Baldwin v. EMI Feist Catalog, Inc.

Court of Appeals for the Second Circuit
805 F.3d 18 (2015)

ELI5:

Rule of Law:

Under New York law, a subsequent agreement that comprehensively deals with the same subject matter as a prior agreement, such as by re-granting all previously held rights and conveying newly vested future interests, supersedes the prior agreement, even without an express rescission clause. The subsequent agreement then becomes the operative grant for the purposes of statutory copyright termination.

Facts:

In 1934, songwriter J. Fred Coots and his partner sold the musical composition 'Santa Claus is Comin’ to Town' to EMI's predecessor, Leo Feist, Inc.
In a separate 1951 agreement, Coots assigned his rights in the song's copyright renewal term to Feist.
In 1976, Congress passed a new Copyright Act that created a statutory right for authors or their heirs to terminate prior grants of copyright after a set period.
On September 24, 1981, Coots served a notice on Feist's successor, Robbins Music Corporation, to terminate the 1951 agreement, with the termination to become effective in 1990.
On December 15, 1981, after serving the notice but before the termination became effective, Coots and Robbins entered into a new agreement (the '1981 Agreement').
In the 1981 Agreement, Coots granted Robbins all his existing rights and all his newly vested termination and reversionary interests in the song in exchange for a $100,000 bonus and future royalties.
The Copyright Office later returned the 1981 termination notice to Coots's attorney unrecorded, a fact EMI was unaware of until 2011.
In 1998, Congress extended copyright terms, making the 1981 Agreement last long enough to become subject to a different statutory termination right under 17 U.S.C. § 203.

Procedural Posture:

The statutory heirs of J. Fred Coots (Plaintiffs) filed a lawsuit against EMI Feist Catalog, Inc. in the U.S. District Court for the Southern District of Florida, seeking a declaratory judgment.
The Florida district court granted EMI's motion to dismiss for lack of personal jurisdiction.
Plaintiffs then filed the action in the U.S. District Court for the Southern District of New York.
The parties filed cross-motions for summary judgment.
The district court granted summary judgment in favor of EMI, holding that the 1951 Agreement was still the operative grant and could not be terminated by Plaintiffs.
Plaintiffs, as appellants, appealed the district court's judgment to the U.S. Court of Appeals for the Second Circuit.

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Issue:

Does a 1981 copyright agreement, which grants all of the author's existing and future rights in a musical composition, including rights that had just vested in the author upon service of a termination notice, supersede a prior 1951 agreement covering the same composition, thereby making the 1981 agreement subject to statutory termination as a post-1978 grant under 17 U.S.C. § 203?

Opinions:

Majority - Livingston, J.

Yes. The 1981 Agreement supersedes the 1951 Agreement, making the 1981 grant subject to statutory termination. The court reasoned that under New York contract law, parties can replace an old agreement with a new one through implication, without needing express rescission language. The 1981 Agreement was so comprehensive that it demonstrated a clear intent to substitute for the 1951 Agreement. It not only transferred Coots's future reversionary interest (which had vested upon service of the 1981 termination notice) but also explicitly re-granted 'all rights and interests whatsoever ... heretofore ... acquired or possessed by Grantor.' To give this language any meaning, the court concluded it must be read as creating a new, singular conveyance that replaced the prior one, as it would be nonsensical for two grants of the same rights to be operative simultaneously. Because the 1981 Agreement is the operative grant and was executed after 1978, it is subject to termination under 17 U.S.C. § 203, and the 2007 Termination Notice served by Coots's heirs is valid and will become effective in 2016.

Analysis:

This decision clarifies that a renegotiated copyright grant made after serving a termination notice can effectively replace the original grant, thereby becoming a 'new' grant for statutory termination purposes. It reinforces the principle of contract substitution (novation) in copyright law, emphasizing that the parties' intent, as gleaned from the comprehensive language of the new agreement, is paramount. The ruling provides a pathway for authors' heirs to terminate agreements that might have otherwise seemed unassailable, as it can convert a pre-1978 grant (subject to § 304 termination) into a post-1978 grant (subject to the different rules of § 203 termination), potentially resetting the clock and creating new termination opportunities.

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