The US Copyright Act of 1976 allows artists, writers, and musicians to “get back” grants of copyrights that had been previously licensed or assigned away. Specifically, artists can “terminate” their copyright arrangements simply by serving notice upon the grantee between 46 and 59 years after the date that the rights were granted. This means that, for the hit songs of the 1960s and 1970s, the window during which copyright termination notices may be served is now upon us—and, of course, litigation sometimes follows.
Sir Paul McCartney served just such copyright notices on Sony, seeking to recapture his rights to some of the world-famous works that he created with The Beatles and as a solo artist. Then, last month, Sir Paul sued Sony in a New York federal court, seeking a declaratory judgment that his termination notices were effective and enforceable. He appears to have filed this pro-active action in attempt to avoid the fate of Duran Duran, who one month prior suffered a significant setback when a UK court ruled that the service of US copyright termination notices constituted a breach of contract under UK law.
Copyright Termination Under US Law
The US Copyright Act of 1909 allowed authors one initial 28-year copyright term, renewable for another 28 years. It was rewritten in 1976 – its first major overhaul since 1909. The Copyright Act of 1976 contains two provisions allowing authors to terminate grants of copyright assignments and licenses after a period of time. The first provision, Section 203, applies to works created after January 1, 1978. The second provision, Section 304, applies to works created before 1978, but still subject to copyright as of 1978. Section 203 allows authors to serve a notice of termination between 25 and 38 years after the initial grant, thus creating a 13-year “termination window.” Section 304 grants of pre-1978 copyrights may be terminated during a five-year period beginning 56 years after the grant. Under Section 304, the author must serve notice in advance, between ten and two years before the termination date.
Duran Duran: Gloucester Place v. Le Bon
Between 1980 and 1993, the members of the rock band Duran Duran entered into several copyright agreements with Gloucester Place Music, owned by Sony. Those agreements assigned Gloucester Place the worldwide copyrights to Duran Duran songs in exchange for the payment of advances and royalties. The agreements were expressly governed by English law. In 2014, the band members sent Sony US termination notices for the assignment of the US copyrights for 37 songs, pursuant to Section 203. Section 203(A)(5) states that “Termination of the grant may be effected notwithstanding any agreement to the contrary.” In other words, Duran Duran took the position that it could exercise its rights under the US Copyright Act, even if its contracts with Gloucester Place seemed to indicate the opposite.
In response to these US termination notices, Gloucester Place Music sued Duran Duran in English court, claiming that the notices violated the contracts between the band and Gloucester Place. The English court agreed with Gloucester Place, finding that by sending the notices, Duran Duran was in breach of its contracts.
Notably, counsel for Duran Duran did not introduce evidence that the terminations would have been valid under US law, instead relying on assertions without any opinion evidence from a US copyright law expert. It is possible that if Duran Duran had submitted such evidence, the Court would have found that the US Copyright Act pre-empted the English contracts, and thus that the termination notices were valid.
Still, Gloucester Place provides a narrow roadmap for a studio attempting to undercut an international artist’s termination rights. If the artist has a signed copyright agreement pursuant to the laws of a non-US jurisdiction, the owner of a copyright could theoretically sue in those courts and potentially circumvent an otherwise effective US termination notice. It is also important to note that when Duran Duran executed its agreements with Gloucester Place in the 1980s and 1990s, it had at least constructive notice of the termination rights contained in the updated 1976 US Copyright Act. Conversely, an artist granting copyrights before 1976 could not be aware of rights not yet in existence.
Paul McCartney v. Sony
With the termination window for many Beatles songs fast approaching, and with an eye to Duran Duran’s recent disappointment, Sir Paul McCartney recently filed suit in New York. At the height of The Beatles’ popularity, and well into his solo career, Sir Paul assigned copyrights to his musical works to a number of companies, with Sony eventually obtaining these rights. Desiring to recapture the rights to several hit songs (for example, the US copyrights to Love Me Do and P.S. I Love You expire in the next two years), Sir Paul has been exercising his US termination rights pursuant to Section 304. He first served notices in 2008 for termination dates effective in 2018.
According a recent court filing, Sony and Sir Paul have been engaging in substantial back-and-forth about these notices for at least the last few months, with Sir Paul seeking assurances that he will regain his copyrights without resorting to litigation, which may cloud his title. In a letter dated December 19, 2016, Martin Bandier, the CEO of Sony wrote Sir Paul McCartney’s counsel that “the previously served notices of termination… constitute an effective exercise under Section 304(c) and will become effective on the dates stated in the notices.” However, in a later email from Sony’s outside counsel, Sony asserted that it still owns the worldwide copyrights to John Lennon’s share of the compositions that the two Beatles wrote together. In the same email, Sony also states that it “will retain all of its derivative works rights in the US as well as retaining its foreign rights in Paul’s share of the compositions post-termination.” It therefore appears that Sony is acknowledging that the termination notices are valid, but arguing that the termination right itself is limited in scope.
Then, on January 18, 2016, McCartney filed his federal lawsuit. In James Paul McCartney v. Sony ATV Music Publishing LLC, Sir Paul is seeking, among other things, a declaratory judgment to confirm that his termination notices are valid and that the subsequent transfer of copyrights from Sony back to him will occur on the effective termination date. Sir Paul is seeking a declaratory judgment in connection with 15 termination notices (covering over 250 titles), effectively seeking to recapture his rights to a large portion of The Beatles’ catalogue and his solo efforts. Given the language quoted above from Sony’s reply email, as well as counsel’s allusions to Sony’s “continuing role and interest in the compositions, both foreign and in the US,” Sony may argue that Sir Paul’s termination notices do not cover any rights outside of the United States. Beyond any substantive defense, Sony could also argue that the lawsuit is premature. The effective date for the terminations has yet to arrive, so it is possible that the federal court will decide that the parties’ discussions (which can be read to be no more than “negotiations” at present) have not yet ripened in an actual “case or controversy” sufficient to give a federal court jurisdiction to hear this case under the U.S. Constitution. Sony’s response to Sir Paul’s complaint is due on March 13, and we will be sure to update you on this important case.