Larry Spier, Inc. v. Bourne Co.

• Decision Date: 09 January 1992
• Docket Number: D,No. 225,225
• Citation: 953 F.2d 774
• Parties: , 1992 Copr.L.Dec. P 26,864, 21 U.S.P.Q.2d 1446 LARRY SPIER, INC., Plaintiff-Appellant, v. BOURNE COMPANY, Defendant-Appellee. ocket 91-7456.
• Court: U.S. Court of Appeals — Second Circuit

Page 774

953 F.2d 774

60 USLW 2455, 1992 Copr.L.Dec. P 26,864,

21 U.S.P.Q.2d 1446

LARRY SPIER, INC., Plaintiff-Appellant, v. BOURNE COMPANY, Defendant-Appellee.

No. 225, Docket 91-7456.

United States Court of Appeals Second Circuit.

Argued Oct. 7, 1991.

Decided Jan. 9, 1992.

M. William Krasilovsky, New York City (Edward M. Cramer, Feinman & Krasilovsky, New York City, of counsel), for plaintiff-appellant.

Janet P. Kane, New York City (Theodore C. Max, Phillips, Nizer, Benjamin, Krim & Ballon, New York City, of counsel), for defendant-appellee.

Frederick F. Greenman, New York City (Deutsch Klagsbrun & Blasband, New York City, of counsel), for amicus curiae The Songwriters Guild of America.

Before MINER and MAHONEY, Circuit Judges, and MISHLER, District Judge. ^*

MINER, Circuit Judge:

Plaintiff-appellant Larry Spier, Inc. appeals from a summary judgment entered in the United States District Court for the Southern District of New York (Haight, J.) in favor of defendant-appellee Bourne Company. Both parties are music publishers, and the district court concluded that Bourne was entitled to judgment as a matter of law because the Copyright Act of 1976, 17 U.S.C. §§ 101 et seq. ("Copyright Act"), prohibits recognition of the assignment under which Spier claims ownership of certain disputed copyrights. See Larry Spier, Inc. v. Bourne Company, 750 F.Supp. 648, 649-51 (S.D.N.Y.1990).

This case is one of first impression. Our review of a district court's grant of summary judgment is de novo. See Citizens Bank of Clearwater v. Hunt, 927 F.2d 707, 710 (2d Cir.1991). Resolution of this dispute therefore depends upon our own analysis of the text, structure and purposes of the relevant Copyright Act provisions, particularly Section 304(c). For the reasons that follow, we hold that the district court erred in granting summary judgment in favor of Bourne. Accordingly, the judgment of the district court is reversed.

BACKGROUND

This case recalls the bygone era of Tin Pan Alley and the popular music of another day. Between 1925 and 1931, successful songwriter Dave Dreyer joined with some famous co-authors in assigning to Irving Berlin, Inc., as publisher, copyrights for five songs still popular enough to generate royalties worth fighting over: "Cecelia," written with Herman Ruby; "Me and My Shadow," "Back in Your Own Back Yard," and "There's a Rainbow 'Round My Shoulder," written with Billy Rose and Al Jolson; and "Wabash Moon," written with Morton Downey and Billy McKenney. Irving Berlin, Inc. is the predecessor in interest of defendant-appellee Bourne Company. The initial term of each copyright was 28 years, and the five copyrights therefore were scheduled to expire between 1953 and 1959. In 1951, prior to the expiration of the initial term of the copyrights, Dreyer assigned to Bourne the right to renew the copyrights. Like the original assignment agreements, the 1951 agreements allocated the various types of royalties to be earned from the songs between Dreyer, as co-author, and Bourne, as publisher. The royalties earned from the manufacture and sale of records of the songs (known as "mechanical royalties") were split evenly between Dreyer and Bourne, as were royalties from licenses for use of the songs in broadcasts and movies. Dreyer was paid a royalty for each copy of the sheet music sold as well.

The Dreyer songs also generated royalties from public performances of the songs (known as "performance royalties"). In the music business, performance royalties are paid by the performer to performing rights societies such as the American Society of Authors, Composers and Publishers ("ASCAP"), of which the songwriter and publisher are members. Dreyer and Bourne were members of ASCAP. ASCAP's practice is to distribute half of the performance royalties to the songwriter ("writer distributions"), and the remaining half to the publisher ("publisher distributions"). See Sidney Shemel & M. William Krasilovsky, This Business of Music 158 (4th ed. 1979). While the songwriter and publisher may by contract alter the allocation of the performance royalties, Dreyer and Bourne did not do so. Under the assignment agreement, Bourne was entitled to retain all of the publisher distributions made by ASCAP. The agreement further provided that its terms were subject to any existing arrangements between Dreyer or Bourne and ASCAP, apparently meaning that Dreyer was entitled to retain all writer distributions made by ASCAP. In any event, Dreyer and Bourne interpreted the agreement over the years in this manner, with writer distributions being paid to Dreyer and publisher distributions to Bourne.

It appears that Bourne duly renewed the copyrights prior to expiration. Under the copyright laws then in effect, the so-called "renewal term" of the copyrights would have continued until 1981-87. The most recent Copyright Act further extends the life of the Dreyer copyrights until 2000-2006. See 17 U.S.C. 304(b).

In 1965, Dreyer executed a will (the "Will") in which he purported to place the following "music assets" in a testamentary trust: (i) "copyrights," (ii) "renewal copyrights and extensions thereof," (iii) "publishing contracts with respect to musical compositions written by me," and (iv) "the rights deriving from my membership, as a writer, in [ASCAP], in accordance with its rules." The Will provided that income from the trust was to be paid to Anna (Dreyer's wife), Lewis (Dreyer's son), Marie (Dreyer's daughter) and Mynna Granat (Dreyer's mistress). A special provision of the Will permitted ASCAP to pay Dreyer's writer distributions directly to the beneficiaries of the testamentary trust rather than to the trust itself. Upon Dreyer's death in 1967, the Will was probated and the trust came into being in accordance with its terms, with ASCAP making the writer distributions directly to the trust beneficiaries.

Lewis Dreyer died in 1972 and was survived by his sons Steven and Dean, who succeeded to their father's rights under the Will. In 1981, Anna, Marie, Steven and Dean attempted to terminate the assignments that Dreyer had made to Bourne and recapture family ownership of the assigned copyrights by serving Bourne with notice of termination in accordance with Section 304(c) of the Copyright Act. In 1984, Anna died intestate, her interests in the trust passing to Marie, Steven and Dean. Steven and Dean purported to assign their portions of the copyrights to Spier in 1988, and were to receive in return a percentage of the royalties earned. In 1989, Dean died intestate, leaving a son as his only heir. Marie purported to assign her portion (the final remaining portion) of the copyrights to Spier in 1990, on terms similar to the assignment by Steven and Dean.

The purported assignments to Spier of the Dreyer copyrights have not yet taken effect. The trust and ASCAP continue to make payments as designated in the testamentary trust: Marie ( 1/3 share), Steven ( 1/6 share), Dean's son ( 1/6 share) and Mynna ( 1/3 share). Spier initiated the present action in March 1990, alleging that the Dreyer family validly had terminated, pursuant to Section 304(c), Bourne's copyright assignments, and that Bourne had wrongfully refused to recognize the termination and relinquish the copyrights to Spier.

DISCUSSION

Section 304(c) provides in pertinent part that the "grant of a transfer or license of the renewal copyright or any right under it" made by the author, his widow or his children, "otherwise than by will," may be terminated by the author, his widow or his children. See 17 U.S.C. § 304(c).

The thrust of Bourne's argument is that "Dreyer's widow and surviving children had no right of termination under [Section 304(c) ] because Dreyer's copyrights, renewal copyrights and publishing contracts were transferred by will prior to the vesting of any termination rights. Any other conclusion would be inconsistent with Section 201(d) of the Copyright Act, which provides that copyright ownership may be transferred by will." Spier counters principally that the phrase "otherwise than by will" is not relevant here, since Dreyer assigned the copyrights for the renewal periods to Bourne by contract in 1951, prior to his death. Accordingly, Spier contends that this is a simple case about the rights of Dreyer's widow and children under Section 304(c) to terminate Dreyer's 1951 assignment.

Judge Haight found both contentions "arguable," but concluded that the text and legislative history of the Copyright Act better supported Bourne's position. Specifically, the district court determined that the statute should be construed to protect Dreyer's intent, as expressed in the Will, to provide for Mynna, and that Mynna would be "entirely cut off" by the attempted termination and recapture of the copyrights:

I decline to adopt a construction of the Copyright Act which would thwart an author's intentions expressed in a will, particularly where Congress has made plain its legislative intention to authorize the transfer of copyright interests by bequests in wills, and, in the particular context of termination, to protect the author's bequests.

Spier, 750 F.Supp. at 651. Judge Haight apparently concluded, as a predicate to this determination, that the 1951 agreement assigning the renewal copyrights to Bourne fell within the term "publishing contracts" as used in Dreyer's Will; and that the agreement was a "right under" the renewal copyright for purposes of Section 304(c). See id.

We believe that Spier is correct about the operation of Section 304(c) in this case, and that the district court erred in its construction of the Copyright Act. The 1951 assignment agreement between Dreyer and Bourne provided that Dreyer

hereby sells, assigns, transfers and sets over unto [Bourne] and its successors and assigns, the renewal copyrights ... and all his right, title and interest, vested and contingent, therein and thereto, subject to the payment of the royalties hereinafter provided...