Sonos has asked a Californian court to dismiss a lawsuit filed against it by SoundExchange on the basis another court in New York recently ruled that the US collecting society isn’t empowered to file lawsuits in relation to royalty disputes.
SoundExchange sued Sonos back in June over royalties that are allegedly owed by the smart speaker company’s Sonos Radio service. The missing royalties relate to when that service was operated for Sonos by Napster, which is also a defendant in SoundExchange’s lawsuit.
A new court filing states that the collecting society’s claims against Sonos “are meritless”, because “Sonos has no obligation to pay royalties to SoundExchange as that obligation solely belongs to Napster”. However, for now, the court does not need to actually consider “the merits of SoundExchange’s claims against Sonos”.
That’s because last month, in an unrelated legal battle between SoundExchange and Sirius XM, New York Judge Naomi Reice Buchwald concluded that – under US copyright law – the collecting society isn’t empowered to pursue litigation against any licensee that it believes owes money to its artist and record label members.
“There is no daylight between SoundExchange’s claims against Sirius and its claims against Sonos here”. the new legal filing declares. Which means if the society isn’t empowered to sue Sirius it’s not empowered to sue Sonos either. Or, in tedious legal speak, “SoundExchange is collaterally estopped from asserting its claims” against the speaker maker.
“Accordingly”, Sonos continues, “SoundExchange’s complaint against Sonos should be dismissed with prejudice”. Or if the judge in this case doesn’t want to go that far just yet, the Sonos litigation should be paused “in its entirety” until there is a “final, non-appealable judgment” in the Sirius case.
SoundExchange administers the compulsory licence that exists in US copyright law for satellite and online radio services, a licence both Sirius and the Sonos Radio service rely on. It’s always been assumed that SoundExchange could pursue litigation against users of the compulsory licence where the society believes, for one reason or another, royalties have been unpaid or underpaid.
But in its legal battle in the New York courts, Sirius pointed out that the US Copyright Act doesn’t explicitly state that SoundExchange can file legal proceedings. Whereas with The MLC – another music industry collecting society that administers a different compulsory licence – the act does explicitly say it can sue.
Sirius argued that that meant SoundExchange cannot pursue litigation, a position which the society says is based on a “flawed interpretation” of copyright law, but it’s a position Reice Buchwald nevertheless adopted in her ruling, dismissing the Sirius lawsuit.
SoundExchange is appealing Reice Buchwald’s judgement, and the latest manoeuvre from Sonos in this unrelated legal battle demonstrates why it’s very important for the collecting society that that appeal is successful.
In the Sonos dispute, SoundExchange says that Napster – when it was running Sonos Radio – stopped providing data and making payments related to that service in 2022. That coincided with Napster being bought by Web3 companies Hivemind and Algorand.
Sonos ended its relationship with Napster in 2023, getting Deezer to power Sonos Radio instead. Since then SoundExchange has been getting its data and payments, but it reckons it’s still owed $3.3 million from when Web3-owned Napster was in charge.
