The MMA's impact on pre-1972 works

Just last year, Congress passed the Music Modernization Act, a comprehensive bill that overhauled the copyright licensing system to bring it into the modern era -- one in which a number of consumers obtain music through digital streaming platforms.

The MMA has a number of provisions that streamline the copyright licensing system, enabling songwriters, artists and producers to obtain royalties from digital and streaming services. One of the most impactful provisions is the Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society ("CLASSICS") Act, which confers federal copyright protection on pre-1972 sound recordings.

Prior to the enactment of the MMA, there was no federal protection for pre-1972 sound recordings. This was caused by a patchwork of federal legislation relating to the many types of licenses available for music, including inter alia, public performance rights, reproduction rights, and mechanical licenses. It was not until 1909 that Congress expressly provided for a right of mechanical reproductions of musical compositions. Sound recordings were still unprotected by federal copyright law at that time, largely because there was a lack of a commercial market for sound recordings. Finally, in the early 70s, Congress passed the Sound Recording Amendment Act of 1971, which afforded copyright protection to sound recordings fixed after the bill's effective date of Feb. 15, 1972. Just five years later, Congress passed the Copyright Act of 1976, which retained the carve out for pre-1972 recordings and provided that any state laws that applied to pre-1972 works were not preempted, preserving state law rights in tort claims like unfair competition, misappropriation, conversion, right of publicity and common law copyright protections, among others. For pre-1972 works, Congress established a cut-off date whereby those works would enter the public domain -- Feb. 15, 2067.

Under this statutory scheme and because there was no federal protection for pre-1972 sound recordings, a number of digital radio services believed they could use music recorded before 1972 for free, meaning that many artists were not receiving royalties when services like Pandora and Sirius XM streamed their works.

Copyright owners eventually turned to the courts to address this problem, arguing that because there is a common law right of public performance for copyright holders of pre-1972 sound recordings, they were entitled to royalties notwithstanding the absence of protection under federal copyright law. In one of the most notable decisions, Flo & Eddie v. Sirius XM Radio Inc., CV 13-5693 PSG (RZx), Judge Phillip S. Gutierrez of the Central District of California granted 70s rock band leaders, Flo & Eddie's, motion for summary judgment, finding that Sirius XM was liable for unauthorized uses of their sound recordings. Flo & Eddie, two of the founding members of the music group "The Turtles," who are best known for their song "Happy Together," argued that in California, copyright ownership of a pre-1972 sound recording includes the exclusive right to publicly perform the recording, requiring anyone who wishes to publicly perform such a recording to first seek authorization from the recording's holder. Dkt. No. 117 at 4 (C.D. Cal. Sept. 22, 2014).

After obtaining summary judgment against Sirius XM, Flo & Eddie brought a case against Pandora based on Pandora's failure to pay royalties for pre-1972 recordings. Flo & Eddie v. Pandora Media, Inc., CV 14-07648-PSG (RZx). The case is currently on appeal after Judge Gutierrez denied Pandora's anti-SLAPP motion, with the 9th U.S. Circuit Court of Appeals having certified two questions to the California Supreme Court: (1) Under Section 980(a)(2) of the California Civil Code, do copyright owners of pre-1972 sound recordings that were sold to the public before 1982 (the year the state of California extended copyright protection to pre-1972 recordings) possess an exclusive right of public performance? And (2) If not, does California's common law of property or tort otherwise grant copyright owners of pre-1972 sound recordings an exclusive right of public performance? The California Supreme Court subsequently asked the parties for additional briefing on the impact of the CLASSICS Act on the litigation.

Under the CLASSICS Act, owners of pre-1972 sound recordings are now protected under federal law for "covered activity" on the same basis as the owners of post-1972 recordings. 17 U.S.C. Section 1401(a)(1), (b) and (l)(1). "Covered activity means any activity that the copyright owner of a sound recording would have the exclusive right to do or authorize under section 106 or 602, or that would violate section 1201 or 1202, if the sound recording were fixed on or after February 15, 1972." 17 U.S.C. Section 1401(l)(1). In the context of sound recordings, this includes reproduction and distribution, the making of derivative works, and public performance of the recordings by means of digital audio transmissions. 17 U.S.C. Section 106 (1)-(3) and (6).

Digital radio services successfully lobbied for a provision that would preempt claims of common law copyright or equivalent rights under state laws arising from digital audio transmission or reproduction before the enactment of the statute. The provision applies to audio transmissions of pre-1972 recordings in the last three years that would have been subject to Federal statutory licensing under 17 U.S.C. Section 114(d)(1), and its server copies that would have qualified as ephemeral copies. Until July 8, 2019, 270 days after enactment of the CLASSICS Act, the digital radio services can either make royalty payments at the federal statutory rate for the preceding three years or negotiate an agreement between the rights owners and the entities performing the sound recording to authorize transmission or reproduction (or waive liability) in exchange for payment. 17 U.S.C. Section 1401(e)(1).

Effectively, if these digital radio services pay back royalties, they can avoid future liability related to their potential infringement during the three years prior to the date of enactment of the MMA.

However, importantly for those who filed suit prior to the enactment of the MMA, like Flo & Eddie, there is no provision in the MMA suggesting that the law should be applied retroactively to those cases pending at the time of the statute's enactment. 17 U.S.C. Section 1401(e)(1) does not include an "effective date" provision, and the U.S. Supreme Court has recognized that a statute should not be applied retroactively to a case that was pending when the statute was enacted. See Landgraf v. USI Film Products, 511 U.S. 244 (1994) (noting that it was improper to apply the law retroactively because the text of the act did not "evince any clear expression of congressional intent" as to whether the act applied to cases pending when the act had been passed).

While the enactment of the CLASSICS Act undoubtedly makes it more likely that owners of pre-1972 copyrights in sound recordings will obtain the royalties they are due, it does not automatically absolve digital radio services and other of their prior infringement. 

Susman Godfrey is counsel for Flo & Eddie in Flo & Eddie v. Sirius XM Radio Inc. and Flo & Eddie v. Pandora Media, Inc.