AARC | Alliance of Artists and Recording Companies

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Auto Litigation

On July 25, 2014, AARC filed a federal class action lawsuit against Ford, GM, and two electronics manufacturers, Denso and Clarion, to recover royalties they owe under the Audio Home Recording Act (AHRA) for automobile-based digital audio recording devices.

A Message from AARC’s Executive Director
 

Dear Members and Friends:
 

Today, AARC filed a federal class action lawsuit against Ford, GM, and two
electronics manufacturers, Denso and Clarion, to recover royalties they owe under the Audio Home Recording Act (AHRA) for automobile-based digital audio recording devices.

 

We did not take this step lightly. We filed suit only after exhaustive efforts to negotiate a compromise – and being stonewalled by these companies at virtually every corner.
 

While there are no sure things whenever the courts are involved, the devices at issue are AHRA-covered music recording systems that allow consumers to rip copies of their CDs and other music and store them in car-based hard drives. Ford’s device is explicitly marketed as “a 10GB digital Jukebox that can hold up to 2,400 songs.” And GM marketing materials explain that to “maintain optimal focus on the top priority of digital music, the hard drive will not accept photos or other sorts of data.” I believe the defendants will have a difficult time convincing the court they do not owe royalties under the statute.


For years, the defendants have reaped the benefits of the tradeoff at the heart of the AHRA – protection for consumers making personal copies of their music and legal certainty for companies manufacturing, importing, and distributing digital music recorders in exchange for royalties to music creators – yet now they refuse to hold up their end of the deal. In my opinion, that’s immoral and unjust.


AARC will not stand by and allow the AHRA, which has served consumers, companies, and music creators so well, to be gutted in this fashion. We will do whatever it takes to protect the rights of our members and all AHRA beneficiaries.


Additional information about the action can be found here, and I will share further updates as I receive them.


Thank you very much for your support.


Sincerely,


Linda R. Bocchi, Esq.
Executive Director
Alliance of Artists and Recording Companies

OFFICIAL PRESS RELEASE
FOR IMMEDIATE RELEASE: July 25, 2014

 

CONTACT:
Kristen Hainen (703) 395-2072
Kristen@lawmedia.net

Artists/Labels’ Org Sues GM and Ford for Unpaid Music Royalties

Alliance of Artists and Recording Companies files federal class action
to collect millions owed performers, songwriters, and copyright owners
for car-based digital music recorders

 

(Washington, DC) Today, the Alliance of Artists and Recording Companies (AARC) filed a federal class action lawsuit against General Motors, Ford, and electronics manufacturers Denso and Clarion to collect royalties and damages owed to artists, songwriters, record labels, and music publishers under federal law.

 

The Audio Home Recording Act (AHRA) – passed unanimously by Congress in 1992 to protect consumers who make personal copies of their music – requires companies that make and sell certain music recording devices to pay royalties to recording artists, songwriters, and copyright owners (record labels and music publishers). By creating a fair and simple royalty scheme, the statute provides legal certainty to consumers and manufacturers and eliminates the need for case-by-case litigation of how any particular devices are used or the specific harm caused by any illegal copying or infringement. Many GM and Ford cars and trucks contain Denso and Clarion manufactured music systems that are covered by the AHRA, but all four companies have refused to pay the royalties they owe.

 

AARC – which represents 300,000 performers and copyright owners for purposes of AHRA royalties – has made every effort to resolve this dispute without litigation. However, the defendants have refused to acknowledge their obligations under the AHRA for two years. Other manufacturers, importers, and distributors of comparable music recorders pay the required royalties without controversy.

 

“Twenty-two years ago, cooperation between music creators and device manufacturers resulted in legislation that led to a digital electronics revolution. But having reaped the benefits of this bargain, Ford, GM, Denso, and Clarion have now decided to ignore their obligations to music creators and declare themselves above the law,” said AARC Executive Director Linda Bocchi. “While no one likes litigation, Ford, GM, Denso, and Clarion have stonewalled long enough, and we are determined to collect the royalties our members – and all artists and music creators with rights under the AHRA – are owed.”

 

Ms. Bocchi pointed out that other companies with comparable music recorders already pay AHRA royalties and that the devices at issue are digital music recorders within the definitions of the AHRA. For example, Ford and GM claim that the recording functions of the devices at issue are not primarily designed or marketed for music. Yet Ford’s device is advertised as “a 10GB digital Jukebox that can hold up to 2,400 songs.” And GM marketing materials explain that to “maintain optimal focus on the top priority of digital music, the hard drive will not accept photos or other sorts of data.”

 

“The defendants here are taking all the benefits of the AHRA without holding up their side of the bargain,” Ms. Bocchi added. “And that’s just not right.”

 

Additional Background

About the AHRA

The AHRA was enacted unanimously by Congress and signed by President George H.W. Bush in 1992. Unlike earlier analog taping systems, digital technology posed a unique threat to the market for recorded music, since copies – and copies of copies – would retain perfect or near-perfect sound quality. Device manufacturers worried they would be liable for aiding illegal copying if they marketed new digital recorders, and artists, songwriters and copyright owners worried about the impact on sales. The result was a compromise, enacted in the AHRA, which immunized device manufacturers, importers, and distributors from liability for copyright infringement, but required them to pay royalties for the digital audio recording device they sold. Manufacturers, importers, and distributors of digital recording media (such as blank CDs) are covered in the same way. Finally, the AHRA requires music-recording devices to include certain protections against repeated – or “serial” – copying (making copies from copies, instead of original recordings). The statute thus created a fair and simple royalty scheme in lieu of case-by-case litigation of how any particular devices are used or the specific harm caused by any illegal copying or infringement.

 

AHRA royalties are capped at $8 per single device and $12 for physically integrated devices (and can be as low as $1 per device depending on its market price). They are paid into the U.S. Copyright Office. The U.S. Copyright Royalty Board then distributes the royalties to artists, songwriters, copyright owners, and the organizations representing them.

The AHRA authorizes lawsuits, such as AARC’s current class action against GM, Ford, Denso, and Clarion, to recover up to one-and-a-half-times the amount of unpaid royalties, as well as substantial additional damages for failure to protect against the potential for serial copying.

 

About AARC

 

The Alliance of Artists and Recording Companies, Inc. (AARC) is the leading organization representing featured recording artists and sound recording copyright owners, both domestically and abroad, in the areas of hometaping/private copy royalties and rental/lending royalties. AARC, a nonprofit organization, was originally formed to collect and distribute the royalties from the Audio Home Recording Act of 1992 (AHRA) to featured recording artists and sound recording copyright owners (usually record companies). However, based on its success in administering the AHRA royalties, AARC’s mandate was later expanded to include foreign hometaping/private copy and rental/lending royalties.

Led by Executive Director Linda R. Bocchi, Esq., AARC has been representing artists and copyright owners in connection with these rights for twenty-one years.

Lawsuit FAQ

What is the Alliance of Artists and Recording Companies?
The Alliance of Artists and Recording Companies, Inc. (AARC) is a nonprofit organization that collects and distributes Audio Home Recording Act royalties to featured recording artists and sound recording copyright owners (usually record companies). Linda R. Bocchi, Esq., is the Executive Director of AARC.

 

What is the Audio Home Recording Act?
The Audio Home Recording Act (AHRA) is a federal law that passed the House and Senate unanimously and was signed into law by President George H.W. Bush in 1992. It represents a consensus between the consumer electronics industry and music creators designed to eliminate legal uncertainty about the sale and marketing of innovative digital devices, protect consumers who make personal copies of their music, and ensure fair compensation to music creators.

 

The AHRA requires manufacturers, importers, and distributors of covered digital music recording devices and media (like blank CDs) to pay royalties into the U.S. Copyright Office. The U.S. Copyright Royalty Board then distributes these royalties to artists, songwriters, and copyright owners. The AHRA also requires these devices to prevent “serial” copying (making copies of copies). In exchange, AHRA protects consumers, manufacturers, importers, and distributors from liability for copyright infringement and eliminates the need for case-by-case litigation of how any particular devices are used or the specific harm caused by any illegal copying or infringement.

 

What is the purpose of this lawsuit?
Many automobiles feature music entertainment systems that allow owners to copy (or “rip”) music from CDs or other sources onto in-car hard drives. These devices are covered by the AHRA and companies that manufacture, import, or distribute them must pay AHRA royalties to the U.S. Copyright Office, which are then distributed to artists, songwriters, and copyright owners. GM, Ford, Denso, and Clarion manufacture, import, or distribute covered music recorders, but they have failed to pay the royalties they owe. AARC is bringing this federal class action on behalf of all music creators with rights under the AHRA to compel these companies to pay overdue royalties and damages they owe under the law.

 

How much is at stake? Who ultimately gets the money?
The total amount of royalties and damages owed will depend on the number of non-complying devices manufactured, imported, or distributed by the defendants, which will be established during the course of the litigation. The royalty amount for each covered device is relatively small, limited to between $1 and $12, although the number of devices involved may be large. The court may also award additional and far more substantial damages for devices that do not include technology to prevent serial copying.

 

You are only suing two auto manufacturers and two electronics companies – do the others pay royalties for their entertainment systems?
Other manufacturers, importers, and distributors of comparable music recorders pay the required royalties without controversy and we continue to monitor the market and research which companies are meeting their obligations and which are not. Hopefully, this action will educate others in the industry about their obligations under the AHRA and there will be no need for further litigation.

 

The auto companies say the recording functions of their devices are not “primarily” designed or marketed for recording music, as the AHRA requires. Why isn’t that a successful defense?
Ultimately, the defendants claim that the recording function of devices marketed as a “10GB digital Jukebox that can hold up to 2,400 songs” or an “Infotainment” system in which “music from CDs can be recorded and stored on the hard drive”are not primarily designed or marketed for recording music. We do not believe that argument will be persuasive in court.


Who is really hurt when someone copies a CD onto a car recorder? Why should anyone pay royalties for that?
With its fundamental give and take of royalties for music creators and copyright owners in exchange for legal certainty for consumers who make personal copies of their music and companies that manufacture, import, and distribute digital music recording devices, the AHRA has helped create a new world of convenience and innovation and a vast digital electronics economy. The statute thus created a fair and simple royalty scheme in lieu of case-by-case litigation of how any particular devices are used or the specific harm caused by any illegal copying or infringement. 

 

We now take for granted how a scratched record, unwound tape, or etched CD no longer automatically results in the need to buy another physical copy. That benefit is certainly true in the case of the devices central to this litigation – auto entertainment systems that substitute hard drive recordings for more fragile and bulky original media on the road.

 

However, after reaping the benefits of this landmark law, defendants may not back out of their end of the bargain.