Paul McCartney's Suit over Songs' Recapture Rights

Sony and its affiliates “are clearly reserving their rights pending the final outcome of the Duran Duran litigation in the U.K.,” stated the complaint signed by Morrison & Foerster partner Michael Jacobs. “If that goes as defendants hope, defendants evidently intend to challenge Paul McCartney's exercise of his termination rights on similar contractual grounds.”

McCartney's Assignments

When McCartney signed his song publishing agreements in England in the 1960s, the U.S. Copyright Act gave compositions up to 56 years of rights. When Congress extended the copyright term, first to 75 years via the Copyright Act of 1976, then later to 95 years, it created a mechanism for authors like McCartney, who had assigned their interests under the old rules, to reclaim the U.S. portion once the 56-year term expired.

Section 304(c) requires authors to serve advance notice with the U.S. Copyright Office as McCartney began doing in 2008 in anticipation of recovering his share of the copyrights in the Beatles songs beginning in 2018.

Lennon and McCartney started assigning their copyright to others “for the period of the copyrights as far as it is assignable by law” in the early 1960s. Over time, Sony/ATV acquired both Lennon's and McCartney's interests in much of The Beatles' catalog. (Yoko One several years ago separately entered into an agreement with Sony/ATV for the music publisher's continued control of John Lennon's share of the Beatles' songs copyrights.)

Duran Duran band members filed copyright-assignment termination notices under 17 U.S.C. §203, which allows recapture of U.S. copyright interests after 35 years, in an effort to reclaim their 1980's hits. But the trial justice, Richard Arnold, of England's High Court of Justice ruled that the notices breached the Duran Duran music publishing contracts that assigned the copyrights to the publisher. Justice Arnold faulted Duran Duran's legal presentation, saying he was given no evidence that the U.S. copyright termination law obviates a music publisher's contractual rights.

According to McCartney's suit, Sony/ATV CEO Martin Bandier raised the case with Lee Eastman during a chance encounter at a Billy Joel concert in December. John Eastman responded by asking Bandier to confirm in writing that Sony does not dispute the validity of McCartney's termination notices.

“I must say I'm surprised that a collegial conversation I had with Lee a few weeks ago at a Billy Joel concert has apparently been misunderstood and caused you to threaten to bring a lawsuit against Sony/ATV,” Bandier responded in a Dec. 19 letter. He gave his assurance that the termination notices “constitute an effective exercise under Section 304(c).”

Eastman wrote again on Dec. 21, saying Bandier didn't answer the question and asking for Sony's assurance “that the termination notices give rise to no valid claim, in contract or otherwise.”

This prompted Bandier to refer the matter to outside counsel Donald Zakarin of Pryor Cashman in New York. Zakarin wrote back Jan. 9 saying that Sony “has no wish to engage in litigation with Paul,” but noted that the Duran Duran case “has yet to conclude” and that it would be “premature to discuss theoretical future events, which I know that ATV hopes will never arise.”

McCartney and his attorneys interpreted that as an attempt to reserve Sony/ATV's ability to sue Paul for allegedly breaching the publishing contracts. “Because the earliest of Paul McCartney's terminations will take effect in 2018,” McCartney's complaint stated, “a judicial declaration is necessary and appropriate at this time so that Paul McCartney can rely on quiet, unclouded title to his rights.”

Duran Duran's Contract

Music publishing agreements that the members of Duran Duran entered into beginning in 1980 gave Gloucester Place Music the worldwide assignment of the copyrights in the band members' songs, including “Rio,” “Hungry Like the Wolf” and “Girls on Film.” Contract language stated: “The Writer as beneficial owner (and by way of assignment of future copyright and rights where appropriate) hereby assigns to the Publishers all the copyrights and all other rights whatsoever and howsoever now or hereafter known … and the right to renew and extend such copyrights and other rights and the ownership of such renewed and extended copyrights and other rights as may now or hereafter be conferred by the laws of any territory so that the entire copyrights and all other rights in the said works shall be vested in the Publishers absolutely free from the adverse claims of any third party ….” The agreements were “governed by and construed under the laws of England whose courts shall have exclusive jurisdiction.”

In 2014, Duran Duran sent termination letters per 17 U.S.C. §203(a)(4) to Sony/ATV, which owns Gloucester, promoting Sony/ATV to file the breach of contract suit against the band members.

The publishing agreements didn't specifically reserve, or even raise, the §203 termination right, although both §203 and §304 state: “Termination of the grant may be effected notwithstanding any agreement to the contrary ….” The U.S. Court of Appeals for the Sixth Circuit explained in a May 2016 decision that a “key feature of the termination right is that, at a minimum, agreements predating 1978 that purport to bargain away all rights in a copyrighted work may not limit the termination right.” Brumley v. Albert E. Brumley & Sons Inc., 822 F.3d 926. New York federal court decisions support this. (See, e.g., Baldwin v. EMI Feist Catalog Inc., 805 F.3d 18 (2d Cir. 2015).)

In addition, according to High Court Justice Arnold, neither Duran Duran nor Sony/ATV put forth experts regarding U.S. copyright termination law. Justice Arnold noted that “the question of whether, and to what extent, title has in fact been assigned by an agreement governed by English law depends on the effect of the agreement applying English law, and in particular English principles of contractual interpretation.”

He added that the general rule “is that English courts will enforce a contract which is valid and enforceable under English law even if the contract would be unenforceable as contrary to public policy in another country with which the contract has a connection.”

Justice Arnold gave Duran Duran a glimmer of hope by prefacing his conclusion with a “not without hesitation,” but decided in his Dec. 2 ruling: “[W]hat the [publishing contracts] language would have conveyed to a reasonable person having the relevant background knowledge was that the parties' intention was that the 'entire copyrights' in the Compositions should vest, and remain vested, in the Claimant for the 'full term' of the copyrights. That implicitly precludes the Group Members from exercising rights under U.S. law ….”

Conclusion

Paul McCartney's lawsuit notes: “Congress adopted the termination of transfer provisions [of §304] to ensure that the extended copyright term would benefit authors and their heirs and would not be a windfall to grantees who negotiated transfers before the extended copyright term existed.”

In addition to the earliest publishing agreement that Lennon and McCartney signed, for “Love Me Do” and “P.S. I Love You,” the subsequent music publishing agreements Lennon and McCartney signed were for the full copyright terms. McCartney's suit against Sony/ATV sets forth the one cause of action for a “declaratory judgment of no breach of contract.”

Looking at Justice Arnold's ruling in the Duran Duran case, copyright lawyer Helene M. Freeman, a partner at Phillips Nizer in New York City and defense co-counsel for the Led Zeppelin defendants in the copyright infringement case over “Stairway to Heaven,” said: “I believe the court made a mistake with Berne choice of law. Under the [international] Berne Convention, we give the same privileges and rights to foreign nationals as to American citizens and origin of a work shouldn't matter. I was somewhat surprised that, with the U.S. law having a statute relatively in plain English, the UK court wanted expert witness testimony and treated as it as a question of fact.”

***** Stan Soocher is Editor-in-Chief of Entertainment Law & Finance and author of Baby You're a Rich Man: Suing the Beatles for Fun & Profit (ForeEdge/University Press of New England). Scott Graham writes for The Recorder, an ALM sibling of Entertainment Law & Finance.