Sobol v. UMG Recordings, Inc.

Background

The plaintiffs are recording artists bringing a purported class action against UMG Recordings, Inc. They alleged that they signed agreements in the 1970s and 1980s transferring copyrights in sound recordings to UMG’s predecessor companies. The plaintiffs served notices under Section 203 of the Copyright Act, which can allow an author to terminate an earlier copyright transfer after specified periods. UMG disputed the validity of the terminations.

For recordings whose termination dates had passed, the plaintiffs alleged that UMG infringed their copyrights by continuing to market and sell the recordings. For recordings whose termination dates had not yet passed, they sought declaratory relief concerning the parties’ rights and duties. The matter came before the court on UMG’s motion to dismiss the first amended complaint.

Statute of Limitations and Works Made for Hire

UMG argued that the plaintiffs’ claims were barred by the Copyright Act’s three-year statute of limitations. UMG relied in part on “works made for hire” language in the recording agreements, arguing that the plaintiffs were put on notice of an ownership dispute when they signed those agreements in the 1970s and 1980s.

The court rejected that argument at the motion-to-dismiss stage. It concluded that the plaintiffs’ infringement claims were based on UMG’s alleged refusal to honor termination notices, not solely on a dispute over original ownership. The claims therefore accrued after the effective termination dates passed. Because the plaintiffs brought the claims within three years of those dates, the claims were not time-barred.

The court did not decide whether the agreements actually made the recordings works made for hire. It noted that neither side argued at this stage that the recordings were specially commissioned or created by employees, and UMG focused its motion on the statute of limitations.

Declaratory Relief

The plaintiffs sought declarations addressing whether the recordings were works made for hire and whether the plaintiffs could terminate the transfers and later exploit the recordings. The court declined to exercise its discretion to provide that relief. It reasoned that a declaration might not fully resolve the uncertainty because UMG could later raise other objections to the termination notices, and the plaintiffs had not adequately alleged why a declaration was necessary before the termination dates.

The court dismissed the plaintiffs’ request for declaratory relief.

Termination Notices

UMG argued that the termination notices were invalid because they omitted grant-execution dates or listed incorrect dates. The court held that the alleged defects were harmless at the pleading stage. UMG possessed the relevant agreements and could reasonably identify the grants and works the plaintiffs sought to terminate. The court also found no sufficient basis to conclude that the errors were made with an intent to deceive, mislead, or conceal information.

The court therefore denied UMG’s motion insofar as it argued that the termination notices were facially invalid. The court noted that grants not listed in both the complaint and the termination notices were not alleged or reasonably identified, so the plaintiffs could not bring infringement claims based on those grants.

Grants Signed by Third Parties

Section 203 permits termination only of grants executed by the author or a statutorily designated successor. The court found that loan-out companies executed the grants associated with Waite and that a third-party company executed the grant for Ely’s recordings made under his 1979 agreement. Because Waite and Ely did not execute those grants, the court held that they could not terminate them under the statute.

The court granted UMG’s motion to dismiss Waite’s and Ely’s claims based on grants transferred by those third parties.

Ely’s 1976 Agreement

The court explained that Section 203 generally applies to grants executed on or after January 1, 1978. It considered Ely’s claims involving grants under his 1976 agreement and recordings created before January 1, 1978. The court held that those recordings were not covered by Section 203, even under the Copyright Office’s approach to certain pre-1978 “gap grants.”

The court granted UMG’s motion as to Ely’s claims concerning sound recordings under the 1976 agreement that were created before January 1, 1978.

Disposition and Classification

The court granted UMG’s motion to dismiss as to three categories: the request for declaratory relief; Waite’s and Ely’s claims based on grants transferred by third parties; and Ely’s claims involving his 1976 agreement for recordings created before January 1, 1978. The court denied the motion in all other respects.

This summary classifies the opinion as a procedural order because the ruling was made on a motion to dismiss, even though the court addressed legal issues concerning copyright termination and the statute of limitations.