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Howard Kaylan and Mark Volman, also known as Flo & Eddie, sued Pandora in 2014, claiming the site’s operation infringes on their rights in sound recordings like “Happy Together” by essentially paying for only one CD and broadcasting it to scores of its users for a profit.
In February 2015, U.S. District Judge Philip Gutierrez denied Pandora’s motion to dismiss the suit under California’s anti-SLAPP statute. Gutierrez found that “[a]lthough the conduct underlying the claims in this case constitutes ‘protected activity’ under the anti-SLAPP statute, Flo & Eddie has demonstrated that its claims are meritorious enough to withstand the anti-SLAPP motion.”
Pandora appealed. A two-judge panel of Circuit Judge Richard Paez and D.C. District Judge Paul Friedman heard arguments Thursday. The third circuit judge, Stephen Reinhardt, was unable to make it and will watch a video recording of the arguments later.
Sound recordings fixed prior to 1972 aren’t protected by federal copyright law, and Pandora’s attorney Gergory Garre argues that The Turtles’ lost state law protection for their hits in the 1960s when they “published” them by selling them to the public.
The California copyright law in effect at the time stated: “The author or proprietor of any composition in letters or art has an exclusive ownership in the representation or expression thereof as against all persons except one who originally and independently creates the same or a similar composition. … If the owner of a composition in letters or art publishes it the same may be used in any manner by any person, without responsibility to the owner insofar as the law of this State is concerned.”
Flo & Eddie attorney Henry Gradstein argues the second part of the statute was never intended to apply to sound recordings and, even if it was, selling records or playing them on the radio don’t constitute “publishing.”
Another point emphasized by Pandora is that rights holders of sound recordings have never been paid royalties by terrestrial radio stations; only the owners to rights in the underlying musical compositions are paid.
“What Pandora does is directly akin to traditional radio broadcasting,” argues Garre.
Gradstein argues that artists didn’t fight non-payment from radio because, at the time, radio play drove physical album sales and now the economic landscape is dramatically different.
“If you want to sell the sounds to 200 million users, you’ve got to get a license from us,” says Gradstein. “Playing records out loud for streaming or satellite or whatever is where the money is. That’s why Pandora paid $90 million to the record companies.” (He’s referencing Pandora’s eight-figure settlement with major record labels last year.)
Garre called Gradstein’s arguments “a radical re-conception” of how the world works. “This case implicates the very heart of the anti-SLAPP statute,” he says. “Pandora no longer plays Turtles songs because of this litigation.”
Both attorneys were asked if this case should be sent to the California Supreme Court. While Garre says it should, Gradstein says the underlying issue is ripe for the state’s high court but this case isn’t.
“The precise bare issue of whether or not there was an infringement as a result of the pure performance will extremely likely be before that court in a case where that is teed up correctly,” says Gradstein, alluding to the SiriusXM fight. “This is here on a SLAPP motion through the back door.”
It’s worth noting that Flo & Eddie’s settlement with Sirius didn’t stop that litigation. In fact, the amount paid is dependent on what happens in upcoming appeals in three states. If Sirius loses, it pays more in future royalties. If it wins all three cases, it won’t have to pay future royalties at all. At a minimum, Sirius will pay $25 million — an estimated $15.68 per play.
Source: The Hollywood Reporter