A federal court has dismissed SoundExchange’s $150 million lawsuit against SiriusXM, ruling the royalty collector lacks the legal authority to sue over alleged underpayments. US District Judge Naomi Reice Buchwald cited Section 114 of the Copyright Act, concluding it provides no express or implied right for SoundExchange to litigate, leaving enforcement to individual copyright holders or Congress.
Without litigation power, SoundExchange may be limited to audits, arbitration, and regulatory negotiations, creating uncertainty over how royalty violations will be pursued. The lawsuit alleged SiriusXM underpaid royalties in 2018 by bundling satellite and streaming services to reduce reported revenue. Audit findings from Adeptus Partners allegedly confirmed the shortfall, but the court did not assess the claim’s merits, focusing solely on legal standing.
Judge Buchwald contrasted Section 114 with Section 115, which explicitly allows the Mechanical Licensing Collective to sue, noting Congress chose not to give SoundExchange similar authority. She rejected arguments from SoundExchange and supporting industry groups, including the Recording Industry Association of America, SAG-AFTRA, the American Federation of Musicians, and the American Association of Independent Music, that limiting litigation would harm artists, stating policy concerns cannot override clear statutory language.
SoundExchange also sought to sue under associational standing, but the court dismissed this approach, ruling it is not a traditional membership organization or a legal proxy for rightsholders. The decision leaves statutory licensees facing less legal risk from SoundExchange, potentially shifting enforcement to direct artist action or informal resolution.
SoundExchange had previously sued SiriusXM in 2013 over similar underpayment allegations, a case settled in 2018 for $150 million. This latest ruling may spark lobbying in Congress to amend the Copyright Act, as the Copyright Office has previously recommended granting SoundExchange explicit enforcement authority.