Recent U.S. District Court Holding Reinterprets U.S. Copyright Act, Sec. 304 and Could Result In Termination and Recapture of both U.S. and Foreign Copyright Rights

For the first time since 2009, a federal court has held that termination rights under Section 304 of the Copyright Act applies to both U.S. domestic and worldwide rights. The holding in the Vetter v. Resnik case is based on the court’s denial of the defendants Rule 12(b)(6) motion to dismiss. In July the Vetter plaintiffs also filed a motion for summary judgment that is still pending, so this case is far from being new settled law. Here’s a brief summary of what’s happened so far.

In 2009 a U.S. District Court in the Siegel v. Warner Bros. Entertainment Inc. case held that copyright terminations under Sec. 304 of the Copyright Act were limited to termination of U.S rights based on this language in Sec. 304(c)(6)(E): “Termination of a grant under this subsection affects only those rights covered by the grant that arise under this title, and in no way affects rights arising under any other Federal, State, or foreign laws.” The long-held Siegel decision has been followed by the Supreme Court, influential cases, music publishers, songwriters, and their statutory heirs alike based on that court’s interpretation of Sec. 304 and Article 5(2) of the Berne Convention for the Protection of Literary and Artistic Works that states: the “extent of protection … shall be governed exclusively by the laws of the country where protection is claimed.”

Cyril Vetter and Don Smith were co-authors of the song “Double Shot (Of My Baby’s Love) that they assigned to Windsong Music Publishers. In 2019, Smith’s heirs, the sucessors-in-interest plaintiffs in the Vetter case who had previously sold their interests to Vetter, brought suit seeking a declaratory judgment that they successfully recaptured both the U.S. and worldwide rights to the song. Defendant Resnik, Windsong’s successor, filed a motion to dismiss the case asserting it is well settled law that the plaintiffs had only recaptured the U.S. renewal term rights. The defendant’s motion to dismiss relied in part on the 1990 Supreme Court decision in Stewart v. Abend, that held only the U.S. domestic renewal rights that were terminated under Sec. 304 during the renewal term, vested in the heirs in that case.

The Vetter court not only denied the motion to dismiss but concluded that the Supreme Court and other influential cases had not resolved whether termination under Sec. 304 that vests during the renewal term rescinds domestic rights only or foreign rights as well. The court declined to follow the Siegel case and accepted as plausible Vetter’s novel claim that a grant of worldwide copyright rights is a “single copyright interest” grant under the U.S. Copyright Act, eligible for termination under Sec. 304 of U.S. copyright law, and not a “multiple and separate” grant of copyright interests that requires termination in each country. The court found that under the “single copyright interest” theory, both the domestic and foreign rights to exploit the song were recaptured by Vetter. Of course, the defendants have argued that the court’s acceptance of the Vetter argument is a misinterpretation of Article 5 of the Berne Convention.

If the Vetter decision holds termination and recapture rights in the music industry in particular will be significantly impacted by resetting treatment of copyright terminations to cover both U.S. and worldwide recaptured rights in songs that revert to songwriters and their heirs upon the applicable recapture dates.

This summary is provided for informational purposes only and is not intended to constitute legal advice nor does it create an attorney-client relationship with Rimon, P.C. or its affiliates.

Celeste Moy is a Partner in Rimon’s Entertainment Sports & Media practice group.  Ms. Moy has extensive music and entertainment law experience primarily representing songwriters, and their successors-in-interest, in disputes over royalty payments and royalty monetization transactions, copyright assignment terminations and recaptures, as well as negotiating and drafting various types of entertainment contracts for recording and performing artists and music producers.  She also helps her clients to obtain trademark registrations and trademark license agreements for use of their logos, and creative works in connection with advertising, marketing materials and merchandise. Read more here.