A federal judge in Chicago scuttled a class action over music royalties, saying no law allows a couple who otherwise own the rights to many chart-topping tunes from the 1950s and ‘60s to exact payment from broadcasters who play their songs.

Judge John J. Tharp Jr. sided with iHeartMedia in his June 5 ruling in the action brought by Arthur and Barbara Sheridan, who own master recordings of many of the hit songs from bygone days. The Sheridans say they and other copyright holders should be entitled to royalties when iHeartMedia plays certain songs on its radio and internet broadcasts.

Tharp noted federal copyright law applies only to recordings made after Feb. 15, 1972. Though the Sheridans claimed they are victims of common law copyright infringement, unfair competition, conversion and unjust enrichment — all state law claims —iHeartMedia argued the plaintiffs failed to state a viable claim.

According to the original complaint, Arthur Sheridan owned and operated “several recording companies specializing in recording and selling doo-wop, jazz, and rhythm and blues music” in the 1950s and 1960s, including artists like the Flamingos, J.B. Lenoir and the Moonglows. In addition to owning audio masters, they also assert ownership of “intellectual property and contract rights associated with the recordings,” which they continue to market to receive “revenue from licenses granted to third parties to publicly perform the recordings.”

The Sheridans said iHeartMedia has not obtained any licenses to use music they own on iHeartRadio, which includes hundreds of traditional AM and FM radio stations, as well as online streaming software and services reaching more than 70 million registered users. They asserted the issue belonged in federal court because the class includes residents of multiple states, has more than 100 members and has more than $5 million at stake.

For Tharp, the primary issue was whether Illinois provides common law copyright protection to pre-1972 recordings sold to the public without licenses for public performance. And in Illinois, publication “extinguishes the common law copyright,” he wrote.

“Both the Illinois Supreme Court and the Seventh Circuit, however, have construed the concept of dedication to the public to include acts by which members of the public could access copies of the work — particularly through sales,” Tharp said.

The judge further clarified the Sheridans erred by attempting to position their recordings as having the same protections as musical compositions: “By selling such recordings, the Sheridans did not, and could not, divest the compositions of their copyright protection. But they could, and did, divest the recordings of performances of those compositions of common law copyright protection by selling those recordings to the public.”

Tharp used similar logic with respect to the unfair competition claim, noting Illinois law technically addresses piracy — “creation and sale of physical unlawful copies of sound recordings.” The Sheridans did not allege iHeartMedia stole the music it plays, only that it engaged in broadcasting, for which state law has codified exemptions. He said the claim “is premised on the unfairness of acknowledging the settled expectations of virtually an entire industry” and therefore provides no cause of action under Illinois law.

The “conversion claim fails to clear the first hurdle” by failing to assert a property right that precludes public performance, Tharp added. Further, established precedent dictates Illinois law applies conversion claims only to tangible rights, and the Sheridans did not plead a tangible object was taken from them, as Illinois courts have concluded digital copies may not be considered tangible property.

Tharp also agreed with iHeartMedia when it argued the unjust enrichment claim failed because it is derivative of the common law copyright claim. He granted the motion to dismiss all four counts, and said since “the dismissal is based on the incurable lack of any state law cause of action, rather than curable pleading deficiencies, the dismissal is with prejudice.”

The Sheridans were represented in the action by attorneys with the firm of Hagens Berman Sobol Shapiro LLP, with offices in Chicago and Phoenix.

iHeartRadio was defended by the firm of Latham & Watkins LLP, with offices in Chicago and San Francisco.

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Organizations in this Story

Hagens Berman Sobol Shapiro, LLP
455 N Cityfront Plaza Dr
Chicago, IL 60611

Latham and Watkins LLP
330 N Wabash Ave
Chicago, IL 60601

U.S. District Court for the Northern District of Illinois
219 S Dearborn St
Chicago, IL 60604

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