On August 7, 2025, a federal district court dismissed the complaint in a lawsuit brought by SoundExchange, Inc., an independent nonprofit representing owners of copyrighted sound recordings that sought underpaid royalties from satellite and internet radio company Sirius XM.1 The court held that the Copyright Act did not confer a private right of action upon SoundExchange to sue, despite its responsibility under the statute for administering the Act's licensing and royalty components.
Background
Sirius XM, like many other radio and streaming service providers, operates pursuant to statutory licenses set forth in Sections 112 and 114 of the Copyright Act to reproduce and digitally transmit sound recordings lawfully released to the public in the U.S. without the need to negotiate with individual sound recording copyright owners for such rights. SoundExchange is a nonprofit organization jointly controlled by representatives of sound recording copyright owners and recording artists that has been designated by the Copyright Royalty Board to collect and distribute royalties pursuant to those licenses.2 In its complaint, SoundExchange alleged that by bundling different service offerings eligible for different royalty structures, Sirius artificially depressed the base for royalty calculation, resulting in underpayment of approximately $150 million in statutory royalties. Sirius moved for judgment on the pleadings, arguing that SoundExchange lacked statutory standing to sue.
Dismissal
Judge Naomi Reice Buchwald, writing for the U.S. District Court for the Southern District of New York, granted Sirius's motion and dismissed the complaint in its entirety. The court held that SoundExchange did not have express or implied authority under the Copyright Act to commence a legal action to enforce Section 114's royalty payment obligations. Beginning with the text of the statute, the court found no express authority because "Section 114 lacks an explicit provision extending SoundExchange a right of action or the power to otherwise bring an action to litigate a royalty dispute"—a proposition, according to the court, that SoundExchange did not dispute. The court also found persuasive that other portions of the Copyright Act do contain an express grant of litigation power, including Section 115, the "mechanical" statutory license for the reproduction and distribution of musical works, which explicitly confers "legal enforcement" authority on the "Mechanical Licensing Collective," an entity that performs similar functions as SoundExchange for the collection and distribution of royalties paid for the reproduction and distribution of nondramatic musical works pursuant to statutory license.
The court opined that the Copyright Act contained no clear manifestation that Congress intended to imply a private right of action under Section 114, either. The court rejected as "unpersuasive" SoundExchange's argument that Section 114's reference to "licensing and enforcement rights," including "negotiations or arbitration proceedings," necessarily implied the authority to commence an action in federal court. The court also pointed to other enforcement avenues that SoundExchange could pursue, such as monitoring, investigation, regulatory mechanisms, and the "threat of potentially costly and invasive audits, arbitrations, etc.," as supporting its read of the statute. Finally, the court disagreed with SoundExchange's additional arguments beyond statutory construction, based on policy, precedent, legislative history, and associational standing.
Takeaways and Implications
SoundExchange issued a statement reacting to the decision, stating it "firmly believes Judge Buchwald's interpretation is entirely wrong on the law."3 It commented in particular that the order "undercuts" Congress's intent to "promote efficiencies in the music licensing marketplace, including the enforcement of the statutory license by SoundExchange as the designated collective." SoundExchange suggested that it may appeal the decision and/or file actions in state courts to collect the royalties it contends are owed to its constituents.
The decision potentially disrupts SoundExchange's role in administering the collection and distribution of royalties paid pursuant to Sections 112 and 114 of the Copyright Act. Specifically, parties subject to audits under the regulations adopted by the Copyright Royalty Board may not be subject to federal court litigation brought by SoundExchange over royalty disputes.
Wilson Sonsini regularly counsels companies operating under the Section 112, 114, and 115 statutory licenses, including defending companies subject to royalty audits, and has successfully defended companies from tens of millions of dollars of improper claims arising out of royalty audits. For more information, please contact Gary R. Greenstein or your regular attorney at Wilson Sonsini.
[1] SoundExchange, Inc. v. Sirius XM Radio, Inc., No. 1:24-cv-05491-NRB (S.D.N.Y. Aug. 7, 2025).
[3] SoundExchange Slams Judge’s Ruling in SiriusXM Case as “Entirely Wrong on the Law,” Music Business Worldwide (Aug. 11, 2025), available at https://www.musicbusinessworldwide.com/soundexchange-slams-judges-ruling-in-siriusxm-case-as-entirely-wrong-on-the-law/.
