60s On 6; Sirius Trouble

By Richard Posell

SiriusXM Radio operates both satellite and internet radio, broadcasting many stations for every musical taste. Its Channel 6 features music from the 60s and called 60s on 6.  In September 2014, Judge Philip Gutierrez in the Central District of the U.S. District held that a 1982 California state statute gives copyright holders in pre-1972 sound recordings the exclusive right to publically perform their recordings.  This ruling challenges the common understanding of state copyrights since at least 1940, thus hearing some scrutiny.

Under the 1909 Copyright Act, there was no Federal copyright in sound recordings (the fixation of sounds, usually a performance, in a recording medium). This left ownership rights in such recordings to the common law of each state. By the 1930s, the sale and performance of phonograph records was a big business. One of the biggest artists recording at that time was Paul Whiteman recording for RCA.

In July 1940, RCA Mfg Co, Inc. v Whiteman came before the Second Circuit Court of Appeals in front of Learned Hand. Plaintiff, Whiteman (then RCA), both of whom claimed they owned Whiteman phonorecords, attacked the concept of royalty-free public performances of sound recordings, claiming a common law property right in such performances. The answer, according to Justice Hand, was that once the recordings embodying that performance were sold, “it would be very difficult to see how [plaintiff] could impose valid restrictions upon their resale….We think that the ‘common law property’ in these performances ended with the sale of the records.”

In 1972, the new Federal Copyright act took cognizance of phonorecords and granted a federal copyright in all sound recordings fixed after February 15, 1972. In 1995, Congress added a public performance right in sound recordings for digital transmission (internet or satellite radio), but exempted FCC-licensed broadcasts and providing for a compulsory license (to be set by the Copyright Royalty Board) for subscription services such as Sirius.  But none of this affected state copyright law.

Flo & Eddie, Inc., is the owner of many sound recordings, including the one at issue: the iconic 1960s Turtles hit “Happy Together.”  In 2013 Flo & Eddie challenged the pre-1972 public performance rights. The target of its lawsuit was the library of pre-1972 sound recordings which formed the mainstay of oldies radio.

The matter ended up in front of Judge Guerrero, who ruled favorably on Flo & Eddie’s motion for summary judgment despite the fact that at least since 1940 there has never been a general public performance right for sound recordings, even at the Federal level.

Judge Guerrero’s argument was simple:  The California statute on sound recordings gives “exclusive ownership” to authors of pre-1972 sound recordings.  In plain English, public performance rights are included in the concept of “exclusive ownership.” The only “exception” in the statute is for independently created imitations that do not actually recapture the sounds in the sound recordings (such as covers, e.g.).

Copyright pundits have observed that this decision is important to the sound recording community, because it will seriously impact the value of pre-1972 catalogues and the platforms on which they are exploited. Publishers and the broadcasters would be well-served by a mediation process that takes into account the network of financial issues and which could create a protocol that would reduce the risk for both sides.

Richard Posell, Esq., is a JAMS panelist in Santa Monica, Calif. He resolves high-profile, complex commercial disputes and has experience in entertainment, trade secrets, trademarks, trade dress, class actions, executive employment disputes and general business disputes.