A US judge last week made what could prove to be a bombshell ruling for the music industry. Louisiana Judge Shelly Dick ruled that songwriter Cyril E Vetter was able to reclaim all the rights he’d assigned to his music publisher under a 1963 publishing deal when he terminated that deal using the termination right in US copyright law. Crucially, he was able to reclaim the rights in relation to his 1962 song ‘Double Shot (Of My Baby’s Love)’ on a global basis, not just in the US.
Music industry convention has - until this case - operated on the assumption that when songwriters exercise their termination rights in US law they can only reclaim the rights in their songs within the US, meaning the publisher still controls the songs in the rest of the world.
Happily ignoring industry convention, Judge Dick ruled last week that “Cyril E Vetter is hereby declared to be the sole owner of all rights, title and interest through the world” for ‘Double Shot’. She then added that Vetter and his company are “the sole and exclusive owners of the song”.
Independent publisher Resnik Music Group - the defendant in the case - acquired a share of the copyright in ‘Double Shot’ in 2019 from previous owner Windsong. Resnik presented various legal arguments for why the termination right section of the 1976 US Copyright Act should be interpreted to allow it to keep control of the song everywhere except the US.
Dick rejected those arguments, despite one legal expert who has been following the case predicting that her ruling would cause a “major upheaval” in the music industry, while another said it could be “financially devastating for music, media and other businesses”.
That’s because - unless the ruling is overturned by the appeal courts - songwriters will be able to reclaim a much bigger set of rights if they exercise their termination rights.
If that happens, the publishers may have to significantly adjust their forward-looking predictions of revenue, as the exercise of termination rights by songwriters would see global revenues revert back to writers, rather than flowing to the publishers.
That said, Vetter’s lawyer Tim Kappel told Billboard that the claims that Dick’s ruling could be “financially devastating” are “speculative and fairly alarmist”. Although he did add that the industry convention that will be overturned if this ruling stands should never have been the convention in the first place.
It is not the court’s job to “conform to comfortable business practices”, he added, particularly when those business practices are based on “misguided legal theories”.
Key copyright facts
Understanding this dispute begins with two key copyright facts.
First, the international dimension of copyright. Each country has its own body of copyright law that directly protects works that meet certain criteria. So US songwriters have direct protection under US copyright law, UK songwriters under UK law and so on.
However, most copyright systems are joined up through global treaties. That means that works which have direct copyright protection in country X are also protected in country Y, and vice versa. For musical works, the treaty that matters is the Berne Convention.
Second, the US termination right. Under US copyright law, where the default first owner of a new copyright - such as a songwriter - transfers ownership to a business partner, that transfer of ownership - known as an ‘assignment’ or ‘grant of transfer’ - can be terminated after a period of time.
The default first owner of a new copyright in a song is usually the songwriter. Songwriters often assign the copyright in their songs to a music publisher via a publishing deal. As a result of the termination right, they can reclaim those rights after 35 years, providing a song was written after 1 Jan 1978. For songs written before 1978 - like 'Double Shot’ - the termination right kicks in at 56 years.
Songwriters using the termination right in relation to old publishing deals has become pretty standard in the US. However, as noted, industry convention is that the termination right only relates to the assignment of rights in the US. So if the original deal was a global publishing deal, the publisher retains the rights everywhere else in the world, and only needs to relinquish the rights for the US.
As a result the publisher can continue to control and monetise the rights in every other country. It also provides an incentive for songwriters to agree a new deal with their old publisher after exercising their termination right, because of the benefits of having the copyright managed and administered by one party worldwide, especially when it comes to things like multi-territory sync deals.
The ‘Double Shot’ dispute
In the case of ‘Double Shot’, it was the use of the song in a sync deal that prompted the dispute. Vetter had exercised his termination rights for his share of ‘Double Shot’ in 2019. Although there was a co-writer on the song, the late Don Smith, who also originally owned a slice of the copyright, Vetter had previously acquired that share from Smith’s estate. As a result Vetter believed he was in complete control of the song.
When TV company ABC then wanted to use ‘Double Shot’ in a programme that would be broadcast worldwide, it informed Vetter that Resnik Music Group had told the broadcaster it still had a stake in the song around the world, because Vetter’s termination had only applied within the US. That prompted Vetter’s lawsuit, seeking confirmation that he owns all the rights in 'Double Shot' worldwide.
Resnik wasn't just relying on industry convention when fighting Vetter's lawsuit. It cited some relevant legal precedent, and especially the judgement in the late 2000s Californian case Siegel v Warner Bros Entertainment Inc.
In that case the court declared that the US Copyright Act “could not be any clearer on this subject”, and that “Congress expressly limited the reach of what was gained by the terminating party through exercise of the termination right; specifically, the terminating party only recaptured the domestic rights”.
However, in a ruling last year rejecting Resnik’s attempt to get Vetter’s lawsuit dismissed, Dick wrote that she “respectfully declines to follow the reasoning of the California district court in Siegel”. The rationale employed in Dick’s ruling last year when rejecting Resnick’s motion for dismissal was also used last week when she granted a summary judgement in Vetter’s favour.
The judge’s rationale
Core to Dick’s decision were the answers she reached to two big questions relating to copyright law.
The first of those is whether the ‘principle of territoriality’ in copyright law applies in this case. Both sides in the dispute acknowledged this principle, with Resnik summarising it by citing legal precedent that says that, “US copyright law has no reach outside US borders”. Under that principle, Resnik argued, the termination right in US copyright law could only apply to copyright within the US.
Vetter took a different view, and argued that the ‘principle of territoriality’ applies when enforcing copyright, but does not apply when it comes to questions of copyright ownership. So if a US copyright owner sues over infringement that occurred in the UK, it’s UK copyright rules that matter, but when it comes to “ownership questions”, said Vetter, they need to be “answered by the law of the country where the work was created”.
The second question is whether the Berne Convention effectively creates multiple copyrights in relation to a single work, one in each signatory country, or whether there is one single copyright under US law which Berne Convention signatory countries then agree to protect under their respective copyright systems.
While that may seem to be basically the same thing, it is important because the 1976 Copyright Act says that termination of a grant of transfer “affects only those rights covered by the grant that arise under this title, and in no way affects rights arising under any other federal, state or foreign laws”.
In other words, if the Berne Convention effectively creates multiple copyrights around the world, those would be individual copyrights in each country, or “rights arising under foreign laws”, and would be excluded from the termination right.
However, if there is a single copyright that is simply provided protection under other legal systems, then those rights arise under US copyright law, and not any “other federal, state or foreign laws”.
Resnik argued the first case, saying that under the Berne Convention there are multiple copyrights around the world and those other copyrights are “rights arising under foreign laws” and so they are excluded from the termination.
But Vetter countered that there is just one copyright created under US law. The “other rights” excluded in the Copyright Act, he added, could simply be other contractual commitments in his publishing deal that are not to do with the assignment of copyright.
Siding with Vetter, the judge wrote that “the court’s conclusion here is that it is entirely plausible that there is only one copyright in the song which is recognised by other countries pursuant to the Berne Convention”.
Therefore, she added, Vetter has “plausibly” claimed that “the right to exploit the song in foreign countries does not ‘arise under’ the domestic law of each individual country where the work may be exploited, but instead ‘arises under’ the Copyright Act, which is recognised and protected by the domestic law of other countries pursuant to the Berne Convention”.
“It’s consistent with Congress’s intent”
When Congress introduced the termination right, its aim, Vetter also argued, was to give songwriters “a second chance to enjoy the benefits” of their work, and counteract “early unremunerative transfers”, and so the judge’s interpretation of the termination right is consistent with what was actually intended by the introduction of that right in the first place.
That’s something that was again stressed by Vetter’s lawyer Kappel when welcoming Dick’s judgement. Her ruling, he said, “is consistent with Congress’s intent to provide creators with a second chance to benefit from the fruits of their labour. There’s a fundamental fairness to that result that Mr Vetter is dedicated to defending”.