Hollywood Docket: Ray Charles' Children See Song Rights Win Overturned by Appeals Court

Ray Charles
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Many artists experience their biggest sales after death. An example from the last decade: Ray Charles, whose 2004 album Genius Loves Company was released two months after he died, topped the charts and has since sold 3.2 million copies, according to Nielsen SoundScan.

2013 was an interesting year for the music industry, thanks to an amendment to copyright law allowing songwriters to terminate their copyright grants to publishers 35 years from when the law took effect in 1978. The end of the 35-year period saw artists including Tom Petty, Tom Waits and Bob Dylan filing terminations with their labels and publishers.

But one of the first big termination attempts was from the children of Ray Charles, who in 2012 filed notices to terminate the rights Warner/Chappell Music holds to 51 of Charles' songs.

The move brought on a lawsuit from the Ray Charles Foundation, which supports the vision- or hearing-impaired. Why?

Shortly before Charles' death in 2004, he left a $500,000 irrevocable trust to each of his children, and nothing more. The royalties and other revenue from his songs were assigned to fund the Ray Charles Foundation, which in turn would not take private donations. So in trying to terminate Warner/Chappell's rights to the songs, the heirs threatened the charity’s revenue stream.

The Foundation sued in 2012, arguing the children had breached their agreement with their father and requesting the court invalidate the termination notices. Following some intriguing discussion over whether Warner/Chappell hired Charles to write the songs or merely owned the rights, the court in early 2013 ruled against the Foundation and let stand the terminations.

The Foundation appealed, and on Friday California's 9th U.S. Circuit Court of Appeals overturned the decision.

The lower court found the Foundation didn't have a case even if Charles wrote the songs under hire to Warner predecessors Atlantic Records and Progressive Music Publishing, though the statutes for termination of rights exclude works created for hire. The appellate court reintroduced the relevance of the question, which it calls "the central premise of the Foundation’s suit, which is that the termination provisions do not apply at all."

Even if the termination provisions do apply, the appellate court thinks the Foundation still has standing.

The district court found the termination statutes weren't the business of "beneficial owners" like the Foundation, but the 9th Circuit finds the Foundation's "beneficial owner" status irrelevant. The concept of "beneficial" ownership only pertains to copyright infringement, says the court.

What the court decided matters is the interest the heirs and the Foundation each seek in the songs. "The Foundation alleges injury to its interest in continuing to receive the royalty stream generated by Charles’s works, which is the same interest that the Terminating Heirs seek to redirect to themselves," writes judge Morgan Christen. This gives the Foundation the same right to challenge the heirs' terminations the heirs have to submit them, says the court. The Foundation's request for invalidation of the termination notices will return to the district court.

Read the full ruling.

The Foundation did not appeal one interesting element of the district court’s ruling: Judge Audrey Collins' endorsement of the heirs' motion to dismiss the breach of contract claims on the grounds the termination notices were protected by California's anti-SLAPP statute, which generally covers free speech.

"We respectfully disagree with the Opinion and are considering en banc review of the decision," the heirs' attorney Marc Toberoff tells The Hollywood Reporter.

In other entertainment law news…

Taryn Manning, who plays Pennsatucky on Netflix's Orange Is the New Black, has sued Caroline Dimech (who sometimes goes by Cline Mayo) and Dimech's company Fierce Flix claiming Dimech stole her idea for a movie and then tried to oust her from the project.

In a complaint filed Thursday in Los Angeles Superior Court (read it here), Manning claims she brought the idea for a film called Droppers to Dimech in 2007. They together shot a trailer allegedly funded by and starring Manning, but Manning claims by 2015, Dimech "insisted that Plaintiff not only played no creative role in 'Droppers,' but that Plaintiff somehow infringed upon a copyright allegedly belonging to [Dimech] and her company." Manning wants the court to declare she didn't infringe on Dimech's copyrights and Dimech doesn't have interest in Droppers sufficient for infringement. She's represented by Freedman & Taitelman's Bryan Freedman.

—Netflix has won an appeal in California's 9th Circuit in a case over whether its sharing of users' viewing records violates the Video Privacy Protection Act. But unlike some VPPA cases, in which plaintiffs have sued defendants including Hulu, Viacom and Google on claims the video outlets share consumer data with advertisers and social networks, Meghan Mollett and Tracey Hellwig took issue with the way their friends, family and guests could view their queues and recently watched videos when signed into Mollett or Hellwig’s accounts or watching over their shoulders. In agreement with the district court’s granting Netflix’s motion to dismiss, the appellate court found the VPPA’s permission of disclosing “personally identifiable information concerning any consumer... to the consumer” applicable to the multiple "consumers" on Hellwig or Mollett's account. Read the ruling. THR has requested comment from the plaintiffs’ lawyers.