Court Dismisses Challenge to Termination by Ray Charles’s Children

Angry JudgeA 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.

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