State copyright law now gives musicians performance rights
The mess began with the Sound Recordings Act of 1971, which granted federal copyright protection to audio recordings made on and after Feb. 15, 1972. Composers, lyricists, performers and recording companies all obtain federal copyrights in their audio recordings, but these creators do not receive the same protection under federal copyright law. Composers and lyricists receive royalties when audio recordings of their works are broadcast. Performers and record labels often don't.
This unequal treatment was largely the result of broadcasters' political clout. "Traditional broadcasters didn't want to pay royalties [to performers and record labels], and they had the political clout to make that happen," says Joseph C. Gratz, a partner in the San Francisco law firm Durie Tangri and chair of the Committee on Broadcasting, Sound Recordings and Performance Artists in the ABA Section of Intellectual Property Law.
STATES TAKE THE LEAD
A fix for this unequal treatment may now be at hand from an unexpected source: state law. Three recent court rulings in California and New York say that state copyright law supplies performers and record labels with the public performance rights currently missing from federal copyright law.
That's great news for the creators of audio recordings. On the other hand, broadcasters, music streaming services and online service providers suddenly may be liable for years of copyright infringement, with fines of potentially hundreds of millions of dollars.
The change began last September with a new judicial interpretation of California's state copyright statute, which grants performers and record labels "exclusive ownership" rights in sound recordings made before Feb. 15, 1972. The case, Flo & Eddie Inc. v. Sirius XM Radio, was begun by two members of the 1960s rock band the Turtles. These ownership rights include public performance rights, according to a federal court in the Central District of California, which ruled that a digital broadcaster infringed these rights when it broadcast pre-1972 recordings.
This decision made a big impression on California Superior Court Judge Mary H. Strobel. After she read it, Strobel threw out her earlier, tentative ruling in Capitol Records v. Sirius XM Radio that the California statute did not grant public performance rights. Instead, she declared in October that the statute did provide such rights. One month later, in another suit by Flo and Eddie Inc., a federal district court in Manhattan held that New York common law grants a public performance right to creators of pre-1972 audio recordings, and that Sirius apparently infringed this common-law copyright when it digitally broadcast the plaintiff's recordings.
All three rulings have gone against a digital radio station, Sirius XM. However, nothing in the decisions suggests that performers' and record labels' public performance rights apply only against digital broadcasters. As a result, traditional radio stations may find themselves liable for millions of dollars in damages for infringing state copyrights in pre-1972 sound recordings. Moreover, these stations may be unable to play such songs—including hits by the Beatles, Elvis and the Rolling Stones—unless the stations reach agreements with the creators of those audio recordings.
It is often easy to overlook the importance of state copyright law, because it was largely wiped out by the expansion of federal regulations in the Copyright Act of 1976.
Yet the 1976 act did not completely pre-empt state copyright law. One conspicuous omission was pre-1972 audio recordings. Those recordings did not receive any federal copyright, so they remained protected by state copyright laws.
While state laws forbade unauthorized copying of pre-1972 audio recordings, they nevertheless did not provide performers or record labels with public performance rights in their audio recordings, according to the seminal case of RCA Manufacturing Co. v. Whiteman.
Writing for the 2nd U.S. Circuit Court of Appeals at New York City in 1940, Judge Learned Hand held that a performer's and record label's common-law copyrights were exhausted once a recording was sold, and that the purchaser had the right to broadcast (or otherwise publicly perform) the recording.
That ruling became black-letter law. "When the Supreme Court refused certiorari for this case, lawyers [in the U.S.] treated this decision as applying to the entire country," says Tyler T. Ochoa, a professor at Santa Clara University School of Law. "As a result, it has been settled since 1940 that there is no performance right in a sound recording. Everyone acquiesced in it. It is hornbook law in any copyright treatise you care to look in."
This hornbook law has been overturned by the three recent court rulings.
MORE SUITS TO COME
The cases against Sirius are just the beginning. With so many other potential defendants, and with infringement damages that could run to hundreds of millions of dollars, plenty of performers and record labels will be itching to sue. "These are test cases, but there will be a lot more plaintiffs suing a lot more companies," says Lisa A. Dunner of Washington, D.C., who chairs the ABA Section of Intellectual Property Law.
Broadcasters, streaming services and online service providers are likely to fight tooth and nail against these suits. If they lose—if the courts ultimately determine that some state copyright laws do provide performers and record labels with public performance rights in pre-1972 audio recordings—many will find themselves with more than large legal fees and hefty infringement damages. They will face a confused legal situation: Some states will recognize these public performance rights, other states will not, and the status in many states will be unclear.
If that occurs, many experts expect broadcasters and other potential defendants will turn to Congress for help. Because having a uniform national law will be preferable to a patchwork of different state laws, these businesses could do what previously was unthinkable. They could drop their opposition to congressional action and instead press Congress to reform this area of federal copyright law.
The businesses would likely lobby for a bill that grants federal copyright protection to pre-1972 audio recordings and pre-empts state law affecting those recordings. Congress might even adopt an additional reform by providing performers and record labels with government-mandated royalties for all broadcasts of their audio recordings. But that change is less certain.
"I don't see the National Association of Broadcasters readily acceding to a public performance right that applies to over-the-air performances of sound recordings. Fighting against that has been one of their top priorities," says Kevin Goldberg, a partner in the Arlington, Virginia, law firm of Fletcher, Heald & Hildreth.
If the courts ultimately find that state copyright law provides performers and record labels with public performance rights in their audio recordings, it will provide a big boost toward finally fixing this area of copyright law. Performers, record labels, the Copyright Office and other advocates for reform would be "on the verge of getting what they have wanted for the last few decades," Ochoa says.
This article originally appeared in the April 2015 issue of the ABA Journal with this headline: "Pay to Play: State copyright law now gives musicians performance rights."