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Of those legislations to be introduced in Congress, the PERFORM ACT of 2006 or "Platform Equality and Remedies for Rights Holders in Music Act," S.2644 and H.R.5361, caused a shakedown in Congress especially as it brought the Recording Industry Association of America (RIAA) head to head with XM Satellite Radio over XM’s release of Pioneer Inno, Helix, and XM2GO in a lawsuit.

Introduced April 25, 2006 and reintroduced on January 25, 2007 (S.256) into the Senate by Dianne Feinstein (D-Calif.) the bill sought to protect the music industry from piracy by limiting the ability to record digital radio broadcasts. It aimed to create parity among all digital media broadcasters—satellite, cable and Internet radio service—by harmonizing rate setting standards for copyright licenses on a fair market rule under Sections 112 and 114 in the Copyright Act. According to Feinstein in a 2007 statement, “what was once a passive listening experience has turned into a forum where users can record, manipulate, collect and create personalized music libraries. As the modes of distribution change and the technologies change, so must our laws change.” [1]

Specifically, addressing Section 114 of the Copyright Act it singled out satellite radio companies XM and Sirius, in which legislators and proponents of the bill argued that the issued compulsory licenses given to these companies were meant only for listening-only services, not recording. Bill proponents were concerned these portable devices allowed consumers to record, sort, and store digital broadcasts, resulting in them turning these broadcast into downloads and creating an unlicensed music library without adequately paying the artist. In this regard, they further argued that the service would bypass the marketplace.

However, opponents such as the Home Recording Rights Coalition said that the legislation would stifle innovation while the Electronic Frontier Foundation argued that the bill would require DRM-laden streaming formats for satellite and digital radio stations as well as Internet webcasters. [2]

XM fired back in Congress and the courts defending its devices which were designed to comply with the 1992 Audio Home Recording Act and the 801(b) standard of the Copyright Act, which governs performance license under section 114. Under the standard, a specific formula for performance royalties is put forth taking into consideration technological contribution, capital investment, cost, risk and contribution to the opening of the new market. Both the Home Recording Rights Coalition and the Consumer Electronics Association sided with XM in the suit supporting its defense.

Main article: Digital copyright#Digital Millennium Copyright Act (DMCA)