A federal appeals court ruled on Monday (January 12) that songwriters can use US copyright law to reclaim their songs worldwide, not just in the US, a decision that could change how the music industry handles decades-old agreements between songwriters and publishers.
The US Court of Appeals for the Fifth Circuit upheld a lower court’s decision allowing songwriter Cyril Vetter to take back full global control of Double Shot (Of My Baby’s Love), a 1963 rock song, from publisher Resnik Music Group. The three-judge panel affirmed an earlier ruling that Vetter and Vetter Communications Corporation are the sole worldwide owners of the copyright.
The decision centers on “termination rights,” a provision in copyright law that lets songwriters reclaim songs they sold off years earlier.
As MBW previously reported, under the US’s Copyright Act of 1976, the original author(s) of a song can “take back” their copyright from a publisher (or whoever they assigned the rights to) after a set period of time. For works written in 1978 or later, that term is 35 years. For works from before 1978, it’s 56 years.
Until now, the general understanding was that US termination rights applied only within the US. Consequently, any international rights remained with the publisher who originally acquired them.
“As the Artists Rights Institute observes, ‘[d]enying terminating authors the full return of a worldwide grant leaves them with only half of the apple—the opposite of [c]ongressional intent.’”
Carl Stewart, US Court of Appeals for the Fifth Circuit
The Fifth Circuit rejected that interpretation, according to a court document, which you can read here. Circuit Judge Carl Stewart said the statute’s language, which affects rights that “arise under” the Copyright Act, should apply to all rights granted under US law, regardless of where they’re exploited.
“[B]ecause termination affects rights that ‘arise under’ the US Copyright Act, and because Vetter’s rights arose under the US Copyright Act, the plain language of section 304(c)(6)(E) dictates that his termination would be effective as to all of his rights—including his copyright to the extent that it extends internationally.”
The decision centered on two separate copyright interests in the song. Vetter wrote Double Shot with Donald Smith in 1962 and transferred their rights to Windsong Music Publishers in 1963.
After Smith died in a plane crash in 1972, his heirs and Vetter renewed the original copyright when the track’s original term ended in 1994. Vetter later terminated his 1963 assignment under provisions of the Copyright Act of 1976, while Vetter Communications purchased Smith’s heirs’ renewal rights.
According to the ruling: “Because Vetter was alive during the renewal term, his renewal rights transferred to Windsong under the 1963 Assignment. Because Smith died before the start of the renewal term, his heirs obtained his renewal rights rather than Windsong under the 1963 Assignment.”
“Therefore, Windsong owned fifty percent of the Renewal Copyright given the transfer of Vetter’s renewal rights, and Smith’s heirs owned the remaining fifty percent of the Renewal Copyright in 1994.”
In the spring of 1996, Vetter Communications acquired the renewal rights held by Smith’s heirs. The same year, Windsong assigned 50% of its stake in the renewal copyright to Lyresong Music. Then in March 2019, Vetter sent Windsong and Lyresong a notice of termination informing them that Vetter was terminating “all authorship/ownership rights originally granted and conveyed by [Vetter] to [Windsong]” under the 1963 assignment as of May 3, 2022.
However, Resnik argued that termination only affected domestic rights. The Fifth Circuit disagreed, saying “this interpretation is unpersuasive.”
Judge Stewart wrote: “Resnik’s interpretation of the statute would deprive Vetter of the full set of rights he originally conveyed to Windsong, which is counter to the purpose of the statute. As the Artists Rights Institute observes, ‘[d]enying terminating authors the full return of a worldwide grant leaves them with only half of the apple—the opposite of [c]ongressional intent.’”
Industry bodies had warned against the earlier decision. In July, a coalition of music creator advocacy organizations filed an amicus brief in the Vetter v. Resnik case. Music Artists Coalition co-founder and board member Susan Genco said: “This case could set a crucial precedent for creators in today’s global marketplace.”
“The district court’s decision unsettles the bedrock understanding of foreign exploitation rights against which tens of thousands of agreements respecting recorded music and music publishing copyrights have been drafted, negotiated, and executed.”
“MAC exists to ensure songwriters have a voice and are represented in a case like this. When artists sign away worldwide rights early in their careers for little money, meaningful termination should let them recapture worldwide rights, not just domestic.”
The amicus brief stated: “Without worldwide termination, creators remain bound by agreements made when they lacked leverage and before their works’ global value could be understood, leaving them at a perpetual disadvantage.”
Separately, the Recording Industry Association of America and the National Music Publishers’ Association also urged the Fifth Circuit to overturn its decision. In a court document obtained by Billboard, lawyers for the two trade bodies wrote: “The district court’s decision unsettles the bedrock understanding of foreign exploitation rights against which tens of thousands of agreements respecting recorded music and music publishing copyrights have been drafted, negotiated, and executed.
Industry Risk Disclosures
The ruling’s potential impact on music companies is already reflected in how they report business risks to investors. Prominent firms have long disclosed termination rights as a business risk in their financial filings, though their language has focused exclusively on domestic rights.
Warner Music Group and Reservoir Media use nearly identical risk factor language in their most recent annual reports, warning that recording artists or songwriters could recapture rights under the US Copyright Act. Reservoir’s disclosure adds that termination rights “may adversely affect our business, cash flows, and financial condition.”
“A termination of U.S. federal copyright rights could have an adverse effect on our Recorded Music business,” both companies state in their regulatory filings, using virtually the same wording throughout the disclosure.
The disclosures explain that termination rights generally kick in 35 years after release for post-1977 works, or 56 years for pre-1978 works, provided they aren’t classified as “works made for hire.”
However, the companies emphasize a crucial distinction: “Since the enactment of the Sound Recordings Act of 1971, which first accorded federal copyright protection for sound recordings in the U.S., virtually all of our agreements with recording artists provide that such recording artists render services under a work-made-for-hire relationship.”
Work-made-for-hire arrangements don’t carry termination rights, effectively shielding most sound recordings from recapture. The real exposure, both companies acknowledge, lies with musical compositions: “A termination right exists under the U.S. Copyright Act for U.S. rights in musical compositions that are not ‘works made for hire.'”
The Fifth Circuit’s ruling suggests these risk disclosures may now understate the potential exposure. While the companies’ filings repeatedly emphasize that terminations affect “U.S. rights” or “U.S. federal copyright rights,” Judge Stewart’s decision indicates that termination could affect worldwide exploitation rights for works originally granted under US copyright law.
The companies note in their filings that “from time to time, authors (or their heirs) have the opportunity to terminate our U.S. rights in musical compositions,” adding that they believe “the effect of any potential terminations is already reflected in the financial results of our business.”
Music Business Worldwide
