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A lawsuit with the potential to shake up commonly held assumptions about the broadcasting of older music will be staying in California.
As we’ve covered, SiriusXM is facing a $100 million class-action lawsuit in California for distributing and performing songs created before 1972, when sound recordings began falling under federal copyright protection. SiriusXM is also facing a second class-action lawsuit in New York and a third class action in Florida. Then, there’s a fourth lawsuit brought by major record labels against the satcaster over pre-1972 music. If that wasn’t enough, it’s also facing a fifth lawsuit from SoundExchange, the digital performance rights organization that collects royalties on behalf of sound recording copyright owners.
In response to the first California lawsuit led by members of The Turtles, Sirius argued that the plaintiffs were playing “lawsuit lottery” and sought to have the case transferred to New York and perhaps consolidated.
On Tuesday, U.S. District Judge Philip Gutierrez denied Sirius’ motion and spoke about the huge stakes involved.
The cases against Sirius are premised on the bold notion that Sirius can’t rely on statutory royalty rates set up by federal law for pre-1972 songs. The plaintiffs are making the argument that copyright holders on these older tunes maintain control over their public performance rights. But if that’s true, why stop at Sirius? Perhaps television and radio broadcasters, restaurant and bar owners, website operators and others also lack valid licenses to perform pre-1972 music.
Sirius has hinted it will be making some sort of laches defense based on “decades of inaction” as well as attacking the proposition that state misappropriation claims (or common law copyrights) cover performance in addition to the physical or digital distribution of sound recordings.
But first things first: Will Sirius face the risk of different judges in different states reaching different conclusions? It might only take one judge to potentially change the game for Sirius on pre-1972 songs, which is estimated to comprise 10 to 15 percent of the music delivered to subscribers.
“SiriusXM argues that Plaintiff is playing the ‘lawsuit lottery’ by filing three essentially identical suits, hoping that at least one court will adopt its allegedly novel view of the law,” writes Judge Gutierrez is his ruling. “If Plaintiff’s suits were materially identical, such an effort would smack of forum shopping, and give rise to an unfair risk that the courts would reach inconsistent judgments. However, SiriusXM has not met its burden of showing that Plaintiff’s three suits are materially identical or that the relevant laws are so closely related that it would be unjust for this Court and the courts hearing the New York and Florida actions to decide issues differently. Rather, it seems at this point that although the three suits share a common factual core, they are legally distinct and will turn on the separate interpretations of California, New York, and Florida law, respectively.”
In short, the California judge wants the opportunity to give his own opinion. In the ruling on Sirius’ motion, he points to some factors that would favor transferring the case — among them, East Coast-based witnesses from the Recording Industry Association of America, SoundExchange and the American Association of Independent Music will have to give testimony — but says that this is outweighed by the nature of what is happening.
“The parties’ arguments suggest that this case will principally turn on a legal dispute over a matter of first impression in California law, which could have far-reaching effects,” writes the judge. “Accordingly, California’s interest in having such an issue decided in a California court carries considerable weight.”
The plaintiffs are being represented by Henry Gradstein and other attorneys at Gradstein & Marzano. SiriusXM has three law firms working on the defense, including Fred Puglisi at Sheppard Mullin, Bruce Rich at Weil Gotshal & Manges and Michael Oberman at Kramer Levin.
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