January 30, 2013 10:18am PT by Eriq Gardner
Ray Charles' Children Win Lawsuit Over Song Rights Termination
This is the year when everything was supposed to change for the music industry.
In 1978, Congress amended copyright laws to allow authors or their heirs to terminate their copyright grants to publishers. All they needed to do was wait 35 years from the date of a published work and follow a strict procedure. The clock's alarm bell is now ringing. The rights to albums released in 1978 are now eligible to be reverted to their creators, and a recent review of termination records at the U.S. Copyright Office by Billboard indicates that that a number of artists including Pat Benatar, Journey, Devo and Billy Joel are exploiting their termination rights.
Still, things won't be that easy. There are still potential roadblocks including the possibility that record labels and song publishers will challenge terminations as improper because the songs were made-for-hire. If a musician is deemed as having been employed by the publisher, then the songs originally belonged to the publisher, and no right to terminate exists.
That brings our attention to a ruling made Friday by a California federal judge concerning a termination attempt on many of Ray Charles' famous songs including "I Got a Woman," "A Fool for You" and "Mary Ann."
Charles' 12 children have just survived the first big challenge in their termination attempt.
When he died in 2004, Charles left most of his estate to the Ray Charles Foundation, a charity that supports the vision- or hearing-impaired.
As for Charles' children, before he died, the singer gathered most of them (two were in jail) and told them that they each would be given an irrevocable trust for $500,000 -- and that's all they'd get.
Years later, when the children attempted to grab back rights to Charles' songs under the termination clauses of copyright law, the foundation sued, alleging that the children had breached their agreements with their father. Further, the foundation sought a declaration that the termination notices were invalid.
In reaction to the lawsuit, the children, represented by attorney Marc Toberoff, brought an anti-SLAPP motion, urging the court to reject the claims.
The first bit of precedent coming from U.S. District Court Judge Audrey Collins' ruling last week is that the anti-SLAPP statutes -- which give recourse to defendants dragged into litigation that interferes with First Amendment rights -- applies to a termination notice because it is "certainly more than simply ministerial and involves more than just a private business transaction," according to the judge. (Read the ruling in full here.)
As such, for the lawsuit to go further, it was the foundation's burden to prove it had a likelihood of prevailing in the case. Collins gave a few reasons why the foundation won't likely succeed.
A key issue in the possibility of termination is whether or not Charles' songs were written as works made for hire and whether he was employed by Atlantic Records and Progressive Music Publishing at the time he composed them. Again, that goes to the issue of whether the songs are eligible to be terminated in the first place.
The foundation wavered on the issue, so the judge addressed both possibilities.
If Charles's songs were not made for hire, and he owned them when he died, the judge says that the "Copyright Act prevents the Court from interpreting the agreements signed by Defendants as limiting their statutory termination rights" -- in other words, when Ray Charles gathered his children and gave them $500,000 and no more, the agreement couldn't include a waiver against termination because that would be something known in legal parlance as an "agreement to the contrary," which some past courts in California have ruled is unenforceable so far as termination attempts go.
And if Charles actually did work for Atlantic/Progressive and didn't own his songs at any point?
If so, Collins ruled that the termination attempt "could not constitute claims against Charles' estate and therefore could not have breached the agreement between Charles and Defendants."
But that doesn't end things in the complicated ruling.
The foundation also suggested that if Charles' children were doing something improper, they had standing to either challenge the termination notices or sue the children for copyright infringement because it was the "beneficial owner" of the songs since the publishing company was cutting the Foundation royalty checks.
Here is where Collins made the second piece of important precedent by deciding that the foundation lacks standing since the statutes were intended to apply only to authors, statutory heirs and grantees of transfers and their successors -- not beneficial owners, which could be bad news for other royalty recipients like record producers who might wish to challenge termination notices.
The foundation argued that its interest was aligned with the current copyright holder -- Warner/Chappell -- but the judge says that isn't exactly true.
"After receiving termination notices, the grantee might be more interested in maintaining an amicable relationship with the statutory heirs to facilitate renegotiations of the grants at issue, rather than to challenge the termination," Collins wrote.
The ruling certainly is a victory for Charles' children, not to mention Toberoff, who has experienced a string of stinging termination defeats in recent months in the war over Superman rights. (See here and here.)
But it might not end the issue because the judge hasn't addressed whether the songs were works made for hire. Clearly, that would be something for Warner/Chappell to challenge if it so chooses.
If that happens, it not only would represent the newest chapter of Toberoff vs. Warner, but it would be a hugely important case that likely would gather the attention of Journey, Joel and all others who are attempting to win back rights to songs.
Email: email@example.com; Twitter: @eriqgardner