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IP/Entertainment Case Law Updates

Johansen v. Sony Music Entertainment

In putative class action involving termination of grants of copyrighted sound recordings under U.S. Copyright Act, district court finds that mistakes in plaintiffs’ notices of termination were likely excusable scrivener’s errors, and lack of specificity in plaintiffs’ notices did not render them invalid, denying Sony Music Entertainment’s motion to dismiss.

Plaintiffs, musicians David Johansen, John Lyon and Paul Collins, brought a putative class action against Sony Music Entertainment for copyright infringement. Plaintiffs had each entered into their own recording agreements with Sony or its predecessors in the late 1970s, pursuant to which several albums were released. In 2015, plaintiffs served Sony with substantially similar termination notices under the termination provisions of the U.S. Copyright Act, each accompanied by a schedule listing the title of the work, author, publication date, copyright registration number, termination notice date and effective date of termination. Sony responded to the termination notices two years later with similar letters of refusal. Sony contended, among other things, that the works were made for hire and therefore not eligible for termination, that plaintiffs’ termination notices failed to identify the specific grants and transfers of copyright, and that plaintiffs’ termination notices were untimely.

Plaintiffs sued Sony in February 2019, alleging that as of the effective dates of termination in 2017, they regained ownership of the exclusive rights to their sound recordings. Sony moved to dismiss the complaint for failure to state a claim, contending that all three notices were invalid because they were untimely or otherwise deficient, echoing Sony’s prior refusal.  

The court denied the motion to dismiss, finding all of Sony’s arguments unpersuasive. First, the district court rejected Sony’s timeliness argument, concluding that plaintiffs had adequately identified the grants subject to termination, as the notices identified “all grants” of the subject recordings. Still, the court concluded that “more information [was] needed to determine if this [was] the case, making this inquiry unsuitable for a Rule 12(b)(6) motion to dismiss.” For the third notice, Sony argued that the notice was one month late. Drawing all reasonable inferences in favor of plaintiffs, as the court was required to do when considering a motion to dismiss, the court found it possible that the listed dates of termination in the notices were flawed because of mere scrivener’s errors, which did not render the notices invalid under the harmless error rule.

The court then turned to Sony’s gap grant argument. The term “gap grant” refers to agreements predating 1978 that concern works that were not created until 1978 or later, and which therefore do not fall into either termination provision of the U.S. Copyright Act. Sony alleged that Lyon’s notice failed to comply with the statutory requirements for gap works as it failed to recite the dates of creation of the relevant sound recordings. Sony argued that Lyon’s works predated 1978 based on a line in the complaint stating, “Lyon signed to . . . CBS Records, Inc., in or about 1976.” However, because the complaint alleged that that the two albums at issue were released pursuant to a 1978 recording agreement, the court decided that for the purposes of Sony’s motion to dismiss, the works were not subject to gap grants, and that they were therefore eligible for termination.  

Sony further contended that the termination notices were phrased so broadly that they failed to satisfy 37 C.F.R. § 201.10(b)(2)(v), which requires “a brief statement reasonably identifying the grant to which the notice of termination applies.” The court disagreed. In this case, the termination notices specifically identified grants of rights in sound recordings set forth in the schedules attached to the notices. The schedules relayed the title of the work, author, publication date, copyright registration number, termination notice date and effective date of termination. Therefore, the termination notices were sufficiently specific, and dismissal on this ground was inappropriate.

Last, the court addressed Sony’s argument that the notices “[did] not contain a clear identification of the specific dates of execution of the grants sought to be terminated.” The relevant regulatory requirement here, 37 C.F.R. § 201.10(b)(2)(iii), requires a clear identification of “the date of execution of the grant being terminated and, if the grant covered the right of publication of a work, the date of publication of the work under the grant.” The court acknowledged that the termination notices omitted the specific date of execution of the grant being terminated; however, “all three of the notices clearly identified the publication dates of the sound recordings at issue, as well as their authors, their titles, their copyright registration numbers and their effective dates of termination. Furthermore, the complaint allege[d] that all the sound recordings were released pursuant to recording agreements between Plaintiffs and Sony.” Ultimately, the court found that “this [was] not a case where the termination notices were completely devoid of any information regarding the grants in question” and when “[l]ooking at these facts in the light most favorable to Plaintiffs, the notices provide[d] Sony with ample information to identify the grants that cover the specific sound recordings identified.” 

Summary prepared by Tal Dickstein and Lyndsi Allsop