings of any kind on their premises or in the immediate
vicinity. Indeed, Congress specifically exempted many of them from the scope of
the federal right even as to the compositions underlying the sound recordings,
freeing them from any licensing obligations in relation to their performances of
recorded music whatsoever. See 17 U.S.C. §§ 110, 114(d)(1)(C)(ii).
Here again, an unqualified and all-encompassing common law performance
right will overthrow accepted and long-settled practices for which liability has
never attached. For the first time in history, any restaurant or diner or bowling
alley in New York would be susceptible to suit for playing pre-1972 recordings on
the premises. Small businesses, in particular, lack the resources to identify and
negotiate licenses with individual rightsholders. They are susceptible to accidental
infringement and they may self-censor other content too. As a result, in order to
avoid potential liability, many smaller establishments may be forced to stop
34
playing pre-1972 recordings for their customers, thereby limiting public access to
these recordings.
D. Local Television Broadcasters And Cable Television System
Operators
In addition to constraining intentional and knowing users of pre-1972
recordings, a new common law public performance right implicates a vast number
of unintentional and unknowing users that only transmit performances of sound
recordings as part of other services. For example, because the federal performance
right in post-1972 recordings is limited to "digital audio transmissions," 17 U.S.C.
§ 1 06( 6), local television broadcasters do not need a license to perform the
copyrighted sound recordings synchronized with the audio-visual programming
they transmit. But, under an unqualified common law performance right, they may
be required to license pre-1972 recordings. Because much of the programming
broadcast on local television is produced by third parties, broadcasters may not
even know which sound recordings are being performed, let alone whether they are
. pre-1972 recordings, or who owns them. See Meredith Corp. v. SESAC LLC, 1 F.
Supp. 3d 180, 187-88 (S.D.N.Y. 2014) ("As a practical matter, a television station
cannot negotiate separately with the holder of the rights to each copyrighted work
within each of its programs.") (discussing analogous problem for musical
compositions). Even though Congress has exempted audio-visual transmissions
from the performance right afforded to sound recordings under federal copyright
35
law, television broadcasters now would risk liability under a New York common
law performance right.
The same is true of cable system operators who retransmit such local
broadcasts. A retransmission of a public performance is itself a public
performance. But, under federal law, cable system operators do not need a license
for secondary performances of sound recordings featured in the television
programming that they retransmit. Accordingly, cable system operators currently
have no system in place for identifying sound recordings that might subject them to
liability. In order to prevent future state law liability, retransmitters would need to
create and implement procedures to screen all content for pre-1972 sound
recordings, and negotiate licenses or self-censor content accordingly. The
resulting transaction and compliance costs would be enormous, if not
insurmountable, and self-censorship to avoid potential liability would further
reduce the storehouse of content available to the public.
* * *
And the list goes on. A host of other entities, ranging from online service
providers to non-commercial entities, such as municipalities, educational
institutions, and museums, among others, publicly perform music. The policy
implications of subjecting all such entities to a New York state law performance
right are equally far-reaching. These myriad, complex policy considerations raised
36
by the effects of any new right upon widely varied, competing interests must be
left to the Legislature to resolve. They fall far outside the institutional competence
of a court at common law.
37
CONCLUSION
For the foregoing reasons, and the reasons set forth in Sirius XM's briefing,
this Court should answer the certified question in the negative and hold that there
is no right of public performance for owners of pre-1972 sound recordings under
New York law.
Dated: New York, New York
September 1, 2016
Respectfully submitted,
~4·-· en~
&gamU£. Marks
Gregory Silbert
Kami Lizarraga
WElL, GOTSHAL & MANGES LLP
767 Fifth Averiue
New York, New York 10153
T: (212) 310-8000
F: (212) 310-8007
Counsel for Amici Curiae
Pandora Media, Inc., The Computer &
Communications Industry Association, New
York State Restaurant Association, and
National RestaurantAssociation
-~ Jvl. ~4:2 ~
James K. Lynci{(Pro hac vice pending)
Andrew M. Gass (pro hac vice pending)
LATHAM & WATKINS LLP
505 Montgomery Street, Suite 2000
San Francisco, California 94111
T: (415) 391-0600
F: (415) 395-8095
Jonathan Y. Ellis (pro hac vice pending)
LATHAM & WATKINS LLP
38
555 Eleventh Street, NW, Suite 1000
Washington, D.C. 20004
T: (202) 637-2145
F: (202) 637-2201
Counsel for Amicus Curiae
iHeartMedia, Inc.
39
Exhibit 1
Subsidiaries of iHeartMedia, Inc.
1567 Media, LLC
AMFM Broadcasting, Inc.
AMFM Broadcasting Licenses, LLC
AMFM Operating, Inc.
AMFM Radio Licenses, LLC
AMFM Texas, LLC
AMFM Texas Broadcasting, LP
AMFM Texas Licenses, LLC
Austin Tower Company
Capstar Radio Operating Company
Capstar TX, LLC
CC Broadcast Holdings, Inc.
CCCVLP,LLC
CC Pineo, LLC
CC Pineo Holdings, LLC
CC Licenses, LLC
CCHCV LP, LLC
CCOI Holdco Parent I, LLC
CCOI Holdco Parent II, LLC
CCOI Holdco Sub I, LLC
CCOI Holdco Sub II, LLC
Christal Radio Sales, Inc.
Cine Guarantors II, Inc.
Citicasters Co.
Citicasters Licenses, Inc.
Clear Channel Adshel, Inc.
Clear Channel Airports of Georgia,
Inc.
Clear Channel Airports of Texas, JV
Clear Channel Brazil Holdco, LLC
Clear Channel Broadcasting Licenses,
Inc.
Clear Channel Electrical Services,
LLC
Clear Channel Holdings, Inc.
Clear Channel Interstate, LLC
Clear Channel Investments, Inc.
Broader Media, LLC
Broader Media Holdings, LLC
Clear Channel Metra, LLC
Clear Channel Metro, LLC
Clear Channel Mexico Holdings, Inc.
Clear Channel Outdoor, Inc.
Clear Channel Outdoor Holdings, Inc.
Clear Channel Outdoor Holdings
Company Canada
Clear Channel Peoples, LLC
Clear Channel Real Estate, LLC
Clear Channel Real Estate Services,
LLC
Clear Channel Spectacolor, LLC
Clear Channel Worldwide Holdings,
Inc.
Clear Channel/Interstate Philadelphia,
LLC
Critical Mass Media, Inc.
Eller-PW Company, LLC
Exceptional Outdoor Advertising, Inc.
Get Outdoors Florida, LLC
iHeartMedia + Entertainment, Inc.
iHeartMedia Capital I, LLC
iHeartMedia Capital II, LLC
iHeartCommunications, Inc.
iHeartMedia Management Services,
Inc.
iHeartMedia Tower Co. Holdings,
LLC
iHM Identity, Inc.
Interspace Airport Advertising
International, LLC
IN-TER-SPACE Services, Inc.
Katz Communications, Inc.
Katz Media Group, Inc.
Katz Millennium Sales & Marketing,
Inc.
Katz Net Radio Sales, Inc.
Keller Booth Sumners Joint Venture
Kelnic II Joint Venture
M Street Corporation
TTWN Networks, LLC
TTWN Media Networks, LLC
Adshel (Brasil) Ltda
Adshel Ltda
Adshel Mexico
Adshel New Zealand Ltd.
Adshel Street Furniture Pty Ltd
Aircheck India Pvt. Ltd.
Allied Outdoor Advertising Ltd.
Arcadia Cooper Properties
Barrett Petrie Sutcliffe London Ltd.
Barrett Petrie Sutcliffe Ltd.
C.F.D. Billboards Ltd.
CCH Holding BV
CCO International Holdings BV
CCO Ontario Holdings, Inc.
China Outdoor Media Investment
(HK) Co., Ltd.
China Outdoor Media Investment Inc.
Cine Guarantors II, Ltd.
Cine Movile SA de CV
Citysites Outdoor Advertising
(Albert) Pty Ltd.
Citysites Outdoor Advertising Pty
Ltd.
Citysites Outdoor Advertising (South
Australia) Pty Ltd.
Citysites Outdoor Advertising (West
Australia) Pty Ltd.
Clear Channel CAC AG
2
Metro Networks Communications, LP
Metro Networks Services, Inc.
Miami Airport Concession LLC
Milpitas Sign Company, LLC
Outdoor Management Services, Inc.
Premiere Networks, Inc.
SmartRoute Systems, Inc.
Sunset Billboards, LLC
Terrestrial RF Licensing, Inc.
TLAC, Inc.
Tower FM Consortium, LLC
Cinemobile Systems International NV
Clear Channel International BV
Clear Channel International Holdings
BV
Clear Channel Adshel AS
Clear Channel Affitalia SRL
Clear Channel A WI AG
Clear Channel Baltics & Russia AB
Clear Channel Banners Ltd.
Clear Channel Belgium Sprl
Clear Channel Brazil Holding S/ A
Clear Channel (Central) Ltd.
Clear Channel Chile Publicidad Ltda
Clear Channel CV
Clear Channel Danmark A/S
Clear Channel Entertainment of
Brazil Ltda
Clear Channel Espana SLU
Clear Channel Espectaculos SL
Clear Channel Estonia OU
Clear Channel European Holdings
SAS
Clear Channel Felice GmbH
Clear Channel France SAS
Clear Channel GmbH
Clear Channel Hillenaar BV
Clear Channel Holding AG
Clear Channel Holding Italia SPA
Clear Channel Holdings CV
Clear Channel Holdings, Ltd.
Clear Channel Hong Kong Ltd.
Clear Channel Infotrak AG
Clear Channel International Ltd.
Clear Channel Interpubli AG
Clear Channel Ireland Ltd.
Clear Channel Italy Outdoor SRL
Clear Channel Jolly Pubblicita SPA
Clear Channel KNR Neth Antilles NV
Clear Channel (Midlands) Ltd.
Clear Channel NI Ltd.
Clear Channel (Northwest) Ltd.
Clear Channel Norway AS
Clear Channel Outdoor Company
Canada
Clear Channel Outdoor Hungary KFT
Clear Channel Outdoor Mexico SA de
cv
Clear Channel Outdoor Mexico,
Operaciones SA de CV
Clear Channel Outdoor Mexico,
Servicios Administrativos, SE de CV
Clear Channel Outdoor Mexico,
Servicios Corporativos, SE de CV
Clear Channel Outdoor Pty Ltd.
Clear Channel Outdoor Spanish
Holdings SL
Clear Channel Overseas Ltd.
Clear Channel Pacific Pte Ltd.
Clear Channel Aida GmbH
Clear Channel Ofex AG
Clear Channel Plakatron AG
Clear Channel Poland SP .Z.O.O.
Clear Channel Sales AB
Clear Channel Sao Paulo
Participacoes Ltda
Clear Channel (Scotland) Ltd.
Clear Channel Schweiz AG
Clear Channel Singapore Pte Ltd.
3
Clear Channel Smartbike SLU
Clear Channel South West Ltd.
Clear Channel South America S.A.C.
Clear Channel (South West) Ltd.
Clear Channel Suomi Oy
Clear Channel Sverige AB
Clear Channel Tanitim Ve Iletisim AS
Clear Channel UK Ltd
Clear Channel UK One Ltd.
Clear Channel UK Two Ltd.
Clear Channel UK Three Ltd.
Clear Media Limited
ComurbenSA
CR Phillips Investments Pty Ltd.
Eller Holding Company Cayman I
Eller Holding Company Cayman II
Eller Media Asesorias Y
Comercializacion Publicitaria Ltda
Eller Media Servicios Publicitarios
Ltda
Epiclove Ltd.
Equipamientos Urbanos de Canarias
SA
Equipamientos Urbanos Del Sur SL
Equipamientos Urbanos - Gallega de
Publicidad Disseno AlE
FM Media Ltd.
Foxmark (UK) Ltd.
Giganto Holding Cayman
Giganto Outdoor SA
Grosvenor Advertising Ltd.
Hainan Whitehorse Advertising
Media Investment Company Ltd.
Illuminated Awnings Systems Ltd.
Interspace Airport Advertising
Australia Pty Ltd.
Interspace Costa Rica Airport
Advertising SA
Interspace Airport Advertising
Curacao NV
Interspace Airport Advertising
Netherlands Antilles NV
Interspace Airport Advertising West
Indies Ltd.
Interspace Airport Advertising New
Zealand Ltd.
Interspace Airport Advertising Grand
Cayman
Interspace Airport Advertising
Trinidad & Tobago Ltd.
Interspace Airport Advertising TCI
Ltd.
KMS Advertising Ltd.
L & C Outdoor Ltda.
Mars Reklam Producksiyon AS
Maurice Starn Ltd
Media Monitors Dominican Republic
Media Monitors (M) Sdn. Bhd.
Ming Wai Holdings Ltd.
More O'Ferrall Ireland Ltd.
Multimark Ltd.
Nitelites (Ireland) Ltd.
Nobro SC
NWP Street Limited
Outstanding Media I Stockholm AB
Paneles Napsa. S.A.
Parkin Advertising Ltd.
Perth Sign Company
Phillips Finance Pty Ltd.
Phillips Neon Pty Ltd.
Postermobile Advertising Ltd.
Postermobile Ltd.
Premium Holdings Ltd.
Premium Outdoor Ltd.
Publicidade Klimes Sao Paulo Ltda
Racklight SA de CV
Radio Computing Services (Africa)
PtyLtd.
4
Radio Computing Services (NZ) Ltd.
Radio Computing Services (SEA) Pte
Ltd.
Radio Computing Services (Thailand)
Ltd.
Radio Computing Services (UK) Ltd.
Radio Computing Services Canada
Ltd.
RCS Radio Computing China, Inc.
Radio Computing Services of
Australia Pty Ltd. -
Radio Computing Services (India)
Pvt. Ltd.
RCS Europe SARL
Regentfile Ltd.
Rockbox Ltd.
Service2Cities
Shelter Advertising Pty Ltd.
SIA Clear Channel Latvia
Signways Ltd.
Sites International Ltd.
Storm Outdoor Ltd.
Street Furniture (NSW) Pty Ltd.
Team Relay Ltd.
The Canton Property Investment Co.
Ltd.
The Kildoon Property Co. Ltd.
Torpix Ltd.
Town & City Posters Advertising.
Ltd.
Tracemotion Ltd.
Trainer Advertising Ltd.
U AB Clear Channel Lietuva
Urban Design Furniture Pty Ltd
Vision Media Group UK Limited
Vision Posters Ltd.