SiriusXM Dealt New Blow in RIAA's Lawsuit Over Older Music

Rolling Stones Hyde Park - H - 2013
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It's getting worse for SiriusXM in the ongoing strife over pre-1972 music.

Last month, a California judge granted summary judgment to Flo & Eddie of The Turtles who alleged that the satellite radio giant was misappropriating their songs without authorization and compensation. The judge decided that ownership of sound recordings authored before 1972 — before federal copyright law began covering recorded music — included the exclusive right to publicly perform the recording.

The decision has now swayed another judge who was presiding over a similar case brought by Capitol Records and other record industry giants.

In August, Los Angeles Superior Court Judge Mary Strobel expressed her inclination to reject proposed jury instructions offered by the record companies, but on Tuesday, she had a change of heart by granting what the record companies were seeking.

"Plaintiffs ask the court to take judicial notice of the order granting summary judgment in Flo & Eddie Inc. v. Siruis XM Radio, Inc," she writes. "While a federal trial court opinion is not binding on this court, the court finds the logic applied in that order interpreting Civil Code §980 to be persuasive."

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Civil Code §980 refers to a California statute passed in 1982 that was directed at pre-1972 sound recordings. Although it's silent on public performance rights, the fact that it didn't constrain exclusive ownership has been ruled to be important. Judge Strobel says she doesn't find "exclusive ownership" rights in pre-1972 recordings to be unambiguous, but nevertheless comes around to the view that it must include performance rights because there was an exception in the statute for recording "cover" songs. In one of the most important passages, she writes:

"As the district court found significant, this court finds significant that the California legislature specifically adopted one exception to exclusive ownership for recording 'covers'  found in federal copyright law, 'nearly word-for-word' but did not specifically adopt the other exception found in that law for public performance rights. Thus this court concludes that the legislature intended the only limitation on ownership rights of pre-1972 recordings to be the 'cover' exception. The court concludes that the exclusive ownership right in pre-1972 recordings includes a public performance right, as not specifically excluded."

The judge goes onto find some case law supporting plaintiffs' position while noting that there's none that cuts the other way. This is despite SiriusXM's argument that decades of use by music users such as bars, restaurants, TV broadcasters and terrestrial radio have assumed their right to publicly perform pre-72 music.

The judge seems to come to this opinion rather reluctantly.

She writes that it is "possible, as Sirius XM contends, that its public performances do not deter sales of Plaintiffs' recordings, and might actually encourage sales to listeners hearing the recordings for the first time. To claim that pre- 1972 sound recordings were protected by common law misappropriation concepts at the time Section 980 was adopted, without any case so holding, begs the question."

And she puts in another shot.

"To read Civil Code §980 to permit record companies to profit from performances of sound recordings when they did not expect such payments at the time they created or obtained the rights to the sound recordings also contravenes public policies in favor of fairness," she further writes. "However, it is not necessary for the court to reach the public policy issue, in light of the court's interpretation of Civil Code §980."

Read more Record Labels Seek to Punish SiriusXM Over Pre-1972 Music

The decision nonetheless underscores that SiriusXM — and perhaps others who publicly perform music in California — are in serious legal trouble.

The case made by The Turtles is asking for $100 million in damages based on some assessment of royalties that should have been paid to a proposed class of plaintiffs. To get anywhere close to a nine-figure damages award, the plaintiffs still have class certification and damage assessment hurdles ahead.

The lawsuit spearheaded by the RIAA on the other hand could have less difficulty some of these issues as the plaintiffs control some of the most iconic recordings in rock music history made by artists like the Beatles, the Rolling Stones, Led Zeppelin, The Supremes and Bob Dylan. On the other hand, this case isn't over either. The plaintiffs here haven't even officially won on the issue of whether SiriusXM is liable. The plaintiffs fast-forwarded to the jury instructions, but SiriusXM still might have affirmative defenses to assert. Plus, Sirius could appeal as it has already indicated it will do in the Turtles case.

UPDATE: RIAA CEO Cary Sherman released this statement about the ruling:

"Two courts have now handed down landmark decisions which confirm what should be obvious – the pioneers of rock and roll and every other genre before 1972 deserve to be compensated when their music is used by companies like SiriusXM.  It’s increasingly clear that SiriusXM, Pandora and other digital music firms who refuse to pay legacy artists and rights holders are on the wrong side of history and the law.  It’s time for that to change.”

Twitter: @eriqgardner