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Termination right case against Universal Music denied class action status

By | Published on Monday 30 January 2023

Universal Music

A US judge last week declined to grant a termination rights case against Universal Music class action status, basically concluding that each aggrieved artist’s individual case relies on the specifics of their old record contracts, making the dispute inappropriate for a class action.

Under US copyright law, when a creator assigns their copyrights to business partner, they can terminate that assignment and reclaim the rights after 35 years. The current termination right was added to US law in the 1970s and only really started to kick in during the early 2010s.

On the songs side of the music industry, songwriters going through the required process to terminate past assignments and reclaim copyrights is now pretty standard. However, on the recordings side there remains a dispute as to whether the termination right even applies.

That’s based on the argument that record contracts are work for hire agreements, which means – under US law – the label not the artist is the default owner of any sound recording copyrights. Which in turn means, with each individual artist’s past record deals, no assignment of rights ever took place and therefore there is nothing to terminate.

Despite that ambiguity, plenty of artists have been able to renegotiate old record deals in the US with the threat of seeking to terminate those deals. However, some artists are pursuing legal action in a bid to prove in court that record contracts are not work for hire agreements and old record deals can be terminated, and therefore those labels which don’t recognise any one artist’s termination notice are in breach of copyright law.

One of the test cases in this domain is against Universal Music. After the major failed to get the case dismissed, the lawyers leading on the lawsuit last year filed papers seeking class action status for the litigation. That would mean, if the artists actively involved in the lawsuit were successful, any heritage artists with similar old deals with Universal would benefit from the ruling.

However, according to Law360, judge Lewis Kaplan last week stated that – while “plaintiffs’ claims raise issues of fairness in copyright law that undoubtedly extend beyond their own grievances”, the lawsuit is still not appropriate for class action status.

That’s because “individualised evidence and case-by-case evaluations” are necessary to reach a conclusion on each individual artist’s claim against the major, making “this case unsuitable for adjudication on an aggregate basis”.

Responding to that judgement, one of the lawyers working for the artists in this dispute told Law360: “Plaintiffs believe they presented a compelling record showing that the defendants’ uniform characterisations of the sound recordings as ‘works made for hire’ was unsupported and a sham. Plaintiffs’ counsel is evaluating the ruling and will determine whether to seek interlocutory appellate review”.