Updated at 12:11 p.m.
Music copyright lawyers: Don't touch that dial. Nonprofit SoundExchange Inc., which collects and distributes digital performance royalties and distributes them to artists and copyright owners, filed a lawsuit yesterday accusing Sirius XM Radio Inc. of underpaying.
In the complaint, filed in U.S. District Court for the District of Columbia, SoundExchange claimed Sirius wasn't including certain revenues in a formula designed to calculate how much the satellite radio company should pay in royalties under its license. Sirius, according to SoundExchange, excluded revenues from pre-1972 recordings, certain premium subscription packages and products developed by XM Satellite Radio Holdings Inc. before it merged with Sirius in 2008.
Jenner & Block's Michael DeSanctis, the firm's former managing partner and a member of the content, media and entertainment practice, is leading SoundExchange's effort to recover damages the nonprofit estimated were worth a minimum of $50 million and possibly more than $100 million. DeSanctis said today that SoundExchange had been a "long and very good client" of the firm since around 2005.
In a formal statement, SoundExchange President and Chief Executive Officer Michael Huppe said Sirius "is knowingly withholding royalties from the creators who bring life to their service, even as the company continues to experience unprecedented and explosive growth."
A spokesman for Sirius declined to comment.
SoundExchange, according to the complaint, collects royalties based on a formula developed by the federal Copyright Royalty Board. Under the formula, Sirius was required to pay a certain percentage of its gross revenue. SoundExchange alleged that Sirius improperly excluded certain revenues from the gross revenue it reported in violation of the federal Copyright Act.
The case is assigned to U.S. District Judge Richard Leon. No hearings are currently scheduled.