John Frederick Coots and Haven Gillespie co-authored the song and conveyed worldwide copyright ownership to Leo Feist, Inc., in 1934, and Feist registered the copyright in its name. Pursuant to the 1909 Copyright Act, the copyright was for an initial 28-year term, plus a 28-year renewal term. In 1951 Coots granted Feist “all renewals and extensions of all copyrights [in the song] throughout the world.” At the end of the 28-year initial term Feist renewed its copyright and continued its ownership.
In 1981 Coots sent Feist a notice to terminate the 1951 agreement pursuant to Section 304(c) of the 1976 Copyright Act, with an effective termination date of October 23, 1990. Coots’ attorney sent the 1981 notice to the Copyright Office to be recorded. Less than a month later, Coots and the remaining plaintiffs entered into an agreement with EMI, granting EMI any and all rights in the extended renewal period, which would commence in 1990. Under this agreement, EMI agreed to pay plaintiffs a $100,000 bonus and royalties for the extended renewal period. The 1981 agreement stated that Coots and plaintiffs had executed, served upon EMI, and recorded in the Copyright Office the 1981 termination notice in full compliance with the Copyright Act of 1976, including Section 304(c)(6)(D). The 1981 notice was never recorded, however. On May 7, 1982, the Copyright Office sent Coots’ attorney a letter stating that, pursuant to a March 1, 1982, telephone conversation, it was returning the 1981 notice to him unrecorded. The notice was never resubmitted to the Copyright Office.
Plaintiffs subsequently sent more termination notices. On April 6, 2004, plaintiffs sent EMI a termination notice pursuant to Section 304(d) of the 1976 Copyright Act, with September 27, 2009, as the effective date of termination. On April 17, 2007, plaintiffs sent EMI another termination notice under Section 203 of the 1976 Copyright Act, and on March 13, 2012, plaintiffs sent EMI a second Section 203 termination notice. The notices identified only the 1981 agreement as the agreement to be terminated.
On cross-motions for summary judgment, defendant argued that the 1951 agreement remained in effect and granted copyright in the song until 2029. Plaintiffs argued that the only agreement in effect between the parties was the 1981 agreement pursuant to the 1981 termination notice. Even if the 1981 notice were not valid, however, plaintiffs also argued that the 1981 agreement superseded the 1951 agreement. In either case, plaintiffs argued, they effectively terminated the 1981 agreement under one of the termination notices they sent to EMI.
The court granted defendant’s motion for summary judgment, finding that the 1981 notice of termination was invalid because it was never recorded, and the 1951 agreement remained in force.
At the outset, the court noted that there was no dispute that the 1981 agreement was governed by Section 304(c)(6)(D), which states that a grant of any right covered by a terminated right is valid only if it is made after the effective date of termination, except that an agreement for a further grant may be made between the author and the original grantee after the notice of termination has been served as provided by clause (4) of the subsection. The 1981 notice identified October 23, 1990, as the effective date of termination of the 1951 agreement. While generally plaintiffs would have had to wait until that date to grant the rights covered by the 1951 agreement, because EMI was the original grantee, the question at issue was whether plaintiffs had satisfied the exception by properly serving a notice of termination.
The court concluded that plaintiffs had not satisfied the exception because they did not comply with Section 304(c)(6)(D) when they served the 1981 notice on EMI by recording the notice in the Copyright Office before the effective date of termination. Because the 1981 notice was never recorded with the Copyright Office, it remained in effect, giving defendant a copyright in the song until 2029.
Plaintiffs argued that the failure to record the notice was irrelevant because the 1981 agreement superseded the 1951 agreement “de facto.” Noting that plaintiffs were correct that parties retain the right to voluntarily agree to terminate an existing grant and negotiate a new one, nothing in the 1981 agreement suggested that the parties intended it to supersede the earlier agreement. By its own terms, the 1981 agreement was intended to terminate the 1951 agreement on the earliest possible date under the 1976 Copyright Act. Under the 1981 notice, this would have been October 23, 1990. The 1981 notice was never recorded, however, and under the Copyright Act, the earliest date possible to terminate the 1951 agreement is 2029. The court noted that the royalties provisions of the 1981 agreement undercut plaintiffs’ interpretation because the agreement did not provide for the payment of royalties until the extended renewal term in 1990. If the 1981 agreement had immediately superseded the 1951 agreement, plaintiffs would have forfeited their royalty rights from 1981 to 1990. Testimony of plaintiffs’ own witnesses also failed to support their interpretation.According to the court, plaintiffs’ subsequent termination notices do not change the result because the 1951 agreement survives them all. The 2007 and 2012 notices do not apply because they were served pursuant to Section 203, which governs grants only after 1978. Even though the 2004 notice was served under Section 304, which governs grants before 1978, plaintiffs do not “get a second bite at the termination apple.” Section 304(d) provides a new termination right only “where the author or owner of the termination right has not previously exercised such termination right” under Section 304(c). Plaintiffs exercised their Section 304(c) termination rights when they served the 1981 notice on EMI and secured a $100,000 bonus payment. According to the court, plaintiffs’ ability to “‘wield the threat of termination’ to secure a better deal is exactly what Congress intended.” When plaintiffs obtained that better deal, they had no further need and no right to terminate the 1951 agreement.