SoundExchange slams judge’s ruling in SiriusXM case as ‘entirely wrong on the law’ – Music Business Worldwide

SoundExchange, a US-based performance rights organization, has slammed a federal judge’s ruling that it lacks legal standing to pursue legal actions against broadcasters, calling the decision “entirely wrong on the law.”

Judge Naomi Reice Buchwald of the US District Court for the Southern District of New York dismissed SoundExchange‘s $150 million lawsuit against SiriusXM, ruling that Congress has never granted the PRO the authority to file lawsuits on behalf of recording artists and record labels.

Judge Buchwald wrote: “Even if we were to consider legislative history, we would find that it fails to offer persuasive evidence of Congress’s intent to empower SoundExchange with the type of litigation authority plaintiff and amici suggest.”

“Simply stated, the parties fail to cite any portion of legislative history — which spans over thirty years — containing a clear reference to an intent to empower SoundExchange with the authority to file lawsuits in furtherance of its delegated responsibilities,” Buchwald said in her opinion on Thursday (August 7), which you can read in full here.

In response, SoundExchange said in a statement issued to MBW: “SoundExchange firmly believes Judge Buchwald’s interpretation is entirely wrong on the law, as Congress created the provisions of the statutory license to promote efficiencies in the music licensing marketplace, including the enforcement of the statutory license by SoundExchange as the designated collective.”

“Even if we were to consider legislative history, we would find that it fails to offer persuasive evidence of Congress’s intent to empower SoundExchange with the type of litigation authority plaintiff and amici suggest.”

Naomi Reice Buchwald, US DIstrict Court Judge

SoundExchange added that the decision “undercuts that intent,” adding, “It is only natural that an entity charged with administering a statutory license be empowered with the ability to sue violators.”

The case centers on SoundExchange’s allegations that SiriusXM manipulated its revenue accounting to shortchange artists on satellite radio royalties. SoundExchange sued SiriusXM in August 2023 to recover what it claims are “substantial unpaid royalties and late fees owed under the Copyright Act” for the use of sound recordings on the satellite streaming service.

SoundExchange at the time said SiriusXM has “wrongfully withheld more than $150 million in unpaid royalties over the past several years”.

Most recently, SoundExchange claimed that the figure has since climbed above $400 million.

“SoundExchange firmly believes Judge Buchwald’s interpretation is entirely wrong on the law, as Congress created the provisions of the statutory license to promote efficiencies in the music licensing marketplace.”

SoundExchange

Judge Buchwald’s 33-page ruling focused on Section 114 of the Copyright Act, which designates SoundExchange as the authority that collects and distributes digital performance royalties. While the statute grants that power to SoundExchange, Judge Buchwald said: “Section 114 does not authorize SoundExchange to litigate royalty disputes.”

SoundExchange said: “Because lawmakers’ specific inclusion of the word “enforcement” in the statue, SoundExchange maintains that this role must include an ability to bring legal action against licensees that fail to meet their obligations under the law. Congress clearly did not intend for SoundExchange to be charged with collecting and distributing royalties without a way to hold services accountable when they either do not pay or underpay.”

“Despite this unfortunate and incorrect ruling, it is an established and long-accepted fact that SoundExchange has the right to sue negligent providers to compel compliance and payment of mandated royalty fees. In fact, SiriusXM has previously conceded this exact point when SoundExchange has brought claims against SiriusXM.”

Judge Buchwald noted in her ruling that unlike Section 114, Section 115 of the Copyright Act, which created The Mechanical Licensing Collective, “expressly confers litigation authority” to the MLC.

“Because lawmakers’ specific inclusion of the word “enforcement” in the statue, SoundExchange maintains that this role must include an ability to bring legal action against licensees that fail to meet their obligations under the law.”

SoundExchange

The judge wrote: “Specifically, Section 115’s MLC governs licensing and royalty distribution for ‘nondramatic musical works,’ but unlike SoundExchange in Section 114, Section 115 grants the MLC express ‘[l]egal enforcement’ authority to pursue a ‘Federal court action’ and ‘commence an action in an appropriate district court of the United States for damages and injunctive relief’ in the event a licensee fails to adhere to its reporting and payment obligations.”

Over the years, The MLC has lodged legal actions against streaming companies, most recently suing Spotify. In May 2024, The MLC sued Spotify in the US for allegedly underpaying royalties to songwriters and publishers. However, in January, Judge Analisa Torres of the US District Court for the Southern District of New York granted Spotify’s motion to dismiss the lawsuit “with prejudice”. In response, The MLC asked the court to reconsider the dismissal in February.

For SoundExchange, the ruling threatens a similar lawsuit against streaming services Napster and Sonos. In June, SoundExchange sued the services for over more than $3.4 million in unpaid copyright royalties tied to the Sonos Radio streaming service that operated from 2020 to 2023.

However, these aren’t the only lawsuits lodged by SoundExchange. In October 2022, the company secured a victory in its lawsuit against Slacker, Inc. and parent company LiveOne in the US over unpaid royalties owed to creators and rights owners. A court in California ordered Slacker and LiveOne to pay $9.7 million in unpaid royalties due to performers and rights owners represented by SoundExchange.

In April 2019, SoundExchange filed a lawsuit against US TV music service Music Choice for underpaying royalties. That case was referred to the Copyright Royalties Board in December 2021, rather than it being heard in Federal court.

In 2015, SoundExchange sued Muzak, a brand of background music played in retail stores and other public areas, also over underpayment. In 2017, an appeals court reversed an earlier decision by a district court to dismiss the case.

Writing about the latest ruling in the SiriusXM case, SoundExchange said: “SoundExchange is currently reviewing the decision and will consider all options, including appeal and potentially filing actions in state courts to ensure the company’s continuing ability to collect all digital performance royalties owed to its constituents for the use of their recordings under the law.”

Music Business Worldwide