A California district court has dismissed a case filed by the Ray Charles Foundation (which received all of Ray Charles’s assets, including his copyrights, pursuant to his will) to challenge copyright grant termination notices filed by Mr. Charles’s children.
The typical termination validity dispute is fought out between the author (or her surviving spouse or children) and the licensee / assignee of the grant being terminated. In this case, however, the fight was between the statutory heirs for the purpose of Section 203 or 304 termination rights (the children of Ray Charles) and the heirs who claimed the rights through the songwriter’s will (the Foundation). Under the Copyright Act, the author’s right of termination descends to particular heirs, irrespective of any provision to the contrary in the author’s will. Hence the Foundation’s desire to invalidate the termination notices.
Another unusual wrinkle in the case was that each of the children had signed agreements during the life of Ray Charles, accepting $500,000 in trust in exchange for waiving any further inheritance or claims against the estate. The Foundation sued upon two state law contract claims, based upon these agreements, and also upon a federal claim for a declaratory judgment that the termination notices were invalid on various grounds, including the agreements waiving any inheritance, timeliness of the notices, and the alleged work for hire status of the songs.
With respect to the state law claims, the district court struck both claims pursuant to California’s anti-SLAPP statute and awarded defendants their attorney’s fees. First, the court held that a dispute concerning the validity of a copyright transfer termination notice fell within the scope of the anti-SLAPP statute on the ground that the required filing of the termination notice with the Copyright Office constituted an “official proceeding” as opposed to a merely “ministerial act.” Next, the court found that the Foundation could not establish a reasonable probability of succeeding on the merits of its state law claims because (1) the termination notices could not be considered claims against the Ray Charles estate, which had completed probate many years before the termination notices were served; (2) if the songs were works for hire, as alleged by the Foundation throughout the Complaint, then Ray Charles never owned the copyrights or any termination right and thus would not have been part of the estate; and (3) if the songs were not works made for hire, the Copyright Act expressly provides that the children had the termination right “notwithstanding any agreement to the contrary,” which would render the agreements unenforceable with respect to any waiver of the termination right.
Turning to the declaratory judgment claim, the court dismissed that claim on the ground of standing, holding that (1) if the songs were works for hire then the Foundation could not be a beneficial owner for the purpose of establishing standing; and (2) even if the songs were not works for hire, a beneficial ownership interest in the copyright was insufficient –only the grantee of the transfer subject to termination has standing to sue for a declaratory judgment of invalidity.
This is just a broad summary of a very interesting and well written decision, which I attach below and recommend to anyone interested in termination disputes and related standing issues.