Ray Charles Found. v. Robinson

• Decision Date: 31 July 2015
• Docket Number: No. 13–55421.,13–55421.
• Citation: 115 U.S.P.Q.2d 1739,795 F.3d 1109
• Parties: The RAY CHARLES FOUNDATION, a California Corporation, Plaintiff–Appellant, v. Raenee ROBINSON, an individual; Ray Charles Robinson, Jr., an individual; Sheila Robinson, an individual; David Robinson, an individual; Robert F. Robinson, an individual; Reatha Butler, an individual; and Robyn Moffett, an individual, Defendants–Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

795 F.3d 1109

115 U.S.P.Q.2d 1739

The RAY CHARLES FOUNDATION, a California Corporation, Plaintiff–Appellant

v.Raenee ROBINSON, an individual; Ray Charles Robinson, Jr., an individual; Sheila Robinson, an individual; David Robinson, an individual; Robert F. Robinson, an individual; Reatha Butler, an individual; and Robyn Moffett, an individual, Defendants–Appellees.

No. 13–55421.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 12, 2015.

Filed July 31, 2015.

Mark Daniel Passin (argued), Yakub Hazzard, and Daniel G. Stone, Robins, Kaplan, Miller & Ciresi LLP, Los Angeles, CA, for Plaintiff–Appellant.

Marc Toberoff (argued), Toberoff & Associates, P.C., Malibu, CA, for Defendants–Appellees.

Appeal from the United States District Court for the Central District of California, Audrey B. Collins, District Judge, Presiding. D.C. No. 2:12–cv–02725–ABC–FFM.

Before: DAVID BRYAN SENTELLE,^* MORGAN CHRISTEN, and ANDREW D. HURWITZ, Circuit Judges.

OPINION

CHRISTEN, Circuit Judge:

When music legend Ray Charles died, he left behind remarkable legacies in music and philanthropy. This appeal arises from the intersection of the two. Seven of Charles's heirs purported to terminate copyright grants that Charles conferred while he was alive. The Ray Charles Foundation, the sole beneficiary of Charles's estate, filed suit to challenge the terminations. The district court dismissed the suit for lack of jurisdiction, and the Foundation now appeals. We reverse the district court's order and remand for further proceedings.

BACKGROUND¹

I. Charles's Copyright Interests

In the 1950s, Ray Charles Robinson, young and early into his career, entered into several contracts with music publisher Atlantic Records and its subsidiary, Progressive Music Publishing Co. The contracts indicated that Charles was an employee of the publishers, who owned all copyright interests in Charles's work. Under the contracts, Charles was entitled to advance payments and future royalties.

By 1980, Charles had achieved considerable success and renown. That year, he renegotiated his copyright grants with Progressive's successor in interest. The renegotiation pertained to songs Charles had previously conveyed to Progressive, as well as published and unpublished works that he had not yet assigned to any publisher. The 1980 grant entitled Charles to royalties and another advance payment.

Charles founded a nonprofit corporation now known as The Ray Charles Foundation. The Foundation was established for “scientific, educational[,] and charitable purposes.” It provides research and scholarship grants for the benefit of deaf, blind, and underprivileged youths.

At the time of his death, Charles had twelve adult children, seven of whom are involved in this case as Defendants–Appellees.² In 2002, Charles informed all of his heirs that he would establish irrevocable trusts of $500,000 for each of them if they agreed to waive further claims to his estate. Each of the heirs, including all of the Terminating Heirs, signed a contract providing:

My father, Ray Charles Robinson, has told me that he will set up an irrevocable trust for my benefit, to be funded with $500,000. This gift is my entire inheritance from him and I understand that I will not inherit anything further under my father's estate plan and that I am waiving any right to make a claim against his estate.

Charles passed away in 2004. According to the complaint, Charles's will named the Foundation as his sole beneficiary and devised “all of [Charles's] rights in his works and rights under contracts, including the compositions that are the subject of this action, to The Foundation.” The Foundation is precluded from accepting private donations. It relies on royalties from Charles's works to fulfill “the wishes of Ray Charles and [t]he Foundation's purpose.”

II. Relevant Statutory Provisions

Sections 203 and 304 of the Copyright Act of 1976 govern termination of copyright grants. 17 U.S.C. §§ 203, 304(c), 304(d). The provisions were designed to “safeguard[ ] authors against unremunerative transfers ... needed because of the unequal bargaining position of authors, resulting in part from the impossibility of determining a work's value until it has been exploited.” H.R.Rep. No. 94–1476, at 124 (1976); see also 3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 11.07[E][4][b] (Matthew Bender, rev. ed.2014) (observing that the provisions were intended to protect “authors and their spouses, children, and grandchildren against unremunerative transfers and improve their bargaining position”).

Section 203 pertains to grants and transfers made after 1978: “In the case of any work other than a work made for hire,^{[ 3 ]} the ... grant of ... any right under a copyright, executed by the author ..., otherwise than by will, is subject to termination under [specified] conditions.” 17 U.S.C. § 203(a) (emphasis added). Under this statute, termination of a copyright grant may be effected at any time during a five-year period, starting 35 years after the execution of the grant. Id. § 203(a)(3). Because the 35–year period began with grants made in 1978, opportunities to execute termination notices under § 203 started to accrue “for the first time on January 1, 2013.” U.S. Copyright Office, Analysis of Gap Grants under the Termination Provisions of Title 17 at 8 (Dec. 7, 2010), available at http://www.copyright.gov/reports/gap-grant-analysis.pdf.

Subsection 304(c) covers grants made before 1978:

In the case of any copyright subsisting in either its first or renewal term on January 1, 1978, other than a copyright in a work made for hire, the exclusive or nonexclusive grant of a transfer or license of the renewal copyright or any right under it, executed before January 1, 1978, by any of the persons designated by subsection (a)(1)(C) of this section, otherwise than by will, is subject to termination under [specified] conditions.

17 U.S.C. § 304(c) (emphasis added). The subsection is “a close but not exact counterpart of section 203.” See H.R.Rep. No. 94–1476, at 140. Under § 304(c), terminations may be effected during a five-year period starting 56 years from the date the copyright was secured, or January 1, 1978, whichever is later. 17 U.S.C. § 304(c)(3). Most existing case law on copyright termination pertains to § 304(c) because opportunities to terminate copyright grants became ripe under this statute earlier than grants subject to § 203.⁴

The Copyright Office's regulations provide:

A copy of the notice of termination shall be recorded in the Copyright Office before the effective date of termination, as a condition to its taking effect. However, the fact that the Office has recorded the notice does not mean that it is otherwise sufficient under the law. Recordation of a notice of termination by the Copyright Office is without prejudice to any party claiming that the legal and formal requirements for issuing a valid notice have not been met, including before a court of competent jurisdiction.

37 C.F.R. § 201.10(f)(6). Effective termination causes “all rights ... that were covered by the terminated grants [to] revert to the author, authors, and other persons owning termination interests [as provided in previous clauses].” 17 U.S.C. § 203(b). A deceased “author's surviving children ... own the author's entire termination interest unless there is a widow or widower....” Id. § 203(a)(2)(B) ; see also id. § 304(c)(2)(B).

Both § 203 and § 304(c) are silent on who may challenge the validity of termination notices.

III. The Subject Termination Notices

In March 2010, the Terminating Heirs filed 39 notices under § 203 and § 304(c) to terminate pre- and post–1978 grants authorized by Charles. They served the notices on various parties, including Warner/Chappell Music, Progressive's successor in interest. The notices served on Warner/Chappell pertain to the 51 compositions at issue in this case. Those works include some of Charles's greatest hits, such as “I Got A Woman,” “A Fool for You,” “Blackjack,” “Leave My Woman Alone,” and “Hallelujah, I Love Her So.” The notices have staggered effective dates, ranging from April 1, 2012 through September 28, 2019. Each notice specifies a date on which it purports to terminate all rights tied to the copyright grants, at which point those rights will revert in proportionate shares to each of Charles's heirs. See 17 U.S.C. §§ 203(b), 304(c)(6). The Terminating Heirs issued multiple termination notices for some of the compositions, thereby purporting to subject individual works to multiple termination dates. For example, three termination notices were issued for the song “Mary Ann,” each asserting a different termination date: April 1, 2012, November 15, 2015, and May 3, 2019.

The Copyright Office recorded the termination notices in January 2012. See U.S. Copyright Office, Public Catalog, Recorded Document Nos. V3603D883 (§ 203 notices), V3603D884–898, V3603D904–905, V3603D909–910, V3603D914, V3603D916–917, V3603D919, V3603D924, V3604D349 (§ 304 notices); see also Harris v. Cnty. of Orange, 682 F.3d 1126, 1132 (9th Cir.2012) (“We may take judicial notice of undisputed matters of public record.”).

IV. District Court Proceedings

In March 2012, the Foundation brought suit to challenge the termination notices. Its complaint asserts state law claims for breach of contract and breach of the implied covenant of good faith and fair dealing, and a federal claim for declaratory and injunctive relief. The district court granted the Terminating Heirs' motion to dismiss the state law claims under California's anti-SLAPP statute, and the Foundation does not appeal that ruling.

The federal claim is the only one at issue in this appeal. In it, the Foundation requests “a judicial determination of the validity and effectiveness of the termination notices and its rights and obligations.” It also seeks a declaratory judgment establishing:

(1) the compositions at issue are excluded from the termination provisions because they were works

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