SiriusXM Loss Paves Way for Suit Vs. Pandora on Pre-1972 Public Performance Royalties
The debate on the role of Congress, state legislatures and the courts over determining pre-1972 public performance royalties for sound recordings continued after a lawsuit was filed Thursday against Pandora (http://bit.ly/1oH6duR). Flo & Eddie filed a suit seeking class-action status against Pandora in the U.S. District Court in Los Angeles on such royalties following its recent victory against SiriusXM in the same court on the same issue (CD Sept 24 p7). The new suit seeks damages in excess of $25 million for Pandora’s unlicensed use of pre-1972 sound recordings. The Pandora suit shows other digital broadcasters aren’t “safe,” said Dina LaPolt of LaPolt Law, an IP and entertainment firm.
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Several House co-sponsors of the Respecting Senior Performers as Essential Cultural Treasures Act (RESPECT) hailed the decision against SiriusXM and hoped the ruling would encourage support for HR-4772, they said last month. The act would establish performance royalties on digital radio for pre-1972 recordings (CD June 19 p11). U.S. District Court in Los Angeles Judge Philip Gutierrez said California copyright laws include the “exclusive right to publicly perform” copyrighted sound recordings, and that SiriusXM broke that law by failing to license and compensate recordings by Flo & Eddie (http://bit.ly/1wKCoyz). Pandora has said it supports full federalization for such royalties under a technology neutral strategy.
"Judge Gutierrez is wrong,” and “we intend to appeal his decision all the way through the appeal process,” said David Frear, SiriusXM CFO, on a webcast Deutsche Bank conference Wednesday. Frear cited a “tentative ruling” in August by Los Angeles Superior Court Judge Mary Strobel in Capitol Records v. SiriusXM that contradicted Gutierrez’s ruling on pre-1972 public performance royalties. The decision on public performance royalties in California should come from its state legislature, not the courts, he said. “Everybody should get paid, and I think everybody should pay, but ... there needs to be a change in the laws,” Frear said.
"Copyright should be handled at the federal level, based on historical precedent,” said Gregory Barnes, Digital Media Association (DiMA) general counsel. Amazon, Apple and Google-owned YouTube are among DiMA’s members. “That you have a federal court and a state court that have examined the exact same statute tells you there’s a lot of ambiguity,” Barnes said.
It’s expected that Flo & Eddie will use the SiriusXM “precedent against Pandora,” said music industry attorney Chris Castle, who represents artists and musicians and has worked with digital music services. “Pandora already informed their stockholders of a risk in not licensing pre-72 sound recordings that Pandora uses to promote and perform on their service.” Because of the new suit, “Pandora may have to also reserve a liability fund to cover potential damages,” Castle said. “One could argue that it would be prudent for Pandora and Sirius to support the RESPECT Act without conditions, but I doubt that they will.” Pandora didn’t comment.
Like SiriusXM, Pandora “makes a ton of money from pre-1972 recordings despite having no license to exploit these works,” LaPolt said. There’s “no reason” the court will reach a different conclusion than it did in the SiriusXM case, she said. “Pandora would be well advised to settle this case quickly and figure out how to compromise with other owners of pre-1972 recordings before it is served with hundreds of similar lawsuits.”