Happy Together: Infringement as Conversion

The copyright world is abuzz this week about Monday’s decision in Flo & Eddie v. Sirius XM. Flo & Eddie Inc. is a corporation owned by two of the original members of “The Turtles,” the group that recorded hit songs in the 1960s such as “Happy Together,” and it sued satellite radio giant Sirius XM Radio Inc. for publicly performing fifteen of its pre-1972 sound recordings. The complaint listed three causes of action: misappropriation, unfair competition, and conversion under California state law. Because sound recordings fixed prior to February 15, 1972, are not protected by the federal Copyright Act, the question of whether there exists an exclusive right to publicly perform pre-1972 sound recordings under California state law was central to all of the plaintiff’s claims. Looking at the statutory text, legislative history, and case law, the district court held: “The Court finds that copyright ownership of a sound recording under § 980(a)(2) includes the exclusive right to publicly perform that recording.”

While most of the coverage that I’ve seen so far has focused on the court’s holding that the plaintiff does have the exclusive right to publicly perform its pre-1972 sound recordings in California, there’s another part of the decision that has caught my eye, namely, that Sirius XM is liable for converting the plaintiff’s property. Conversion is an intentional property tort wherein the defendant wrongfully exercises dominion over the plaintiff’s personal property.1 Historically, conversion only applied to tangible personal property, but over the last two centuries, it has increasingly been applied to intangible personal property as well.2

California state law takes a broad view of the tort of conversion, and this, in turn, follows from the state’s broad conception of property. As far back as 1880, the Supreme Court of California noted that “the action no longer exists as it did at common law, but has been developed into a remedy for the conversion of every species of personal property.”3 While early cases required that the intangible property converted be merged in a document,4 such as a stock certificate, that requirement is no longer adhered to in California.5 And this follows from the recognition that “property” does not refer to the thing itself, but rather to the rights appurtenant to the thing. As one California appellate court put it in 1948, “property is all-embracing so as to include every intangible benefit and prerogative susceptible of possession or disposition.”6

Flo & Eddie presents a unique look at the nature of an author’s exclusive rights, unmoored from the baggage of the Copyright Act. The district court found Sirius XM liable on all three claims: misappropriation, unfair competition, and conversion. Each of these claims is unique, yet they’re also interrelated in that they focus on practices that are fundamentally inequitable. When Sirius XM publicly performed the plaintiff’s sound recordings without paying for the privilege, its business practices were unlawful and unfair. The plaintiff invested substantial time and money to create its property, yet Sirius XM misappropriated that property and reaped where it had not sown. And Sirius XM converted the plaintiff’s property, wrongfully exercising dominion over the plaintiff’s intangible rights.

Too often today, these fundamental notions of fairness get lost when discussing copyright infringement, and we hear complaints from the copyleft whenever anyone dares suggest that copyright is property that can be converted or stolen. Such notions are dismissed as the inventions of “maximalists” who are dishonestly attempting to reframe the debate. But the truth is that the “propertization” of copyright is nothing new,7 and there’s been a steady change in how we think about property generally, both tangible and intangible, over the last few centuries. The district court in Flo & Eddie had no trouble determining that the plaintiff’s intangible property rights had been converted, and this wasn’t because some Hollywood boogeyman was whispering in its ear—it’s simply because the modern conception of property is far broader than it used to be centuries ago.

In its motion for summary judgment, the plaintiff argued that Sirius XM had engaged in conversion under California state common law, and it’s interesting to note too how the plaintiff grounded its property rights in the labor-desert theory:

California’s common law also protects pre-1972 recordings under the long recognized theories of misappropriation and conversion. . . . Conversion . . . is a strict liability tort and only requires a plaintiff to show (1) ownership or right to possession of the property; (2) conversion by a wrongful act or disposition of property rights; and (3) damages. . . .

There can be no doubt that Flo & Eddie and its principals (Kaylan and Volman) invested substantial time and money in development of their pre-1972 recordings. They not only supplied the artistic performances that are on the recordings, but they waived substantial royalty claims in order to obtain ownership of those recordings, and paid to buy out the interests of the other members of The Turtles in those recordings.

In addition, Flo & Eddie and its principals (Kaylan and Volman) have devoted their time and energy over the last four decades licensing, promoting, and marketing those recordings. On the other hand, Sirius XM has simply taken those recordings at little or no cost to it and has used them to become the largest radio broadcaster in the United States measured by revenue.

In its opposition brief, Sirius XM argued that it had not dispossessed Flo & Eddie of any of its property nor caused it any damage when it publicly performed the plaintiff’s sound recordings:

Plaintiff likewise makes no serious effort, nor could it, to prove out the elements of a conversion claim, which requires “the wrongful exercise of dominion over the property of another” and proof of “(1) the plaintiff’s ownership or right to possession of the property; (2) the defendant’s conversion by a wrongful act or disposition of property rights; and (3) damages[.]” . . .

Sirius XM’s public performances of Plaintiff’s sound recordings neither dispossess the Plaintiff of those recordings nor cause any injury or lost sale that could be said to “interfere” with its possessory interest. Plaintiff admits that it cannot identify a single lost sale, lost license, or diminished license fee it has suffered as a result of Sirius XM. . . . Absent any dispossession or any proven damage, Plaintiff’s attempt to extend the conversion cause of action to bar unauthorized performances of its recordings must fail.

In its reply brief, the plaintiff argued that Sirius XM’s public performances had dispossessed it of its property and caused it damage:

Similarly unavailing is Sirius XM’s argument that it is not liable for conversion because its “public performances of Plaintiff’s sound recordings” does not dispossess Flo & Eddie of those recordings. . . . Sirius XM’s ipse dixit ignores the fact that performance of those recordings dispossesses Flo & Eddie of that performance. . . .

Sirius XM’s contention that conversion of sound recordings has been limited by the court to those instances where it interferes with a sale wrongly suggests that only sales of physical product matter. Finally, Sirius XM’s contention that Flo & Eddie have not suffered harm because they are unable to identify lost sales ignores that the harm in this case is measured by much more than lost sales. It also includes the revenue that Sirius XM wrongfully appropriated to itself and the license fees that Sirius XM should have paid had it licensed the recordings instead of simply taking them.

Confronted with these highly disparate views as to whether Sirius XM had converted Flo & Eddie’s property when it violated the plaintiff’s exclusive public performance rights, the district court easily sided with the plaintiff:

“In California, conversion has three elements: ownership or right to possession of property, wrongful disposition of the property right and damages.” . . . Flo & Eddie has an ownership interest in the right to publicly perform its sound recordings under § 980(a)(2). . . . There was wrongful disposition of that property right every time Sirius XM publicly performed the recordings without Flo & Eddie’s permission, in violation of California copyright law. . . .

On the element of damages, Sirius XM contends that there are none because Flo & Eddie cannot identify a single sale or lost or diminished license fee that it has suffered as a result of Sirius XM’s performance of its sound recordings. . . . But Sirius XM’s unauthorized performances alone establish conversion damages in the form of license fees that Sirius XM should have paid Flo & Eddie in order to publicly perform its recordings. . . . Thus, the Court grants Flo & Eddie’s motion for summary judgment on conversion liability.

I don’t claim to know whether the court reached the right conclusion as to the existence of an exclusive right to publicly perform pre-1972 sound recordings under California state law. I’ve never researched that issue, and I have no idea whether it will survive the inevitable appeal. But, assuming that holding is correct, I think the court reached the right result—both descriptively and normatively—that Sirius XM converted Flo & Eddie’s property. And while I’m sure this holding brings much chagrin to those who see little value in the exclusive rights of authors and artists, it makes perfect sense to me.

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© 2014 Devlin Hartline. Licensed under the Law Theories Public License 1.0.

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  1. See, e.g.Burlesci v. Petersen, 68 Cal. App. 4th 1062, 1066 (1998) (“Conversion is the wrongful exercise of dominion over the property of another. The elements of a conversion claim are: (1) the plaintiff’s ownership or right to possession of the property; (2) the defendant’s conversion by a wrongful act or disposition of property rights; and (3) damages. Conversion is a strict liability tort. The foundation of the action rests neither in the knowledge nor the intent of the defendant. Instead, the tort consists in the breach of an absolute duty; the act of conversion itself is tortious. Therefore, questions of the defendant’s good faith, lack of knowledge, and motive are ordinarily immaterial.”). 
  2. See, e.g., Restatement (Second) of Torts § 242 cmt. d (1965) (“The modern action for the tort of conversion always has been colored by its descent from the common law action of trover, which originated as a remedy against the finder of lost goods who refused to return them. Because of this origin, and the persistence until comparatively recent years of the fiction of losing and finding, the action was narrowly limited in its scope, and it would not lie for the appropriation of any property which could not be lost and found. It would not lie for the appropriation of land, because land was incapable of being lost; and it would not lie for the appropriation of any choses in action or other intangible rights, which were incapable of being found. With the disappearance of the forms of action, the modern action of conversion has undergone a slow process of extension, which has carried it beyond these ancient limits of the action of trover.”). 
  3. Payne v. Elliot, 54 Cal. 339, 341 (1880). 
  4. See, e.g., Restatement (Second) of Torts § 242 cmt. e (1965) (“It was first held that the conversion of a document in which intangible rights were merged permitted recovery of damages for the appropriation of the rights so identified with it. . . . Then . . . it came to be recognized by a number of courts that the recovery was for the interference with the intangible rights themselves, and that the conversion of the document was merely the means by which this was accomplished. The final step, which a good many courts have taken, was the recognition that there may be ‘conversion’ of such an intangible right, of a kind customarily identified with and merged in a document, even though the document is not itself converted.”). 
  5. See, e.g., Kremen v. Cohen, 337 F.3d 1024, 1033 (9th Cir. 2003) (“In short, California does not follow the Restatement’s strict requirement that some document must actually represent the owner’s intangible property right. On the contrary, courts routinely apply the tort to intangibles without inquiring whether they are merged in a document . . . .”); Welco Electronics, Inc. v. Mora, 223 Cal. App. 4th 202, 210 (2014) (“In California, the tort of conversion has expanded well beyond its original boundaries.”). 
  6. Downing v. Mun. Court of City & Cnty. of San Francisco, 88 Cal. App. 2d 345, 350 (1948) (internal quotations and citations omitted). 
  7. See, e.g., Justin Hughes, Copyright and Incomplete Historiographies: Of Piracy, Propertization, and Thomas Jefferson, 79 S. Cal. L. Rev. 993, 1008-09 (2006) (“The question of whether copyrights were property had been debated by seventeenth- and eighteenth-century English jurists and writers, albeit in a jumble of other issues. Through those debates the view that copyright was property steadily strengthened. While the issue might not have been totally resolved by the time of the American Revolution, the colonists-cum-revolutionaries may have missed some of the nuances of the English debate—and appear to have landed more squarely on the copyright-is-property side. In that sense, the recent scholarly debate about the ‘propertization’ of copyright recapitulates this seventeenth- and eighteenth-century debate—with modern scholars seemingly cautioning modern judges and policymakers not to do what seventeenth- and eighteenth-century judges and policymakers have already done.”). 

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