Those
practitioners who deal with estate planning issues for artists and songwriters
are going to be paying attention to the decision of the California Federal
District Court in the Ray Charles Foundation v. Raenee Robinson, et
al case which was decided in January.
In that case, the Court upheld the right of seven of Ray Charles' twelve children to serve
39 notices of copyright termination on various entities including
Warner/Chappell. The heirs are
exercising their statutory right to terminate assignments of copyright despite
the fact that each of these children had agreed contractually that upon receipt
of $500,000.00 each in an irrevocable trust that they “would not inherit anything further under my father's
estate plan and I am waiving my right to make a claim against his estate."
Ray Charles entered into these
agreements with his children and then apparently left his right to receive
additional royalties from these compositions to his foundation – a charitable
organization . Clearly he intended to
provide for his children but also to provide for those less fortunate.
By attempting to terminate the
copyright assignments, the children have the potential to redirect the income
from these works to themselves, thereby thwarting their father’s charitable plans.
In seeking declatory relief, the
foundation argued that the children breached their agreement with their father
by filing the termination notices.
The Court concluded (1) that there could
be no claim against the estate because the
estate had in fact been through probate and was closed and (2) because
Section 304(c) of the Copyright Act provides that the termination right is
inalienable and may be exercised "notwithstanding any agreement to the
contrary" that the foundation did not have standing to stop the heirs from
filing these notices of termination.
Note that Warner/Chappell did not contest the notices.
The rationale in this case is pretty
straightforward and it is difficult to know if the 9th Circuit will do anything
different on appeal.
As an important footnote, the Court
goes to great lengths to explain that the holdings in the Milne case and the Steinbeck
case were not relevant here. In those
cases, the original statutory heirs somehow terminated the original grants themselves
and abrogated the whole "inalienable" concept. The Court also noted the important lesson from
the Larry Spier, Inc. v. Bourne Co.
case that the intent of an author in executing a will is irrelevant under
Section 304(c) because "if the author's intent were the paramount
concern of the statute, then no termination of any kind would be allowed
because most authors presumably intend to make the assignment that is the very
object of Section 304(c)'s termination provisions".
Therein lies the problem. While the termination provisions of the
Copyright Act serve an important purpose they can subvert an author's original intent,
no matter how beneficial and noble that intent might have been. Artists and songwriters contemplating long-term estate plans should be
keenly aware of the potential impact of these provisions and plan accordingly, to the extent possible.
