Termination Rights Class Action Against Sony Music Entertainment to Proceed

Johansen v. Sony Music Entertainment Inc., No. 19-cv-1094-ER, 2020 WL 1529442 (S.D.N.Y March 31, 2020).

On February 5, 2019, musicians David Johansen, John Lyon, and Paul Collins (collectively, “Plaintiffs”) filed a copyright infringement and declaratory judgment class action against Sony Music Entertainment based on Sony’s continued exploitation of the Plaintiffs’ copyrighted sound recordings despite being served with termination notices.  On June 11, 2019, Sony filed a motion to dismiss the action for failure to state a claim because the Plaintiffs’ termination notices are untimely, deficiently identify the grants being terminated, deficiently identify the dates of execution of the grants, and that these errors are not harmless so the notices are invalid. Addressing Sony’s assertions, the court determined based on the record before it that it is entirely plausible that Johansen’s and Lyon’s notices were timely, and that Collins’ untimeliness was due to a “scrivener’s error,” which would make it harmless error, so dismissing the suit without more information would be inappropriate.  Moreover, the court determined that the Plaintiffs provided sufficient information about the sound recordings in issue to overcome omissions of details about the grants being terminated, so “the general harmless error rule may apply.” As a result, the court denied Sony’s motion to dismiss. 

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.

Paul McCartney and Sony Settle Copyright Termination of Transfer Litigation

McCartney v. Sony/ATV Music Publishing LLC, et al., No. 17-cv-363 (ER) (S.D.N.Y. Document 41 Filed 06/29/17).

The parties resolved their litigation involving Paul McCartney's termination notices by entering into a confidential settlement agreement and jointly requested that the Court enter a proposed order dismissing the action without prejudice.

Copyright Termination By Majority Of Heirs Effective As To Lucrative Gospel Song; 6th Circuit

Brumley v. Albert Brumley & Sons, Inc., No. 15-5429 (6th Cir. May 16, 2016)

Four of six children of the author of the gospel song “I’ll Fly Away” successfully exercised their right to terminate the assignment of the song’s copyright to another one of their brothers, holds the Sixth Circuit.  The case centered on the 1976 Copyright Act’s termination right that allows an author to undo a prior transfer of his copyright and recapture all interests in the copyright for himself. 

In this case, Albert Brumley composed the song “I’ll Fly Away” (a gospel spiritual) in the late 1920s and owned the copyright through a publishing company.  In 1975, the publishing company was sold to two of Brumley’s sons, assigning and transferring all right title and interest in the song.  Brumley died in 1977, and in 1986 one of the sons bought out his brother’s interest.  In 2008, a sibling spat arose over the royalties for the song (approx. $300,000/year), and four of Brumley’s children served and filed a termination notice to share in the lucrative rights.  In December 2008, the four siblings filed a declaratory judgment action seeking a declaration that their termination notice was effective.  The owning brother (Robert) responded with two defenses, one of which – whether the song was a work made for hire – was tried before a jury, who found in favor of the four siblings.

On appeal, the Court found that the termination notice was effective.  Because the rights were transferred before 1978, the termination provisions in section 304 of the Copyright Act govern.  When Brumley’s wife passed away, each of his children held a one-sixth interest in the termination right.  Accordingly, the four siblings could exercise two-thirds of the termination interest with respect to the pre-1978 assingment.  Further, a post-transfer (1979) second “bill of sale and assignment” did not bargain away the wife’s termination replace and did not replace the 1975 contract.  The Court found that it should not lightly assume that a contract bargains away the centerpiece feature of the 1976 act.

No Rehearing By Second Circuit For "Santa Claus" Copyright Termination Case

Baldwin v. EMI Feist, No. 14-182 (2d Cir. Jan. 29, 2016).

In the copyright termination case concerning "Santa Claus Is Comin' To Town," the Second Circuit denied defendant-EMI's application for a rehearing (by the panel or en banc).

Santa Clause Is Comin To Town Reverts To Author's Heirs In 2016

Baldwin v. EMI Feist Catalog, 14-182-cv (2d Cir. Oct. 8, 2015).

The Second Circuit held that EMI publishing owned rights to the song "Santa Clause Is Comin' To Town" under a 1981 grant, not a 1951 grant, and accordingly that a 2007 termination notice terminates EMI's interest in 2016, reversing the lower court's entry of summary judgment for EMI.  The case details the complex statutory scheme under the 1976 Copyright Act which gave authors and their statutory heirs the right to terminate previously made grants of copyright under certain circumstances, and thereby to recapture some of the value associated with the works.  17 USC 203 and 304(c)-(d).  Plaintiff sought a declaration that either a notice of termination served on the publisher in 2007 or another served in 2012, will, upon becoming effective, terminate EMI's rights to the song.  The Second Circuit concluded that EMI owned rights to the song not under a 1951 agreement but instead under a subsequent 1981 contract, and that that the 2007 termination notice will terminate the 1981 agreement in 2016.  Accordingly, plaintiff (the author's heirs) were entitled to a declaratory judgment.

The Court detailed the various rights of reversion under the Copyright Act, which permits the author of certain earlier works to terminate a grant of copyright (e.g., to a publisher, like EMI's predecessor).  It then found that a 1981 Agreement not only granted EMI the future interest scheduled to revert to the author upon termination, it also replaced an earlier 1951 agreement as to the source of EMI's existing rights to the song.  Applying New York common law, the Court held that the parties intended for the new contract to substitute for the old one.  "Section 1 of the contract shows that they chose not only to have EMI receive the future interest that vested in [the author] upon service of the termination notice, but also to replace the 1951 Agreement as the source of EMI's existing rights in the Song."  Thus, the failure to record a 1981 termination notice under the 1951 agreement was irrelevant to the question whether EMI presently owned the copyright in the Song under either agreement.  Its rights to the renewal term were traceable to the 1981 agreement.  Thus, that was all that matters for decided plaintiffs' termination notices pursuant to section 203.

The Court concluded that Plaintiff could terminate the 1981 agreement under section 203 (section 304 did not control), and that the 2007 termination notice terminated the 1981 agreement.  Publication is a one time event that occurred in the 1930s.  Because the 1981 grant was executed by the author and does not cover the right of publication, it was terminable under section 203 starting on December 15, 2016, which is the effective date of termination stated in the 2007 notice.

Attorney's Fees Awarded To Village People Member

Scorpio Music v. Willis, No. 11-cv-1557 (S.D. Cal. filed 9/15/15) [Doc. 280].

In a dispute over the percentage of copyright ownership over the Village People's hit songs (including "YMCA") that went to a jury trial, the Court held that an original member of the group and author (invidivually and jointly) of various songs was entitled to attorney's fees as the prevailing party.  17 USC 505.  The court found that Mr. Willis was the prevailing party and that he achieved a high degree of success: he defeated Plaintiff's claim that he could not unilaterally terminate his grants of copyright under 17 USC 203, prevailed on a number of summary judgment motions brought on the grounds of statute of limitations and laches, and prevailed on 13 of the 24 compositions at trial (including YMCA, the most lucrative).  Specifically, the Court found that granting fees would advance the purposes of the Copyright Act inasmcuh as Mr. Willis was "trying to get back what he transferred to Plaintiffs, parties with superior bargaining power, decades ago.  An award of attorney's fees is justified to encourage authors like Willis to assert their rights to regain their copyright interests and to deter production companies and other transferees of copyright from attempting to interfere with those rights."  Willis sought an award of approximately $527,000, and the Court did not find that an upward or downward adjustment was warranted.  Costs of approximately $3,000 were also taxed.

Ray Charles' Foundation Can Challenge Notices His Heirs Served To Terminate Copyright Grants To The Foundation

The Ray Charles Foundation v. Robinson, No. 13-55421 (9th Cir. Opinion dated July 31, 2015).

The 9th Circuit holds that that the Ray Charles Foundation, the sole beneficiary of Ray Charles’s estate, had standing to challenge the validity and effectiveness of notices of termination of copyright grants conferred by Charles to the predecessors of Warnter/Chappell Music.  The Court found that the Foundation was a real party in interest because the termination notices affected its right to royalties, and its claims fell within the statutory zone of interests.  Accordingly, it had standing to sue to challenge whether the underlying works were made for hire and thus not subject to the termination provisions of 17 USC 203 and 304(c).

11th Circuit Clarifies Author's Standing When Publisher Registers Copyright As Author's Assignee

Smith v. Casey, No. 13-12351 (11th Cir. Jan. 22, 2014) (decision here).

At issue in this appeal is whether the author of a musical composition who assigned his rights in exchange for royalties may rely for purposes of standing to sue for infringement under the Copyright Act on a registration his publisher filed.  The 11th Circuit found that the lower court erred in concluding that the estate lacked statutory standing to sue for copyright infringement.

The basic facts are this.  Around the same time a song called "Spank" was recorded, Harrick Music, Inc. (Harrick Music), a publishing company affiliated with the record label Sunshine Sound, registered a copyright for the musical composition “Spank,” identifying Smith as composer and itself as claimant.  Harrick Music checked a box on the registration indicating the song was not a composition made for hire.  In the ensuing years, Smith acquiesced in Harrick Music’s administration of the “Spank” composition copyright, but, he alleged, the company never remitted a cent to him. According to the complaint, neither did Sunshine Sound. Under Smith's Recording Agreement with Sunshine and the form songwriter’s agreement attached to it,
however, Smith was owed percentage royalties for the song’s exploitation in exchange for assigning his rights to it. So on November 28, 2011, shortly before his death, Smith through counsel sent a cease-and-desist letter revoking Harrick Music’s authority to administer “Spank.” And Smith also filed with the Copyright
Office four Notices of Termination, seeking to formally record his revocation. Despite this, the defendants continued to commercially exploit the composition, and thereafter Smith's estate sued for infringement of the composition (not the sound recording).

Two defendants (not Sunshine or Harrick) moved to dismiss, and the district court concluded Smith lacked statutory standing to pursue his copyright claim and sua sponte dismissed that count with prejudice as to all of the defendants.  Harrick Music, not Smith or his estate, had registered the copyright, the district court noted, and registration was a necessary precondition to filing suit for infringement.

On appeal, the 11th Circuit first examined sections 411 and 501 of the Copyright Act: "The 1976 Copyright Act’s legislative history explains that Congress intended 'beneficial owner,' as the term is used in § 501(b), to 'include . . . an author who had parted with legal title to the copyright in exchange for percentage
royalties based on sales or license fees.'"  Continuing,

Under this definition, the estate has a sufficient ownership interest for standing under § 501(b). According to Smith’s allegations, he never signed any agreement giving Harrick Music the right to exploit the “Spank” copyright. But even were we to treat Smith’s agreement to permit Sunshine Sound to execute the form songwriter’s contract appended to his Recording Agreement as acquiescence to its terms for the “Spank” composition, Smith still would only have assigned his rights to the musical composition in exchange for royalties. Thus, he has at least a beneficial interest that satisfies § 501(b) of the Copyright Act.

The twist was that Harrick, not Smith, had filed the registration.  Nonetheless, the 11th Circuit found that "The district court’s construction of § 411(a) was too narrow. Harrick Music registered a claim to copyright in the 'Spank' composition, specifically identifying Smith as the composer and informing the Copyright Office the work was not made for hire. Nothing in § 411(a) indicates that a composer who has agreed to assign his legal interest in a composition, along with the right to register it, in exchange for royalties, may not rely on the registration his assignee files. Where a publisher has registered a claim to copyright in a work not made for hire, we conclude the beneficial owner has statutory standing to sue for infringement."  (Emphasis added).

Although the 11th Circuit reversed on the standing issue, it found that the District Court properly dismissed plaintiff's declaratory judgment claim.

YMCA Termination Rights

From the New York Times (article here):

A Copyright Victory, 35 Years Later

Victor Willis, a former member of the Village People, is set to take control of a share of the copyright to songs he wrote for the group.

Article re: Copyright Termination in 2013

See Ryan Davis, "Copyright Termination For '70s Hits Won't Spark Lawsuit Fever" (Law360, New York; Nov. 26, 2012).  (Link to article; registration required).

Article summary (first paragraph): "Musicians who recorded hit songs in the late 1970s will gain the right to reclaim ownership of their work starting in January under a 1978 copyright law provision, and while record labels are expected to fight to retain control of lucrative music, 2013 is unlikely to bring a flood of litigation, attorneys said."

The article concerns the reclamation of rights by authors that were licensed or transferred after 1978, pursuant to section 203 of the Copyright Act.  Generally, termination rights may be effected after 35 years from the grant.  Id.  Thirty-five years from 1978 is...2013!

Lawyers interviewed for the article predicted that there will be few actually litigated cases, and instead termination notices will serve as a jumping-off point for contract re-negotiations between artists and record labels.