Flo & Eddie, Inc. v. Sirius XM Radio, Inc.

• Decision Date: 20 December 2016
• Citation: 28 N.Y.3d 583,48 N.Y.S.3d 269,70 N.E.3d 936
• Parties: FLO & EDDIE, INC., a California Corporation, Individually and on behalf of All Others Similarly Situated, Respondent, v. SIRIUS XM RADIO, INC., a Delaware Corporation, Appellant, et al., Defendants.
• Court: New York Court of Appeals Court of Appeals

28 N.Y.3d 583
70 N.E.3d 936
48 N.Y.S.3d 269

FLO & EDDIE, INC., a California Corporation, Individually and on behalf of All Others Similarly Situated, Respondent,
v.
SIRIUS XM RADIO, INC., a Delaware Corporation, Appellant, et al., Defendants.

Court of Appeals of New York.

Dec. 20, 2016.

48 N.Y.S.3d 269

O'Melveny & Myers LLP, Washington, D.C. (Jonathan D. Hacker, of the District of Columbia bar, admitted pro hac vice, of counsel), O'Melveny & Myers LLP, Los Angeles, California (Daniel M. Petrocelli, of the California bar, admitted pro hac vice, and Cassandra L. Seto, of the California bar, admitted pro hac vice, of counsel), and O'Melveny & Myers LLP, New York City (Anton Metlitsky of counsel), for appellant.

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Gibson, Dunn & Crutcher LLP, New York City (Caitlin J. Halligan, Ester Murdukhayeva and Kathryn M. Cherry of counsel), and Gradstein & Marzano, P.C., Los Angeles, California (Henry Gradstein, of the California bar, admitted pro hac vice, Maryann R. Marzano, of the California bar, admitted pro hac vice, and Daniel B. Lifschitz, of the California bar, admitted pro hac vice, of counsel), for respondent.

Mitchell L. Stoltz, Electronic Frontier Foundation, San Francisco, California, for Electronic Frontier Foundation, amicus curiae.

Jenner & Block LLP, Washington, D.C. (Kenneth L. Doroshow and Devi M. Rao of counsel), and George M. Borkowski, Recording Industry Association of America, Inc., Washington, D.C., for Recording Industry Association of America, Inc., amicus curiae.

Paul Hastings LLP, Washington, D.C. (Stephen B. Kinnaird of counsel), and Rick Kaplan and Suzanne Head, National Association of Broadcasters, Washington, D.C., for National Association of Broadcasters, amicus curiae.

Wilson, Elser, Moskowitz, Edelman & Dicker LLP, New York City (Adam R. Bialek, Stephen J. Barrett and Kerianne Losier of counsel), and David L. Donovan, New York State Broadcasters Association, Inc., Albany, for New York State Broadcasters Association, Inc., amicus curiae.

Hartman & Winnicki, P.C., Ridgewood, New Jersey (Daniel L. Schmutter of counsel), for Howard B. Abrams and others, amici curiae.

King & Spalding LLP, San Francisco, California (Joseph R. Wetzel and Ethan P. Davis of counsel), for Association for Recorded Sound Collections, amicus curiae.

Irell & Manella, LLP, Los Angeles, California (Robert M. Schwartz and Victor Jih of counsel), and Kelley Drye & Warren LLP, New York City (Michael Lynch and James Saylor of counsel), for CBS Radio, Inc., amicus curiae.

Weil, Gotshal & Manges LLP, New York City (Benjamin E. Marks, Gregory Silbert and Kami Lizarraga of counsel), Latham & Watkins LLP, San Francisco, California (James K. Lynch and Andrew M. Gass of counsel), and Latham & Watkins LLP, Washington, D.C. (Jonathan Y. Ellis of counsel), for Pandora Media, Inc. and others, amici curiae.

Raza Panjwani, Public Knowledge, Washington, D.C., for Public Knowledge, amicus curiae.

OPINION OF THE COURT

STEIN, J.

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70 N.E.3d 937

The Second Circuit Court of Appeals has certified the following question to this Court: "Is there a right of public performance for creators of sound recordings under New York law and, if so, what is the nature and scope of that right?" Because New York common-law copyright does not recognize a right of public performance for creators of sound recordings, we answer the certified question in the negative.

I.

Procedural History

Plaintiff is a corporation owned by two of the original members of the Turtles, a band formed in 1965 and most famous for its No. 1 hit song "Happy Together." Plaintiff controls the master recordings of approximately 100 Turtles songs that were recorded before 1972. Defendant is the nation's

28 N.Y.3d 590

largest satellite digital radio service. Defendant acknowledges that it broadcasts pre–1972 sound recordings, including Turtles songs, but does not have licenses with the performers or the sound recording copyright holders, nor does it pay them for broadcasts. Plaintiff commenced this federal putative class action,

70 N.E.3d 938

48 N.Y.S.3d 271

on behalf of recording artists of pre–1972 sound recordings—or the owners of their rights, who are mostly record companies—alleging common-law copyright infringement and unfair competition. Defendant moved for summary judgment dismissing the complaint.

The United States District Court for the Southern District of New York denied defendant's motion for summary judgment, finding, among other things, that New York affords a common-law right of public performance to protect copyright holders of pre–1972 sound recordings, and that defendant's conduct in making internal reproductions of plaintiff's recordings to facilitate its broadcasts did not constitute fair use (62 F.Supp.3d 325 [S.D.N.Y.2014] ). The District Court indicated that it intended to grant plaintiff summary judgment on liability. That court later denied defendant's motion for reconsideration (113 U.S.P.Q.2d 1303, 2014 WL 7178134, 2014 U.S. Dist. LEXIS 174907 [S.D.N.Y., Dec. 12, 2014, No. 13 Civ. 5784(CM) ] ), but certified an interlocutory appeal.

On defendant's appeal, the Second Circuit Court of Appeals determined that the case presented "a significant and unresolved issue of New York copyright law," and certified the foregoing question to this Court (821 F.3d 265, 267, 272 [2d Cir.2016] ).¹ This Court accepted the certified question (27 N.Y.3d 1015, 32 N.Y.S.3d 576, 52 N.E.3d 240 [2016] ).

II.

Federal Copyright Law

Although copyright evolved in English common law and was adapted into the common law in this country, it is now primarily governed by federal statutes. Congress enacted the first federal Copyright Act in 1790 (see Act of May 31, 1790 § 1 [1st Cong., 2d Sess., ch. 15], 1 U.S. Stat. 124, reprinted in Lib of Cong.,

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Copyright Enactments, 1783–1900 at 30–32); however, federal law did not protect musical works until 1831 (see Copyright Act of 1831 [21st Cong., 2d Sess., ch. 16], 4 U.S. Stat. 436). Despite a major revision of the Copyright Act in 1909, Congress did not consider audio musical works or recordings—as contrasted with the musical composition (sheet music)—to be within the scope of the act (see Capitol Records, Inc. v. Naxos of Am., Inc., 4 N.Y.3d 540, 552, 797 N.Y.S.2d 352, 830 N.E.2d 250 [2005] ). This is unsurprising, considering that sound recording was, at that time, a relatively new technology.² State common law applies to copyright only to the extent that federal statutes do not (see 17 U.S.C. § 301 [a]; Naxos, 4 N.Y.3d at 559, 797 N.Y.S.2d 352, 830 N.E.2d 250 ). Pursuant to federal statute, copyright protection encompasses original works of authorship fixed in any tangible medium of expression, including the categories of literary works, musical works, dramatic works and, as relevant here, sound recordings, subject to certain limitations (see 17 U.S.C. § 102 [a] ).

Sound recordings were a late addition to the federal statutes. They were first included in the Sound Recording Amendment of 1971, but the protection afforded by the amendment was limited to those recordings produced after February 15, 1972 (see Pub. L. 92–140, 85 U.S. Stat. 391

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70 N.E.3d 939

1971] ). The federal statutes then provided exclusive rights to the owner of a copyright to reproduce the work in copies or phonorecords, prepare derivative works, and distribute copies of the work to the public by sale or lease (see 17 U.S.C. § 106 [1]–[3]; Arista Records, LLC v. Launch Media, Inc., 578 F.3d 148, 152 [2d Cir.2009] [noting the right to reproduce " tangible" copies of sound recordings], cert. denied 559 U.S. 929, 130 S.Ct. 1290, 175 L.Ed.2d 1105 [2010] ). Although the statutes provided a right "to perform the copyrighted work publicly," that right applied only to literary, musical, dramatic, and choreographic works, motion pictures, pantomimes and other audiovisual works; Congress expressly stated that this performance right did not extend to sound recordings (see 17 U.S.C. §§ 106 [4]; 114[a] [providing that the exclusive rights of owners of sound recordings were limited and did not include any right of performance]; Arista Records, LLC, 578 F.3d at 152 ).

A summary of the historical background of the distinction between the law's treatment of composers versus performers was articulated in Bonneville Intl. Corp. v. Peters, as follows:

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