Bit Parts

Copyright Termination Claims Found Timely, But Loan-Out Companies Can't Terminate Copyright Assignments

The U.S. District Court for the Southern District of New York decided that, under the federal Copyright Act of 1976, that artists' loan-out companies can't terminate assignments of the artists' copyrights. Waite v. UMG Recordings Inc., 19-cv-1091. In a class action lawsuit, recording artists sued seeking to terminate assignments of the copyrights in sound recordings covered by the artist's agreements with UMG-owned companies. UMG moved to dismiss the case in part as untimely ownership claims, which UMG argued had accrued when the artists signed their recording agreements in the 1970s and 1980s. District Judge Lewis A. Kaplan instead found the claims were for copyright infringement, which may be brought within three years of the last infringing act. As District Judge Kaplan noted: "[T]he gravamen of plaintiffs' claim is defendant's refusal to recognize their termination rights. Termination rights are, by their very nature, about the 'nature, extent, or scope of copying' a particular work. Indeed, it is impossible for there to be a legally cognizable infringement claim until a termination right vests, a valid and timely termination notice is sent, is ignored, and the copyright's grantee continues to distribute the work." But the district judge went on to rule against first-named plaintiffs John Waite and Joe Ely, who had signed the recording agreements through their artist loan-out entities. Judge Kaplan found that, under §203 of the Copyright Act, "loan-out companies, which 'loan' out an artist's services to employers and enter into contracts on behalf of the artist, do not have a termination right under the statute."