AARC Files Federal Class Action Lawsuit – Press Release


Kristen Hainen (703) 395-2072

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.