Yesterday's unanimous ruling from a three-judge panel at the 9th U.S. Circuit Court of Appeals saves Sirius from $5 million it would have owed if Flo & Eddie had won.
"We are gratified that this important issue has been finally and correctly resolved," Sirius' attorney, Daniel Petrocelli of O'Melveny & Myers, said over email.
Flo & Eddie's attorney, Kalpana Srinivasan of Susman Godfrey LLP, said over email that while "disappointed" in the result, "we are glad class members received the benefits of the $25 million cash settlement and several years’ worth of royalty payments during the pendency of the appeal through our agreement with Sirius XM."
The ruling is the latest to come from a series of royalties disputes between the parties, stemming from a complex web of state and federal laws governing radio providers and recent changes to those laws.
When an AM/FM radio station plays a song over the air, it does not have to pay public performance royalties to the owner of the original sound recording. On the other hand, digital and satellite radio providers including Sirius must pay public performance royalties whenever they broadcast post-1972 recordings -- but until Congress enacted the Music Modernization Act in 2018, they did not need to pony up royalties for playing pre-1972 recordings under federal law. What's unclear is whether providers like Sirius must pay to play pre-1972 recordings under state law.
"This patchwork quilt of federal and state copyright laws," U.S. Circuit Judge Kenneth Lee wrote in Monday's ruling, "led to a ball of confusion — and to this longstanding litigation."
Flo & Eddie first sued Sirius back in 2013, under California law, on behalf of a class of copyright owners whose music it argued Sirius played without permission or compensation. Flo & Eddie brought similar claims against Sirius in New York and Florida.
When the parties settled in 2016, Sirius agreed to pay the class at least $25 million in past royalties, plus $5 million for each Flo & Eddie win on appeal for the three cases. In 2017, the 11th Circuit affirmed Sirius' Florida win and the 2nd Circuit reversed Flo & Eddie's New York win, meaning that Sirius has now won appeals in all three cases.
In California, Flo & Eddie argued that Sirius was required to pay royalties because state copyright law gives the creators of pre-1972 recordings "exclusive ownership" of their music. A judge initially sided with Flo & Eddie, saying that the phrase covers public performance rights. But Sirius appealed the ruling, arguing that when the law was first used in 1872, "exclusive ownership" referred not to public performance rights but to the right to reproduce and sell copies of an unpublished work.
The 9th Circuit agreed, writing that at the time the law was first used, "no state had recognized a right of public performance for music, and California protected only unpublished works."