In SoundExchange v. SiriusXM, the court docket’s opinion reads much less like a impartial utility of regulation and extra like a result-oriented train in narrowing artist rights handy Sirius a Pyrrhic victory. To get there, the decide needed to look in all places however the statute — twisting Congress’s phrases, importing unrelated authorized doctrines, and ignoring the historic context of 17 USC §114 (the part of the Copyright Act that covers SoundExchange).
Keep in mind, this case grows out of a SoundExchange audit of Sirius that the corporate refused to settle, so SX sued. Platforms are notoriously obnoxious in terms of audits (aka royalty compliance examinations) which is why it’s so onerous to settle audits with them absent litigation. The litigation is simply a part of the audit, and if the decide now says that not solely does SX not have the proper to sue, however solely the copyright house owners can sue, the audits won’t ever settle. And if solely the copyright house owners can sue, who will implement the underpayment on behalf of the featured artists and unions who additionally take part. Realizing the animal spirits at Sirius, they are going to stiff the artists and unions totally with another half-baked litigation.
Congress didn’t intend for SoundExchange to be a passive royalty accountant. The Copyright Act is specific: SoundExchange could deduct prices for “the licensing and enforcement of rights with respect to the making of ephemeral recordings and performances… together with these incurred in taking part in negotiations or arbitration proceedings below part 112 and this part.” That’s enforcement in the actual sense — the safety of statutory rights, not mere bookkeeping.
But the court docket insists that “‘enforcement’ isn’t synonymous with litigation,” treating it as an alternative as a grab-bag of bureaucratic capabilities — audits, notices, license suspensions — whereas dismissing the apparent level that, in §114’s context, enforcement essentially contains litigation when rights are violated like when Sirius stiffs us on royalties that solely will get caught by an SX audit. That is the hallmark of an opinion with its vacation spot already chosen: redefine “enforcement” narrowly sufficient to exclude court docket motion, and Sirius wins.
The opinion additionally leans on a misapplied maxim that “the specific point out of arbitration is commonly interpreted as precluding litigation.” Recall that the code part at problem in 17 U.S.C. § 114 was handed in 1998. The primary webcasting charges had been set by the (final) Copyright Arbitration Royalty Panel (CARP) Webcasting Fee Continuing and later the Small Webcaster Settlement Act in 2002). The problem of who paid for the prices of the CARP was on everybody’s thoughts on the time.
In that historic context, “arbitration” within the 1998 statute was plainly about Congress’s rate-setting mechanism, not a contractual bar to court docket enforcement (significantly for the reason that Copyright Act and laws are silent on the procedures regarding an “arbitration” within the Federal Arbitration Act sense since we’re being all statutory and stuff). Treating it in any other case is traditionally baseless. Though the court docket appears fascinated with the Copyright Royalty Board as an excuse for SX to exist, she fails to say that the 1998 “arbitration” straw she’s greedy at pre-dated the CRB which wasn’t created till the Copyright Royalty and Distribution Reform Act of 2004 (Public Legislation No. 108-419 for these studying alongside at dwelling). So there’s that.
Having thrown artists and SX to the Sirius wolves, the decide claims that there’s nonetheless a treatment by referencing the final proper of copyright house owners to sue below Part 501 for copyright infringement. OK — so if that’s the world the court docket desires us to reside in, discover what meaning: the labor concerned — featured and nonfeatured artists — now wouldn’t have a proper to sue for underpayments (or any funds) below the Copyright Act. The court docket has successfully minimize off the rights of artists and their unions to sue for nonpayment of royalties.
Then comes the assault on SoundExchange’s standing as an “affiliation.” The court docket waves away the fact that each featured and nonfeatured artist on the earth whose royalties are collected by SX is, in substance, a member. Her reasoning — no “membership charges” — ignores that each working greenback at SX comes from artist and copyright proprietor royalties. To faux that this isn’t a membership construction is to shut one’s eyes to the apparent.
Congress’s intent was clear: In 1995/98 we pressured artists and copyright house owners to license in an effort to give a then-fledgling webcasting trade an enormous break. In return, Congress gave artists a collective enforcement mechanism, together with the flexibility to sue effectively. Now that these ungrateful welps have grown into huge company platforms, that litigation proper is extra essential than ever. That is significantly true on condition that Sirius and Pandora have devoted themselves to destroying any collective voice that artists may need by embarking on a program of direct licensing to make us weak bargaining companions.
So now what? I see at the least three classes of sophistication actions towards Sirius, if not an unfair labor follow case earlier than the NLRB, in addition to claims for unfair enterprise practices below state regulation introduced by artists of their dwelling states.
Ultimately, the Sirius ruling rewrites §114 into one thing Congress by no means handed: a regime the place SoundExchange could monitor the cash however not defend the folks it belongs to, and the place unions and artists lose their collective voice in court docket absent class actions. It’s a reward to Sirius/Pandora, an organization that has spent years deploying its litigation and lobbying muscle to weaken the very legal guidelines that defend the creators whose work it monetizes.
Labor ought to take notice — this choice stands Congress’s cut price on its head and is as anti-labor as a Pinkerton leg breaker.
This put up first appeared on ArtistRightsWatch.
