Will New York State Go With (the) Flo (& Eddie)?

More of a Grass Roots fan.

More of a Grass Roots fan.

Every once in a great while comes along an intellectual property law decision so significant that blawgers fall over themselves and each other in the scramble to write something pithy about it. The April 13, 2016, decision from the Second Circuit in Flo & Eddie, Inc. v. Sirius XM Radio, Inc. is not such a case. Rather, it is a decision worth writing about because of the handful of opportunities it presents to make puns involving song titles and lyrics.

That’s not to say that the decision isn’t important on its own merits. Indeed, as the brief opinion begins, “This case presents a significant and unresolved issue of New York copyright law.” On the other hand, the issue is not resolved by the decision. Because it is that important! You’ll see.

The plaintiff-appellee is a California corporation that “asserts that it owns the recordings of ‘The Turtles,’ a well-known rock band with a string of hits in the 1960s.” The California corporation is “controlled by two of the band’s founding members, [and] acquired the rights to The Turtles’ recordings in 1971 and continues to market the recordings in a variety of ways, including by licensing the rights….” Let’s unpack this before we go any further.

Flo & Eddie, Inc. has two principals, two humans named Mark Volman (a/k/a “Flo”) and Howard Kaylan (a/k/a “Eddie’). These two were the founding members of the band the Turtles. (As with most, or all, bands, some capitalize The, while others do not. In any event neither Mr. Volman nor Mr. Kaylan has ever asserted that the name of the band was simply “Turtles,” like that other band named for an animal, albeit a much more aggressive/majestic one. So, you know, take it easy.) After the Turtles dissolved, contractual restrictions prevented the comedic musical duo from using the name “the Turtles”—or their own real names—in a musical context, so Volman and Kaylan continued to perform–including performing Turtles songs—as “Flo & Eddie.” And, it would seem, at some point they also formed a corporation in California. As one does.

Defendant-Appellant is the “largest radio and internet-radio broadcaster in the United States, with a subscriber base of more than 25 million individuals. [Sirius XM] broadcasts music directly to its own subscribers as well as through third parties. These broadcasts include sound recordings created before February 15, 1972. Among them are recordings allegedly belonging to Appellee.” And, of course, the reason for the lawsuit is that Sirius XM has not paid Flo & Eddie for the use of the pre-1972 recordings, and Flo & Eddie has not given Sirius XM license to use them. In other words, the parties are not so happy together.

In May of 2014, in the suit in the United States District Court for the Southern District of New York brought by Flo & Eddie on behalf of itself and all others similarly situated, Sirius XM moved for summary judgment on two grounds: (1) that there is no public-performance right in pre-1972 recordings under New York copyright law, and (2) that its internal reproductions of the recordings at issue (e.g., “library, buffer and cache copies” used to facilitate its digital broadcasts) were permissible fair use. Sirius XM also argued that “a state-law public performance right, if recognized, would be barred by the dormant Commerce Clause.” In November of 2014, the District Court denied the motion, finding (1) that “New York does afford a common-law right of public performance to copyright holders,” and (2) that Sirius XM’s “internal reproductions were [therefore] not fair use.” Moreover, the District Court found that “the recognition of a performance right did not implicate the dormant Commerce Clause because such a right was not a ‘regulation’ of commerce” under the relevant, controlling 1876 decision of the Supreme Court of the United States.

Now it gets interesting! No, wait. The opposite of that: Sirius XM—with new counsel!—moved the District Court to reconsider its decision or, in the alternative, for certification of its summary judgment order for interlocutory appeal. The District Court denied the motion for reconsideration (no surprise there) but certified its summary judgment order (and its reconsideration order as well!) for interlocutory appeal. (You can’t make this stuff up!) And then, Sirius XM petitioned the Second Circuit to permit the interlocutory appeal… which it did! If you want to catch your breath before reading further, I’ll certainly understand.

Ready to continue? Ok, good. Because now things do get (more) interesting. For, you see, in 1971 Congress amended the then-in-effect Copyright Act “to grant limited copyright protection to sound recordings fixed on or after February 15, 1972” (which is why this date was mentioned above) “while expressly reserving state-law property rights in sound recordings fixed before that date.” Later, Congress created an exclusive performance right in post-1972 sound recordings performed by digital audio transmission. “Because [Flo & Eddie’s] recordings were fixed before February 15, 1972,” the Second Circuit explained, “they are protected, if at all, by state copyright law. While New York provides no statutory protection to owners of pre-1972 sound recordings, New York common law does provide certain rights to copyright holders in these recordings.”

“As a result,” wrote the Second Circuit, “the issue before us is whether New York common law affords copyright holders the right to control the performance of sound recordings as part of their copyright ownership.”

Terrific! That’s a juicy issue, indeed. So let’s all move forward a bit, to the edges of our seats…

“The New York Court of Appeals has not ruled on whether such a right exists,” the Second Circuit noted, and at this point, at the very top of page 7 of the 12-page decision—the exact halfway point—it begins to dawn on one that he can move back from the edge of his seat.

Flo & Eddie argued that New York common law affords it a right of public performance, which Sirius XM violated when it broadcast the corporation’s songs without a license! Sirius XM argued that no such right exists! The District Court sided with Flo & Eddie, concluding that “general principles of common law copyright dictate that public performance rights in pre-1972 recordings do exist.” But that’s not all the District Court had to say about that.

The District Court, “in so holding… noted the uncertain state of New York law and expressed its regret at not being permitted to certify the question to the New York courts.” Indeed, the District Court judge expressly commented in his decision that he was not applying the law as he thought it should be, but as he predicted how the New York Court of Appeals would resolve the question. “Unlike the Second Circuit, I do not have the option to certify even profoundly uncertain issues of state law to the Court of Appeals,” he wrote. One might imagine, then, that even while the District Court judge was trying to rule in the wisest way possible, within the scope of his judicial powers, he was also hoping that his decision would be appealed to a court that could in turn certify the issue to the New York Court of Appeals.

And that’s just what the Second Circuit did, of course.

With no clear guidance from the New York Court of Appeals, we are in doubt as to whether New York common law affords [Flo & Eddie] a right to prohibit [Sirius XM] from broadcasting the sound recordings in question. ***

Certification is clearly appropriate in the case before us.

But what, you might ask, of the “dormant Commerce Clause” issue? Well, the Second Circuit has an answer for that: “The question of whether [any law that would grant a public performance right to copyright holders would violate the dormant Commerce Clause] is not something we can adjudicate without knowing what, if any, limitations New York places on such rights, if they do exist.” In other words, this case is going to the top New York court and there’s nothing anyone can say or do to stop it!

Unless, of course, the New York Court of Appeals declines certification of the matter, which it can do.