Universal Music Group has a ticking time bomb on its hands.
The Copyright Act gives authors the ability to terminate a grant after a 35-year wait, and now there are hundreds of recording artists from the early 1980s who are looking to take advantage of this statutory provision to reclaim ownership rights. Soon will come artists from the late 1980s aiming to do the same. And after that, artists from the 1990s will want to cancel copyright grants so as to enjoy more financial rewards from digitally distributed music.
On Friday, UMG set in motion its plan to defuse this bomb.
John Waite and Joe Ely are leading an attempted class action against UMG. They contend that in the face of termination notices, the music giant “routinely and systematically refused to honor them.” The lawsuit aims to get a judge to reject all roadblocks and force UMG to stand down.
UMG has now submitted a motion to dismiss.
In a memorandum filed on Friday, the music company brings forth a series of contentions that will have the judge exploring largely untested ground.
For instance, take the fact that some recording artists including Waite and Ely do business through loan-out corporations. Doing so may have had tax advantages, but now UMG argues that plaintiffs can’t terminate copyright grants because technically, they aren’t the grantors.
Or take the issue of the clock.
It may be 35 years until a grantor terminates, but is that from the time the original contract was signed or is it from the time the work was published? When is the grant actually executed? This so-called “gap grant” issue comes up when the contracts predate 1978 as that is when the termination provisions of copyright law went into effect. So UMG’s position is that since an artist like Ely made his deal in 1976, his later sound recordings are ineligible to be terminated. The U.S. Copyright Office came to the conclusion that artists should still be able to terminate these gap works, but UMG asserts that as a matter of statutory interpretation, courts should decide and should hew to how the law was written. UMG even invokes a recent Supreme Court opinioninvolving copyright registration to make the point that courts must follow the “plain meaning” of statutes. In other words, this is precisely the sort of issue that could spend years being litigated all the way up to the high court.
And that’s not the end of UMG’s bid to doom mass termination.
Many sound recordings were registered decades ago with “work for hire” notations. Under copyright law, if an employee creates something as a work for hire, that means the employer is deemed the author of the work. The work is thus ineligible to be terminated.
Here, UMG isn’t directly yet arguing just yet that these older sound recordings are work for hire. Rather, UMG says that the agreements provide that the sound recordings are works for hire, and true or not, any dispute over ownership is untimely. UMG invokes the Copyright Act’s three-year statute of limitations.
Here’s the full memorandum, which also gets into the question of whether there are defects in the termination notices in that they allegedly fail to fully identify what’s been terminated. This may also set up the next round of the fight. If the plaintiffs are able to get past the initial motion to dismiss, UMG will surely oppose class certification on the grounds that every instance of termination requires an independent factual analysis.
This article was originally published by The Hollywood Reporter.