June 2014
Intellectual Property Today
Authored by Danny M. Awdeh and Brian R. Westley
Five major record labels are suing Pandora for copyright infringement, alleging the internet radio service has refused to obtain licences to play thousands of songs recorded before 1972—including iconic hits 'Hey Jude' by the Beatles, the Jackson 5's 'ABC', and 'Big Girls Don't Cry' by Frankie Valli & The Four Seasons. The record labels, which are seeking an injunction and unspecified damages, filed suit on 17 April, 2014 in New York state court.1 A similar lawsuit filed in September 2013 by the same record labels is pending against satellite radio provider Sirius XM in California Superior Court.2 The suits were brought in New York and California state courts because the federal Copyright Act does not protect sounds recordings made prior to 15 February, 1972, and the record labels instead must rely on state statutes and/or common law copyright protection.3 The lawsuits come as the U.S. Copyright Office urges that pre-1972 sound recordings be brought under the federal copyright statute to harmonise the law and provide greater clarity regarding these recordings to parties that, at least for now, must rely on a patchwork of state statutes and common law rights.4
Pandora is a popular digital music service provider that streams music to more than 250m users in various ways, including through its website and apps. Pandora offers its users numerous stations, including those dedicated to pre-1972 recordings such as "Motown," "Classic Rock," and "50s Rock 'n' Roll." Users can also create personalised stations based on their favourite artists, such as a "Beatles" station featuring recordings by that group and other recordings of similar music style, many of which were recorded before 1972. In a filing with the Federal Securities and Exchange Commission, Pandora has warned that if it is required to obtain licences for pre-1972 recordings, it may have to remove such recordings from its service. "[T]he time, effort, and cost of securing such licenses could be significant and could harm our business and operating results."5
Plaintiffs Capitol Records, Sony Music, UMG Recordings, Warner Music Group, and ABKCO Music and Records own thousands of pre-1972 recordings by such famed artists as The Rolling Stones, the Grateful Dead, and the Supremes. With the ongoing popularity of these recordings, the record labels "have invested an enormous amount of time, effort, money, and creative talent" to promote, sell, and license their pre-1972 recordings–including for use in mobile apps, commercials, movies, and television programmes, according to the complaint against Pandora.6 The record labels assert that payments received from authorised use of these recordings allows them to compensate the artists and recover their ongoing investment and expenses. "Pandora's refusal to pay plaintiffs for its use of those recordings is fundamentally unfair," the complaint states. "Pandora deprives plaintiffs and their artists of compensation, while profiting enormously from and gaining an unfair advantage over others who do pay to copy and publicly perform plaintiffs' Pre-72 Recordings."7
Federal protection for sound recordings has a complex history. The first federal copyright statute, the Copyright Act of 1790, referenced only the written word, providing protection from unauthorised printing only to the "authors of any map, chart, book or books." The Act was amended by Congress in 1831 to include "musical compositions." The subsequent development of technology for reproducing and disseminating copyrighted works such as the phonograph forced courts to confront whether the Copyright Act applied to technology beyond the written word.
In 1908, the Supreme Court in White-Smith Music Publishing Co v Apollo Co considered whether the federal Copyright Act encompassed perforated rolls of music for pianos.8 The court ruled that protection for musical compositions did not extend to music rolls (and, by implication, sound recordings), determining that only written works that others could "see and read" met the requirements for federal copyright protection.9 Shortly after White-Smith Music was decided, Congress passed the Copyright Act of 1909. Although the 1909 Act did not expressly extend copyright protection to audio musical works, Congress made clear that, "nothing in this Act shall be construed to annul or limit the right of the author or proprietor of an unpublished work, at common law or in equity, to prevent the copying, publication, or use of such unpublished work without his consent."10 As a result, owners of sound recordings could rely on state law to protect their proprietary rights. But protections varied, with some states relying on criminal anti-piracy laws and others on various legal theories such as unfair competition, misappropriation, and common law copyright.11 "In short," the Copyright Office later explained, "the protections that state law provides for pre-1972 sound recordings are inconsistent and sometimes vague and difficult to discern."12
In the decades that followed, music piracy became an increasing problem for the music industry. In response, Congress adopted the Sound Recording Amendment of 1971, which protected sound recordings fixed on or after 15 February, 1972.13 Shortly thereafter, the Supreme Court in Goldstein v California held that under the 1909 Act there was no federal pre-emption of state law protection for pre-1972 sound recordings.14 Congress opted to maintain this two-tiered system for protecting sound recordings when it overhauled the Copyright Act in 1976. Specifically, while Section 301 of the 1976 Act preempts all state laws pertaining to rights within the general scope of copyright, subsection (c) carves out an important exemption:
(c) With respect to sound recordings fixed before February 15, 1972, any rights or remedies under the common law or statutes of any State shall not be annulled or limited by this title until February 15, 2067. The preemptive provisions of subsection (a) shall apply to any such rights and remedies pertaining to any cause of action arising from undertakings commenced on and after February 15, 2067. Notwithstanding the provisions of section 303, no sound recording fixed before February 15, 1972, shall be subject to copyright under this title before, on, or after February 15, 2067.15
In a December 2011 report, the Copyright Office stated that, "Congress did not articulate grounds for leaving pre-1972 sound recordings outside the federal scheme and there is very little information as to why it did so."16 In its report, the Copyright Office recommended that pre-1972 sound recordings receive the same protections as post-1972 recordings, asserting this would bring more certainty to the law and more opportunity to preserve and make pre-1972 recordings available to the public.17 The law, however, remains unchanged.
In choosing to file suit in New York, the record labels selected a jurisdiction that has been willing to extend common law copyright protections to pre-1972 recordings. In a significant case involving these recordings, New York's highest court held in 2005 that record labels can prevent others from releasing pre-1972 recordings without permission.18 Capitol Records, Inc v Naxos of America, Inc involved a dispute between Capitol Records, which owned the rights to several classical recordings from the 1930s, and Naxos of America, which, without permission, copied the recordings from their original format and remastered them for sale to the public as CDs. Capitol Records filed suit against Naxos in U.S. District Court for the Southern District of New York in 2002, alleging claims of common law copyright infringement, unfair competition, misappropriation, and unjust enrichment under New York state law. Naxos moved to dismiss, arguing that the recordings had entered the public domain in the United Kingdom and, consequently, in the U.S. as well. The District Court granted summary judgment to Naxos, but on appeal the Second Circuit determined that under federal copyright law, "it is entirely up to New York to determine the scope of its common law copyright with respect to pre-1972 sound recordings."19 The New York Court of Appeals determined that the musical recordings at issue were, in fact, protectable. "Until 2067, no federal or state statutory impediment constricts this common-law durational component for pre-1972 sound recordings."20
More recently, in April 2014, the Supreme Court of New York County held that a restaurant owner's conduct constituted copyright infringement under New York common law.21 Capitol Records, which owns rights to a 1970 recording of the song "The Rumor" by The Band, filed suit against the owner of a Manhattan restaurant that began playing the song on its website without obtaining a licence.22 Capitol Records filed suit for common law copyright infringement. The court granted summary judgment for Capitol Records on copyright infringement, stating that it was undisputed that the recording was uploaded to the website without a licence and that New York common law clearly governed because the song was recorded in 1970.
Given these earlier decisions, the record labels may find New York courts receptive to their common law copyright claims against Pandora. Much is at stake: if successful, the record labels could potentially recover considerable damages from the satellite and digital music services.
Endnotes
1 Complaint, Capitol Records v Pandora Media, Inc, No 6511952014 (NY Sup Ct filed 17 April, 2014).
2 Complaint, Capitol Records LLC v SiriusXM Radio, No BC520981 (Cal Super Ct filed 11 September, 2013).
3 In the New York case, the record labels are asserting common law claims, while in the California case, the record labels have asserted both common law claims and a violation of California Civil Code Section 980(a)(2), which provides: "The author of an original work of authorship consisting of a sound recording initially fixed prior to 15 February, 1972, has an exclusive ownership therein until 15 February, 2047 …." Both states also have laws making it a criminal offense to duplicate and distribute pre-1972 sound recordings. See CAL. PENAL CODE § 653h (West 2011) and NY Penal Law §§ 275.00-275.45 (McKinney 2011).
4 Register of Copyrights, Federal Protection for Pre-1972 Sound Recordings (2011), available at http://www.copyright.gov/docs/sound/pre-72-report.pdf.
5 Capitol Records v Pandora Media, Inc, at 3-4.
6 Id at 7-8.
7 Id at 3-4.
8 209 U.S. 1 (1908).
9 Id at 17.
10 Copyright Act of 1909, ch 320, § 2, 35 Stat 1075, 1076 (1909).
11 See Register of Copyrights, at 48; see also Eva E Subotnik & June M Besek, Constitutional Obstacles? Reconsidering Copyright Protection for Pre-1972 Sound Recordings, 37 Colum. JL & Arts 327, 378 (2014).
12 See Register of Copyrights, at 48.
13 Sound Recording Act of 1971, 85 Stat. 391 (1971), amended by Act of 31 Dec, 194, 88 Stat. 1873 (1974).
14 412 U.S. 546 (1973).
15 17 USC 301(c) (2006).
16 See Register of Copyrights, at viii.
17 Id at viii and ix.
18 See Capitol Records, Inc v Naxos of Am, Inc, 830 NE 2d 250, 263 (2005).
19 Id at 253.
20 Id at 265.
21 Capitol Records, LLC v Harrison Greenwich, LLC, 984 NYS 2d 274 (NY Sup Ct 2014)
22 Id at 275.
Originally printed in Intellectual Property Magazine (www.intellectualpropertymagazine.com). Reprinted with permission. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
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