John Frederick Coots may not be a household name but he wrote a song that we all know. “Santa Claus is Comin’ to Town”, written in 1934, is one of the highest earning songs of all time.

In 1981, Mr Coots assigned the copyright in the song to EMI, the music publisher. Under US law – the Copyright Act 1976 – it is possible for authors and their statutory heirs, under certain circumstances, to terminate previous grants of copyright and thereby effectively reclaim copyright ownership even after the assignment of rights to a third party. The rationale for this legislation is to give authors the opportunity to renegotiate the terms of their agreements with publishers since the value of a work may not become apparent for several years after its first publication.

Mr Coots has since died but his heirs filed a notice in 2007 purporting to cancel his 1981 agreement with EMI and terminate EMI’s copyright with effect from 15 December 2016. EMI offered to pay the family $2.75 million to acquire the ownership of and exclusive rights to the song – an offer rejected by the family but which does indicate the value of the song.

The issue before the Second Circuit Court of Appeals concerned the wording of the 1981 agreement – did the 1981 agreement actually replace an earlier agreement entered into in 1951 by Mr Coots and EMI or did the 1951 agreement still have effect? If the latter was the case, the heirs would not be able to terminate under the 1976 Act because the agreement in question preceded the date that legislation came into force. The Court held that the intention of the parties was to replace the 1951 agreement which, in turn, had the effect of validating the family’s 2007 termination notice. Consequently, the rights in the song will revert to the family who will be able to enjoy the considerable benefits from copyright ownership until the term of protection expires in 2029.