Second Circuit overturns district court ruling and holds that notice of termination sent to EMI for song “Santa Claus Is Comin’ to Town” successfully terminated 1981 grant of rights because, despite the lack of recordation of 1981 grant, grant by its plain language superseded and replaced prior grant and was terminable.

Gloria Coots Baldwin, Patricia Bergdahl and Christine Palmitessa, the heirs of songwriter John Frederick Coots, sued EMI Feist Catalog, Inc., seeking a declaration that one of the two copyright termination notices they served on EMI (in 2007 and 2012) was valid and enforceable, and terminated EMI’s copyright in the song “Santa Claus Is Comin’ to Town.” The song, written by Coots and Haven Gillespie in the 1930s, is considered the most performed holiday song of all time.      

Coots and Gillespie conveyed worldwide copyright ownership to Leo Feist, Inc., in 1934 (including the initial term of copyright in the United States), and Feist registered the copyright in its name. Pursuant to the 1909 Copyright Act, the copyright was for an initial 28-year term, plus a 28-year renewal term. In 1951, Coots and Feist entered into a further agreement in which Coots granted Feist “all renewals and extensions of all copyrights [in the song] throughout the world.” At the end of the initial 28-year term, Feist renewed its copyright and continued its ownership.      

In September 1981, Coots sent Feist a notice to terminate the 1951 agreement pursuant to Section 304(c) of the 1976 Copyright Act (which governs terminations of copyright assignments occurring before 1978), with an effective termination date of Oct. 23, 1990. Coots sent the 1981 notice to the Copyright Office to be recorded. In December 1981, Coots and the plaintiffs entered into an agreement with EMI, which had acquired Feist. The 1981 agreement granted EMI any and all rights in the extended renewal period, which would commence in 1990. Under this agreement, EMI agreed to pay a $100,000 bonus and royalties for the extended renewal period. The 1981 agreement stated that Coots and the plaintiffs had executed, served upon EMI and recorded in the Copyright Office the 1981 termination notice in full compliance with the Copyright Act of 1976, including Section 304(c)(6)(D). The 1981 notice was never recorded, however. On May 7, 1982, the Copyright Office sent Coots’ attorney a letter stating that, pursuant to a March 1, 1982, telephone conversation, it was returning the 1981 notice unrecorded. The 1981 notice was never resubmitted to the Copyright Office.   

Coots died in 1985. In 1998, the Sonny Bono Copyright Term Extension Act extended the term of copyright (for those works still in their renewal term at that time) for an additional 20 years, and provided for a new termination right by authors or their heirs for that extended period. The plaintiffs subsequently sent additional termination notices in 2004 pursuant to Section 304(d), and in 2007 and 2012 under Section 203 (which governs terminations of copyright assignments occurring after Jan. 1, 1978). The 2007 and 2012 notices were directed against the 1981 agreement.      

On cross-motions for summary judgment, the parties argued over whether EMI’s ownership of rights in the song was derived from the 1951 agreement or the 1981 agreement. EMI argued that the 1951 agreement remained in effect and granted copyright in the song until 2029, and the plaintiffs could not terminate under Section 304 because Coots had already exercised a Section 304(c) termination right in the 1981 agreement, and Section 304(d) does not provide a second right to terminate where the right of termination has already been exercised, or under Section 203 because that applies only to post-1978 assignments. The plaintiffs countered that the only agreement in effect between the parties was the 1981 agreement. They contended that even if the 1981 notice were not valid, the 1981 agreement nonetheless superseded the 1951 agreement, that the 1981 agreement was terminable and that they effectively terminated the 1981 agreement under one of the termination notices they sent EMI.     

The district court granted EMI’s motion for summary judgment, finding that the 1981 notice of termination was invalid because it was never recorded and that the 1981 agreement had not superseded the 1951 grant. EMI therefore owned its rights in the song under the 1951 agreement, which, as a pre-1978 grant, is not terminable under Section 203. The district court further held that termination under Section 304 also was unavailable because the “[p]laintiffs exercised their Section 304(c) termination rights when they served the 1981 notice on EMI and secured a substantial $100,000 bonus payment.” Accordingly, EMI’s rights would survive until 2029, the court concluded. The plaintiffs appealed.      

Reversing the lower court’s ruling, the Second Circuit held that EMI’s rights to the song are governed by the 1981 agreement, not the 1951 agreement. Even though the 1981 termination of the 1951 agreement was never actually recorded, and the 1981 agreement did not explicitly say that it was superseding the 1951 agreement, the language in the 1981 agreement “clearly manifested” an intention to replace the 1951 agreement by granting EMI all of the same rights that it already owned under the 1951 agreement, in addition to the future interest scheduled to revert to Coots upon termination. Having established that EMI’s rights in the song were traceable to the parties’ 1981 agreement, the Second Circuit found that it did not need to decide whether an unrecorded termination notice can serve to terminate a prior grant, or whether Coots could terminate the 1951 agreement after having “exercised” his Section 304(c) termination rights by serving a termination notice and then securing a $100,000 bonus payment.      

Finally, the Second Circuit, interpreting Section 203(a), which provides that individuals meeting certain statutory requirements may terminate a grant “at any time during a period of five years beginning at the end of thirty-five years from the date of execution of the grant,” concluded that the operative date was Dec. 15, 2016 — which is the effective date of termination stated in the 2007 termination notice.