absolute right to prevent anyone who lawfully purchased a sound recording from playing it that includes not just sirius x m but am f m radio stations bars restaurants d j s and school dances and even individuals nothing in the statutes text history purpose recordings it unambiguously granted sound recording overs as absolute unfettered performance right but this court has already rejected that text to argument in pandora which held that the term exclusive ownership doesn't tell you the scope of the ownership rights and cracked well our position is that the text itself as this quarter a held in pandora doesn't answer the question because the question is what the ownership right in a sound recording is in the back question has to be determined s i think it clearly means what we say it means and not what the plain of says it means but if you think it's ambiguous then you would also have to find for us because every other tool of construction points in our direction and the st thing i would say is when you're trying to figure out what ownership in a sound recording would have meant in one thousand nine hundred and two to somebody you know reasonably understanding the extant law at the time the question is what was the law and the answer is that ownership of a sound recording of the time meant a right against unauthorized duplication that is a piracy right that was the law in california under cases like heilman erickson in this court's decision in lone ranger and it was the law under federal under the federal copyright act as well and so the reasonable construction of ownership when it comes to sound recordings in particular would have been a piracy right and not a performance right which had never been recognized in california or federal law think it's the only case that makes that recognize a recognition as a performance right is the only case i think that the same district court in the pandora case also help this way but it was certainly the st case and then there were subsequent cases in other states so judge macmahon in the in the s d n y for example agreed with with the district court here but then it went up to the court of appeals in the court of appeals held that there was no performance right under new york law the florida supreme court likewise held that there was no performance right under florida law and we think that the same thing is true here now that what is a fact counsel what impacted the does the pennsylvania rule as i understand it that is the one state that is the exception that recognizes the common law right of a performance how is that in serious right so you know i'm not sure so the pennsylvania rule is not the kind of absolute performance right dollars after nine hundred and forty dollars and judge hands whiteman decision everybody including every relevant stakeholder including the record companies understood that as a general matter states did not recognize a performance right in sound recordings and i think it has never paid owners in who have some tie to pennsylvania and if not the not that i'm aware of your honor i'm not even where of the lawsuit that was that has been filed in pennsylvania you know any seventy two recordings and so california law is reasonably right i think to to and that same piracy right to pre one nine hundred and seventy two recordings and then finally i think the general context in which this this right had has been considered ever since judge hans decision in whiteman which rejected even the limited right recognized in wearing ever since then every single stakeholder has recognized that there is no performance right in sound recordings which is why the record companies themselves were asking congress to honor one is a technical answer and what one is a sort of practical one the technical answer is that the way that the federal copyright statute works is that every possible bundle of copyrights is set forth in section one hundred and six and at the time plays and movies and like musical compositions and so under federal law just as a technical matter when congress grants somebody a copyright if it doesn't want to give them every one of those bundles of rights it has to exclude the one that it doesn't want to grant and that's now so the california legislature doesn't have any similar kind of technical requirement and if it was trying to if the legislature was looking at that federal law it couldn't have mirror won't even if it wanted to because there is no one dollars equivalent now the practical answer is that congress had squarely before the question whether it should recognize a performance right the record companies were asking for one they were asking for a compulsory right not the kind of d tells the register of copyright to go ahead and study the issue further so i think congress obviously felt compelled to say what it was it wasn't doing with respect to a performance right in the seventy six dollars act where is nobody not a single legislator not a record company not any stakeholders suggested to the california legislature that a performance right should be included in the one thousand nine hundred and eighty two amendment and of course that would have been a an absolutely seismic change in the law again nobody since since whiteman had thought that a better performance right exists and even congress by the time it an act of performance right and acted a highly limited one it excluded am f m radio it excluded bars and restaurants and the like the business does that play music and it provided for a compulsory licensing regime so that record companies couldn't actually preclude broadcasters book from playing their music where is the right to the point of wants here is absolute it doesn't include a compulsory licensing  it would again it would apply to you know am f m radio it would apply to bars restaurants a bit of white people it seems to me now if so i understand context you put a pot of money in the settlement right now and then you reserve the right that come and talk about yes and is there another five million out there that could get burned in the pot or what what exactly is this yes yes and the royalty rate going forward is affected by the settlement as well and of course this court has held that settlements that settlements that did that depend in their size on later litigation don't deprive the court of standing if that's what the court's getting at but yes that's it that's right you have a dormant commerce clause only comes up if you think there is a performance right in which which means that california would preclude sirius x m from performing meaning playing its sound recordings and the federal law requires serious when it broadcast anything to broadcast it identically everywhere in the continuous forty eight dollars contiguous forty eight dollars states so that would be just the direct regulation of commerce in every state not just california ok so if we how do you reconcile the fact that the federal law recognizes the for for public performance right with your assertion that the recognition of california right of public performance unduly burden interstate commerce so that's what the federal was adoption of the right to if we're just talking about sirius x m now not the entities that to which the federal law doesn't apply at all but as the sirius x m it creates a compulsory licensing regime the right that that the plaintiffs says exists is just an absolute right m wouldn't have the the ability to play their music unless they say it's ok right and so i don't see how there could be a local benefit to to prevent music from being played and it's very hard to imagine how that wouldn't unduly burden interstate commerce when the whole point of the copyright act the federal copyright act is to make sure that music gets out into the into the to the public to the listening public this would allow record companies from precluding it all together provision is fourteen a one in one right one thousand four hundred and one d one allows parties to enter into voluntary agreements and then wouldn't be governed by the federal scheme and that's what we did i mean we did it before the m m a was adopted but that provision part of it the one or the little why is that the broadcaster has to pay comply with the federal scheme going retrospectively so it including paying back the oil tees under the federal licensing scheme which didn't just didn't happen here because we're paying royalties and the settlement and the like under our own voluntary agreement now there's a nd provision be to or be you little i r i which doesn't apply here either that's about what happens if you enter into agreement in an agreement that after the agreement there's a broadcast performance and the sound recording owner tries to sue you for that later broadcast which just has not  occurred here so that's why we think that nothing nothing in the preemption them describes construing nine hundred and eighty s conferring exclusive ownership rights and sound recordings as some radical results and the history of the law in california and the comparison to what congress did in the federal statute shows that it's absolutely not and it is what the california legislature intended now there's a whole lot right next to your client so long to bring this claim if that were true and everybody understood that change technology has evolved and a company like serious fact than is able to buy a cd and to digitally stream it to thirty million users but your argument with your argument would require eight radio stations to pay every time they play a three hundred seventy two sound recording would it not only if sound recording owner elected sue pursue a royalty or license from a radio station and historically it gets back to my question counsel as to what took your client so long to assert this claim if everybody knew that far back that the law had changed in that if you needed to in california there were good reasons historically not to pursue radio broadcasters that was actually a benefit to sound recording owners to have their music publicized and that it encourages record sales but doesn't sirius do the same thing to your client's benefit that's that's what i'm having off a member of difficult time understanding your theory and why it took this long to assert it your honor it does not what sirius fax them does it is able to stream perfect digital sound to thirty million subscribers that pay royalties to sirius x m and as the district court found below that actually undercuts the value of a flow in eighty being able to sell it sound recordings or to license them and so in this situation it's appropriate for the owner of the sound recording to pursue those rights the technology has changed that dramatically to find that it would be totally an equitable for sirius them to do what they did but but the have the sound recording is reaching a larger share of music listening not if they don't ultimately buy a wrecked recording if they if that music is played so that nobody needs to ever go out and purchase flow in any sound recordings directly then it is cannibalized what their sales of their records would be and one reason or assurance or that your clients were willing to put up with a lack of royalties in a smaller geographical market that would be reached by a traditional am f m radio station but they're not but they now want to assert that right with regard to it that the it's able to reach the entire united states them the are listening to it that's correct your honor the balance of what can be what the benefits of radio broadcasting are for a sound recording owner are different and that doesn't negate this th of the right concern is the same because we're hearing these claims for the st time what how many years forty years fifty years after the statute was amended i'm having a hard time understanding why all sound recording owner could find that it did benefit them but in this instance where a digital audio transmission can actually undercut the value of the sound recordings and the need to take a license it is harmful and one of the things about the district court the now less that's under the common law of misappropriation is that it looked at the form of injury and some of the issues we've heard raised today about whether a it would impair broadcasting or performance on other mediums those broadcasters still have the ability to raise appropriate defenses and the district court can weigh whether or not there are damages that that having been incurred there by the sound recordings owners but in this in court made a finding that the property interests upflow and eddie had been misappropriated easily misappropriated by sirius x m and had done so to the damage flow and id as i would have you know i think along the lines of what thomas saying you said there's nothing really unusual about this i mean i think this is the almighty this is the only case like that and if the th circuit were to hope that you do not if they don't have those rights in any of the other circuits they've lost their correct your honor that's in florida and new york they have there's no statute there that governs but you asked earlier about whether there were other cases the blue b action which we cite in our brief in that case there was a web site that allowed for streaming and downloading of sound recordings and judge that and found also a violation of ninety along with a finding that the miss procreation of the sound recordings and of conversion of the in the original versions of the statute it refer to xclusive ownership st of the inventions of the mind and then later when it was amended the st time exclusive ownership of what is an arts and letters it is only with the amendment in one thousand nine hundred and two that the exclusive ownership was specifically described in connection with sound recordings and sound recordings you know the cornerstone of the right of a sound recording is the ability to perform it so those earlier versions of the statute that described exclusive ownership did so in the context of commonly you know written music or something that might be published or made available in a different capacity here we are talking about the performance itself a artistic rendition that is embodied in a material object and that there is value as california courts have repeatedly found that there's intrinsic value in that and it's the california supreme court and stanley recognized that there had been it does not have a statutory regime and so it was a different than california law i did not have a statute like nine hundred and eighty and so it could not you know its determination was made on its own history there  legislature here used but they had before and a very clear record of wanting to protect ownership rights broadly and to judge lee's earlier question about what we should be make of the federal law when the legislature acted here in  and two it had before it a federal law that very clearly exempted public performance and it i heard sirius x m say that it could not have mirrored that performance exemption it absolutely could have the one exemption in the statute is for cover songs and that is verbatim lifted from the federal law so they're looking at what other law the legislature had before it when it enacted this than one thousand nine hundred and two including statutes in north carolina and south carolina where they did exempt public performance it's clear that it was deliberate if they wanted to carve out public performance there was a clear path to do so and your honor you asked earlier you know our client flow and eddie they had licensed their performances to other types of entities prior to bringing this litigation it was not a novel concept that public performance may be subject to license rights and just as they license for movie usage for restaurants for other places all their establishment that are going to perform them publicly that sirius x m now contends that this is a novel interpretation a law is against the law that we've seen and a and i do think it's important that here contesting the district court's determination that there was misappropriation and conversion and that is because they don't have they don't contest there's a property right here there is and even sirius m concedes that there is a property right that flow and he invested its time and money and resources in that it was easily misappropriated by sirius x m at no cost the cost to buy a cd and that it caused injury in the district court so held that it undermined the licensing rights and loyalties of flow and eddie you believe any of those grounds are inappropriate basis on which to affirm what the district court found here above and beyond the statutory analysis ambiguous on its face to say it's an exclusive ownership as against all other persons and with only one exception for cover songs that beings that the context around how that statue came to be the long history of cases in california and the fact that the california legislature intentionally did not adopt a public performance exception are all corroborate the way exclusive ownership should be interpreted california already had on the books a criminal law in six thousand five hundred and thirty eight which made it which prescribe criminal conduct for copying sound recordings for the purpose of public performance it is very clear that the california legislature deemed it important to protect not just the sale of an actual record or tape but the artistic performance that was embodied in so your honor the statute is clear on its face but even with the cont it makes clear that a deliberate decision was made to encompass performance rights rather than carve them out as the federal government had done and the states have done as well and your honor if you look at the stanley versus columbia broadcasting case which is a california supreme court action there a show had been submitted to c b s they copied portions of it and then developed their own broadcast that they then aired on radio and the california supreme court found that they had embodied plaintiffs program not piracy embodying a performance likewise the california appeals court in erik's and found that phoenix can just copy or made imitations of the death that they had actually appropriated the product itself so we believe the the long line of cases that predated the introduction of nine hundred dollars make clear that california regarded sound recordings differently and exclusive ownership has a specific meaning both in the statute and in the context of property rights that has gone back one hundred years and makes clear that it is right as against all others now the council had described a federal law and the need to specifically carve out aspects of the copyright act state law is broad and is presumed to encompass all of these rights absent a specific direction otherwise and that's what we have here in the state courts adoption of the statute in the legislatures adoption of the statute again it would drew from the history of cases misappropriation and conversion  to the major record labels without there being any disruption and how they operate and of course there are now many entities that will are subject to the federal requirement that they pay royalties sound reporting usage and broadcasters have as sirius x m does have to pay for the underlying composition if they want to establish a compulsory license to do so that avenue is available to them what's not available is taking a cd using it to profit and to be able to serve hundreds of thirty million dollars subscribers for enormous amount of money and to pay the sound recording owners nothing that's that's actually a denigration of the sound recording right just briefly on the commerce clause issue that judge callahan raised it is clear that federal law intended to carve out protection for and the ability for states to regulate in the area of and seventy two dollars sound recordings they were explicit about it and this is expressly authorized action and it is of no burden to simply have to pay a license fee or royalty for a sound recording or so that you can stated you didn't address in your opening that would be helpful for me anyway sure if you're talking about unfair competition and conversion of course where we're contesting that we contested in our brief and the answer to that is pretty simple  cases like ericsson heilman unfair competition and conversion cases in california all we're talking about piracy copying without authorization this court held in pandora that those cases were all about piracy and had nothing to do with their performance right and as the new york court of appeals has explained there's a big difference between piracy and performance there is piracy has always been understood to be unfair competition because you're taking somebodies work and you're using it for a purpose for which it's not meant a record isn't meant to be copied and resold in competition with the record company but a record a record of course is meant to be played that's the whole purpose of it it's meant to be performed in flow in eddie's parlance and so no court has ever held that performing playing a record is unfair competition the nd circuit has held that it's not the florida supreme court has held that it's not a district court in illinois has held it is not and no court ever has held that it is so that's that's the answer to unfair competition now like this is an interactive service where where a user can actually pick the song they hear the song on the radio just like they did in the radio in one thousand nine hundred and two but more important they say that they didn't sue because they didn't think it was worth it for them to enforce a performance right it's a good submitted a long document saying that they wanted and needed a performance right now they wanted a compulsory licensing regime it's true they didn't think that a radical right like this was plausible but they were asking for a performance right at the time so it's totally implausible that they got one litigated i'm not sure it latches is exactly the right frame because you know they didn't we serious exam was in around one thousand nine hundred and two but i think it goes to the statutory construction because you always look at the conduct and understanding of the relevant factors including obviously legislatures whether slater's but also the regulated parties to figure out what a statute meant and without a clear statement you can't possibly construed a statute to mean what they say because it means everybody missed it for thirty years now on whether exclusive ownership necessarily includes the right to stop everybody who buys an album from playing it i think that question answers itself because it would stop from playing it in my living room if that were right but it was also answered by the pandora case i see on that of out of time your honor i was going to be hanged at let me find out if anyone has any additional questions is there give any of the judges have any additional doesn't answer this question two is that the converse exception by its terms only applies to piracy so it doesn't say anything in particular about a performance right about whether there was a performance right in the statute in the st place and rd what it does is highlight that the legislature knew how to make exceptions to the rights that it did adopt and yet strikingly didn't make any exceptions from a performance right including from bars restaurants or even people that buy the records and that seems to me as good as evidence as any that the plaintiff's reading is