Courts appear happy together on sound recordings

LEGAL ENTERTAINMENT

Balancing the entertainment industry with a recording musician's interests concerning the legal rights for a sound recording remains to be difficult to this day. As technology evolves faster than copyright law, the federal Copyright Act did not originally protect sound recordings. The law finally recognized sound recordings in 1971 when Congress passed an amendment adding the definition of "sound recording" to the list of protectable works. Unfortunately, Section 114 of Copyright Act of 1976 limits these rights strictly to copying, creation of derivative works, and distribution, specifically excluding a performance right under Section 106(4).

The recording industry finally found some success in 1995 with the passage of the Digital Performance Right in Sound Recordings Act. The act granted owners an exclusive right "to perform the copyrighted work publicly by means of a digital transmission." This provides royalties to owners of a sound recording if played on interactive programs such as Spotify. The act clearly protects all sound recordings created after 1972. However, it does not retroactively apply to any sound recordings created prior to 1972. On the plus side, Section 301(c) of the act keeps state protections intact until 2067, but the lack of federal protection allows for pre-1972 songs to be played at no cost to anyone providing the "public performance." Streaming companies are able to generate income from playing these songs without having to pay any royalties to copyright owners.

Flo and Eddie of the 1960s band The Turtles brought this issue forward arguing that state law offers a public performance right in pre-1972 sound recordings. It's well known that most states provide protection against copying of the sound recording but do not expressly include or exclude performance rights. Flo and Eddie filed three separate class actions in 2013 - in New York, Florida and California - all alleging that states provide a performance right for pre-1972 recordings. Though the cases are filed under state laws, at this point it looks as though the courts may reach the same overall conclusion.

The federal district court in New York decided the issue first. The court found that New York law provided for a performance right that is exclusive to the owner of the sound recording copyright. This case was appealed to the 2nd U.S. Circuit Court of Appeals.

Looking at the impact that the decision would have on state law, the federal appeals court decided that it needed guidance from the highest state court due to a lack of clear precedent on the issue. The 2nd Circuit deferred the case to the New York Court of Appeals. In December of 2016, the New York court found that no public performance right existed for pre-1972 sound recordings under state law. The court reasoned that the issue is still ripe and has not been fleshed out in the legal sense. It's not the job of the court to proscribe detailed limits to define the scope of a right. If the court found such right existed, no one would know how that right would be applied, since to this day, this right has not been available.

The case was sent back to the 2nd Circuit, where it was decided that no performance right currently existed for pre-1972 sound recordings, even though there is a right to prevent copying. The court further reasoned that any copies made were a fair use necessary to the legal performance of the sound recording.

A California district court also found that state law provided a public performance right for pre-1972 sound recordings. Surprisingly, the California court used property law to decide the issue rather than copyright law. On summary motion, the district court wrote that state law offered "exclusive ownership" of property, which gives the right to possess and use something exclusively of others, thus finding that artists have the right to "use" the work, including the right to perform. The case was appealed to the 9th U.S. Circuit Court of Appeals, and as of March, just like in New York, the case was deferred to the California Supreme Court. At this point, we are waiting to see what the California Supreme Court will say.

The final lawsuit was brought in Florida. Unexpectedly, the case had a different outcome. The district court rejected the idea of a performance right. The court wrote that it was uncertain of its parameters if the right was found, mirroring the final decision in New York. The court went on to discuss how it would not know who was subject to or excluded from the right, who would have to pay, who would collect the royalties and what rates would be paid. These are just a handful of the many questions that would need to be answered. The court did address the fact that at the time, the other two states found in favor of the right. The district court distinguished Florida, claiming that both California and New York are such entertainment hubs that it would make more sense to rule in favor of a right under the state law. On appeal, the 11th U.S. Circuit of Appeals decided to refer the case to the Florida Supreme Court. Oral arguments were heard in April, where plaintiffs argued that the property right of the state is all encompassing and should include sound recordings. We will see what is decided in the coming months.

At this point, only one of the three cases have been decided by the state's highest court while the other two are not far behind. It looks to be a losing battle at the state level for pre-1972 artists. The courts appear likely to unanimously deicide that this issue must be brought up in the legislative context. Musicians, song writers and even admirers all need to talk to their legislatures about adding a state right and, hopefully, bringing it to the federal level. There is too much ambiguity for the court to decide that there is a right where there never has been one. It seems a decision in favor of a performance right for sound recordings would bring a lot more lawsuits and uncertainty, rather than clarity.