2nd Circuit Reverses Lower Court on Flo & Eddie's Pre-'72 Royalties Suit Against Sirius XM
The 2nd Circuit Court of Appeals reversed and remanded Thursday a set of 2014 and 2015 U.S. District Court rulings in New York in Flo & Eddie v. Sirius XM, as expected (see 1612200066). The New York district court had said Sirius owed performance royalties to Flo & Eddie, who own the copyright to The Turtles' “Happy Together” and the rest of that band's music, and other artists for the performance of The Turtles' pre-1972 sound recordings and other pre-1972 recordings (see 1411170043 and 1501160053).
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.
A three-judge 2nd Circuit panel -- Judges Guido Calabresi, Susan Carney and Denny Chin -- ruled against Flo & Eddie based on the New York State Court of Appeals' December ruling against Flo & Eddie's claim that New York common law allows a performance royalty right for sound recordings made before 1972. Numerous music licensing stakeholders had said they believed the 2nd Circuit would reverse the District Court after the top New York court's ruling. The 2nd Circuit paused its review of Sirius' appeal of the Flo & Eddie case until the top New York court could rule on whether a pre-1972 right existed in state law (see 1604130063).
The judges ruled Thursday that the New York state court's finding against a pre-1972 performance right led them to fully reverse the district court, despite Flo & Eddie's claim after the New York state court's ruling that there was still a question of whether Sirius engaged in unfair competition by allowing public performance of unauthorized copies of Flo & Eddie's recordings for profit. The 2nd Circuit said in its per curiam ruling its referral of the case to the state court that the copying issue “is bound up with whether the ultimate use of the internal copies is permissible. As a result, the certified question is determinative of Appellee’s copying claim,” as was the unfair competition issue. The ruling orders the New York district court to grant Sirius' motion for summary judgment of the Flo & Eddie lawsuit and dismiss it.
The new ruling appears likely to reduce the final amount Flo & Eddie will receive under a November settlement with Sirius, an industry executive said. Sirius agreed to pay at least $25 million to settle Flo & Eddie's California class-action lawsuit in the U.S. District Court in Los Angeles. The settlement amount could have reached as high as $99 million, depending on future outcomes of the California and New York suits, as well as an identical lawsuit in Florida that's on hold before the 11th Circuit Court of Appeals (see 1611290054 and1612070032). The Florida Supreme Court is to hear oral argument April 6 in the 11th Circuit's referral of the case over the question of whether Florida law recognizes a pre-1972 performance right (see 1702140067 and 1612070032). Flo & Eddie and Sirius didn't comment.
The decision is “no surprise” and is “definitely welcome news for Sirius,” said Fletcher Heald copyright and music licensing lawyer Karyn Ablin. The court made clear that "resolution of the copying and unfair competition claims was linked closely to the resolution of whether New York recognizes a public performance right” for pre-1972 sound recordings, she said. “It makes no sense to hold [Sirius] liable for making internal copies of recordings where the market value to the public of those internal copies is inextricably linked to the performances that they facilitate,” Ablin said. She noted that Sirius argued “an unfair competition [or] misappropriation claim requires some underlying property right that was misappropriated.”
The decision “demonstrates how difficult it is for artists to be treated fairly” by top tech firms “who engage in loophole seeking behavior that will cost them more to litigate than they would have paid in royalties,” said music industry lawyer Chris Castle. “It also shows why Congress should have passed” the 2014 Respecting Senior Performers as Essential Cultural Treasures Act, he said, “to protect artists” from Sirius and others.