NEW YORK — SoundExchange, a U.S. performance rights organization, has expressed strong disapproval of a federal court’s recent decision that effectively blocks it from taking legal action against broadcasters. The organization labeled the ruling “entirely wrong on the law.”
In a decision delivered by Judge Naomi Reice Buchwald of the U.S. District Court for the Southern District of New York, the court dismissed SoundExchange’s $150 million lawsuit against SiriusXM. The judge ruled that Congress has not conferred the necessary legal authority to SoundExchange to pursue lawsuits on behalf of artists and record labels, which the organization asserts is essential to enforcing music licensing rights.
"The legislative history does not provide convincing evidence of Congress’s intention to give SoundExchange the kind of litigation authority that it and its supporters claim," Buchwald wrote in her opinion. She indicated that despite a long legislative backdrop, there is no clear reference empowering SoundExchange to litigate such disputes.
In its response, SoundExchange voiced concern that this ruling undermines congressional goals intended to streamline the music licensing landscape. The organization strongly believes that as the administrator of statutory licenses, it should have the ability to initiate lawsuits against violators.
The lawsuit itself centers on allegations that SiriusXM has manipulated its financial reporting to shortchange artists on satellite radio royalties. SoundExchange filed against SiriusXM in August 2023, seeking to recover what it claims are unpaid royalties and late fees owed under the Copyright Act, initially claiming over $150 million in withheld payments. Most recently, SoundExchange revised that figure to exceed $400 million.
Judge Buchwald’s decision analyzed Section 114 of the Copyright Act, which designates SoundExchange to gather and distribute digital performance royalties. However, she clarified that this section does not grant the organization authority to litigate on these matters.
Following the ruling, SoundExchange pointed out that the law’s specific mention of "enforcement" implies a necessity for the ability to take legal action against non-compliant licensees. The organization emphasized that failing to allow such enforcement contradicts Congress’s intent.
Significantly, the ruling has implications for pending lawsuits SoundExchange has against other streaming services. In June, it filed a lawsuit against Napster and Sonos for over $3.4 million in unpaid copyright royalties for the Sonos Radio streaming service.
Historic precedents also weigh on the situation. In prior cases, such as against Slacker, Inc. and LiveOne, courts have ruled in favor of SoundExchange, awarding millions in royalties owed to artists.
The ruling raises concerns that SoundExchange could face challenges in enforcing the rights of artists moving forward. Nevertheless, SoundExchange stated that it is reviewing its legal options, including the potential for an appeal or the possibility of filing actions in state courts to ensure recovery of owed digital performance royalties.
As the music industry navigates complex licensing landscapes, the ramifications of this ruling may resonate far beyond the immediate parties involved.
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