Delia Ramirez, Of Counsel at Hakimi Law
The struggle for ownership rights between The Beatles songwriters, Sir Paul McCartney and John Lennon (now his estate), and their publishers has been a long one. In 1963, McCartney and Lennon along with publisher, Dick James, and manager, Brian Epstein, started a publishing company called Northern Songs, which became public two years later. At the time, McCartney and Lennon each owned 15 percent of the company, while James (through his company Dick James Music) and Epstein (through his company Nems Enterprise Limited) held majority ownership.
After a falling out, James sold his share to ATV Music (ATV), who outbid McCartney and Lennon’s attempt to buy back the ownership interests of their catalogue. In 1985, Michael Jackson acquired ATV after famously discussing the value of composition ownership with McCartney himself. Jackson wasn’t able to solely hold on to ATV for too long. He sold half of the company to Sony in 1995 forming the well-known Sony/ATV Music Publishing (Sony/ATV). In 2016, Sony exercised a purchase option to buy out Jackson’s share of the company. After a long series of transfers, the ownership interests in McCartney and Lennon’s catalogue ultimately ended with Sony/ATV.
McCartney filed a lawsuit on January 18, 2017 against Sony/ATV in the U.S. Federal Court in the Southern District of New York for a declaratory judgment to enforce rights provided for under the U.S. Copyright Act of 1976 (Copyright Act). The complaint specifically asks for the court to “declar[e] that the termination notices served on [Sony/ATV] are valid, that the termination notices will re-vest Paul McCartney’s copyright ownership in him on their effective termination dates, and that the termination notices do not give rise to any valid contract claim against Paul McCartney.” McCartney filed the lawsuit in reaction to two events. First, Sony/ATV refuses to confirm the validity of any of the served termination notices; and second, a case was recently decided by the U.K. High Court system regarding the ownership rights of the catalogue for Duran Duran, also a Sony/ATV client.
The Copyright Act gives the original owner of the musical composition copyright the right to terminate a grant of ownership and regain the rights to the copyright, except in a work for hire situation. Because The Beatles’ songs were written and transferred prior to the current Copyright Act, ownership rights are recapturable within a five-year window beginning at the end of the 56-year term of the copyright given through the Copyright Act of 1909. This offers the original owner the opportunity to exploit and enjoy the ownership in their works for the remainder of the copyright. McCartney has been preparing for the reversion of the ownership rights of his catalogue for almost a decade. According to McCartney’s complaint, he transferred rights to songs co-authored by him and John Lennon between 1962 and 1971 to various music publishers. So the first chance for McCartney to recapture the ownership rights is in 2018. As required by the Copyright Act, McCartney diligently caused several notices of termination to be sent to Sony/ATV between the years of 2008 and 2015. However, Sony/ATV remains silent on the issue and has yet to confirm or agree to the termination and transfer of rights.
The Copyright Act is very clear that the termination rights are inalienable and thus cannot be waived by contract. Nevertheless, Sony/ATV seems to be taking the position that not U.S. law but English law governs these matters; arguing that McCartney is a U.K. citizen, the parties entered into the agreement in the U.K. and finally, that payment occurs in the U.K. This comes amidst the recently decided case regarding ownership rights to the catalogue of Duran Duran. In 2014, when Duran Duran attempted to enforce termination rights, the band was sued by publishing holding companies, including Sony/ATV, for breach of contract. Under English law, the rights cannot be recaptured prior to the original duration of the copyright, which is life of the author plus an additional 70 years. When the agreement transfers all ownership rights for the duration of the copyright, any attempt to recapture these rights prior to this, unless otherwise agreed upon, is considered a breach of contract. The U.K. High Court of Justice ruled against the band’s attempt to regain the rights to their musical compositions under English contract law. The court found that the contracts agreed to and signed in the U.K. took precedent over U.S. Copyright Law. Even with an undesirable decision, McCartney’s attorneys do not seem to be worried. They argue that the termination notices apply only to the rights in the U.S. and, thus, English law need not be considered.
McCartney decided not to risk the same outcome as Duran Duran by filing the lawsuit in U.S. federal court. Under U.S. Copyright law, McCartney does have the right to recapture the rights regardless of any prior contractual agreement. The policy behind the termination rights within the Copyright Act are to allow authors to take advantage of the extension in time provided by the Copyright Act, since it was unknown at the time of the grants that the law would change. Finding the service of a termination notice a breach of contract under the U.S. Copyright Act would be against the policy and purpose behind termination rights. The outcome would set an unfortunate precedent for songwriters in the future.
At this point, it’s uncertain how everything will play out for McCartney. The U.K. High Court decided to allow Duran Duran to appeal the decision which they believe to be some sort of acknowledgement that the premise of the decision was flawed. The decision by the court could be overturned, and open a clear path for McCartney. Unfortunately, this will take time. McCartney will need to push for a quick decision or settlement as the first song that he sent a termination notice for, “Love me Do,” should revert back to him on October 5, 2018. We will need to keep close watch on how these cases play out.
Delia is a business transactional attorney at Hakimi Law that has a passion for music, art, craft beer and technology. She believes that the connection to art, in any form, is inspiring. Her passion is rooted in working with all around creative and innovative people. She can be reached at firstname.lastname@example.org