Small Fixes to Copyright Act Sought To Solve Disparity on Royalty Rules
A wholesale revamp of the Copyright Act is unlikely soon, but more piecemeal fixes could be possible, lawyers said Friday during a Practising Law Institute event. The House Judiciary Committee has been doing a copyright law review since 2013, last week holding a pair of roundtables with copyright stakeholders in California (see 1511100063 and 1511120049). Any legislative fix would occur in the midst of ongoing legal battles over whether a terrestrial performance royalty right exists and the nature of fair use, lawyers said at PLI.
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“We’re about as likely to get a significant change in copyright law as we would be to get an IRS revision that’s only three pages long,” said Microsoft Deputy General Counsel-Business Development and Evangelism Group Mary Snapp. Debevoise & Plimpton IP lawyer Jeffrey Cunard said he believes it’s “perhaps overly ambitious” to believe a total Copyright Act revamp is possible now.
Federalizing royalty rules for all sound recordings is a possible fix for ongoing disputes about which performances are entitled to royalties, “but the question is whether it’s a good” idea, said MPAA-Executive Director Academic Research Jennifer Pariser. There's a movement to federalize sound recordings “that’s waxed and waned over the years depending on what the sound recording owners think is to their advantage at any given point in time,” Pariser said. “When common law copyright was basically the only way you could shut down a service [that] was relying on a [Digital Millennium Copyright Act] safe harbor, then you don’t want to federalize all of the sound recordings because you need a body of work that isn’t subject to that defense.” Now that “we’ve moved away from that to a certain extent, it makes a bit more sense to federalize it, routinize it and get all of the license fees paid through SoundExchange,” Pariser said.
It “makes sense to federalize” sound recording royalty rules given ongoing disputes over the need for terrestrial performance royalties and the status of royalty rights on pre-1972 sound recordings, said Durie Tangri IP lawyer Joe Gratz. “It makes no sense that a little sliver of works is under state copyright and it makes no sense that there’s a digital and not a terrestrial performance right in sound recordings.” Lower courts in California and New York have recognized state laws requiring royalty payouts on pre-1972 sound recordings as part of Flo & Eddie’s ongoing cases against Pandora and Sirius XM over their claim of royalties on the Turtles’ pre-1972 recordings. Sirius XM appealed to the 2nd U.S. Circuit Court of Appeals in its case and Pandora appealed to the 9th Circuit. Gratz said he believes the state-federal difference on pre-1972 royalty right should be fixed before federal courts have to deal with the “conundrum.”
Pandora’s and Sirius XM’s respective settlements with the RIAA and five record labels (see 1506260048 and 1510230069) calls into question whether Flo & Eddie can maintain their class status in their lawsuits against those companies since major record labels collectively control between 80-85 percent of pre-1972 sound recordings, Pariser said. If remaining copyright holders only control 15-20 percent of pre-1972 recordings, “do they even have a class anymore? There’ll be some interesting discussions around that.” Flo & Eddie “will be arguing around” the RIAA and record label settlements “if they wish to take the position that they’re entitled to an outsized component” of any royalty recovery, Pariser said.