In 1996, Congress amended the Copyright Act to create a new entitlement to royalties from certain performances of sound recordings for musicians who performed on those recordings—regardless of whether they have any ownership of the copyright in the recordings. The statute provides that most of these artist royalties go to “featured” recording artists, and a much smaller share goes to “non-featured” recording artists. In a dispute between a band owner and the band's lead vocalist, the First Circuit held that the “featured” “recording artist” is the human band member(s) who performed the music, not the band itself, even if the album cover only identifies the band and not its members.
Background
El Gran Combo, “one of the most popular Puerto Rican bands in history,” has been performing and recording music for more than six decades. Over that time, members have come and gone, but at any given time, the band typically consists of fourteen musicians: three singers, two saxophonists, two trumpeters, a trombonist, a bassist, a pianist, a timbalero, a conguero, a bongosero, and a director.
Rafael Ithier founded El Gran Combo in 1962 and created a company called EGC Corp. to administer his rights in the band. Ithier selects the band members and also hires backup vocalists or chorus members who are not members of the band to perform on some of the band's sound recordings.
Carlos Aponte‑Cruz was a member of El Gran Combo from 1972 through 2014; during that time, he served as the lead vocalist on over two hundred of the band's sound recordings. In 2017, Aponte‑Cruz made a formal request to SoundExchange for statutory royalties based on his performance as the lead vocalist on El Gran Combo sound recordings.
Section 114(g) of the Copyright Act, 17 U.S.C. § 114(g), enacted as part of the Digital Performance Right in Sound Recordings Act of 1996 (“DPRA”), established an exclusive right to perform a copyrighted work publicly by means of digital audio transmission and provided a statutory framework for the payment of royalties from those digital transmissions to certain categories of beneficiaries. (It is worth noting that, other than the rights established under DPRA for digital transmissions, there is no exclusive performance right for sound recordings. This means that performances of music via, say, traditional radio generate royalties for the owners of the musical compositions but not for anyone with rights in the sound recordings.) The statute states that “45 percent of the receipts shall be paid, on a per sound recording basis, to the recording artist or artists featured on such sound recording (or the persons conveying rights in the artists' performance in the sound recordings).” 17 U.S.C. § 114(g)(2)(D). (Again, DPRA is unique in that it establishes an entitlement to royalties for performers, even if they do not own the copyright in the sound recordings.) The Small Webcaster Settlement Act of 2002 (“SWSA”) further amended 17 U.S.C.§ 114(g)(2) to establish “[a]n agent designated to distribute receipts from the licensing of transmissions.” That agent is a non-profit created for this purpose, SoundExchange, Inc.
For years, SoundExchange had been remitting all El Gran Combo statutory royalties to ECG Corp., but ECG Corp. had not distributed any of those royalties to the members of El Gran Combo who had performed on the recordings. When he petitioned SoundExchange for a share of the performance royalties, Aponte‑Cruz argued that he was a “recording artist . . . featured on [the] sound recording[s],” and SoundExchange froze all payments of royalties under § 114 related to sound recordings in which Aponte-Cruz appeared as lead singer for El Gran Combo.
On November 8, 2019, Ithier and EGC Corp. filed suit against Aponte‑Cruz in the United States District Court for the District of Puerto Rico, seeking a judgment declaring that (1) “Ithier is the sole owner of the right to collect royalties as Artist from Sound[]Exchange as a featured artist,” (2) “during Aponte[‑Cruz]'s tenure in [El Gran Combo] [he] was an employee for hire . . . making Plaintiff the sole proprietor of any rights to collect royalties from Sound[]Exchange,” and (3) “Aponte[‑Cruz] is a non-featured artist with a right to collect royalties as a non-featured artist from Sound[]Exchange.” (DPRA allocates 5% of performance royalties to non-featured artists—2.5% to vocalists and 2.5% to musicians, i.e., instrumentalists.) Aponte‑Cruz filed a counterclaim seeking a declaratory judgment “that he is entitled to collect royalties from Sound[]Exchange as a performer of El Gran Combo sound recordings . . . and that [Ithier and EGC Corp.] must pay Aponte[‑Cruz]'s share on royalties collected from Sound[]Exchange that have not been distributed to the band's performers.”
Aponte‑Cruz moved for summary judgment on his counterclaim, requesting that the District Court “rule that ‘the recording artist or artists featured on such sound recordings' . . . are the members of El Gran Combo that performed on each sound recording and that those royalties are to be divided among them in the manner Sound[]Exchange determines appropriate.” The district court ruled that “(i) El Gran Combo, a distinct legal entity organized as a corporation, is the group most prominently featured on the sound recordings and, thus, is entitled to collect the royalties as the featured artist; and (ii) []Ithier, as the sole owner of El Gran Combo, is entitled to collect the featured artist royalties due to the corporation.”
Aponte‑Cruz timely appealed to the First Circuit. Chief Judge Barron, writing for the three-judge panel, reversed.
Aponte‑Cruz Is a “Featured” “Recording Artist” Entitled to Royalties
District Court's Holding Was Not Supported by Statutory Text
After first determining that Aponte-Cruz did not forfeit or waive his arguments on appeal, the First Circuit turned to the merits. Ithier and EGC Corp. conceded that the Copyright Act does not define the phrase “the recording artist or artists featured on such sound recording” or its constituent parts. Instead, they argued that “the ordinary meaning of the word ‘featured,'” as defined by Merriam-Webster, supported their position that, because Aponte‑Cruz's name was not “displayed, advertised or presented” on the relevant album covers, he was not a “featured” artist as contemplated by the statute. They argued that the album covers featured “El Gran Combo” itself as an entity separate and apart from any individual members of the band, and thus that Ithier and ECG Corp., as owners of the band, are entitled to the royalties due to the “recording artist . . . featured” on the recordings.
Ithier and EGC Corp. pointed out that this construction of § 114(g)(2)(D) would not prevent Aponte‑Cruz from collecting the 2.5% of statutory royalties “distributed to nonfeatured vocalist[s] . . . who had performed on sound recordings” for the recordings in which he was the lead vocalist. Indeed, they argued that if the court were to adopt Aponte-Cruz's construction, i.e., that individual members of the band were “featured” “recording artists,” it would render superfluous §§ 114(g)(2)(B) and (C)—which provide royalties to “nonfeatured musicians” and “nonfeatured vocalists,” respectively.
The court, however, was persuaded by Aponte‑Cruz's interpretation of “featured,” which claimed that the “featured” artists on an album should include the individual, natural persons who are members of the band. The court noted that this interpretation would not render the provision allocating 5% of royalties to “non-featured” artists superfluous, because that provision “would be fully applicable in the case of any band that hires session musicians, backup vocalists, or chorus members”—the types of artists who are frequently hired to play on a specific sound recording but are not otherwise members of the band. Relying on an analogy to The Beatles, the court noted that “there is some intuitive appeal to the notion that Congress did not use the word ‘featured' to equate a star like Lennon or McCartney with a session musician like Frederick Alexander (who played the cello for ‘Martha My Dear' on the White Album), such that each would be entitled to only equal portions of the 5% share of royalties owed to ‘nonfeatured' artists.”
Additionally, the court noted that § 114(g)(1)(A), in describing a “featured recording artist,” uses the phrase “who performs on a sound recording” (emphasis in original). The court determined that the word “who,” especially when used as the subject of the verb “performs” “is most comfortably read to be referring to a natural person rather than an artificial entity.” The court found further support for this construction in other parts of the Copyright Act, such as the definition of “perform,” which the statute defines to mean “recite, render, play, dance, or act”; the court observed that such activities are undertaken by “people, not artificial, nonphysical entities like a corporation.”
Lastly, the court pointed out that if “the recording artist or artists featured on such sound recording,” were not construed to refer to a natural person, then the statute would become ambiguous in certain situations as to “who would be entitled to the 45% share of statutory royalties”—as in the case of an unincorporated band, for example. Therefore, the court concluded that the statutory phrase “recording artist . . . featured” is most naturally read to refer to an individual person.
District Court's Holding Was Not Supported by Legislative History
The court pointed out that an analysis of legislative history is unnecessary where the statutory text is clear. Nevertheless, because Ithier and EGC Corp. advanced arguments based in legislative history, the court did discuss the sources cited by the parties. At the outset, the court observed that much of the legislative history contemplates that “the recording artist or artists featured on such sound recordings” would be a natural person, supporting Aponte‑Cruz's reading of § 114(g)(2)(D). As an example, the court pointed to a quote by Senator Orrin Hatch, who was presenting the bill that eventually became the DPRA: “it is important that the creators of America's music – whether they compose the score, write the lyrics, sing the songs, or produce the recordings – be fairly and equitably compensated for the public performances that result.” 141 Cong. Rec. S11949 (daily ed. Aug. 8, 1995) (statement of Sen. Orrin Hatch) (emphasis added in the opinion). Further, the court found that the 2002 amendments to § 114(g)(2) were intended to provide more protection to recording artists relative to record companies by establishing direct payment to “musicians, vocalists, and artists” through SoundExchange. See 148 Cong. Rec. H7047 (daily ed. Oct. 7, 2002) (statement of Rep. John Conyers, Jr.).
Ithier and EGC Corp. argued that their position was supported by a passage from S. Rep. No. 104-128, at 36 (1995), namely:
The term ‘featured recording artist' means the performing group or ensemble or, if not a group or ensemble, the individual performer, identified most prominently in print on, or otherwise in connection with, the phonorecord actually being performed. . . . [T]here will ordinarily be only one ‘featured recording artist' per phonorecord. A vocalist or soloist performing along with a group or ensemble is not a ‘featured recording artist' unless that person is identified in connection with the phonorecord as the primary performer. For example, the Eagles would be the ‘featured recording artist' on a track from an Eagles album that does not feature Don Henley by name with equal prominence; but if the same sound recording were performed from ‘Don Henley's Greatest Hits,' then Don Henley and not the Eagles would be the ‘featured recording artist.'
(emphasis in opinion). However, the court noted that this passage was separated from its context. This part of the Senate Report actually addresses the “sound recording performance complement,” which is a provision that limits the number of times within a three-hour period that a statutory licensee can play recordings from the same album or “featured recording artist.” See 17 U.S.C. §§ 114(d)(2)(B)(i), (C)(i), (j)(13), S. Rep. No. 104-128, at 36. The passage was intended to “simply clarify[] that a radio station or other service provider playing a sound recording from an album on which a person is performing as part of a band can play a sound recording from another album on which that same person is performing in a different capacity without necessarily running afoul of the ‘sound recording performance complement'” limit. Thus, the court did not view this passage as “weighing in on the point in dispute here – whether a ‘featured' artist in § 114(g)(2)(D) is the band as an entity independent of its individual members or instead the individual members of that band.”
Finding that neither the statutory text nor the legislative history supported Ithier's arguments, the court reversed the district court's award of summary judgment to Ithier and EGC Corp. and its denial of summary judgment to Aponte-Cruz. The case will return to the district court to address damages.
The case is Ithier v. Aponte-Cruz, 105 F.4th 1 (1st Cir. 2024).
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