In reaching this decision, the Court looked at the language of the California statute dealing with pre-1972 sound recordings. Finding that the statute vested "exclusive ownership" in the pre-1972 sound recordings in the "author" of the work, the Court looked at other California statutes on property ownership generally, to determine what "exclusive ownership" meant. Looking at the California civil code, the Court concluded that ownership was the right "to possess and use a thing to the exclusion of others." From that language, the Court concluded that the public performance was a "use" of the "thing" (i.e. the sound recording), and that Flo and Eddie had the right to exclude Sirius XM from the public performance of their songs or to demand consideration from Sirius XM for such use.
This is a very surprising decision, in that the Court finds, from a generic definition of "ownership" applicable to tangible property in California, a public performance right in sound recordings. The public performance right is a creature of copyright law, and a right that never existed in the United States until the mid-1990s when it was adopted exclusively for digital transmissions of sound recordings. Copyrights are not "natural" rights like an ownership right to a piece of tangible property – they are rights that are created by the law, and subject to the limitations established by law. Owning a copyright is not like owning a car or a house, as it is not something where your use of the property excludes others from using it at the same time. It seems like a dangerous precedent to take the definitions applicable to tangible property and extend them to copyright concepts that are not really applicable at all to the kinds of property to which the definition of ownership originally applied. There is no right to "publicly perform" a house or a car, but from the definition of ownership applicable to that tangible property, the Court found an inherent right to publicly perform sound recordings – this sweeping right that has never before existed in the US.
If this decision were upheld, the potential ramifications for business in California could be great. There appears to be nothing in the decision that would limit it to just the digital world. So any business that plays pre-1972 sound recordings – bars and restaurants, stadiums, schools and churches, broadcasters, etc. could all face claims for royalties? And who would they pay?
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It is important to recognize that this is a trial court decision by a Federal Court interpreting California law. A California court, in another case addressing this issue, preliminarily reached a different conclusion just a few weeks ago (see
this article about that preliminary ruling). So this decision likely will be appealed, and could be subject to collateral attack were the California courts, who have the right to determine what their own state law is, reach a different determination