Photo Credit: Levi Meir Clancy
All SoundExchange can do is wait in its cases against Sonos and SiriusXM, as the latter lingers in appeals, halting proceedings in the former.
After collection agency SoundExchange attempted to sue SiriusXM over unpaid royalties, the case was dismissed when the court determined that SoundExchange lacked the legal standing to sue companies over royalties. The collection agency is appealing that decision, but doing so has also halted SoundExchange’s similar lawsuit against Sonos, which was paused late last year pending the outcome of the appeal in the SiriusXM case.
Now, the Sonos case has been removed from the docket while the appeals process drags on, leaving Sonos effectively off the hook depending on the Court of Appeals’ decision. In December, a federal judge stayed SoundExchange’s royalties lawsuit against Sonos pending the resolution of an appeal in the collection agency’s “very similar action” against SiriusXM.
“The present case will be stayed until two weeks after the issuance of the (…) order on the appeal in the Sirius action,” wrote Judge Hernán Vera. “At that point, the parties can present their respective positions on what effect, if any, the Sirius appellate decision has on the Court’s (…) analysis here.”
The SiriusXM case, which began over a dispute related to an alleged underpayment of $150 million in royalties, has ballooned into a test of a collection agency’s power to take companies to court over unpaid royalties. Recently, the Second Circuit Court of Appeals heard arguments in SoundExchange’s efforts to overturn the lower court’s ruling that Congress never gave royalty collection agencies the authority to sue companies for alleged royalty underpayment under federal law.
A ruling in SiriusXM’s favor could have major consequences for SoundExchange, not just in its ongoing litigation against Sonos, but also in its ability to pursue alleged underpayments in court in general—and to potentially leave rights owners to fight these battles themselves.
The case against Sonos dates back to June, when SoundExchange accused the company as well as Napster of failing to pay “in excess of $3.3 million” in royalties and fees. Since the alleged underpayment took place in 2022 and 2023, much has changed for Sonos Radio and Napster; the former made a new deal with Deezer, while the latter found a new owner after a catastrophic fundraising round.