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Business News Legal
Sirius insists no royalty due on pre-1972 catalogue in the US
By Chris Cooke | Published on Tuesday 15 October 2013
US satellite radio company Sirius has responded to one of the lawsuits filed against it by the American record industry in relation to the pre-1972 catalogue. And in legal papers submitted last week the broadcaster said it wasn’t obliged to pay labels or recording artists royalties for tracks released before 1972, either directly or via the SoundExchange collective licensing system.
As much previously reported, in the US the copyright in sound recordings released before 1972 is protected by state rather than federal law. This has created a number of debates in recent years, not least whether the federal laws that provide protection to digital platforms that inadvertently host infringing content uploaded by third parties still apply with copyright works protected by state legalisation.
In that debate, the record industry would prefer it if federal law did not apply to pre-1972 recordings, so that the labels could sue Grooveshark for routinely hosting user-uploaded tracks that originated in the 1950s and 1960s (whereas federal law prevents labels from suing over tracks released after 1972 because of Grooveshark’s allegedly shoddy but seemingly legally sound takedown system).
In the Sirius debate, however, it would probably be better for the record companies if some principles of federal copyright law could be deemed to cover the pre-1972 catalogue.
Under federal law the satellite broadcaster, unlike AM and FM radio stations in the US, has to pay royalties to the sound recording rights owners for the music it plays (traditional radio firms only have to pay performing right royalties to the publishers and songwriters). The rights owners, though, are obliged to licence, and licensees like Sirius and online radio services (which are also obliged to pay recording royalties) can opt to do so via the rights agency SoundExchange, with royalty rates set by statute.
Sirius does pay its sound recording royalties via SoundExchange, but it recently transpired it has not been paying royalties for tracks it plays that were released pre-1972. That has resulted in litigation from SoundExchange itself, and also from the major labels and sixties band The Turtles, who argue that if the satellite broadcaster reckons the federal law collective licence doesn’t apply to pre-1972 tracks, then it should be doing direct deals with labels and recording artists for that catalogue instead.
But, in its court filing last week, Sirius argued otherwise. It said that the specific obligation for satellite and online broadcasters to pay a sound recording royalty did not exist in state law, so if AM/FM radio stations are not obliged to pay labels a royalty under state copyright – which they are not – then neither is the satellite broadcaster.
In a court filing actually requesting that legal action filed against it in the Californian courts be moved to the New York jurisdiction, Sirius said: “The plaintiff apparently has become aggrieved by the distinction drawn by Congress in withholding copyright protection from its pre-1972 recordings; thus now, after decades of inaction … it asserts a purported right under the law of various states to be compensated by SiriusXM”.
It adds: “As will be shown at a later stage of these proceedings, there is no state law that requires SiriusXM (or any of the hundreds of thousands of other US businesses that publicly perform music) to pay license fees for pre-1972 recordings”.
As stated there, Sirius insists that no state laws in the US oblige it to pay recording royalties on pre-1972 catalogue, though the broadcaster’s lawyers accuse The Turtles vocalists Flo & Eddie of playing a lawsuit lottery by filing identical litigation in three separate states, ie sue in as many courts as possible in the hope one judge can be persuaded a royalty should apply.
But, says Sirius, if a state court did just that, the ruling would affect anyone using sound recordings in public, including radio, television, clubs, bars and other public spaces, which would have a far-reaching impact beyond increasing the royalties the satellite radio firm pays.
The dispute continues.
