Sheridan et al v. iHeartMedia, Inc.
MEMORANDUM Opinion and Order Signed by the Honorable John J. Tharp, Jr on 6/5/2017: For the reasons stated in the accompanying Memorandum Opinion and Order, iHeartMedia's motion to dismiss 22 is granted with prejudice. Civil case terminated. Enter Judgement. Mailed notice(air, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
ARTHUR SHERIDAN & BARBARA
Judge John J. Tharp, Jr.
MEMORANDUM OPINION AND ORDER
Plaintiffs Arthur and Barbara Sheridan own the master recordings of many hit songs from
the 1950s and 1960s. Defendant iHeartMedia plays these recordings on its internet and
traditional broadcast radio stations without paying any sort of royalty or licensing fees to the
Sheridans. The Sheridans sued on behalf of themselves and others like them, claiming
iHeartMedia’s actions constitute common law copyright infringement, unfair competition,
conversion, and unjust enrichment. iHeartMedia has moved to dismiss the complaint for failure
to state a claim. For the reasons stated below, the motion is granted.
In the 1950s and 1960s, plaintiff Arthur Sheridan owned and operated “several recording
companies specializing in recording and selling doo-wop, jazz, and rhythm and blues music.”
Compl. ¶ 15. He and Barbara Sheridan own the “master sound recordings” of many “fixtures” of
these genres, by artists like the Flamingos, J.B. Lenoir, and the Moonglows. Id. at ¶ 16-17. They
assert they also own any “intellectual property and contract rights associated with the
All facts are drawn from the complaint. On a motion to dismiss, all well-pleaded facts
are accepted as true and all inferences are drawn in the plaintiffs’ favor. See Cincinnati Life Ins.
Co. v. Beyrer, 722 F.3d 939, 946 (7th Cir. 2013).
recordings” and continue to market these recordings, receiving “revenue from licenses granted to
third parties to publicly perform the recordings.” Id. at ¶ 18-19.
Defendant iHeartMedia, operating under the name iHeartRadio, “offers internet radio
services in the form of customizable music ‘stations’ that stream music to users on the internet”
as well as owning “hundreds” of traditional AM and FM radio stations, whose broadcasts also
can be streamed online. Id. at ¶ 24. Users who listen to customized stations hear advertisements
at “periodic intervals between tracks” and can skip only a limited number of tracks per day. Id. at
¶ 26. iHeartMedia has over 70 million registered users as well as millions of other conventional
radio listeners. Compl. ¶ 31. According to the complaint, iHeartMedia “regularly broadcasts to
Illinois listeners” the recordings owned by the Sheridans. Id. at ¶ 33. When these recordings are
transmitted, the recordings are reproduced for the purposes of buffering, streaming, and other
uses. Id. at ¶ 28. iHeartMedia has not obtained any licenses from the Sheridans. Id. at ¶ 34.
This case concerns only recordings made before February 15, 1972 (“pre-1972
recordings”) because, as explained further below, sound recordings made on or after that date are
subject to federal copyright law; to the extent that pre-1972 recordings have legal protection, it is
provided by state law (statutory and common law) rather than federal law. The Sheridans filed
this putative class action on behalf of themselves and other “owners of reproduction and public
performance rights in Pre-1972 Recordings that have been publicly performed. . . by iHeartRadio
. . . .” Id. at ¶ 37. They assert four state law claims: that iHeartMedia infringed their common law
state copyright (Count I), that iHeartMedia misappropriated their property under the Illinois
Uniform Deceptive Trade Practices Act (“IUDTPA”) (815 ILCS 510/1 et seq.) (Count II), that
iHeartMedia converted their property rights (Count III), and that iHeartMedia has been unjustly
enriched (Count IV). iHeartRadio has moved to dismiss all of the claims (see Mot., ECF No. 22),
which are discussed in more detail below.
The Sheridans assert this court has jurisdiction under the Class Action Fairness Act of
2005, 28 U.S.C. § 1332(d), because at least one class member is a citizen of a different state than
the defendant, there are more than 100 class members, and the aggregate amount in controversy
exceeds $5,000,000. Compl. ¶ 8. iHeartMedia has not contested the sufficiency of the class
allegations to confer subject matter jurisdiction, and given the large number of recordings that
could potentially be covered by a ruling on pre-1972 recordings, the Court finds the class
allegations as to diversity and the amount in controversy to be reasonable. See Back Doctors Ltd.
v. Metro. Prop. & Cas. Ins. Co., 637 F.3d 827, 830 (7th Cir. 2011) (“the estimate of the dispute's
stakes advanced by the proponent of federal jurisdiction controls unless a recovery that large is
legally impossible”). As claims under the Class Action Fairness Act are still governed by state
law like any other claim brought under diversity jurisdiction, the Court applies Illinois law (and
neither party has suggested that the Court should do otherwise). See Springman v. AIG Mktg.,
523 F.3d 685, 686 (7th Cir. 2008).
B. Common Law Copyright
Federal copyright law extends to sound recordings created on or after February 15, 1972.
Copyright protection for sound recordings “fixed” (recorded) prior to February 15, 1972,
however, is a matter of state law, rather than federal law. See 17 U.S.C. § 301(c). Both parties
offer their own takes on the history of copyright law, but the basic undisputed fact is that for
decades, the federal Copyright Act provided no protection for sound recordings (as distinct from
protected lyrics and musical notes). Much lobbying was done on the subject, but there was little
litigation. See Danielle Ely, Note, We Can Work It Out: Why Full Federalization of Pre-1972
Sound Recordings is Necessary to Clarify Ambiguous and Inconsistent State Copyright Laws, 23
GEO. MASON L. REV. 737, 740-742 (2016). In 1971, Congress enacted the Sound Recordings Act
(“SRA”), which provided limited protection for sound recordings fixed after it went into effect in
1972. See Pub. L. No. 92-140, sec. 1(a), § 1(f), 85 Stat. 391, 391 (1971). In 1976, Congress
added the language currently found at § 301(c), which clarifies that state copyright law governs
Illinois has no state copyright statute governing sound recordings, unlike some other
states, such as California. See Cal. Civ. Code § 980(a)(2); see also Flo & Eddie Inc. v. Sirius XM
Radio Inc., No. CV 13-5693 PSG RZX, 2014 WL 4725382, at *4 (C.D. Cal. Sept. 22, 2014),
reconsideration denied, No. CV 13-5693 PSG (RZX), 2015 WL 9690320 (C.D. Cal. Feb. 19,
2015). The question, then, is whether Illinois provides common law copyright protection to pre1972 sound recordings that have been sold to the public, but were not licensed by the defendant
for public performance.3
For a survey of the reasons why Congress may have added this language, see Ely, 23
GEO. MASON. L. REV. at 742-43. For this Court’s purposes, all that matters is that Illinois law is
the only applicable governing law. Although some scholars have objected that the Supremacy
Clause may prevent the application of state copyright law to pre-1972 recordings, see, e.g., Julie
Ross, Unhappy Together: Why The Supremacy Clause Preempts State Law Digital Public
Performance Rights in Radio-Like Streaming of Pre-1972 Sound Recordings, 62 J. COPYRIGHT
SOC’Y 545 (2015), the parties have not raised this concern and thus any argument to that effect
has been waived.
Both parties reference the first wave of litigation brought by Flo & Eddie, Inc., a
company owned by several former members of the Turtles, a band whose heyday was in the
1960’s, regarding state copyright protection for pre-1972 recordings. As those decisions were
made under the law of the states in which the cases were brought, the Court instead focuses its
discussion on Illinois law as interpreted by Illinois state courts and the Seventh Circuit. The
district court decisions in the Flo & Eddie litigation can be found at: Flo & Eddie, Inc. v. Sirius
XM Radio, Inc., 62 F. Supp. 3d 325, 340 (S.D.N.Y. 2014), rev’d 849 F.3d 14 (2d Cir. 2017); Flo
& Eddie, Inc. v. Pandora Media, Inc., No. 14-07648-PSG-RZx, 2015 U.S. Dist. LEXIS 70551
(C.D. Cal. Feb. 23, 2015), appeal pending, No. 15-55287 (9th Cir.); Flo & Eddie, Inc. v. Sirius
Illinois recognizes a common law copyright in unpublished productions of “literature, 
drama, music, art, etc.” that allows authors to control the initial publication of their work.
Frohman v. Ferris, 87 N.E. 327, 328 (Ill. Sup. Ct. 1909); Morton v. Raphael, 79 N.E.2d 522, 523
(Ill. App. Ct. 1948) (“the settled rule of law in this and other jurisdictions” is “publication
without copyright divests the owner of an exclusive common law right and the production
becomes common property, subject to the free use of the community”). Publication, however,
extinguishes the common law copyright. Rees v. Peltzer, 75 Ill. 475, 478 (Ill. Sup. Ct. 1874)
(“there is no copyright in a published work at common law”) (emphasis in original). Under
Illinois law, then, the dispositive question as to whether there is copyright protection that
includes the right to exclusive public performance of a sound recording is whether the work has
been “published.” This question in turn depends upon whether it can be said that the copyright
holder has dedicated, or donated, the work to the public, Raphael, 79 N.E.2d at 523, or,
conversely, has effectively limited its distribution. In Frohman, for example, a playwright
successfully sued a competitor who put on a nearly identical production of his play. 87 N.E at
329. Frohman had never published his manuscript, but he had overseen public productions of the
play. Id. The Court held such performances did not constitute publication of the play, citing
copyright treatises of the era for the proposition that under the common law “the author does not
lose his rights in the production by public representation [i.e., performance].” Id. at 328
(bracketed material added). The Illinois Supreme Court did not view performance as indicative
of an intent to surrender the author’s common law copyright, distinguishing a limited
performance of the play from having the composition “printed and published in a book.” Id. In
Raphael, by contrast, an artist “made the first publication” of a series of murals “when she
XM Radio, Inc., No. 13-cv-23182, 2015 WL 3852692 (S.D. Fla. June 22, 2015), appeal pending,
No. 15-13100 (11th Cir.).
painted them on the walls of the Great Lakes Room where they could be seen and were
undoubtedly observed by many persons.” Raphael, 79 N.E.2d at 523. Of course, the same might
be said of public performances of the play at issue in Frohman, but such are the challenges of
applying the common law.
Whether the Sheridans can be said to have “dedicated to the public” their recordings has
therefore been the principal sticking point for the parties, with the Sheridans arguing that
“virtually no public domain” exists for sound recordings and that they have not “surrender[ed]”
their copyright to the public. Pl.’s Resp. at 2, 7. Both the Illinois Supreme Court and the Seventh
Circuit, however, have construed the concept of dedication to the public to include acts by which
members of the public could access copies of the work – particularly through sales. See, e.g.,
Peltzer, 75 Ill. at 479 (publication of maps made “by selling several copies to real estate dealers
without any restriction as to their use”); Data Cash Sys. v. JS&A Grp., Inc., 628 F.2d 1038, 1042
(7th Cir. 1980) (2,500 sales of computer games sufficient to constitute publication). The
Sheridans, of course, offered the recordings at issue in this case for sale to the public and found
many, many buyers.4
The Sheridans nevertheless argue that sound recordings constitute a “special case”
because they involve “captured performance.” Relying on Frohman, the Sheridans argue that
performance of a work does not constitute publication sufficient to divest them of their common
law copyrights, but in so arguing they confuse the conduct at issue. In Frohman, the question
was whether the public performance of the composition (there, a play) divested the composition
The large volume of sales further defeats any argument that the Sheridans engaged in
“limited publication,” which may preserve common law copyright where a work is distributed
“to a definitely selected group and for a limited purpose, without the right of diffusion,
reproduction, distribution or sale.” Letter Edged in Black Press, Inc. v. Public Bldg. Comm'n,
320 F. Supp. 1303, 1309 (N.D. Ill. 1970). The Sheridans placed no limitations on who could buy
their records, and thus engaged in divestive publication rather than limited publication.
itself of its copyright protection, such that the owner no longer had the right to limit performance
of the work. The issue here, however, is not whether the musical compositions have copyright
protection but whether the recordings of performances of those compositions are protected. By
selling such recordings, the Sheridans did not, and could not, divest the compositions of their
copyright protection. But they could, and did, divest the recordings of performances of those
compositions of common law copyright protection by selling those recordings to the public.
In any event, and contrary to the Sheridans’ position, under Illinois law “it is eminently
clear that the broadcast of the records manufactured by Plaintiff or the sale of those records
constitutes a publication or public performance,” and therefore no common law copyright
protection is available for those recordings. Columbia Broad. Sys., Inc. v. Spies, Doing Bus. as
Tape-A-Tape Tape Sound Reprod. Co. (”Spies II”), No. 69-CH-3477, 1970 WL 10120 (Ill. Cir.
Ct. Oct. 19, 1970) (unpaginated).5 In Spies II, the only occasion an Illinois court has specifically
addressed whether a common law copyright might be available for sound recordings,6 the court
rejected CBS’s common law copyright claim against Spies, who was making copies for
commercial resale from the original records produced and sold to the public by CBS, holding
that by virtue of those sales, CBS had no copyright claim against Spies. The case therefore
plainly puts the lie to the Sheridans’ contention that “[s]ale to the public is not a ‘publication’
Spies II is a companion case to what will be referred to as Spies I, that is Capitol
Records v. Spies, 264 N.E.2d 874 (Ill. App. Ct. 1970). In both cases, record companies sued
Spies for making pirated recordings from original recordings they had produced. Spies II is a trial
court decision that was actually issued a few days before Spies I, which was an appellate
decision rendered after another trial court had denied the plaintiff’s request for a preliminary
injunction barring Spies from making further copies from the recordings that plaintiff had
originally created. The parties have referred to the trial court decision with CBS as “Spies II” and
the court of appeals decision involving Capitol Records as “Spies I,” to reflect that the Capitol
Records case was filed and decided in the trial court before the CBS case; accordingly, the Court
will follow the convention adopted by the parties.
Spies I did not address the copyright issue because it had not been raised in the trial
court. See Spies II, 1970 WL 10120.
that destroys ownership of pre-1972 recordings”—at least to the extent that ownership implies
copyright protection under Illinois law.7
The Sheridans invoke a number of out of state cases and treatises to support their position
that sales of a sound recording do not divest an owner of their copyright (such as Capitol
Records, Inc. v. Naxos of Am., Inc., 830 N.E.2d 250, 264 (N.Y. Ct. App. 2005)), but none of
these sources addresses Illinois law. Moreover, the Sheridans rely most heavily on New York
law, and whatever persuasive force the New York cases they have cited may have had when the
Sheridans filed their briefs has been dissipated by the result of the recent collaboration between
the New York Court of Appeals and the Second Circuit. Answering a question certified to it by
the Second Circuit in another case brought by a putative copyright holder of other pre-1972
recordings, the New York high court held that New York law does not recognize a right of public
performance for creators of pre-1972 sound recordings. See Flo & Eddie, Inc. v. Sirius XM
Radio, Inc., 70 N.E.3d 936, 949 (N.Y. 2016) (“New York's common-law copyright has never
recognized a right of public performance for pre–1972 sound recordings.”). Based on that ruling,
the Second Circuit reversed the district court’s denial of the defendant broadcaster’s motion for
summary judgment and remanded the case for entry of judgment in the broadcaster’s favor. Flo
& Eddie, Inc., v. Sirius XM Radio, Inc., 849 F.3d 14, 17 (2d Cir. 2017).
The Sheridans maintain that this result is “draconian,” but of course such a judgment,
even if deserved, would not authorize this Court to disregard the clear import of Illinois law. The
Sheridan’s characterization, moreover, depends for its force on the premise that they are being
unfairly denied compensation for their products, but why is that so? From the birth of sound
Remarkably, the Sheridans attempt to rely on Spies II for the proposition that sales of
sound recordings do not constitute divestive publication. That effort is misplaced, if not
disingenuous, conflating the court’s reasoning regarding the unfair competition claim it
addressed with its resolution of the copyright issue.
recordings until the mid-1990’s, there has been scant evidence that anyone considered it to be an
obvious injustice not to require broadcasters, or others who play recorded music publicly, to pay
royalties to record companies as compensation for the use of their recordings. Flo & Eddie, 70
N.E.3d at 941 (if there is a right to control public performance of sound recordings, “the
copyright holders have gone decades without acting to enforce that right.”). Private parties
routinely order their transactions to adjust to legal rules, see R.H. Coase, The Problem of Social
Cost, 3 J. L. & ECON. 1, 17 (1960), and here is a perfect example; an alternative compensation
system evolved in which consumers paid prices to record companies high enough to incentivize
continued artistic creation but low enough that public performance of the recordings fostered,
rather than eliminated, the market for the recordings. As the Third Circuit has observed, “this
state of affairs . . . produced relatively high levels of contentment for all parties. The recording
industry and broadcasters existed in a sort of symbiotic relationship wherein the recording
industry recognized that radio airplay was free advertising that lured consumers to retail stores
where they would purchase recordings. And in return, the broadcasters paid no fees, licensing or
otherwise, to the recording industry for the performance of those recordings.” Bonneville Int’l
Corp. v. Peters, 347 F.3d 485, 487-88 (3d Cir. 2003). Even today, this system survives largely
intact; there is still no requirement that traditional broadcasters pay such royalties.8 The argument
Even after extensive legislative consideration, and major amendments to the federal
Copyright Act, sound recording owners today have a right to control public performance only for
public performances “by means of digital audio transmission.” 17 USC § 106. Under federal
copyright law, Defendant iHeartMedia now must pay royalties for playing post-1972
performances by means of digital transmissions, but traditional broadcasters and other types of
businesses that play music for the public by means other than digital transmission need not pay
those royalties. And no one pays royalties for pre-1972 recordings, regardless of how they are
played for the public. Some states—notably, California—have enacted legislation providing
exclusive ownership rights for sound recordings that owners could use to compel royalties, but
Illinois has not. See Cal. Civ. Code § 980(a)(2).
that this long-extant system exacts “draconian”—i.e., fundamentally unfair—costs is not
There is no dispute that the Sheridans voluntarily sold their recordings. When they did so,
the Sheridans lost their common law right to control the public performance of those recordings
in Illinois (and pretty much everywhere else).9 Thus, the motion to dismiss is granted as to Count
I, the common law copyright claim.
B. Deceptive Trade Practices Act
Count II of the complaint alleges that iHeartMedia has violated the Illinois Uniform
Deceptive Trade Practices Act (“IUDTPA”), 815 ILCS 510/1 et seq. The purpose of the
Deceptive Trade Practices Act is to “enjoin[ ] ... trade practices which confuse or deceive the
consumer.” Popp v. Cash Station, Inc., 613 N.E.2d 1150, 1156 (Ill. App. Ct. 1992). The Act
provides in pertinent part:
A person engages in a deceptive trade practice when, in the course of his or her business,
vocation, or occupation, the person:
(2) causes likelihood of confusion or of misunderstanding as to the source,
sponsorship, approval, or certification of goods and services;
(3) causes likelihood of confusion or of misunderstanding as to affiliation,
connection, or association with or certification by another …
(5) represents that goods or services have sponsorship, approval,
characteristics, ingredients, uses, benefits, or quantities that they do not
have or that a person has a sponsorship, approval, status, affiliation, or
connection that he or she does not have...[or]
(12) engages in any other conduct which similarly creates a likelihood of
confusion or misunderstanding.
815 ILCS 510/2.
Since it is plain that the Sheridans have no copyright protection in the pre-1972
recordings under Illinois law, it is not necessary to consider iHeartMedia’s “fair use” arguments.
The complaint alleges that pre-1972 recordings have been used for commercial purposes,
that this creates a likelihood of confusion (regarding whether or not the artists have agreed to the
use of their recordings), and that iHeartMedia is a large and sophisticated company familiar with
the law governing its actions. Compl. ¶ 52-55. The Sheridans therefore request an injunction and
a constructive trust with any money iHeartMedia earned through its use of the pre-1972 songs.
Id. at ¶ 44.
The IUDTPA, however, expressly excludes from its coverage “broadcasters … who
publish, broadcast or reproduce material without knowledge of its deceptive character.” 815
ILCS 510/4(2). The statute does not define, and the Illinois courts have not had occasion to
address, what it means to be a “broadcaster” or engage in “broadcasting,” but there is no dispute
here about that question because the Sheridans repeatedly acknowledge, in both the complaint
and their response, that iHeartMedia’s conduct at issue in this case constitutes “broadcasting.”
See e.g., Compl. ¶ 24 (“iHeartMedia . . . streams their broadcasts online”); ¶ 27 (iHeartRadio’s
. . . broadcasts have included . . . public performances of Pre-1972 Recordings”); ¶ 28 (“in the
course of broadcasting”); ¶ 33 (“iHeartMedia regularly broadcasts”); Resp. at 1 (“common law
of Illinois makes it illegal to broadcast sound recordings without paying royalties”); at 4
(“Defendant iHeartMedia broadcasts music on traditional AM/FM stations”). 10
No case law has defined the limits of what constitutes broadcasting (for example, if it
includes services such as cable television and satellite radio for which recipients must pay a fee
or a restaurant that plays music over its dining room speakers). Without such guidance, the Court
construes the term according to its common meaning – that broadcasters include, at least, all
forms of radio and television. See 720 Ill. Comp. Stat. 5/16-7(g) (explicitly mentioning radio and
television as broadcasters). Whether these broadcasts are sent by the transmission of analog or
digital signals via transmitting towers, satellites, or cables does not alter the fundamental
character of the conduct in question, namely the public playing of a sound recording that is
unaccompanied by distribution of a copy of the recording itself.
Rather than dispute that iHeartMedia engages in broadcasting, the Sheridans argue that
the broadcaster exemption is inapplicable because their claim is not about the content of the
broadcasts but rather the misappropriation of songs. Resp. at 4, 12. This distinction is unavailing
because the text of the statute does not exempt only certain types of claims against broadcasters;
it exempts them wholesale from any potentially deceptive broadcast that falls within the
exemption—that is, as to any broadcast, regardless of its content, that the broadcaster did not
know to be deceptive.11
Thus, the Court must consider whether iHeartMedia falls within the broadcaster
exemption of the IUDTPA. While the complaint alleges that iHeartMedia’s actions constitute
“willful engagement in a deceptive trade practice,” it does not directly allege that iHeartMedia
had knowledge of the deceptive character of its broadcasts. See Compl. ¶ 55. Rather, it alleges
that iHeartMedia is “intimately familiar with the mechanics of the music industry and the law
governing its actions,” thereby perhaps implying that iHeartMedia knew the broadcasts had a
The parties dispute whether the IUDTPA codifies the common law tort of
misappropriation. Compare Resp. at 11 & n.4 (“The Act codifies common law
misappropriation”), with Reply at 11 (“the IUDTPA did not codify the branch of common law
unfair completion that the Sheridans assert”). Cases can be found to support both propositions.
Compare, e.g., NFL Props., Inc. v. Consumer Enters., 327 N.E.2d 242, 247 (Ill. App. Ct. 1975)
(“the Illinois Deceptive Practices Act merely codifies Illinois common law”), with Calderon v.
Sw. Bell Mobile Sys., LLC, No. 02 C 9134, 2003 WL 22340175, at *6 (N.D. Ill. Oct. 10, 2003)
(“While the [Illinois Uniform Deceptive Trade Practices Act] has codified the law of unfair
competition generally, certain causes of action for unfair competition may still be found outside
the statute . . . . To the extent that non-statutory claims for unfair competition exist, they are
either in the nature of tortious interference or “misappropriation” claims.”).
It is, however, unnecessary to resolve the debate. There is no requirement that the
Sheridans plead a misappropriation claim apart from their IUDTPA claim; indeed, they do not
have to plead a misappropriation claim, or any other legal theory, in the complaint. See King v.
Kramer, 763 F.3d 635, 642 (7th Cir. 2014). And to the extent that the IUDTPA codifies the tort
of misappropriation, as the Sheridans maintain, a claim based on that theory remains subject to
the statutory exemption applicable to broadcasters. And if the tort is not codified in the IUDTPA,
and the statutory exemption is unavailable to broadcasters, the claim fails because, as discussed
infra, no Illinois court has ever held that broadcasting (as opposed to pirating) a pre-1972 sound
recording without express authorization constitutes misappropriation.
“deceptive character.” Id. The Court concludes, however, that iHeartMedia’s knowledge of the
industry generally and its knowledge that “not paying royalties for public performances of sound
recordings was an accepted fact of life in the broadcasting industry for the last century,” Flo &
Eddie, Inc. v. Sirius XM Radio, Inc., 62 F. Supp. 3d 325, 340 (S.D.N.Y. 2014), demonstrate as a
matter of law that iHeartMedia could not have known that its broadcasts of the Sheridans’
recordings were deceptive—because they were not.
As iHeartMedia points out, and the Sheridans do not and cannot refute, “[n]o Illinois
court has ever held that broadcasting a published sound recording . . . is among the wrongful
conduct proscribed by” the doctrine of unfair competition or misappropriation. Mem. in Supp. at
14. Rather, as noted in the discussion of the Sheridan’s common law copyright claim, supra,
Illinois law has recognized that there is no common law right to limit public performance of a
work that has been published. The theory undergirding that precept, as noted, is that in selling a
recording otherwise subject to common law copyright protection, the copyright owner essentially
“dedicates” or “donates” that recording to the public. It would be in tension with, if not wholly
antithetical to, that premise to conclude that subsequent playing, or performance, of that
recording by the public constitutes “misappropriation” of that performance. It is no surprise,
then, to find that Illinois criminalizes the unlawful use of recorded sounds but exempts “any
person engaged in the business of radio or television broadcasting who transfers, or causes to be
transferred, any sounds (other than from the sound track of a motion picture) solely for the
purpose of broadcast transmission.” 720 Ill. Comp. Stat. 5/16-7(g). Since Illinois common law
provides no right of public performance (that is to say, no right vested in the creator of a work to
limit the public performance of a published work, including a sound recording), iHeartMedia and
other broadcasters have had over the past century no reason to regard the act of broadcasting a
published recorded performance—i.e., a pre-1972 recording—as deceitful or otherwise culpable
conduct. Such broadcasts, then, cannot reasonably be regarded as giving rise to a claim for
misappropriation (whether or not that claim is codified in the IUDTPA).
The Court acknowledges that in Spies I, the Illinois appellate court stated that the “taking
and appropriating” of “the actual sounds recorded on the albums” constitutes a “form of unfair
competition.” Capitol Records v. Spies, 264 N.E.2d 874, 877 (Ill. App. Ct. 1970). That
statement, however, was made in the context of addressing record piracy – that is, the creation
and sale of physical unlawful copies of sound recordings.12 See id. at 430. As noted, no Illinois
court has, either before or after Spies I, held that broadcasting a performance unfairly
misappropriates “the actual sounds recorded on the albums.” There is a world of difference
between the unauthorized copying and distribution of a recording (piracy) and playing a
recording for an audience without distributing a copy of the recording to the listeners
(broadcasting).13 Illinois recognizes this distinction, in its civil and criminal exemptions for
Record piracy, of course, may in this era also involve the creation of digital, rather than
physical, copies of recordings. Obviously file sharing, in which users download digital copies of
copyrighted material without paying for it, would constitute piracy regardless of what method is
used to transmit the files. See Peter K. Yu, P2P and the Future of Private Copying, 76 U. COLO.
L. REV. 653, 660 (2005). There is no allegation in this case, however, that iHeartMedia allowed
users to download files or even to request that the service play specific songs on demand.
The distinction between piracy and broadcasting is patent in this case, but may be more
difficult to discern in future cases involving new forms of music distribution, such as streaming
on demand, that like broadcasting do not involve the distribution of a copy of the recording but
nevertheless eliminate the need for purchase of the recording itself (in contrast to the purchase of
the right to listen to the recording). The economic effect of on demand digital streaming is at
present unclear. Recent research suggests that the contention that on demand streaming will
leave licensing as the only means of compensation for sound recording rights holders’ is
potentially flawed. See, e.g., Godefroy Dang Nguyen, Sylvain Dejean, and François Moreau, On
the Complementarity Between Online and Offline Music Consumption: The Case of Free
Streaming, 38 J. CULTURAL ECON. 315 (2014); Luis Aguiar and Joel Waldfogel, Streaming
Reaches Flood Stage: Does Spotify Stimulate or Depress Music Sales (NBER, Working Paper
No. 21653, 2015); but see R. Scott Hiller, Sales Displacement and Streaming Music: Evidence
from YouTube, 34 INFORMATION ECON. & POL’Y 16 (2016) (finding most popular albums may
broadcasters of sound recordings, and other states do as well. Most recently, the New York Court
of Appeals identified this distinction as the basis for its holding that “New York common law
does not recognize a right of public performance for creators of pre-1972 sound recordings.” Flo
& Eddie, Inc. v. Sirius XM Radio, Inc., 28 N.Y.3d 583, 610 (2016). In so holding, the New York
Court of Appeals distinguished anti-piracy cases as prohibiting only the unauthorized copying
and distribution of sound recordings and noting that such cases “do not provide an answer or
rationale to support a conclusion regarding . . . whether New York common law provides a right
of public performance to creators of sound recordings.” Id. at 602.
None of this is to say that misappropriation and copyright infringement are necessarily
co-extensive. See Chicago Bd. Options Exch., Inc v. Int'l Sec. Exch., LLC, 973 N.E.2d 390, 399
(Ill. App. Ct. 2012) (“Misappropriation is not necessarily synonymous with copyright
infringement” and thus can be recognized as a separate cause of action); Christopher J. Norton,
Comment, Turtle Power: The Case for Common Law Protection for Pre-1972 Sound
Recordings, 31 BERKELEY TECH. L. J. 759, 783 (2016). As piracy cases like Spies I and Spies II
demonstrate, there may be occasions to apply misappropriation law and principles of unfair
competition where common law copyright law does not provide a remedy. “The controlling
question in a misappropriation case is whether the commercial practice at issue is fair or unfair.”
Bd. of Trade of Chi. v. Dow Jones & Co., 439 N.E.2d 526, 537 (Ill. App. Ct. 1982). But in the
context of broadcasts of sound recordings, where the settled expectation of the industry has for
decades been that there is no requirement to pay for the right to broadcast pre-1972 sound
recordings, it cannot reasonably be said that it is fundamentally unfair for a broadcaster to
operate in conformance with that status quo. To the contrary, disrupting the settled expectations
suffer some displacement from online streaming). Thus, at least at the present time (and in any
event in this case), the historical distinction between piracy and broadcasting endures.
of the entire music industry could unfairly impose substantial costs on myriad industry
stakeholders. As the New York Court of Appeals observed, the consequences of changing the
historic allocation of rights within this system “could be extensive and far-reaching” in view of
the “many competing interests at stake,” Flo & Eddie, 70 N.E.3d at 949, threatening the interests
of not just broadcasters, but also the public, composers, artists, and ultimately even those of the
Courts considering misappropriation claims, moreover, are obliged to consider the effects
on future product development and innovation. See Board of Trade v. Dow Jones & Co., 456
N.E.2d 84, 89 (Ill. Sup. Ct. 1983) (“Competing with the policy that protection should be afforded
one who expends labor and money to develop products is the concept that freedom to imitate and
duplicate is vital to our free market economy.”). Obviously any rule developed in this case will
do nothing to foster the creation and production of new music because it would only apply to
recordings already created. On the other hand, there is a substantial risk that employing a
hodgepodge of state common law causes of action would hamper innovation in the further
development of electronic commerce and distribution. See, e.g., Mitch Stoltz, EFF to Court:
Expanding Copyrights in Old Music Recordings Will Squelch Competition in New Music
https://www.eff.org/deeplinks/2015/08/eff-court-expanding-copyrights-old-music-recordingswill-squelch-competition-new. iHeartMedia’s stations broadcast nationwide and the scope of any
cause of action for misappropriation of pre-1972 sound recordings under Illinois law is wildly
unclear. Would it extend only to stations broadcasting pre-1972 recordings from Illinois?
Broadcasts that could be heard in Illinois? Scholars have routinely noted the potentially
devastating consequences of a regime in which national broadcasts generate liability in some
states and not in others. See, e.g., Gary Pulsinelli, Happy Together? The Uneasy Coexistence of
Federal and State Protection for Sound Recordings, 82 TENN. L. REV. 167, 200-204 (2014).
There is, moreover, no single licensing rate or clearinghouse for pre-1972 recordings, so rates for
each recording would need to be negotiated independently (potentially causing broadcasters to
just yank the songs from the airwaves, cutting off revenues to artists and copyright holders and
limiting fans’ access to them). See, e.g., Stephen E. Demos, Comment, The Fair Pay Fair Play
Act of 2015: Does Congress Spot-ify a Solution for the Music Market, 12 J. BUS. & TECH. L. 73,
88 (216) (“while digital music services would ultimately prefer not to pay royalties for these
recordings, there is at least some consensus that a federalized licensing scheme would be
preferable and more efficient as opposed to the current method of obtaining licenses over
scattered state laws”).14
To the extent, then, that the Sheridans’ IUDTPA claim is premised on the unfairness of
acknowledging the settled expectations of virtually an entire industry, the Court is not persuaded
that there is a cause of action under Illinois law. The absence of any precedent even questioning
the legitimacy of, much less imposing sanctions on, the broadcast of published sound recordings
suggests that neither the state legislature nor judiciary ever intended to recognize such a tort in
enacting or construing the IUDTPA. And given the uncertainty and the myriad issues that
recognizing such a cause of action would create, the task of balancing the competing interests is
best left to the state’s legislature and courts. See Flo & Eddie, Inc. v. Sirius XM Radio, Inc., 70
Still more questions would arise in addressing the scope of this proposed new
application of misappropriation law. What forms of public performance constituted a deceptive
practice or misappropriation? Does it include broadcasts by not-for-profit college radio stations?
Music played over the loudspeaker at your favorite diner or during “Bring Your Own Vinyl
Night” at the Duck Inn? See Best Oldies Music Bars in Chicago, CBS Chicago, Aug. 25 2016,
http://chicago.cbslocal.com/top-lists/best-oldies-music-bars-in-chicago/. Playing music in the
backyard during an annual Fourth of July barbeque?
N.E.3d 936, 950-51 (N.Y. 2016) (“Given this uncertainty and the plethora of issues involved in
deciding these questions, such line-drawing is best left to the legislature.”); Hollander v. Brown,
457 F.3d 688, 692 (7th Cir. 2006) (“we have warned litigants that those who seek to base their
claims on an innovation in state law would be well-advised to file their claims in state court”);
Instituto Nacional de Comercializacion Agricola v. Continental Illinois Nat'l Bank & Trust Co.,
858 F.2d 1264, 1270 (7th Cir. 1988) (whether to extend Illinois law is “a decision is for the
courts of Illinois and not for a federal court sitting in diversity”); Affiliated FM Ins. Co. v. Trane
Co., 831 F.2d 153, 155 (7th Cir. 1987) (federal courts in diversity have “limited discretion to
adopt untested legal theories brought under the rubric of state law”).
Recognizing a cause of action for misappropriation or deceptive practices arising from
the broadcast of published sound recordings would be a marked departure from the state of
existing state law, inconsistent with statutory exemptions, and would threaten to upset settled
arrangements while forcing this Court to legislate out of whole cloth. iHeartMedia could not
have known that simple broadcasting without paying royalties to rights holders (which had never
been required under any law to date), as opposed to selling copies of pirated records, would
render its broadcasts “deceptive.” The utter dearth of case law indicating that it had any
obligation to pay royalties dooms the Sheridan’s argument that it should have known the
broadcasts were deceptive enough to ignore the IUDTPA’s exception for broadcasters. Thus, this
count too must be dismissed.
Count III of the complaint alleges that iHeartMedia “wrongfully assumed control over
Plaintiffs’ and Class Members’ property, and exercised that control in a manner inconsistent with
Plaintiffs’ and Class Members’ property rights” and thus committed the tort of conversion.
Compl. ¶ 58. “[T]o recover for conversion in Illinois, a plaintiff must show: (1) a right to the
property; (2) an absolute and unconditional right to the immediate possession of the property; (3)
a demand for possession; and (4) that the defendant wrongfully and without authorization
assumed control, dominion, or ownership over the property. Van Diest Supply Co. v. Shelby Cty.
State Bank, 425 F.3d 437, 439 (7th Cir. 2005).
The Sheridan’s conversion claim fails to clear the first hurdle: the plaintiff must have a
property right. As discussed above, however, the Sheridans have no property right to preclude
public performance of sound recordings they have published by selling them to the public; there
is no such right under Illinois common law and the Sheridans have identified no other source of
such a right. Cf. Price v. Bd. or Educ. of City of Chicago, 755 F.3d 605, 607 (7th Cir. 2014)
(“property rights are created and their dimensions are defined by existing rules or understandings
that stem from an independent source such as state law”). That does not mean that the Sheridans
do not have other property rights in their recordings—again, Spies establishes that they do—but
those rights do not include the right of public performance. The Sheridans surrendered that right
when they published (i.e., sold) their recordings; iHeartMedia could not have converted it.15
The conversion claim falters on the third and fourth elements as well. As for the third,
there is no allegation in the complaint that appears to indicate the Sheridans ever made a demand
for possession. Cf. Van Diest Supply Co, 425 F.3d at 438-39 (recounting demand letter sent by
plaintiff); 800 Trans, Inc. v. Chi. Medallion Mgmt. Corp., 2016 IL App (1st) 152142-U, ¶ 35 (Ill.
App. Ct. 2016) (plaintiff sent demand letter). Although the Sheridans may argue such a demand
would be futile, see Bijouterie Int'l, Inc. v. Clear Channel Outdoor, Inc., 2011 IL App (1st)
102986-U, ¶ 38 (Ill. App. Ct. 2011) (citing A.T. Kearney, Inc. v. INCA International, Inc., 477
N.E.2d 1326, 1334 (Ill App. Ct. 1985)), iHeartMedia continues to broadcast the pre-1972 songs,
so whatever possession it might have converted is ongoing and a demand would not be futile.
The conversion claim also falters on the fourth element, which contemplates that the converter
has possession of the property in question. The Sheridans have no claim against iHeartMedia for
possessing the pre-1972 recordings (presumably, iHeartMedia purchased its inventory of such
recordings; there is no allegation to the contrary) but rather that iHeartMedia played (performed)
the recordings without authorization. A claim premised on unauthorized publication of a work
Further, even if the Sheridans had retained the right of public performance, their
conversion claim would still fail because the Illinois Supreme Court has recognized that “an
action for conversion lies only for personal property which is tangible, or at least represented by
or connected with something tangible.” In re Thebus, 108 Ill. 2d 255, 260, 483 N.E.2d 1258,
1260 (Ill. Sup. Ct. 1985); Bilut v. Northwestern University, 692 N.E.2d 1327, 1334 (Ill. App. Ct.
1998) (citing In re Thebus). There are a few state cases and some opinions from judges in this
district recognizing conversion claims involving intangible rights,16 but the Seventh Circuit has
unequivocally held that “Illinois courts do not recognize an action for conversion of intangible
rights.” Am. Nat'l Ins. Co. v. Citibank, 543 F.3d 907, 910 (7th Cir. 2008) (but recognizing that in
some context, like commercial paper, intangible rights may merge into the document). This
Court is bound by the Seventh Circuit’s interpretation of Illinois law unless the Illinois Supreme
Court issues a conflicting decision. See Reiser v. Residential Funding Corp., 380 F.3d 1027,
1029 (7th Cir. 2004).
The Sheridans maintain that their interests in the recordings are represented by or
connected to something tangible, as required; specifically, the recordings themselves. Resp. at
12. They invoke the facts of Bilut for support; there, the court found that plagiarism of ideas in a
research paper could constitute conversion “because the printed copy of the research constituted
tangible property.” Bilut, 692 N.E.2d at 1334. This means the Sheridans must in fact plead that a
does not state a claim for conversion. See Seng-Tiong Ho v. Taflove, 648 F.3d 489, 501-02 (7th
In Conant v. Karris, 520 N.E.2d 757, 763 (Ill. App. Ct. 1987), for example, an Illinois
appellate court recognized a conversion claim based on use of client’s confidential information
about valuation of a parcel of property. Courts in this district have also split on whether the
interception of satellite television programming constitutes conversion. Compare DIRECTV, Inc.
v. Ostrowski, 334 F. Supp. 2d 1058, 1064 (N.D. Ill. 2004) (allowing conversion claim), with Joe
Hand Promotions, Inc. v. Lynch, 822 F. Supp. 2d 803, 809 (N.D. Ill. 2011) (barring conversion
“tangible object” was taken from them. See Michael v. Bell, No. 11-CV-4484, 2012 WL
3307222, at *4 (N.D. Ill. Aug. 13, 2012) (taking “ideas” and “intellectual property” insufficient);
Foodworks USA, Inc. v. Foodworks of Arlington Heights, LLC, No. 10 CV 1020, 2015 WL
1343873, at *2 (N.D. Ill. Mar. 19, 2015) (trademark and licensing fees insufficiently tangible).
Here, the Sheridans contend that iHeartMedia converted their property “[b]y duplicating
the pre-1972 recordings without authorization.” Compl. ¶ 58. Thus, the Sheridans contend, there
is something physical being converted – the physical files of the recordings, which are
duplicated. Some states have found that, like a printed copy of research, a digital file can be
converted. See, e.g., Thompson v. UBS Fin. Servs., Inc., 115 A.3d 125, 132 (Md. Ct. App. 2015);
Thyroff v. Nationwide Mut. Ins. Co., 864 N.E.2d 1272, 1278 (N.Y. Sup. Ct. 2007). Recently,
however, an Illinois appellate court ruled that digital files contained on a USB drive are “not
tangible personal property” such that a trespass to chattels or conversion claim would pass
muster.17 Ogbolumani v. Young, 2015 IL App (1st) 141930-U, ¶ 33. Since iHeartMedia offers
only internet and broadcast radio, and is not alleged to have converted any physical records, the
only remaining option for the connected tangible object is the digital file.18
Here, again, this Court has only “limited discretion to adopt untested legal theories
brought under the rubric of state law.” Affiliated FM Ins. Co., 831 F.2d at 155. Moreover,
There are other courts that have similarly found less concrete digital property is not
sufficient for conversion. See, e.g., CICCorp, Inc. v. Aimtech Corp., 32 F. Supp. 2d 425, 430 n.9
(S.D. Tex. 1998) (internet webpage address not capable of conversion). But see Kremen v.
Cohen, 337 F.3d 1024, 1033-34 (9th Cir. 2003) (webpage address can be converted).
The issue of the conversion of digital property has also been the subject of academic
commentary. See, e.g., William Larsen, Comment, A Stern Look at the Property Status of TopLevel Domains, 82 U. CHI. L. REV. 1457, 1477 (2105); Caitlin J. Atkins, Note, Conversion of
Digital Property: Protecting Consumers in the Age of Technology, 23 LOY. CONSUMER L. REV.
215 (2010); Courtney W. Franks, Comment, Analyzing the Urge to Merge: Conversion of
Intangible Property and the Merger Doctrine in the Wake of Kremen v. Cohen, 42 HOUS. L.
REV. 489 (2005).
“[w]here the state supreme court has not ruled on an issue, decisions of the state appellate courts
control, unless there are persuasive indications that the state supreme court would decide the
issue differently.” Lexington Ins. Co. v. Rugg & Knopp, Inc., 165 F.3d 1087, 1090 (7th Cir.
1999). Here, a state appellate decision is on point and concludes that a digital file is insufficiently
tangible property for a conversion claim to survive. Furthermore, although the needs of the
digital age could prompt Illinois courts to revisit the scope of the conversion cause of action in
the future, the Seventh Circuit and Illinois courts have given no indicia that the Illinois Supreme
Court would in fact alter its stance at this time. iHeartMedia’s conversion claim therefore fails.
D. Unjust Enrichment
Finally, the Sheridans contend in Count IV that iHeartMedia has been unjustly enriched.
Compl. ¶ 59-61. iHeartMedia contends that this claim is “derivative” of the common law
copyright claim and therefore fails because the Sheridans lacked any rights in the recordings.
Mem. in Supp. at 15; Reply at 14. The Sheridans appear to agree that this count rises or falls with
the other substantive counts, arguing that iHeartMedia has been unjustly enriched “[t]o the extent
that iHeartMedia has retained benefits from copyright infringement and unfair competition.”
Resp. at 14. “Unjust enrichment is not an independent cause of action.” Gagnon v. Schickel, 983
N.E.2d 1044, 1052 (Ill. App. Ct. 2012). Having found no substantive cause of action, the unjust
enrichment count must also be dismissed.
No broadcaster has ever been held liable under any cause of action available under
Illinois law for broadcasting a pre-1972 sound recording without authorization. Having published
their recordings through decades of sales to the public, the Sheridans surrendered their common
law copyright protection under Illinois law to bar public performance of those recordings.
Neither the IUDTPA nor the Illinois common law tort of conversion provides a means of
restoring that right. The former exempts broadcasters and the latter does not reach intangible
property rights; neither provides a basis to regard as tortious the growth of broadcast radio over
the past century. With no substantive counts remaining, the unjust enrichment claim must fail as
well. Thus, the motion to dismiss is granted. As the dismissal is based on the incurable lack of
any state law cause of action, rather than curable pleading deficiencies, the dismissal is with
Dated: June 5, 2017
John J. Tharp, Jr.
United States District Judge
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