Flo & Eddie Hit a Florida Sinkhole

Unlike California and New York, the Florida sun doesn't shine on Flo & Eddie's claim of performance rights for pre-1972 sound recordings.

It probably seemed like a good idea at the time. Flo & Eddie were suing Sirius XM in California and New York, so why not do the same in Florida? What could possibly go wrong?

What could go wrong would be U.S. District Judge Darrin P. Gayles, who has declined to follow the Flo & Eddie-friendly lead of courts in Cali and the Big Apple. Instead, Judge Gayles summarily tossed their suit, ruling that Florida does not provide pre-1972 recordings the exclusive public performance rights that his brethren in New York and California had found.

(If you're not familiar with the issue of pre-1972 recording performance rights, then you haven't been reading our blog enough. We've covered in some detail the bevy of lawsuits filed by Flo & Eddie and various record labels - and newcomer Zenbu magazines - against Sirius XM and Pandora. To date, the plaintiffs have won in federal courts in California (Flo & Eddie over Sirius XM) and New York (Flo & Eddie over Sirius XM). And in state court in California (record labels vs. Sirius XM), the parties recently wrapped the case up with a settlement putting 210 million of Sirius XM's dollars into the record labels' pockets.

The arguments in Florida were pretty much the same as those that had been successful elsewhere. Flo & Eddie alleged copyright infringement, unfair competition, conversion and civil theft, all based on claims that Sirius had infringed on their exclusive rights to public performance and reproduction of their pre-1972 sound recordings. (The reproduction claim was based on the fact that Sirius XM's operations involve the creation of backup and buffer copies of recordings it transmits.) In response, Sirius XM argued that there is no public performance right in the sound recordings and that the backup and buffer copies it makes don't violate any of Flo and Eddie's rights.

So how come Judge Gayles didn't join the pro-Flo and Eddie parade?

Judge Gayles agreed with the New York and California judges that, historically, federal copyright laws did not prevent individual states from guaranteeing copyright protections to sound recordings under common law. And when in 1971 Congress created any copyright for sound recordings made after February 15, 1972, it didn't prevent the states from regulating such copyright interests - via statute or common law - in recordings made before that date. (While pre-1972 recordings will come within the protection of the federal Copyright Act as of February 15, 2047, until then the states are free to act.)

But, as Judge Gayles was quick to observe, Florida is different from New York and California. In particular, the Florida code does not create a public performance right in sound recordings and does not prevent the creation of the type of backup or buffer copies at issue here. Thus, unlike Judges Gutierrez and Strobel in California, he had no state statute to interpret. Judge McMahon in New York didn't either, but he at least did have several New York state law cases that touched on the question.

Judge Gayles wasn't surprised by the fact that New York and California law addressed such copyright issues. In fact, he said, it makes sense, because California and New York are "creative centers of the Nation's art world".

In arguing its position, Flo & Eddie could point only to New York common law and one district court case arising out of the Middle District of Florida - which also relied extensively on New York law. According to Flo & Eddie, this wasn't a problem because Florida defines the concept of property broadly, so (at least in their view) Florida copyright law has got to include an exclusive right of public performance.

But Judge Gayles declined to join Flo & Eddie in that logical leap. As he sees it, by endorsing the notion of such an exclusive right, he would be creating an unqualified property right that didn't exist previously and that even owners of post-1972 recordings don't have. Under that new right, Flo & Eddie would control every aspect of their pre-1972 sound recordings, a broader entitlement than owners of post-1972 recordings have.

And then there are the additional practical issues that would have to be addressed if Gayles were, in effect, to create a right that didn't exist previously. For instance: (1) who would set and administers royalty rates at the state level; (2) who would determine the owner of a sound recording when the recording artist dies or the record company goes out of business; and (3) what, if any, exceptions exist to the public performance right?

Faced with all these questions, Judge Gayles was particularly sensitive to the fact that he is a Federal, not a state, judge:

[I]t is not the Court's place to expand Florida law by creating new causes of action. Federal courts are entrusted to apply state law, not make it".The Court finds that the issue of whether copyright protection for pre-1972 sound recordings should include the exclusive right to public performance is for the Florida legislature

Bottom line: Since neither the Florida legislature nor the Florida judiciary had thus far established the public performance right that Flo & Eddie were asserting, that right simply didn't exist in Florida.

Judge Gayles also ruled against Flo & Eddie on the reproduction issue, finding that buffer and back-up copies aren't unlawful reproductions mainly because they aren't accessible to public, they're discarded after use, and they don't even constitute complete copies of the recordings.

So what's the impact?

While this may be an outlier case - as noted, unlike in the California and New York cases, Judge Gayles found no Florida statutes or case law to rely on - it's still got to give (a) Sirius XM (and, presumably, Pandora) some hope and (b) Flo & Eddie some cause for concern. After all, maybe it's California and New York who are the outlier states here - being the nation's "creative centers" and all (at least according to Gayles) - and Florida is closer to the norm. At a minimum, this case establishes that not all states are like California and New York, so Flo & Eddie shouldn't necessarily expect that their successes in those states will be duplicated everywhere else: when it comes to picking the venue for Flo & Eddie's next appearance, their counsel will presumably be paying close attention to the availability of relevant statutes and case law. And it's also possible that any uncertainty that Judge Gayle's decision may have injected into the overall mix of litigation considerations may cause the parties to be more open to settlement. (As we have reported, just a few days before Gayle's decision was issued, Sirius XM settled with the record labels in their California suit, thereby demonstrating that settlement is possible.)

Meanwhile, one of the California cases and the New York case are currently on appeal. While it's doubtful a ruling rooted in Florida law will have much impact there, you never know. Check back here for updates.