Turtles Quick to Leverage SiriusXM Decision in New Suit Against Pandora

JD Supra Perspectives

Any child familiar with Aesop’s Fables can tell you that turtles are slow.  The founding members of the 1960s rock band named after these half-shelled plodders, however, were anything but slow in moving to take full advantage of a September 22, 2014, decision in their favor by a U.S. District Court judge.  After prevailing against SiriusXM in a suit regarding public performance royalties for pre-1972 recordings, Flo & Eddie Inc., a corporation owned by the two founding members of the Turtles, waited just over a week before filing a similar class action lawsuit against online music giant Pandora in California Superior Court.

Flo & Eddie and the Courts Happy Together After September Ruling

Before they hit the litigation circuit by storm, the Turtles were known for hits like “Happy Together,” which have been played frequently on Pandora, SirusXM, broadcast radio, and other sources for music-listening. Because federal copyright laws apply only to recordings “fixed” starting in 1972, the Turtles are not entitled to royalties under these laws for public performances of their pre-1972 recordings.  Flo & Eddie, however, contend that they are entitled to such royalties under California law.  On September 22, 2014, a federal trial court in Los Angeles agreed and granted summary judgment in their favor.  On behalf of a large class of artists similarly situated, Flo & Eddie sought $100 million in the SiriusXM lawsuit.

With this ruling in hand, Flo & Eddie have moved on to Pandora, seeking $25 million on behalf of themselves and a proposed class of other artists whose records were “fixed” prior to 1972.  The complaint states that “Pandora understands that having a vast range and array of music is critical to the success of any music service which is why pre-1972 recordings constitute a significant part of the Music Service.  Pandora offers and advertises stations dedicated to pre-1972 recordings, such as ‘50s Rock n’ Roll,’ ‘60s Oldies,’ ‘Motown,’ ‘Doo-Wop, ‘70s Folk,’ ‘Early Jazz,’ ‘Standards,’ ‘Classic Soul,’ ‘Jam Bands,’ and ‘Classical Rock.’” 

Pandora has yet to formally respond to the complaint, but has asserted that it pays publishing royalties for any music streamed on its site, and supports “the full federalization of Pre-72 sound recordings under a technology-neutral approach that affords libraries, music services and consumers the same rights and responsibilities that are enjoyed with respect to all other sound recordings.”  Publishing royalties are distinct from (and easier to track than) performance royalties to which the artists in these matters believe that they are entitled.  Pandora’s statement is also a pointed recommendation that the safe harbor provisions contained in the 1995 federal Digital Performance Right in Sound Recording Act (“DPRA”) be extended to pre-1972 recordings, with a twist.  Pandora likes the protections afforded under the DPRA, but does not care for the fact that Internet radio providers must pay a higher percentage of revenues for performance royalties than satellite radio providers like SiriusXM, let alone FM radio stations, which need not pay such royalties at all.

The Larger War for Royalties on Pre-1972 Recordings

Pandora is no stranger to the ongoing war regarding the legal treatment of pre-1972 recordings.  The Recording Industry Association of America recently filed suit against Pandora in New York state court alleging copyright violations. The artists and record companies involved in the suits in New York and California (along with a number of others involving various players in the industry) have contended that they have not been paid for usage of their pre-1972 recordings. Pandora, at least, appears to tacitly acknowledge as much. According to the complaint against the company in New York, Pandora told the SEC that if it were required to obtain licenses for the reproduction and public performance of pre-1972 sound recordings, the expense of compliance may be so prohibitive that Pandora would simply remove all pre-1972 recordings from its service.

Pandora and SiriusXM have each taken the legal position that they need not pay royalties for pre-1972 recordings.  The cases involve a loophole of sorts in federal copyright law. On February 15, 1972, Congress brought sound recordings under federal copyright law. Prior to 1972, however, musical recordings were protected only by state copyright laws, many of which are based in common law, court-made rules that are not codified in statutes and, at least in many instances, do not require registration in order to protect recorded material.  In California, authorship rights related to pre-1972 recordings are expressly prescribed under Civil Code Section 980.  Until the SiriusXM decision, however, it was unclear how courts would treat these state laws, given the extent to which Congress occupied the field in 1972.

The Road Ahead

SiriusXM has already stated that it will appeal the trial court’s ruling to the Ninth U.S. Circuit Court of Appeals. Given the substantial financial interests at stake, even a trip to the Supreme Court would not appear to be out of the question. In any event, Pandora will certainly demand that the California trial court look with fresh eyes at the issues raised by Flo & Eddie, rather than adopting the federal court’s ruling as controlling precedent.  How these cases end up being resolved will almost certainly have a tremendous impact on the future of music on new media platforms.

Jason Horst is an attorney in the Litigation and Intellectual Property practice groups at Oakland, Calif.’s Wendel, Rosen, Black & Dean LLP. He can be reached at (510) 834.6600 or jhorst@wendel.com.

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