Second Circuit Protects Artist Copyright Termination Rights by Reading the Contracts

Santa Claus is Comin’ to Town was written in the 1930’s and recordings of it are playing on radio stations and in stores and restaurants right now. I’ve written often about the complex sections of the Copyright Act that are supposed to allow artists and their heirs to regain the copyrights they signed away decades in the past.

In Baldwin v. EMI Feist Catalog, the Second Circuit this fall gave a lesson about the barriers thrown up in the music industry to stop termination rights from working as intended—and how federal courts can allow artists a chance to jump the barriers.

Fred Coots and Haven Gillespie signed their rights away to Leo Feist, Inc. in 1934 and the company promptly got a copyright registration for the song. Feist was one of the largest music publishing companies in the world at the time and MGM bought a controlling interest in it a year later. Control of the Feist catalog continued to change hands after that, and there were new contracts with the composers in 1951 and 1981.

The Baldwin decision traces the many attempts to give copyright termination notices under the two sections of the Copyright Act which have different rules depending on when the “grant” of rights was made. Note they don’t depend on when a song was written or recorded. What counts is the date of the contracts.

If an author grants or licenses rights before January 1, 1978, there is a 56 year waiting period before the author or her heirs can get the rights back through termination. 17 U.S.C. §304(c). But if the agreement being terminated was signed on or after January 1, 1978, the wait is only 35 years for termination. 17 U.S.C. §203(a). Yes, it’s counterintuitive.

Musical compositions and recordings still making money decades after their debut are not happily turned over to artists or their heirs by the publishing and recording companies who have been enjoying the lucrative longevity of the music. These are often companies with vast catalogs, deep pockets, and excellent lawyers. You can guess which side of the dispute thought the heirs should wait 56 years instead of 35 years.

Artists and their heirs rarely can match the resources they face, and they must be prepared to run a legal marathon. The Coots heirs lost at the district court but kept going. The Second Circuit reversed the district court and a year from now they will regain the rights their ancestor signed away.

The Second Circuit’s decision is forty pages long but not packed with citations to legal precedent. That is because most of the opinion is Judge Livingston’s painstaking analysis of what the 1951 and 1981 contracts actually say and mean under  New York state rules for contract interpretation.

Each copyright termination story has its own unique combination of events and agreements. Although the drafters of the 1976 Copyright Act who gave us the termination provisions presumably wanted to create simple and virtually automatic procedures, they did little to insure that would be the reality starting decades after the Act became law. And the complexity of applying the knotty termination sections to a unique set of facts gives those opposing a termination of rights much raw material for creative arguments.

Lawyers are prone to focus on mastering the details of the Act and relying on the small body of legal precedents on copyright termination to argue that termination is or is not appropriate. They often generalize about how copyright law applies to a situation when the real question is what the operative contracts say and how the court should interpret them. It is surprising how often both sides in the dispute throw caselaw at each other when they should focus on a few words in an agreement. Congratulations to the Second Circuit for going past the generalizations and looking at the deals themselves.

About Craig Pinkus

Craig Pinkus is a partner in the Intellectual Property Group. He also is a member of the Litigation and the Sports, Entertainment and Media Groups. He assists clients with a broad range of disputes and transactions involving all areas of intellectual property, entertainment, and other complex business arrangements. He has conducted trials and arbitrations throughout the United States and has argued appeals before the Seventh, Sixth and Federal Circuit Courts of Appeal, the Indiana appellate courts, and United States Supreme Court.
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