That’s because the recording industry is suing XM. Big time. The major labels filed papers last month against the orbital boom box, claiming copyright infringement.

At issue isn’t necessarily what XM is playing, but how it is being received. Specifically, XM sells two receivers – the Inno and Helix – that record music for later playback. Music recorded on these devices cannot be copied, nor can it be transferred to other devices or burned onto CDs. XM likens these devices to VCRs and DVRs. The labels claim these receivers make XM more like Napster or iTunes and that XM must pay the same fees online music services pay to keep the long arm of copyright law at bay.

Now XM is playing out its defense in the court of public opinion. XM Executive VP of Programming, Eric Logan, penned an “open letter” to “artists, musicians and songwriters” detailing its legal views on June 23rd.

Logan writes that the fledgling satellite radio industry “is the single largest contributor of sound recording performance royalties to artists and record labels,” and then restates his company’s position that the new receivers do not violate copyright laws.

“Some have characterized these products as download radios – they are not,” Logan wrote. “They simply enable listeners to save songs off the radio for playback later – the 21st century equivalent of a cassette recorder, in the same way that TiVo allows them to save TV shows for later viewing.”

Logan goes on to say that XM subscribers cannot pick the music the satellite service plays, nor do they own the music they record off of XM broadcasts.

“… it cannot be burned to a CD, transferred to other radios or uploaded to the Internet,” Logan wrote. “In addition, XM subscribers can only listen to recorded XM content as long as they keep an active XM subscription.”

Of course, the XM receivers do more than just record music from the satellite service. Capable of recording up to 50 hours of music, the Inno also parses the music and tags the songs within a broadcast, making it easy to find a single tune among hundreds of songs. In fact, XM’s marketing slogan for the Inno is Hear it. Click it. Save it.

However, it’s hardly in league with current online services. Like Logan states in his open letter, Inno and Helix users cannot transfer, burn or copy any of the recorded music. Sure, through its devices XM is making radio a little more user-friendly. But it’s hardly in league with download-on-demand services.

That is, for the time being. However, there is legislation moving its way through Congress that, if passed, might change current copyright law.

It’s called the “Perform Act of 2006,” and its purpose is to amend copyright law in order to ensure that satellite radio broadcasters pay the same royalties as music download services. Representatives Mary Bono (R-Calif.) and Howard Berman (D-Calif.) are backing the bill on the House side while Dianne Feinstein (D-Calif.), Lindsey Graham (R-S.C.), Bill Frist (R-Tenn.) and Joseph Biden (D-Del.) are the bill’s champions in the Senate. As you can probably guess, the labels’ are very much in favor of this bill.

“From the Senate to the House, from both the Judiciary and the Commerce committees, on both sides of the aisle, congressional leaders are stressing the need for a level playing field for digital radio services,” reads a statement on the Recording Industry Association of America’s Web site. “One that ensures fair payment for artists and songwriters, fair competition among services, and protection for the integrity of the digital music marketplace.”

In other words, if the RIAA can’t convince the judge presiding over its lawsuit against XM, it hasn’t necessarily lost the legal contest. It might only have to wait until Congress changes the rules.