Back in October, the Second Circuit reversed a district court’s ruling that the heirs of John Frederick Coots, the author of the song “Santa Claus is Comin’ to Town,” could not terminate the copyright assignment currently held by music publisher EMI. (Baldwin v. EMI Feist Catalog, Inc.) In doing so, it held that EMI’s copyright ownership will end on December 15, 2016 and pass to Coots’s heirs for the remainder of the copyright term, which ends in 2029. On January 29, 2016, EMI’s petition for a rehearing, or en banc review of that decision was denied.
The Second Circuit’s decision has real financial consequences—“Santa Claus is Comin’ to Town” is one of the highest earning songs of all time. It has been recorded by a range of artists as diverse as Eddie Cantor, Frank Sinatra, Bruce Springsteen, Destiny’s Child, Green Day, Justin Bieber, Lynyrd Skynyrd and the Beach Boys.
Coots’s descendants brought suit against EMI in 2012 after a dispute arose during the course of renegotiating licensing terms with the publisher. In 1934, the year the song was written, Mr. Coots and his co-author Haven Gillespie, sold the rights to Leo Feist Inc., now called EMI Feist Catalog Inc. Mr. Coots granted renewal rights to EMI in 1951 and 1981.
In 1976, Congress enacted a major overhaul of U.S. copyright law which, under certain conditions, gave authors and their statutory heirs the right to terminate previously made grants of copyright, and effectively reclaim copyright ownership even after assignment of the ownership rights to a music publisher. These provisions (17 U.S.C. §§ 304, 305 and 203) were designed to provide authors the opportunity to renegotiate the terms of their license agreements with publishers, since the value of their work would likely be better understood after placement in the open market for several years.
The Coots family claimed that a notice they filed in 2007 canceled the songwriter’s 1981 agreement, and terminated EMI’s copyright as of Dec. 15, 2016. In 2007, EMI offered to pay the family $2.75 million to acquire ownership and exclusive rights to the song, an offer the family rejected.
The challenge for the Second Circuit was deciding whether EMI owned rights under the 1951 agreement, or the 1981 agreement. EMI argued that the 1951 agreement remained operative and that under the 1976 Copyright Act, the Coots heirs could not terminate the renewal period because it was granted prior to 1978. Although the publisher prevailed at the district court, the Second Circuit reversed Judge Shira Scheindlin in October, finding that the language of the 1981 agreement manifested an intent to replace the earlier 1951 contract. While there was no language explicitly rescinding the 1951 agreement, the 1981 contract included the following:
“Grantor hereby sells, assigns, grants, transfers and sets over to Grantee . . . all rights and interests . . . heretofore . .. acquired or possessed by Grantor . . . under any and all renewals and extensions.”
The Second Circuit read this language as replacing the 1951 agreement, which, in turn, gave effect to the 2007 termination notice terminating EMI’s rights in the song as of December 15, 2016. As a result, the rights revert back to the family and the Coots heirs get to reap the benefits of the remainder of the copyright term without having to rely on EMI for royalties.