In a decision that could save satellite radio giant SiriusXM at least $5 million and represent a huge relief to terrestrial radio operators and others who broadcast older music, a New York appeals court on Tuesday concluded that New York's common law doesn't protect the public performance of pre-1972 sound recordings and therefore broadcasters don't have to pay.

The decision comes in one of the many putative class action lawsuits brought by Flo & Eddie of The Turtles, best known for their 1967 hit, "Happy Together." The duo filed litigation in New York, California and Florida with the contention that SiriusXM needed their authorization to play their songs. Because their works were authored before Feb. 15, 1972, when sound recordings became protected under federal copyright law, they sued under various state laws to be compensated for what was played on stations like SiriusXM Radio's '60s on 6. 

The lawsuit was eye-opening to many who assumed that the performance of older sound recordings required no authorization. After all, broadcasters regularly perform the early works of Bob Dylan, The Rolling Stones, The Beatles and others. It's long been taken for granted that publicity is all that is given to recording artists, although there's been intense lobbying efforts over the years to change that.

But in 2014, Flo & Eddie scored a massive victory in California before gaining a second big win in New York. They later sued Pandora while major record labels took their lead and filed similar litigation. In late November, shortly before trial in Flo & Eddie's California lawsuit, a proposed settlement was struck that required SiriusXM to fork over $25 million with payments potentially escalating to about $99 million depending on the outcome of various appeals.

Now, Flo & Eddie — as well as the other independent musicians they sought to represent — have suffered their first significant setback in their legal campaign with an appellate decision today that reverses a New York district court judge.

In the opinion (read here), New York appeals court judge Leslie Stein writes that "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."

The New York appeals court took up the issue after it was certified by the 2nd Circuit Court of Appeals, which may now be asked to take another look at the public performance question. (The 9th Circuit and the Florida Supreme Court will soon address the topic as well.)

Stein looks at piracy cases stretching back to the 1940s to figure out whether New York provides a right of public performance for sound recordings and comes to the conclusion that the state's common law is limited to reproduction. "It makes sense that, consistent with its name, copyright prevents copying of a work, but does not prevent someone from using a copy, once it has been lawfully procured, in any other way the purchaser sees fit," she writes.

The appellate judge accepts arguments from SiriusXM, represented by attorney Daniel Petrocelli at O'Melveny & Myers, that lawmakers have crafted copyright rules after ample discussion and with full knowledge of radio exploitation of sound recordings. Stein agrees there's a broad understanding in both federal law and state law that copyright holders of sound recordings don't own a right of public performance. She points to lobbying efforts, statements from several Registers of Copyrights and more.

"Instead, common sense supports the explanation ... that the record companies and artists had a symbiotic relationship with radio stations, and wanted them to play their records to encourage name recognition and corresponding album sales," Stein writes. "Nevertheless, those participants have co-existed for many years and, until now, were apparently 'happy together.' While changing technology may have rendered it more challenging for the record companies and performing artists to profit from the sale of recordings, these changes, alone, do not now warrant the precipitous creation of a common-law right that has not previously existed."

She continues, "Simply stated, New York's common-law copyright has never recognized a right of public performance for pre-1972 sound recordings. Because the consequences of doing so could be extensive and far-reaching, and there are many competing interests at stake, which we are not equipped to address, we decline to create such a right for the first time now."

New York appellate judge Eugene Fahey writes a concurring opinion that notes advancing technologies and the difficulty in defining boundaries between performance and publication. He also believes that public performance rights aren't included under common law, although with a caveat: Public performance, he writes, "does not include the act of allowing members of the public to receive the 'on-demand' transmission of particular sound recordings specifically selected by those listeners." The judge thinks that "on-demand" services like Spotify or Apple Music publish recordings, potentially opening up a door for future litigation should those services attempt to play pre-1972 recordings without negotiating rights.

Finally, New York appellate judge Jenny Rivera writes in dissent, "I reject a parochialism that justifies turning a blind eye to the exploitative practices of today's music industry made possible by technological advances and that, as a consequence, excludes from our common-law copyright in sound recordings a quintessential property interest in the use of these works, and limits a creator's opportunity to derive financial benefit from their performance."

She asserts that the right of public performance "addresses the imbalance of financial incentives and revenue streams" and believes such right exists under the state's law in the interest of creators and the public interest.