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“Happy Together” – The Ninth Circuit Plays the Golden Oldies of Copyright Law

“Happy Together” – The Ninth Circuit Plays the Golden Oldies of Copyright Law

Calling it a “ball of confusion,” the Ninth Circuit recently considered a case involving the music of the Turtles, SiriusXM Satellite Radio, and whether royalties are owed under California copyright law for music dating prior to 1972. In doing so, the Ninth Circuit reviewed nearly 200 years of copyright law to reach its conclusion.

In a lawsuit that was originally filed in 2013 titled, Flo & Eddie, Inc. v. Sirius XM Radio, Inc., the Ninth Circuit confronted the issue of “whether digital and satellite radio stations have a duty to pay public performance royalties for pre-1972 songs under [California] copyright law.” The crux of the case turned on the meaning of the phrase, “exclusive ownership,” which the California legislature used in California’s copyright statute in 1872.

Flo & Eddie was formed in 1971 by two founding members of the Turtles “to control the rights to the band’s songs, including their iconic anthem, `Happy Together.’” While Flo & Eddie receive substantial royalties from when Turtle songs are played in movies or in TV shows, it does not receive any royalties for when their songs are played on AM/FM radio given that federal law does not give sound recording owners any right to receive such royalties.  It was not until 2013 that Flo & Eddie first demanded SiriusXM to pay it royalties for playing Turtle songs from before 1972 on its satellite radio stations. After SiriusXM declined to pay such royalties, Flo & Eddie filed a lawsuit alleging that SiriusXM had played the Turtle’s pre-1972 songs without permission and thus violated California copyright law.  Flo & Eddie contended that California Civil Code section 980, which uses the term “exclusive ownership,” meant that Flo & Eddie were entitled to compensation whenever their copyrighted recordings were publicly performed, such as on satellite radio. They filed similar suits in Florida and New York contending that those states’ copyright laws required a similar result.

After approximately one year of litigation, the federal district court in California granted partial summary judgment to Flo & Eddie finding that section 980 did provide sound recording owners with the right of public performance and thus entitled them to royalties. The parties settled before trial and SiriusXM agreed to pay for past performances of pre-1972 recordings in exchange for a license to use those recordings until 2028. The settlement, however, did not end the case because the amount of money owned for the playing of that music was apparently based on a formula depending on how the appeals of the New York, Florida and California lawsuits turned out. In essence, if Flo & Eddie prevailed in any of the three appeals, they would be entitled to an additional $5 million under the settlement agreement. As the appeal to the Ninth Circuit was pending, SiriusXM won its appeals arising out of the New York and Florida lawsuits, which the Ninth Circuit recognized to mean that “Flo & Eddie has nowhere to run but to the Ninth Circuit.” (Adding a further twist, Congress in 2018 enacted the Music Modernization Act, which extended federal copyright protection “prospective[ly] for the digital playing of pre-1972 recordings.”)

Before turning to its statutory interpretation of California Civil Code section 980, the Ninth Circuit began by reviewing nearly two centuries worth of copyright law development. It began by recognizing that the United States had “inherited the fundamental principles of copyright protection from England.” There, common law copyright had vested “a perpetual monopoly over the initial publication of the creative work and all later physical reproduction of it.”  But it wasn’t until 1834 that the British Parliament extended copyright protections “to include a novel protection for dramatic works and exclusive performance right.”

At about the same time, the U.S. Supreme Court “first recognized state common law copyright protection for pre-publication manuscripts.” The U.S. Supreme Court, however, declined “to extend common law copyright protections to published works; in fact, it held that publication divested the work of its copyright.”  Approximately 20 years later, Congress adopted the British Parliament’s “public performance right for published dramatic works,” which it later incorporated into the Copyright Act it passed in 1870.  In 1872, California enacted its first copyright statute that provided copyright protection only for unpublished materials.  It was in the 1872 statute that the California legislature first used the language “exclusive ownership” and, but for some amendments to the California copyright statute in section 980, remained in effect for the last 150 years.

In 1908, the U.S. Supreme Court held that the federal copyright act did not extend copyright protections to sound recordings. California, on the other hand, continued “to provide a perpetual monopoly for unpublished sound recordings.”  Thus, as of the early 1900s, “federal law provided limited protection for published works while [California] law offered robust protections but only for unpublished materials.”

During the next 70 years, performers, music labels and their lobbyists expended substantial effort trying to extend copyright protection and eventually succeeded. In 1971, the U.S. Congress “finally prohibited `unauthorized duplication and piracy of sound recordings’.” Five years later, it enacted a new federal copyright act that “abrogated the distinction between published and unpublished works so that parties no longer had to walk the line between state and federal copyright protection.” But once again, there was a catch. This new law “did not apply to sound recordings `fixed’ on or before February 14, 1972.” It also “explicitly rejected a public performance right for sound recordings.”

The Ninth Circuit recognized that there were a few more tweaks to federal and state copyright law over the last four decades. In 1982, California amended its copyright law to remove the distinction between pre- and post-publication but continued to use the term “exclusive ownership.” Thirteen years later in 1995, the U.S. Congress enacted the Digital Performance Right and Sound Recordings Act that “recognized a limited performance right for the digital audio transmission of post-1972 recordings requiring the copyright holders to license their music under a federalized pricing scheme.”  However, once again, digital music providers like SiriusXM did not have to pay public performance royalties for pre-1972 music under the federal copyright law.

Thus, the issue facing the Ninth Circuit was whether the district court properly interpreted the term “exclusive ownership” in determining that Flo & Eddie should be entitled to royalties for when SiriusXM played their music, despite the music being created prior to 1972. The Ninth Circuit began by looking at the text of section 980.

It noted that the district court had used various dictionary definitions of the words “exclusive” and “ownership” to come to a broad definition that meant “a copyrighted song must include the right of public performance.” The Ninth Circuit, however, disagreed with this approach and stated that while dictionaries can sometimes help interpret legislative terms, often times these phrases have a more specialized “term of art” meaning and thus should not “be stripped away from its historical context or subject matter area.” The Ninth Circuit reasoned that it was appropriate to look at the meaning of “exclusive ownership” as of the time it was first adopted in 1872.  It noted that the California legislature did not use this term on a “blank slate,” but rather, had looked to common law emanating from England.  It noted that no English or U.S. court had interpreted copyright protection to extend to the “public performance” and that this silence should have some legal effect.  Thus, when the California legislature first used the term “exclusive ownership” in 1872, it “almost certainly did not include a right of public performance.” Rather, the Ninth Circuit conclude that “exclusive ownership” meant only that the owner of a common law copyright in an unpublished work had the right to reproduce and sell copies of that work.

The Ninth Circuit found that its conclusion that there was no right of public performance became stronger when one looked at the development of New York’s copyright law upon which California’s section 980 was based. Courts interpreting New York’s law had limited the understanding of “exclusive ownership” and “did not recognize a copyright holder’s right to control post-sale public performance of a sound recording.”

Finally, the Ninth Circuit looked at the differences between California and its common law (which provided a perpetual copyright for unpublished works) with that of the federal statutory copyright framework (which provided some copyright protection for published works).

Flo & Eddie urged the court to focus on the modern 1982 version of section 980 in attempting to resolve its dispute but the Ninth Circuit stated that it would not change the result since the term “exclusive ownership” had remained unchanged for almost a century and a half.  The Ninth Circuit concluded that it did not believe the “California legislature retained the same statutory language, yet altered the original meaning of `exclusive ownership’ as it existed in 1872.”

Thus, the Ninth Circuit held that the district court had erred in recognizing a right to royalties for pre-1972 music under California’s copyright law and reversed the district court’s grant of summary judgment.

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