A BFD INDEED: FLO & EDDIE HIT PAYDIRT

floLast year the corporate alter ego of former Turtles frontmen Howard Kaylan and Mark Volman—Flo & Eddie, Inc.—filed a class action lawsuit against Sirius XM. Their claim is that pre-1972 sound recordings, such as the Turtles’s classics “Happy Together” and “Eleanore,” which have no federal copyright protection, are nonetheless protected against unauthorized use under California state law. In a post that included our attempt to summarize the byzantine labyrinth that is music copyright law, we noted the “ambitiousness” of the claim and predicted that the case could have “broad ramifications.” If a decision handed down in the their case this week (and see 11/17/14 update below the fold) holds up on appeal, that post will merit a spot in the pantheon of gross understatement.

The Supreme Court has ruled that Federal copyright law does not pre-empt all state protections of material that falls outside the scope of Federal protection. Pre-1972 recordings retain some protection under common law copyright or, in the case of California, a state statute which provides that “[t]he author of an original work of authorship consisting of a sound recording initially fixed prior to February 15, 1972, has an exclusive ownership therein until February 15, 2047.”

We complimented Flo & Eddie for the cleverness of their legal theory, which seemed to focus on certain interactive services provided by Sirius XM, beyond the mere play of the recordings over the satellite, such as “on demand” and “replay” features, arguing that they constituted misappropriation and conversion of the recordings under state law. But we discounted the possibility that the mere live, digital transmission of recordings to subscribers could be deemed an unlawful violation of the author’s exclusive ownership. To use copyright law terminology, we thought Flo & Eddie had a viable claim that Sirius XM’s “reproduction” or copying of the recordings violated the California statute, but not its mere “performance” of those recordings. Under that analysis, we thought the case had “broad ramifications” for digital, interactive services, but not for traditional broadcast radio.

Boy, did we get it wrong. The court found the California statute clear and unambiguous on its face: “Giving the words their usual and ordinary meaning and construing them in context . . the legislature intended ownership of a sound recording in California to include all rights that can attach to intellectual property” including an exclusive right of public performance.

For decades record labels and recording artists have fought for the right to collect copyright royalties from traditional, “terrestrial” broadcast music users. For decades, they have been thwarted as Congress has resisted upsetting the status quo in music rights, under which neither pre- nor post-1972 recordings receive performance royalties, a triumph of history over logic. Forty-five years after their heyday on AM radio, the Turtles may finally be gaining on the hare.

UPDATE 11/17/14: Flo and Eddie have now prevailed in a companion case filed under New York common law. The money quote:

Sirius is correct that this holding is unprecedented (aside from the companion California case, which reached the same result), and will have significant economic consequences. Radio broadcasters – terrestrial and satellite – have adapted to an environment in which they do not pay royalties for broadcasting pre-1972 sound recordings. Flo and Eddie’s suit threatens to upset those settled expectations. Other broadcasters, including those who publicly perform media other than sound recordings, will undoubtedly be sued in follow-on actions, exposing them to significant liability. And if different states adopt varying regulatory schemes for pre-1972 sound recordings, or if holders of common law copyrights insist on licensing performance rights on a state-by-state basis (admittedly, an unlikely result, since such behavior could well cause broadcaster to lose interest in playing their recordings) it could upend the analog and digital broadcasting industries.

 

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