The Supreme Court of Georgia has ruled that a company’s popular streaming of music over the internet is legal under Georgia law.
In response to a question by the United States District Court for the Middle District of Georgia, Justice Harold Melton writes for the state’s high court that the internet radio services offered by iHeart Radio are exempt from a Georgia statute that makes it illegal to transfer sound recordings without the owner’s consent.
iHeartRadio, owned by iHeartMedia, Inc., a Delaware corporation, offers internet radio services in the form of customizable music “stations” that stream music over the internet to users based on their individual preferences. iHeart also owns hundreds of traditional AM and FM radio stations, sometimes referred to as “terrestrial stations,” and streams their broadcasts online. iHeart offers its internet radio services on a variety of internet platforms, including computers, digital media devices, tablets and smartphones. Streaming music and other programming over the internet involves the transfer of a series of digital “packets” to the temporary random access memory of the listener’s internet-connected device.
According to briefs filed in the case, in the 1950s and 1960s, Arthur Sheridan owned several recording companies that recorded and sold doo-wop, jazz, and rhythm and blues music. Today he owns several master sound recordings of the music that was made prior to 1972, including jazz, blues and doo-wop songs. Barbara Sheridan owns the pre-1972 master sound recording of “Golden Teardrops” by The Flamingos. Arthur and Barbara, who live in Illinois, also own the intellectual property and contract rights associated with the recordings.
iHeart has regularly streamed the Sheridans’ pre-1972 recordings to Georgia customers, despite having no license, authority or consent from the Sheridans to do so. Furthermore, iHeart has never compensated the Sheridans for the use and transfer of their pre-1972 master recordings.
Federal law governs sound recordings made after 1972, while sound recordings made before 1972 are governed by state law. In 1972, Congress granted federal copyright protection to sound recordings but left the states free to continue regulating sound recordings made before the law went into effect. In Georgia, Georgia Code § 16-8-60 gives owners of master sound recordings the sole right to transfer the sounds of those recordings under the law entitled, “Criminal Reproduction and Sale of Recorded Material.” Specifically, § 16-8-60 makes it illegal to transfer “any sounds or visual images recorded…onto any other…phonograph record, disc, wire, tape, videotape, film, or article without the consent of the person who owns the master phonograph record, master disc, master tape….” However, the statute includes an exemption that states that § 16-8-60 “shall not apply to any person who transfers or causes to be transferred any such sounds or visual images intended for or in connection with radio or television broadcast transmission or related uses.”
At issue in this case is whether iHeart’s internet radio services qualify as “radio broadcast transmission” or “related uses.”
On Sept. 29, 2015, the Sheridans filed a one count class action lawsuit in the U.S. District Court for the Middle District of Georgia against iHeart, alleging violations of the Georgia Racketeer Influenced and Corrupt Organizations (RICO) Act on behalf of themselves and others like them who owned pre-1972 master recordings. The Sheridans alleged that iHeart repeatedly violated Georgia Code § 16-8-60 in a form of racketeering by the ongoing transfer of songs without the consent of the owners of the master recordings. In response, iHeart filed a motion to dismiss the case, claiming the exemption applies to its streaming over the internet. Because the Georgia courts have not clearly ruled on the matter, the U.S. District Court certified this question to the state Supreme Court: “Whether the exemption to Georgia Code § 16-8-60, set forth in § 16-8-60 (c) (1), applies such that internet radio services are exempt from application of § 16-8-60.” The federal court stayed resolution of the case pending the state Supreme Court’s response.
In today’s unanimous opinion, “we find that the type of internet radio services being offered by iHeartMedia, Inc. in this case do fall under the exemption set forth in § 16-8-60 (c) (1).”
“On its face, § 16-8-60 (c) (1) provides an exemption for both radio broadcast transmissions and related uses,” the opinion says.
At the least, iHeartMedia’s services qualify as a related use to a radio broadcast transmission because in reference to the user’s experience, “iHeartRadio is nearly identical to terrestrial AM/FM radio,” the opinion says. “For example, one of iHeartMedia’s internet services, ‘simulcast,’ concurrently broadcasts the exact programming offered by its terrestrial radio stations over the internet. The only difference for the listener is that the music would be accessed through an internet-connected device such as a smartphone or computer, rather than a traditional radio receiver.”
iHeart’s services also qualify as a related use because “the nature of the streaming of sound recordings by iHeartRadio and the nature of the broadcast by terrestrial AM/FM radio are qualitatively the same,” the opinion says. iHeartRadio digitally broadcasts a track to the listener for a single use, then the track disappears from the listener’s device, just as the recording on a radio is not stored for replaying.
“Therefore, because there is no significant difference in either the user experience or the nature of the broadcast of sound recordings between terrestrial AM/FM and internet transmissions of the type offered by iHeartMedia in this case, the latter is a related use of the former.”