On Dec. 20, 2016, the New York Court of Appeals issued its decision in Flo & Eddie Inc. v. Sirius XM Radio Inc.,[1] holding, by a 4-2 vote, that New York law does not recognize a public performance right in sound recordings fixed before Feb. 15, 1972. Flo & Eddie dealt a setback to recording artists and record companies seeking royalty payments from digital music services that perform their sound recordings over the internet. However, the full impact of the court’s decision remains to be seen.
The Legal Framework for Pre-1972 Recordings
Copyright in original works of authorship is governed almost exclusively by federal law. The Copyright Act of 1976 sets forth a number of exclusive rights for owners of copyrightable works, including in most cases the right to reproduce, distribute, make derivative works of, publicly perform and publicly display those works.[2] But for sound recordings — the recorded performance of a series of musical, spoken, or other sounds — those exclusive rights are more limited. Most notably, sound recordings do not enjoy a general right of public performance under the Copyright Act.[3] In 1995, with the advancement of computer technology, Congress enacted the Digital Performance Right in Sound Recordings Act, adding to the copyright statute an exclusive right to perform sound recordings, but only “by means of a digital audio transmission.” [4] This addition was saddled with a number of exemptions, qualifications, limited compulsory licenses, and statutorily-mandated royalty rates, set by a governmental body and collected by what is essentially a royalty clearinghouse for distribution to relevant stakeholders.[5]