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Baldwin v. EMI Feist Catalog, Inc.

United States Court of Appeals, Second Circuit

October 8, 2015

GLORIA COOTS BALDWIN, PATRICIA BERGDAHL, CHRISTINE PALMITESSA, Plaintiffs-Appellants,
v.
EMI FEIST CATALOG, INC., Defendant-Appellee

Argued December 11, 2014.

THOMAS K. LANDRY, Carey Rodriguez O'Keefe Milian Gonya, LLP, Washington, DC, for Plaintiffs-Appellants.

DONALD S. ZAKARIN (Frank P. Scibilia, Ross M. Bagley, on the brief), Pryor Cashman LLP, New York, NY, for Defendant-Appellee.

Before: POOLER, LIVINGSTON, and DRONEY, Circuit Judges.

OPINION

Page 19

DEBRA ANN LIVINGSTON, Circuit Judge.

Plaintiffs appeal from a December 17, 2013 judgment of the United States District Court for the Southern District of New York (Scheindlin, J.) in favor of defendant EMI Feist Catalog, Inc. (" EMI" ). The district court granted summary judgment to EMI on plaintiffs' claim seeking a declaration that either of two copyright termination notices served on EMI in 2007 and 2012 will terminate EMI's rights in the musical composition " Santa Claus Is Comin' to Town." On appeal, plaintiffs argue that the district court erred in holding that EMI owns its rights under a 1951 grant that plaintiffs are powerless to terminate, and argue instead that EMI owns its rights under a 1981 grant that will be terminated by either the 2007 or 2012 termination notice. We agree with plaintiffs that EMI owns its rights under the 1981 grant, and conclude that the 2007 termination notice will terminate the 1981 grant in 2016. We therefore reverse the district court's judgment and remand for the entry of a declaratory judgment in plaintiffs' favor.

This appeal involves a dispute over the copyright in the musical composition " Santa Claus is Comin' to Town" (the " Song" ), a classic Christmas song written by J. Fred Coots and Haven Gillespie in the 1930s. In 1976, Congress enacted a complex statutory regime that--as we explain later in this opinion--gave authors and their statutory heirs the right to terminate previously made grants of copyright under certain circumstances, and thereby to recapture some of the value associated with the authors' works. See 17 U.S.C. § § 203, 304(c). Plaintiffs-appellants Gloria Coots Baldwin, Patricia Bergdahl, and Christine Palmitessa (" Plaintiffs" ) represent Coots's statutory heirs; since 2004, they have attempted to navigate this legal 1 thicket and terminate rights in the Song held by defendant-appellee EMI Feist Catalog, Inc. (" EMI" ) under the terms of certain grants made by Coots to EMI's predecessors. Plaintiffs brought this lawsuit in the United States District Court for the Southern District of New York, seeking a declaration that either a notice of termination served on EMI in 2007 [116 U.S.P.Q.2d 1274] (the " 2007 Termination Notice" ) or another such notice served in 2012 (the " 2012 Termination Notice" ) will, upon becoming effective, terminate EMI's rights in the Song.

The district court (Scheindlin, J.) granted summary judgment to EMI, holding that its rights in the Song will subsist through the entire remaining copyright term--which, under current law, is scheduled to expire in 2029--pursuant to a 1951 agreement (the " 1951 Agreement" ) that Plaintiffs are powerless to terminate. We reverse. For the reasons set forth below, we conclude (1) that EMI owns its rights in the Song not under the 1951 Agreement but instead under a subsequent contract executed in 1981 (the " 1981 Agreement" ), and (2) that the 2007 Termination Notice will terminate the 1981 Agreement in 2016. Plaintiffs are, accordingly, entitled to a declaratory judgment in their favor.

BACKGROUND

Coots and Gillespie sold the Song and " the right to secure copyright therein" to EMI's predecessor Leo Feist, Inc.

Page 20

(" Feist" ) in an agreement dated September 5, 1934 (the " 1934 Agreement" ). J.A. 40. In the 1934 Agreement, Feist agreed to " publish [the Song] in saleable form . . . within one (1) year," and to pay Coots and Gillespie certain royalties generated by the Song. J.A. 41. On September 27, 1934, Feist registered its copyright in the Song with the Copyright Office.

At the time, the Copyright Act of 1909 (the " 1909 Act" ), Pub. L. No. 60-349, 35 Stat. 1075, was in effect. Under the 1909 Act, authors were entitled to copyright in their work for an initial twenty-eight-year period beginning on the date the work was published. They then had the right to renew their copyright for an additional twenty-eight-year " renewal term," a right that they could exercise even if they had granted their rights in the initial copyright term to a publisher. Thus, " [t]he renewal term permit[ted] the author, originally in a poor bargaining position, to renegotiate the terms of the grant once the value of the work ha[d] been tested." Stewart v. Abend, 495 U.S. 207, 218-19, 110 S.Ct. 1750, 109 L.Ed.2d 184 (1990); see also Penguin Grp. (USA) Inc. v. Steinbeck, 537 F.3d 193, 197 (2d Cir. 2008). But authors could (and often did) grant their rights in the renewal term to publishers before the initial copyright term expired, and in Fred Fisher Music Co. v. M. Witmark & Sons, the Supreme Court held that these grants were enforceable. 318 U.S. 643, 657, 63 S.Ct. 773, 87 L.Ed. 1055 (1943). Unless the author died before the renewal term began--in which case his renewal rights vested in his statutory heirs, notwithstanding his assignment of an expectancy in those rights, see Miller Music Corp. v. Charles N. Daniels, Inc., 362 U.S. 373, 376, 80 S.Ct. 792, 4 L.Ed.2d 804 (1960)--a grant of renewal rights ensured that the publisher would own the copyright for the entire fifty-six-year period provided by the 1909 Act. See Steinbeck, 537 F.3d at 197; Marvel Characters, Inc. v. Simon, 310 F.3d 280, 284 (2d Cir. 2002).

While many authors sold their rights in the initial term and the renewal term simultaneously, Coots granted his renewal rights separately, in the 1951 Agreement. The 1951 Agreement assigned to Feist a number of " musical compositions" by Coots, including the Song, " and all renewals and extensions of all copyrights therein," in exchange for certain royalties to be paid " during all renewal periods of the United States copyright in each of said compositions." J.A. 46. Feist renewed its copyright in the Song on September 27, 1961, at which point its rights were set to expire 1 fifty-six years after copyright was originally registered--i.e., on September 27, 1990.

In 1976, Congress enacted a major overhaul of U.S. copyright law (the " 1976 Act" ), Pub. L. No. 94-553, 90 Stat. 2541, several aspects of which are central to this appeal. For works created on or after January 1, 1978, the 1976 Act did away with the 1909 Act's dual-term structure, replacing it with a single copyright term lasting for the life of the author plus fifty years. See id. § 302(a). By contrast, for works created before January 1, 1978, the 1976 Act retained the 1909 Act's dual-term structure, see id. § 304(a), (b), and for works (like the Song) already in their renewal term, it extended the renewal term to " seventy-five years from the date copyright was originally secured." Id. § 304(b). After the passage of the 1976 Act, the rights in the Song that Coots had granted to Feist were scheduled to expire in 2009.[1]

Page 21

[116 U.S.P.Q.2d 1275] Although the 1976 Act extended copyright protection for works already in their renewal term, it contained a mechanism for giving authors and their families, as opposed to publishers who had come to own the renewal term rights, an opportunity to benefit from the extended term. See 3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 11.05[B] (2013) [hereinafter " Nimmer" ]. To this end, § 304(c) of the statute permitted authors--or, if the author had died, certain statutory heirs designated in § 304(c)(2)--to terminate " the exclusive or nonexclusive grant of a transfer or license of the renewal copyright . . . executed before January 1, 1978." 17 U.S.C. § 304(c). Because the parties' dispute implicates the intricacies of this section, we quote the relevant portions at length:

(3) Termination of the grant may be effected at any time during a period of five years beginning at the end of fifty-six years from the date copyright was originally secured, or beginning on January 1, 1978, whichever is later.
(4) The termination shall be effected by serving an advance notice in writing upon the grantee or the grantee's successor in title. . . .
(A) The notice shall state the effective date of the termination, which shall fall within the five-year period specified by clause (3) of this subsection, . . . and the notice shall be served not less than two or more than ten years before that date. A copy of the notice shall be recorded in the Copyright Office before the effective date of termination, as a condition to its taking effect.
(B) The notice shall comply, in form, content, and manner of service, with requirements that the Register of Copyrights shall prescribe by regulation.
(5) Termination of the grant may be effected notwithstanding any agreement to the contrary, including an agreement to make a will or to make any future grant.
(6) . . . In the case of a grant 1 executed by one or more of the authors of the work, all of a particular author's rights under this title that were covered by the terminated grant revert, upon the effective date of termination, to that author or, if that author is dead, to [his statutory heirs]. In all cases the reversion of rights is subject to the following limitations:
. . .
(B) The future rights that will revert upon termination of the grant become vested on the date the notice of termination has been served as provided by clause (4) of this subsection.
. . .
(D) A further grant, or agreement to make a further grant, of any right covered by a terminated grant is valid only if it is made after the effective date of the termination. As an exception, however, an agreement for such a further grant may be made between the author . . . and the original grantee or such grantee's successor in title, after the notice of termination has been served as provided by clause (4) of this subsection.
. . .
(F) Unless and until termination is effected under this subsection, the grant, if it does not provide otherwise, continues in effect for the ...

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