by David Schulman*
Prior to 2018, copyright law did not require payment of royalties for sound recordings to pre-1972 artists (or the respective copyright owner), creating a massive pay disparity between pre-1972 artists and contemporary artists who had a statutory right to receive those royalties. In 2018, Congress enacted the Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society (“CLASSICS”) Act to remedy this gap in protections and payments between legacy and contemporary artists. Essentially, the CLASSICS Act ensures that pre-1972 artists are afforded copyright-like protections and liberties in line with what their contemporary peers have enjoyed for years. The question yet to be resolved is whether the Act should apply retroactively. Retroactive application of a new legal right implicates due process rights given that vested interests, particularly in previously negotiated contracts, may be negatively impacted. This Contribution argues that the CLASSICS Act should apply retroactively given its purpose and status as economic legislation. Moreover, retroactive application of the CLASSICS Act would not violate due process rights notwithstanding potential adverse effects on reliance interests because the Act meets the requisite rational basis test.
The U.S. Constitution’s Copyright and Patent Clause grants Congress the power “[t]o promote the Progress of Science and useful Arts by securing for limited Times to Authors . . . the exclusive Right to their . . . Writings.”1 Pursuant to that power, Congress created the first federal copyright statute that provides copyright owners with the exclusive rights to distribute, reproduce, or publicly perform their works.2 Copyright owners can also license out their creative works for others to use whether it be for streaming purposes, sampling to create a new song, or for public performance of the work.3 As a result, when such exclusive rights are violated, copyright owners are entitled to sue for infringement.4 This system of rights and legal remedies has been in operation for years, however, legacy artists whose works were recorded prior to 1972 were not afforded these same basic protections. This is because the Copyright Amendment of 1971 explicitly provided federal copyright protection only to sound recordings on or after February 15, 1972.5 Correspondingly, there was no retroactive copyright extended to pre-1972 works.
In order to close this loophole and bring pay parity to legacy artists, Congress passed the CLASSICS Act to create “royalties for so-called ‘pre-72 works’ using the same . . . system for royalties already applicable to post-72 works . . . [which previously] generate[d] no royalties for older artists.”6 The CLASSICS Act also ensures that copyright owners’ rights are now uniform within the United States, since pre-1972 sound recordings were previously only protected by any applicable state laws or common law precedent.7 However, the first issue that the music industry will now face is whether the Act applies prospectively or retroactively.
The CLASSICS Act should be interpreted to apply retroactively for a number of reasons. First, economic legislation is given a presumption of constitutionality and can be applied retroactively. Second, retroactive application of the CLASSICS Act would be faithful both to Congress’s clear legislative intent to remedy the inequity in our laws and provide rights to legacy artists. This understanding is also supported by the plain meaning of the statute. Finally, when applying laws retrospectively, due process rights are implicated, but the CLASSICS Act is still constitutional when applied in this manner because it passes the rational basis test, it is well within Congress’s authority to create retroactive laws, and there is no manifest injustice that would be created by retroactivity here.
First, while Congress is explicitly forbidden from creating ex post facto criminal laws, Congress has the ability to legislate both prospectively and retrospectively in the civil context.8 Retroactive application of a civil statute does bring up potential due process concerns,9 but this does not mean such an application is per se unconstitutional. Indeed, while traditionally a presumption against retroactivity attaches to legislation, the retroactive application of economic laws often passes constitutional muster.10 Economic legislation is fundamentally any law that concerns itself with wealth, businesses, and contracts. Economic legislation concerning taxes, retirement benefits, and employee disability benefits have all been applied retroactively and survived constitutional challenges on this issue.11 This is because “legislative Acts adjusting the burdens and benefits of economic life come to the Court with a presumption of constitutionality, and . . . one complaining of a due process violation [has] to establish that the legislature has acted in an arbitrary and irrational way.”12 Akin to a new tax or retirement law changing the previous statutory scheme as Congress sees fit, the CLASSICS Act provides copyright-like protections to pre-1972 artists and allows them to earn royalties from digital streaming in order to adjust and rebalance the finances of copyright.
Further, the CLASSICS Act should be understood to apply retroactively because Congress’s purpose is abundantly clear and “where the congressional intent is clear, it governs.”13 Accordingly, legislative materials for both the Senate and House bills of the Act support retroactive application here. The House stated that the purpose of the CLASSICS Act, which is Title II of the Music Modernization Act (“MMA”), was to assist “older artists who have highlighted the negative impact upon their ability to survive economically as they increasingly enter their retirement years.”14 Likewise, Senate co-sponsors of the bill went on the record to say that the laws in our country were outdated and that the MMA overall is necessary to modernize copyright protections.15 Furthermore, the Senate stated its clear goal that the Act compensate aging, legacy artists who are near retirement and unable to make money from touring.16
Tellingly, several companies who would be directly and detrimentally impacted by a retroactive application of the CLASSICS Act actually encourage such an interpretation. For example, Mitch Glazier, the President of the Recording Industry Association of America (“RIAA”), testified during a Senate Judiciary Committee Hearing regarding the MMA.17 He called previous copyright law and the gap in protections a “quirk in the law” and agreed that the bill would close the “loophole” that allowed legacy artists to be exploited.18 RIAA’s members include major record labels and distributors, and it is representative of the many businesses currently paying royalties to artists. As such, to have industry support like RIAA’s supplements clear legislative intent that the CLASSICS Act would apply retroactively. It is without question that Congress, industry representatives, and artists agree that pre-1972 artists had been waiting for decades to enjoy copyright-like protections and royalty payments from digital streaming just like their contemporary peers have, particularly given how pervasive streaming is in American consumption today. Correspondingly, courts’ interpretation of the CLASSICS Act should reflect its purpose to address these long-standing concerns.
Moreover, statutory interpretation leads to the same determination of retroactivity.19 Applying a textualist approach, plain meaning, the dominant mode of statutory construction in the federal courts, points towards retroactive application of the CLASSICS Act.20 The text of the statute provides that “[a]nyone” is covered by the Act’s provisions, subject to explicit and specific exceptions for “certain authorized transmission and reproductions.”21 “Anyone” is defined as “any person at all”22 and therefore makes no distinction between pre-1972 and post-1972 artists. Further support for retroactive application comes from the title of the Act itself.23 Calling the legislation the “Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society Act” was a direct way for Congress to showcase its retroactive objective for the Act. In light of these textual directives, to hold that the CLASSICS Act only applies prospectively would go against the explicit purpose of the Act and an absurd result would ensue, which our courts must avoid whenever possible.24
Thus, ordinary statutory interpretation principles support a retroactive application of the CLASSICS Act. Precedent also provides further support given that retroactive application of economic legislation is favored with a presumption of constitutionality.25 In light of this historical practice, the clear intention and plain language of the CLASSICS Act, and precedent, there should be no issue, considering the statute alone, with providing pay parity in a retrospective fashion.
However, such retroactive application does implicate due process rights for those who have contracts that rely on the use of pre-1972 sound recordings subject to the pre-CLASSICS Act loophole. Despite this, under the retroactivity analysis above, those previous contracts will not be exempt from the CLASSICS Act provisions. In considering such due process concerns, the Court has said that when legislation is applied retroactively, as it should be here, a due process challenge requires the Court to review the law under a rational basis test.26 Rational basis review is the most deferential form of review, making it a very high standard for plaintiffs to overcome, since the law needs only to be “supported by a legitimate legislative purpose furthered by rational means.”27 Here, the rational basis test is easily met: the CLASSICS Act and MMA are well-thought-out, rational means to achieve a legitimate end—pay parity among all artists.
In addition to satisfying the rational basis test, there is historical and legal support for the argument that retroactive application of CLASSICS Act would not be an unconstitutional infringement on due process rights. This is because while the use of property and making of contracts may be private matters and thus are generally free of government interference, “neither property rights nor contract rights are absolute . . . . Equally fundamental with the private right is that of the public to regulate it in the common interest.”28 Likewise, “[h]istory reveals an unbroken congressional practice” when copyright laws were amended in the past indicating that copyright extensions were granted to existing copyrights retroactively, with no notice given, and on the effective date of enactment despite the impact such legislation had on private parties.29
Significantly, Congress has the power to impose new constraints on the way property and contract rights are used or to condition their retention on certain affirmative duties.30 If a legitimate legislative objective is being furthered by imposing new duties or constraints upon the continued usage of private property, then the restriction is permissible.31 Similarly, due process does not guarantee that the freedom to contract is absolute, and Congress, exercising its constitutional power to regulate commerce, can alter private agreements if the impact is not unreasonable.32 Although individuals and companies may have reliance interests in their previous unfettered use of pre-1972 works, Congress has the power to alter those expectations.33
Relatedly, although rational basis review does not require notice to prevent unfairness,34 the general trend of federal copyright law and recent technology innovation provides a basis of constitutional notice for the CLASSICS Act.35 “[I]t has been widely known that whenever Congress has extended copyright terms, it has done so retroactively, granting the benefit of the extension to all works still under copyright on the effective date of the extension.”36
Finally, no claim against the CLASSICS Act’s retrospective use would result in a manifest injustice to anyone’s rights. The Supreme Court instructed in Bradley v. School Board of Richmond that when considering retroactivity and due process rights, courts must consider whether the nature and identity of the parties are changing, the nature of the implicated rights, and the nature of the impact of the change in law upon those rights.37 Using a balancing approach, the court must weigh these factors and determine if the retroactivity will result in a manifest injustice. Analyzing the CLASSICS Act in this manner, retroactive application does not result in a manifest injustice because it only modifies the relationship between artists, record labels, and streaming services in a specific manner: Pre-1972 artists (or copyright owners) would have to be paid royalties for the use of their copyrights as appropriate. This change means that individuals and companies who were taking advantage of the loophole will now have to pay legacy artists for many previously uncompensated uses, such as public performances and streaming. As the legislative history reveals, this change is exactly what Congress contemplated and intended. The goal of not only providing copyright-like protections to pre-1972 artists but also making them whole in terms of pay parity is abundantly clear and does not change the parties’ identities and overall relationship, nor the nature of their rights. The material change now is that payment is owed to legacy artists, which is not a manifest injustice to previously contracted parties.
The CLASSICS Act is a piece of economic legislation with the unambiguous goal of fixing a major gap in copyright law. Given Congress’s unequivocal intent, basic principles of statutory construction, and the CLASSICS Act’s presumption of constitutionality as economic legislation, retroactive application of the Act should not be an open question but the only reasonable interpretation. It certainly is the desired one for aging, legacy artists who cannot tour anymore and who have been receiving fewer and fewer royalty payments simply because federal law did not previously protect them. Furthermore, such retroactivity is also constitutional. Although due process concerns may result from such an application of the CLASSICS Act, property rights are not absolute. Retroactive application of the CLASSICS Act assuredly survives the requisite rational basis review insofar as it provides a rational means to achieve a legitimate end. Thus, the CLASSICS Act is a retroactive law whose impact does not result in a manifest injustice in violation of due process. As such, courts should readily recognize that the CLASSICS Act requires a retroactive application to achieve pay parity in the music industry.
* David Schulman is a J.D. Candidate (2023) at New York University School of Law. This Contribution is a commentary on the problem from the 2022 BMI Entertainment and Media Law Moot Court Competition hosted by Cardozo Law School. The question presented was whether the CLASSICS Act should apply retroactively, and, if so, would this be a violation of due process rights since private contracts would be impacted. This Contribution presents a distillation of the side of the argument assigned to the author in the BMI Competition, and the views expressed herein do not necessarily reflect the views of the author.
1. U.S. Const. art. 1 § 8, cl. 8.
2. Act of May 31, 1790, 1 Stat. 124.
3. See id.; Copyright Act of 1976, 17 U.S.C. §§ 101–1332 (2018).
4. See 17 U.S.C. § 501(b) (“The legal or beneficial owner of an exclusive right under a copyright is entitled, subject to the requirements of section 411, to institute an action for any infringement of that particular right committed while he or she is the owner of it.”).
5. The Sound Recording Copyright Amendment of 1971, Pub. L. No. 92-140, § 3, 85 Stat. 391, 392 (1971).
6. S. Rep. No. 115-339, at 17 (2018).
7. See 2 Nimmer on Copyright § 8C.03 (2021).
8. See U.S. Const. art. 1 § 9, cl. 3 (“No Bill of Attainder or ex post facto Law shall be passed.”); Ames v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 567 F.2d 1174, 1179 (2d Cir. 1977) (“[N]or is the ex post facto law provision of the Constitution applicable to other than criminal statutes.”).
9. See Matthew P. Harrington, Symposium: Retroactivity of Law: Foreword: The Dual Dichotomy of Retroactive Lawmaking, 3 Roger Williams U. L. Rev. 19, 20 (1997) (“[T]here is always some controversy attending the promulgation of a legal rule that might affect past transactions or relationships.”).
10. See id. at 21 (“Where economic legislation is concerned, however, the Court has been quite lenient in permitting a great deal of retroactivity.”).
11. See, e.g., United States v. Carlton, 512 U.S. 26 (1994) (tax); Pension Ben. Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717 (1984) (retirement benefits); Usery v. Turner Elkhorn Mining Co., 428 U.S. 1 (1976) (employee disability benefits).
12. Usery, 428 U.S. at 15.
13. Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494 U.S. 827, 837 (1990).
14. H.R. Rep. No. 115-651, at 15 (2018).
15. Randy Lewis & Randall Roberts, Music industry hails passage of the Music Modernization Act, L.A. Times (Oct. 11, 2018, 2:35 PM), https://www.latimes.com/entertainment/music/la-et-ms-music-modernization-act-20181011-story.html (quoting Senator Orrin Hatch saying, “[o]ur music licensing laws are convoluted, out of date and don’t reward songwriters fairly for their work. . . . They’ve also failed to keep up with recent, rapid changes in how Americans purchase and listen to music.”); see also 164 Cong. Rec. S6259–6261 (daily ed. Sept. 18, 2018).
16. See S. Rep. No. 115-339, at 17–18 (2018).
17. Protecting and Promoting Music Creation for the 21st Century: Hearing Before the Comm. on the Judiciary, 115th Cong. 10 (2018).
18. Id.
19. See Litton Sys., Inc. v. Am. Telephone and Telegraph Co., 746 F.2d 168, 174 (2d Cir. 1984) (“Determination of retroactivity remains a matter of statutory construction.”).
20. See, e.g., Ali v. Fed. Bureau of Prisons, 552 U.S. 214 (2008) (holding that plain meaning prevails).
21. 17 U.S.C. § 1401(a)–(b).
22. Anyone, Merriam-Webster Online Dictionary.
23. See Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation Of Legal Texts 221 (2012) (titles and headings canon); I.N.S. v. Nat’l Ctr. for Immigrants’ Rts, Inc., 502 U.S. 183, 189 (1991) (“[T]he title of a statute or section can aid in resolving an ambiguity in the legislation’s text.”).
24. See Scalia & Garner, supra note 25, at 234 (absurdity doctrine).
25. See Kadrmas v. Dickinson Pub. Sch., 487 U.S. 450, 462–63 (1988) (requiring economic legislation to be “both arbitrary and irrational” to rebut the presumption of constitutionality); Usery, 428 U.S. at 15; see also Sheridan Square P’ship v. United States, 66 F.3d 1105, 1108 (10th Cir. 1995) (“Although the Due Process Clause places more stringent constraints upon the retroactive reach of Congress . . . we nonetheless favor retroactive economic legislation with a presumption of constitutionality and uphold such legislation unless the challenging party proves it to be arbitrary or irrational.”).
26. R.A. Gray & Co., 467 U.S. at 729.
27. Id.
28. Nebbia v. New York, 291 U.S. 502, 523 (1934) (citations omitted).
29. Eldred v. Ashcroft, 537 U.S. 186, 200 (2003); see, e.g., id. at 237 (Stevens, J., dissenting) (“To be sure, Congress, at many times in its history, has retroactively extended the terms of existing copyrights and patents.”).
30. See United States v. Locke, 471 U.S. 84, 104 (1985).
31. Id.
32. See Virginian Ry. Co. v. Sys. Fed’n No. 40, 300 U.S. 515, 558 (1937); Norman v. Baltimore & O.R. Co., 294 U.S. 240, 307–08 (1935) (“Contracts . . . cannot fetter the constitutional authority of the Congress. Contracts may create rights of property, but . . . [p]arties cannot remove their transactions from the reach of dominant constitutional power . . . .”).
33. See Nat’l R.R. Passenger Corp. v. Atchison Topeka & Santa Fe Ry. Co, 470 U.S. 451, 472 (1985) (“When the contract is . . . private . . . [a] due process violation must overcome a presumption of constitutionality and establish that the legislature has acted in an arbitrary and irrational way.” (internal citations and quotation marks omitted)).
34. Carlton, 512 U.S. at 34 (“[W]e do not consider . . . lack of notice . . . to be dispositive. In Welch v. Henry, the Court upheld the retroactive imposition of a tax despite the absence of advance notice of the legislation.”).
35. See Copyright Act of 1976, 17 U.S.C. §§ 101-1332 (2022) (containing all relevant Acts and amendments such as the original Copyright Act of 1976, the Copyright Renewal Act of 1992, the Sonny Bono Copyright Term Extension Act, the Digital Millennium Copyright Act, and the impact of the Berne Convention and the Uruguay Round Agreements Act); see also R.A. Gray & Co., 467 U.S. at 731–32 (“We have doubts, however, that retroactive application of the MPPAA would be invalid under the Due Process Clause for lack of notice even if it was suddenly enacted by Congress without any period of deliberate consideration.”).
36. Robert Brauneis, A Brief Illustrated Chronicle of Retroactive Copyright Term Extension, 62 J. Copyright Soc’y U.S.A 479, 479 (2015).
37. 416 U.S. 696, 718–21 (1974).