Termination Rights Class Action Against UMG Recordings to Proceed

Waite v. UMG Recordings, Inc., No. 19-cv-1091-LAK, 2020 WL 1530794 (S.D.N.Y March 31, 2020)

In 2018, John Waite and Joe Ely filed a copyright infringement class action against UMG Recordings based on UMG’s failure to stop marketing and selling sound recordings after being served with termination notices for such recordings. In response, UMG filed a motion to dismiss arguing that since termination rights do not apply to works for hire, whether a work was made for hire is a copyright ownership issue, and Plaintiffs claim to own the copyrights in issue, that the core of Plaintiffs’ claims revolve around ownership. Based on this, Defendants asserted that the presence of work for hire provisions in the Plaintiffs’ recording contracts signed in the 1970s and 80s alerted them of ownership issues at the time of signing, and that the statute of limitations has therefore run on the Plaintiffs’ claims. Refuting this argument, the court stated that while ownership is relevant to Plaintiffs’ claim, “the gravamen of plaintiffs’ claim is defendant’s refusal to recognize their termination rights,” and to apply a three year statute of limitations to claims involving termination rights, which do not vest until 35 years after copyright assignment, “would thwart Congress’s intent and eviscerate the right itself.” As a result, the court denied Defendant’s motion to dismiss as to all claims, except for those relating to declaratory relief, copyrights transferred by third parties, and sound recordings made prior to January 1, 1978.