Now Who Owns "Yesterday"? If You Signed a Foreign Music Contract, It's Still Not So Clear

Now Who Owns

July 23, 2017

(originally posted 3/29/2017; updated 7/23/2017)

Now Who Owns "Yesterday"?

In January 2017 Sir Paul McCartney sued Sony/ATV Music Publishing as part of his efforts to reclaim his U.S. copyright interests to Beatles songs he wrote or co-wrote in the early 1960s and 1970s. Reading his attorneys’ Complaint for Declaratory Judgement is something of a walk down memory lane: the first (of many) rights they said should revert to him (starting in October 2018) include “Love Me Do,” “P.S. I Love You,” “Thank You Girl,” and “I’ll Keep You Satisfied”.  He could reclaim his interests in “Yesterday,” they said, July 21, 2021.  

Why did McCartney have to sue to get the rights back? The story starts in England in the 1960s, when various publishers acquired copyright interests to many of these songs. In 1984, the copyright interests to the Beatles’ catalogue owned by these publishers went up for sale. The singer Michael Jackson outbid McCartney and bought the Beatles' catalog for just over US$47 million; Jackson soon sold half his interest in the catalogue for US$115 million to Sony, which then formed Sony/ATV Music Publishing. Sony/ATV subsequently bought the other half of Jackson's interests from his estate for US$750 million, and it's all those rights for which Sir Paul sued Sony/ATV in January 2017.

The answer to who owns what is rooted in the interplay of various laws.  When the original publishers first obtained the rights to Beatles’ songs like “Love Me Do” starting in the 1960s, the 1909 U.S. Copyright Act was in effect. Under this Act, authors were entitled to an initial 28 year copyright term, which could be renewed for an additional 28 year term. In their January 2017 filing, though, McCartney's lawyers relied on the 1976 U.S. Copyright Act (effective January 1, 1978). Under the 1976 Act getting the rights back for Sir Paul would seem at first to be a no-brainer. The 1976 Act distinguishes between works created before 1978, and those created after 1978.

Basically (as extended under the Copyright Term Extension Act of 1998), for works like McCartney’s (the rights to which originally were secured before 1978), the copyright term was extended to a total of 95 years, with the copyright owner – presently Sony/ATV, in the case of the Beatles’ catalog – receiving the benefit of this extension. 

But (and this is a BIG but), the 1976 Copyright Act also gives the authors of pre-1978 works the non-waivable right to terminate assignments or other transfers of copyright made before 1978 by those authors, and to get back their rights to the works 56 years from the date of the copyright — October 2018 in the case of “Love Me Do”. (A similar termination right, with different time periods, exists under the 1976 Copyright Act for post-1978 works.) This suggests that even if the authors had signed an agreement transferring their rights to a music publisher, the 1976 Act would prevail, and the authors could get their rights back.  To exercise this right, the author must, among other things, send a termination notice in accordance with the 1976 Act to the transferee (Sony/ATV in the case of the Beatles' catalogue).

McCartney’s attorneys duly began sending termination notices to Sony/ATV. After some back-and-forth, Sony/ATV basically said, not so fast.

On what basis did Sony/ATV object?  Here the focus shifts back to London, England. There, members of the band Duran Duran also intended to reclaim the U.S. copyright interests to certain songs, and so they (like Sir Paul) sent termination notices to the songs' publisher.  Their publisher, Gloucester Place Music Limited (owned by Sony/ATV), sued the band members for breach of contract, arguing that the band members breached their music publishing agreements by exercising their rights under the 1976 Act to terminate the prior copyright transfers under those agreements.  In December 2016 a London judge sided with the music publisher.  The judge concluded that in this case, where a conflict exists between U.S. copyright law and English contract law, the latter should prevail, and that, under English law, the band was violating their contracts with the publisher by terminating the original assignments.   

The Duran Duran band members received approval to appeal.  Their appeal may argue more forcefully (among other things) that U.S. copyright law gives the band the right to terminate and should prevail.

The problem for Sir Paul’s lawsuit is that the Duran Duran decision muddied the water as far as whether he could expect his rights to smoothly revert to him.  That's apparently what prompted him to sue Sony/ATV in the U.S. in January 2017: he sought to establish that asking for his rights back does not breach his contracts with Sony/ATV. In light of the Duran Duran decision, Sony/ATV’s response to McCartney’s January 2017 suit was that the McCartney case should be put on hold (it was not yet “ripe”), until the English courts addressed the Duran Duran appeal.

Both McCartney and Sony/ATV decided to settle, probably due in large part to the uncertainties surrounding how the Duran Duran appeal will work out.  In June 2017 attorneys for McCartney and Sony/ATV informed the U.S. District Court judge handling the case, ". . . the parties have resolved this matter by entering into a confidential settlement agreement" and they requested that the judge enter a proposed order dismissing the action without prejudice.  He concurred.

Therefore, the underlying question of whether a contract like this — made in, and governed by the laws of, England — trumps U.S. copyright law will apparently have to await the Duran Duran appeal (if any).  In the meantime, anyone in the music business with a foreign music contract (and anyone contemplating signing such a contract) probably should keep the McCartney - Sony/ATV suit in mind, and monitor how the Duran Duran case unfolds before taking any action.

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