District court dismisses SoundExchange’s suit against Sirius XM Radio seeking $150 million in alleged unpaid royalties, finding that “licensing and enforcement of rights” under Section 114 of Copyright Act is not synonymous with litigation enforcement and does not grant SoundExchange an express right of action.
Plaintiff SoundExchange Inc., the nonprofit designated for music royalty collection under Section 114 of the Copyright Act, brought suit against defendant Sirius XM Radio Inc., a broadcaster that provides satellite and online radio services, alleging $150 million in unpaid royalties owed to rights holders. The case was initially filed in the Eastern District of Virginia, but venue was transferred to the Southern District of New York at Sirius XM’s request. Sirius XM moved to dismiss, arguing that Section 114 does not authorize SoundExchange to litigate royalty disputes. The district court agreed, granting the motion to dismiss without addressing the underlying merits of the case. In so holding, the court enumerated three reasons: (1) Section 114 did not provide SoundExchange with an express right of action; (2) implying a right of action for SoundExchange was neither warranted nor appropriate; and (3) SoundExchange’s extra-statutory, policy-based arguments were devoid of the necessary legal reinforcement to support a right of action in Section 114.
The parties agreed that Section 114 does not explicitly grant SoundExchange a right of action to litigate a royalty dispute. In holding that Section 114 did not provide SoundExchange with an express right of action, the court declined to read additional terms into the statute. The court presumed that the omission of such a right by Congress was intentional, particularly given that other statutory provisions, such as Section 115, grant express “legal enforcement” authority to The Mechanical Licensing Collective—a right that includes filing lawsuits in federal court for damages and injunctive relief. In contrast, Section 114 “clearly lacks an express conferral of a right of action upon SoundExchange.”
The court also concluded that implying a right of action under Section 114 was neither warranted nor appropriate. At the outset, the court noted the “heavy burden on the plaintiffs” to demonstrate an implied right of action. The parties agreed to apply the Oxford Bank three-factor test to determine whether a right of action should be implied: (1) whether the allegedly violated provision contains “rights-creating language” focused on the “individuals protected”; (2) whether Congress “provided an alternate means of enforcing the relevant provisions”; and (3) whether “Congress expressly provided a cause of action” elsewhere in the statute.
As to factor one, the court found that Section 114 lacks any rights-creating language with respect to SoundExchange. Rather, it merely grants “the licensing and enforcement of rights,” including “participating in negotiations or arbitration proceedings.” Although SoundExchange argued that the word “enforcement” encompassed litigation rights, the court found that the sole reference to “enforcement” did not constitute “a full-throated grant of litigation authority to the collective to commence an action in a U.S. District Court.” In short, “enforcement is not synonymous with litigation.”
As to factors two and three, the court held that the single mention of “enforcement” was clarified by reference to “negotiations or arbitration proceedings” and not litigation. The court deployed the maxim expressio unius—that the clear expression of a term excludes other similar yet unmentioned terms—and also that the express mention of “arbitration” is “often interpreted as precluding litigation.” The court also noted that the singular reference to “enforcement” was, in essence, “made in an accounting context” and Congress “does not hide elephants in mouseholes.” The court concluded that Congress intentionally opted not to grant SoundExchange litigation authority “as an arrow in its quiver.”
Finally, the district court rejected SoundExchange’s extra-statutory, policy-based arguments, finding that they were devoid of the necessary legal reinforcement to support a right of action in Section 114. First, SoundExchange asserted that, as a matter of policy, efficient functioning of the statutory licensing regime requires the collective to possess some legal enforcement rights. Without a right of action, it would be an “unwieldy “and “unworkable” regulatory regime. The court held that it was “powerless to rely on any such arguments to rewrite the statute.” Second, SoundExchange pointed to its involvement in past lawsuits as evidence that it has standing to sue in this case. Specifically, in the 2017 case SoundExchange, Inc. v. Muzak LLC in the D.C. Circuit, Muzak did not challenge SoundExchange’s authority or standing to bring the action. The court disagreed, finding “various factual and procedural factors” eliminated the precedential value of those cases. Third, SoundExchange invoked the legislative history of Section 114 to suggest that a right of action was contemplated by Congress. Again, the court declined to find the right of action, reasoning that “reliance on legislative history is inappropriate when the statutory text is clear.” Last, SoundExchange conceded that while it might not possess a private right of action under Section 114, it nevertheless should be able to sue under an associational standing theory. The court rejected this policy argument as well, finding that “SoundExchange exists to facilitate efficient royalty collection and distribution, not to champion the views and interests of copyright owners beyond royalty collection.”
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