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Soundexchange, Inc. v. Sirius XM Radio, Inc.

United States District Court, D. Columbia.

August 26, 2014

SOUNDEXCHANGE, INC., Plaintiff,
v.
SIRIUS XM RADIO INC., Defendant

Decided August 25, 2014

For SOUNDEXCHANGE, INC., Plaintiff: Joshua Morris Segal, LEAD ATTORNEY, JENNER & BLOCK, LLP, Washington, DC; Michael Brian DeSanctis, LEAD ATTORNEY, JENNER & BLOCK LLP, Washington, DC.

For SIRIUS XM RADIO INC., Defendant: Peter Dean Isakoff, LEAD ATTORNEY, WEIL, GOTSHAL & MANGES, LLP, Washington, DC; Adam B Banks, R. Bruce Rich, Todd D. Larson, PRO HAC VICE, WEIL, GOTSHAL & MANGES, LLP, New York, NY.

Page 151

MEMORANDUM OPINION [Dkt. #13]

RICHARD J. LEON, United States District Judge.

Plaintiff SoundExchange, Inc. (" SoundExchange" ) brings this action against defendant Sirius XM Radio Inc. (" Sirius XM" ) in an effort to recover royalties SoundExchange claims it is owed under the Copyright Act. See generally Compl. [Dkt. #1]. Sirius XM moves to dismiss the Complaint, or, in the alternative, stay the action, pursuant to the doctrine of primary jurisdiction. Def. Sirius XM Radio Inc.'s Mot. to Dismiss Pl.'s Compl. (" Def.'s Mot." ) [Dkt. #13]; Def. Sirius XM Radio Inc.'s Mem. of Law in Support of its Mot. to Dismiss at 2 (" Def.'s Mem." ) [Dkt. #13-1]. After review of the motion, the applicable law, and the record herein, defendant's motion is GRANTED and the case is STAYED pending a decision by the Copyright Royalty Board (" CRB" ).

Page 152

BACKGROUND

Sirius XM is the only satellite digital audio radio service (" SDARS" ) in the United States. Compl. ¶ 2. The Copyright Act grants entities such as Sirius XM a statutory license to digitally broadcast copyrighted sound recordings. 17 U.S.C. § § 112, 114(d)(2); Compl. ¶ ¶ 1, 13. Statutory licensees pay royalties, but do not have to negotiate with individual copyright owners for every recording they want to broadcast. Instead, regulations implementing the Copyright Act charge SoundExchange, an independent non-profit organization, with collecting the performance royalties from statutory license users--such as SDARS, Internet radio stations, and cable TV music channels--and distributing those royalties to the copyright owners in accordance with 17 U.S.C. § 114(g)(2)(A)-(D). Compl. ¶ ¶ 10, 15.

The " reasonable rates and terms of royalty payments" SDARS like Sirius XM owe are set by the Copyright Royalty Board, which is comprised of three Copyright Royalty Judges (" CRJs" ). 17 U.S.C. § § 114(f)(1), 801(a)-(b). These CRJs must be experienced attorneys, and at least one judge must have significant knowledge of copyright law and another must have significant knowledge of economics. 17 U.S.C. § 802(a)(1). The Copyright Act directs that the SDARS royalty rates set by the CRB

be calculated to achieve the following objectives:
(A) To maximize the availability of creative works to the public.
(B) To afford the copyright owner a fair return for his or her creative work and the copyright user a fair income under existing economic conditions.
(C) To reflect the relative roles of the copyright owner and the copyright user in the product made available to the public with respect to relative creative contribution, technological contribution, capital investment, cost, risk, and contribution to the opening of new markets for creative expression and media for their communication.
(D) To minimize any disruptive impact on the structure of the industries involved and on generally ...

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