Federal Court Dismisses SoundExchange $150M SiriusXM Royalty Lawsuit

A federal court has dismissed SoundExchange's $150 million lawsuit against SiriusXM, ruling that SoundExchange lacks the legal authority to sue over alleged royalty underpayments under Section 114 of the Copyright Act. The decision, delivered by Judge Naomi Reice Buchwald, emphasized that Congress intentionally did not grant SoundExchange litigation powers, unlike the Mechanical Licensing Collective under Section 115. SoundExchange had accused SiriusXM of manipulating revenue reporting through bundling satellite and streaming services to reduce royalty payments, but the court did not assess these claims on their merits, focusing solely on legal standing. This ruling significantly limits SoundExchange's enforcement options to audits, arbitration, and regulatory negotiations, creating uncertainty about how future royalty disputes will be resolved. SoundExchange is considering an appeal, asserting its long-standing right to sue negligent providers to ensure compliance with royalty payments. The ruling marks a major shift in how royalty compliance is enforced across the audio industry, potentially placing more responsibility on individual copyright holders or legislative action by Congress.