California District Court Hands Victory to Ray Charles's Children's Efforts to Terminate Artist's Copyright Transfer | Practical Law

California District Court Hands Victory to Ray Charles's Children's Efforts to Terminate Artist's Copyright Transfer | Practical Law

In The Ray Charles Foundation v. Robinson, the US District Court for the Central District of California, Western Division, decided in favor of Ray Charles's children allowing them to proceed with their attempt to terminate Ray Charles's transfer of certain of his copyrights to the Foundation.

California District Court Hands Victory to Ray Charles's Children's Efforts to Terminate Artist's Copyright Transfer

by PLC Intellectual Property & Technology
Published on 04 Feb 2013 • USA (National/Federal)
In The Ray Charles Foundation v. Robinson, the US District Court for the Central District of California, Western Division, decided in favor of Ray Charles's children allowing them to proceed with their attempt to terminate Ray Charles's transfer of certain of his copyrights to the Foundation.

Key Litigated Issues

In The Ray Charles Foundation v. Robinson, key litigated issues included whether:
  • The Foundation's state-law claims based on Charles's children's filing of copyright transfer termination notices are precluded under California's Anti-SLAPP statute.
  • The Foundation had standing to pursue its federal claims.

Background

During the 1950s, Ray Charles entered into various agreements with Atlantic Records to compose and record songs. Progressive Music Publishing, a subsidiary of Atlantic, owned the copyright in the compositions. In 1980, Charles allegedly renegotiated the terms of an agreement with Progressive's successor, affecting songs previously assigned to Progressive and others that had not been assigned to any publisher. Eighteen months before his death, Charles and each of his twelve children entered into an agreement, whereby each child waived his or her right to make a claim against his estate in return for a $500,000 irrevocable trust. When Charles passed away, he left all of his rights in his works to The Ray Charles Foundation, a charity that supports the vision or hearing impaired.
In 2010, seven of Charles's children served 39 copyright transfer termination notices on various individuals with interests in Charles's works, seeking to terminate transfers that occurred prior to 1978. The notices were given, pursuant to Section 304(c) of the Copyright Act, which governs termination of pre-1978 transfers. Because all of the works subject to the notices were also covered by the 1980 notice, they also served notices pursuant to Section 203 of the Copyright Act, which governs termination of post-1978 transfers.
In response to the termination notices, the Foundation brought:
  • A federal law declaratory judgement claim that the notices were ineffective and untimely.
  • Several state law claims asserting that the serving of termination notices:
    • were claims against Charles's estate; and
    • therefore violated the agreements the defendants entered with Charles.
The defendants moved to:
  • Strike the state claims pursuant to California's Anti-SLAPP statute
  • Dismiss all of the claims on the grounds that the Foundation lacks standing under the Copyright Act.

Outcome

In its January 25, 2013 decision, the US District Court for the Central District of California, Western Division granted both of the defendants' motions and:
  • Struck the Foundation's state law claims.
  • Dismissed the Foundation's federal claim for lack of standing.

Agreements with Charles Do not Limit Defendants' Copyright Termination Rights

The California Anti-SLAPP statute was designed to discourage meritless cases brought for the sole purpose of chilling expression through costly, time-consuming litigation. To strike a state-law claim, a court must determine:
  • First, whether the defendant has made a prima facie showing that the challenged claim is based on an act that is protected by the Anti-SLAPP statute.
  • If the defendant carries that burden, whether the plaintiff has demonstrated a probability of succeeding on the merits.
On the preliminary inquiry, the Court determined that the filing of the copyright transfer termination notices were acts done in an official proceeding because the notices were attempts to establish a property right under the Copyright Act.
Turning to the second prong, the court found that the Foundation could not demonstrate a reasonable probability of succeeding on the merits of the claims. Among other bases for its conclusion, the court ruled that the Copyright Act prevents it from interpreting the agreements between the defendants and Charles as limiting the defendants' statutory termination rights because:
  • Under the Copyright Act, both Section 203(a) and 304(c) terminations may be effected "notwithstanding any agreement to the contrary, including an agreement to make a will or to make any future grant."
  • To interpret the agreements as waivers of the defendants' termination rights, would mean they are "agreements to the contrary."

Licensee Standing to Sue to Invalidate the Termination Notices

In ruling on whether the Foundation had standing to sue to invalidate the termination notices, the court considered, among other questions, whether the beneficial owner of an exclusive right, which has the right to sue for infringement under Section 501(b) of the Copyright Act, also has the right to challenge termination notices under Sections 203 and 304(c). The court ruled that it does not.
The Foundation argued, among other things, that because, as a beneficial owner, it has the right to sue under Section 501(b), it must fall within a zone of interests under the Copyright Act that should allow it to challenge the termination notices under Sections 203 and 304(c). The Court rejected this argument, concluding that by including beneficial owners in Section 501(b) but not Sections 203 and 304(c), Congress must have intended to exclude them from the termination.

Practical Implications

This decision demonstrates the difficulty copyright assignees and licensees may have in avoiding termination of those grants under Sections 203 and 204(c) of the Copyright Act. The court's interpretation of the "notwithstanding any agreement to the contrary" language as extending to agreements between a copyright owner and his heirs suggests that an author may not be able to restrict his heirs' exercise of the right. Grantees on good terms with a work's author should seek to negotiate new grants to avoid termination.
Licensees of copyright interests should ensure they know whether the licensor is the original copyright owner (either as a work made for hire or as the author) and, where the licensor is not, consider proactive steps to encourage the licensor to either renegotiate the grants or exercise any rights it may have to challenge any termination notices it receives.

Court Documents