NY Court Rules Against Flo & Eddie on Pre-1972 Performance Right Issue
The New York State Court of Appeals ruled 4-2 Tuesday against Flo & Eddie’s claim that New York common law allows a performance royalty right for sound recordings made before 1972. Flo & Eddie, owners of The Turtles’ music, argued for a pre-'72 performance right as part of their lawsuit against SiriusXM seeking compensation for performances of such Turtles recordings. The ruling likely means the 2nd U.S. Circuit Court of Appeals will in turn rule against Flo & Eddie in its review of SiriusXM's appeal of a 2015 U.S. District Court ruling in New York in the Flo & Eddie suit there, industry lawyers told us. The 2nd Circuit paused its review until the New York court could rule on the pre-'72 performance right question (see 1604130063 and 1605030055).
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
Flo & Eddie’s arguments to the New York court ultimately reflect “a broader understanding that there was no such right -- including under state common law” to performance royalties for pre-'72 recordings, said Judge Leslie Stein in the court’s majority opinion. “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.”
Judges Eugene Fahey, Michael Garcia and Eugene Pigott joined Stein. Fahey issued a separate concurring opinion saying he believes the definition of a performance right “does not include the act of allowing members of the public to receive the ‘on-demand’ transmission of sound recordings specifically selected by those listeners.” Stein and Garcia voiced skepticism of Flo & Eddie’s claims during October oral argument (see 1610190053).
“If this court were to recognize a right of public performance under the common law, we would be ill-equipped -- or simply unable -- to create a structure of rules to properly guide the application of that right” to pre-'72 recordings, Stein wrote. “The legislative branch, on the other hand, is uniquely qualified, and imbued with the authority to conduct the required balancing of interests and make the necessary policy choices.” Streaming services like Sirius “may have rendered it more challenging for the record companies and performing artists to profit from the sale of recordings,” but “these changes, alone, do not now warrant the precipitous creation of a common-law right that has not previously existed,” Stein said.
Judges Sheila Abdus-Salaam and Jenny Rivera dissented. Rivera wrote that New York’s common law has long recognized a “broad and flexible” performance right that should include pre-'72 recordings. “Given our state's long history of protecting rights in creative works,” recognizing a common-law pre-'72 performance right “best serves both the creator and the public interest in access to those recordings by tracking the federal public performance right in post-1972 musical works,” Rivera dissented. Giving pre-'72 recordings “protection that is at least equivalent to the federal right recognized in the post-1972 works allows us to treat both classes of sound recordings equally and avoids enhanced rights for one based not on a considered reason but on an arbitrary date.” Chief Judge Janet DiFiore recused herself from the case but gave no explanation.
The “good fight to protect artist's rights rages on” nonetheless, emailed Flo & Eddie attorney Henry Gradstein. The state court was “deeply divided” and had a “hard time understanding that the sale of a record is not the sale of the artistic performance embodied as sounds on the record even though people have no trouble understanding that the purchase of a DVD does not allow public performance of a movie or that purchase of a CD Rom does not permit public exploitation of the software,” he said. The court “did not preclude claims based on unfair competition or illegal ripping of CDs for server copies on which these services are based,” Gradstein said. Sirius didn’t comment.
The ruling doesn’t affect the $25 million proposed base settlement that Flo & Eddie and Sirius reached last month, Gradstein said. Filed in U.S. District Court in Los Angeles, it could have reached a maximum of $99 million depending on future outcomes, including an on-hold appeal based on Florida law in the 11th Circuit and the full worth of a 10-year license for Sirius that included a 5.5 percent royalty rate (see 1611290054). The ruling is a “nice Christmas gift for the licensing community,” though “even one state court’s decision doesn’t fully answer” the issues presented in the Flo & Eddie lawsuits, said Fletcher Heald copyright and music licensing lawyer Karyn Ablin.
The decision makes it all but certain the 2nd Circuit will follow suit in ruling against Flo & Eddie, said Ablin and other lawyers. The 2nd Circuit is “effectively bound” to abide by the New York court’s ruling when it referred the performance right issue to that court, said Wilkinson Barker broadcast attorney David Oxenford. Referrals to state courts are “relatively rare” and the New York court “definitively answered the question about the existence of a pre-1972 performance right,” said Electronic Frontier Foundation Senior Staff Attorney Mitch Stoltz. The 2nd Circuit must still resolve auxiliary issues included in the Flo & Eddie case including whether there’s a reproduction right related to ephemeral copies of recordings made during the streaming process, but beyond that, “I’m not sure there’s much left for Flo & Eddie to argue,” Oxenford said.