In a significant victory for digital music companies, a New York appeals court rejected an attempt by members of the 1960s band the Turtles to claim a new sort of copyright for decades-old sound recordings such as the hit song Happy Together.
In a 5-2 decision, the New York State Court of Appeals sided with SiriusXM, which had argued that the issue of royalty payments was determined by the federal Copyright Act and that an alleged state copyright for pre-1972 sound recordings did not exist.
The ruling comes weeks after a settlement between the Turtles members, who are best known as Flo and Eddie, and SiriusXM in a related lawsuit in California. That settlement, which also covers class action claims on behalf of other performers, called for payouts of up to $99 million—an amount that is likely to be reduced as a result of Tuesday's appeals court ruling.
In the decision, Judge Leslie Stein pointed out an argument that has long been made by digital music companies: If a state copyright for pre-1972 recordings exists, why did the music industry wait so long to try to enforce it? Stein also suggests the granting of a new right could interfere with a complex royalty scheme created by Congress to balance competing interests. Here are some key bits from the ruling:
Indeed, it would be illogical to conclude that the right of public performance would have existed for decades without the courts recognizing such a right as a matter of state common law, and in the absence of any artist or record company attempting to enforce that right in this state until now [...]
Simply stated, New York's common-law copyright has never recognized a right of public performance for pre-1972 sound recordings. Because the consequences of doing so could be extensive and far-reaching, and there are many competing interests at stake, which we are not equipped to address, we decline to create such a right for the first time now. Even the District Court here, while finding the existence of a common-law copyright of public performance in sound recordings, acknowledged that such a right was "unprecedented," would upset settled expectations, and would "have significant economic consequences" ... Under these circumstances, the recognition of such a right should be left to the legislature.
More broadly, the law over state copyright in sound recordings—including whether such a right even exists at all—remains a scrambled mess. In California, a lower court judge sided with the Turtles on the issue, though the case is now on appeal there, while SiriusXM has the upper hand in similar litigation in Florida.
Tuesday's ruling may also increase the chance the issue could end up at the Supreme Court. Even though the cases turn on questions of individual state laws, SiriusXM has also raised the question of whether such laws — if they create a new form of state copyright — could interfere with interstate commerce.
A SiriusXM spokesperson declined to comment on the ruling.
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Despite the ongoing legal questions, the music industry has so far prevailed by using the uncertainty as leverage to pressure digital music companies into settlements. Record labels have reached deals worth hundreds of millions not only with SiriusXM but also with Pandora. Meanwhile, other groups—including the Turtles—are pursuing a sprawling number of class action suits, some of which target companies like Apple and YouTube that also play pre-1972 recordings.
The fight over royalties has also been the subject of pitched PR battles. The music industry, including the likes of the Turtles, has often portrayed digital music companies like Pandora as getting rich at the expense of musicians and failing to pay a fair share. But such arguments typically fail to acknowledge that digital companies may a much higher royalty rate than AM/FM stations (which do not have to pay so-called "performance rights") or that any company must pay the songwriter of pre-1972 works. There is also the question of whether it's sound policy to require digital music companies, and by extension consumers, to pay a new sort of tax for music that is 50 years old—rather than directing such money at younger or up-and-coming performers.
Correction: an earlier version of this story incorrectly said Tuesday's ruling came from the Second Circuit Court of Appeals, and named the judge as Sidney (not Leslie) Stein.