ATLANTA — The Georgia Supreme Court has ruled that music streaming service iHeart Radio is exempt from a Georgia statute that makes it illegal to transfer pre-1972 sound recordings without the owner’s consent.
In a decision released Monday, the high court responded to a question posed by the U.S. District Court of Middle Georgia, saying the Georgia justices “find that the type of internet radio services being offered by iHeartMedia Inc. in this case do fall under the exemption” to state law.
According to the Georgia Supreme Court release, Arthur and Barbara Sheridan of Illinois filed a one-count class action lawsuit in the U.S. District Court for the Middle District of Georgia in September 2015 against iHeartMedia, alleging the Delaware-based corporation had violated the Georgia Racketeer Influenced and Corrupt Organizations (RICO) Act.
iHeartRadio has regularly streamed to Georgia customers the pre-1972 recordings that the Sheridans own rights to without license, authority or consent from the Sheridans, and has never compensated the Sheridans for the use and transfer of those pre-1972 master recordings, the high court said.
The Sheridans, filing on behalf of themselves and others like them who own pre-1972 master recordings, contended that iHeart repeatedly violated the state RICO law by the ongoing transfer of the songs they own without the owners’ consent. iHeart responded by filing a motion to dismiss the case, contending a state TV and radio exemption applies to its internet streaming service.
Federal law governs sound recordings made since 1972, when Congress granted federal copyright protection. Sound recordings made before 1972 are governed by state law. Because the Georgia courts had not clearly ruled on the issue, the presiding federal judge in the case certified a question to the state Supreme Court, asking whether the internet music service was exempt from the Georgia Code. The federal court stayed resolution of the case pending the Georgia Supreme Court’s response.
Georgia law, the state justices noted, gives owners of master sound recordings the sole right to transfer the sounds of those recordings, but says the statute “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, the high court said, was whether iHeart’s internet radio services qualify as “radio broadcast transmission” or “related uses.”
The justices said the user’s experience with iHeartRadio qualifies it as a “related use” to a radio broadcast, noting that one of its services is a simulcast of programming offered on its regular broadcast stations. “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,” the opinion stated.
iHeartRadio’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, the court said.