‘Chaos Benefits No One’: Major Labels Ask Supreme Court to Overturn ‘Disruptive’ Copyright Ruling

The major music companies filed a hotly-anticipated case at the U.S. Supreme Court aimed at reversing a first-ever ruling on copyright termination, calling it a “profoundly wrong” decision they say will cause “chaos” for the music business.

The ruling, won in January by songwriter Cyril Vetter, said artists can use termination to regain not only American copyrights, but also overseas rights to the same songs — overturning decades of precedent and industry practice. It was hailed as a “game-changer” for musicians, but seen as dangerously incorrect by publishers, labels and investors.

In a June 11 petition obtained and first reported by Billboard on Wednesday (June 17), the major labels didn’t hold back — calling Vetter a “headscratching” and “startling” ruling that would be “every bit as disruptive as it sounds” if it was not quickly reversed by the high court.

“In a single stroke, the decision below unsettled 50 years of industry practice,” writes Paul Clement, the elite Supreme Court attorney representing Universal Music Group, Warner Music Group and Sony Music Entertainment, as well as BMG. “[It] immediately calls into question the scope and meaning of countless negotiated agreements backed by billions of dollars.”

Termination gives songwriters and other creators a chance to recapture their rights decades after they sold them away. But it has only ever applied to U.S. copyrights and had no effect on rights in foreign countries. Under that approach, labels, publishers and investors continue to control overseas rights even after termination. That gives them a major source of perpetual revenue in a globalized streaming era, not to mention veto power over cross-border projects and key leverage in deal re-negotiations.

In January’s ruling, the U.S. Court of Appeals for the Fifth Circuit rejected that longstanding precedent. Siding with Vetter in his quest to win back ownership of the 1963 rock classic “Double Shot (Of My Baby’s Love),” the court said Congress had written the termination statute with the goal of correcting “unequal bargaining power,” and thus clearly did not intend for authors to win back “only half of the apple” when they invoke the law.

But in their Supreme Court petition, the labels said that ruling was clearly legally incorrect. They cited language of the statute that termination “in no way affects rights arising under any foreign laws,” which they argued had been “universally understood” before the Vetter case.

“For decades, virtually no one even tried to argue that the statute’s plain text could be read any other way,” the labels wrote. “The Fifth Circuit’s decision not only marks a dramatic split from decades of contrary authority, but is also profoundly wrong.”

As expected, Clement’s pitch to the justices focused heavily on the practical impact of the ruling, which he argued has already begun to “sow confusion” and cause “chaos” — not just for music companies, but also for movie studios, other entertainment industries and creators themselves.

“The Fifth Circuit has upended the prevailing background rules around which creative industries do business,” Clement wrote for the music firms. “This indeterminacy is crippling, and it reinforces why the entire creative ecosystem… needs an answer now.”

Making an unexpected appearance in last week’s petition was Paul McCartney, who famously sued Sony Music in 2017 over his efforts to take back Beatles songs via termination. The labels cited that case to point out that copyrights are typically broken down on a country-by-country basis. If Vetter’s theory is upheld, the labels argued, McCartney never could have pursued that case.

“Even though Sir Paul remains a British subject and ‘Yesterday’ and ‘Hey Jude’ are U.K. works, and even though U.K. law currently has nothing like [termination], the uniform understanding has been that McCartney nonetheless has distinct U.S. rights in those musical works that he could recapture,” the labels wrote.

At times, the petition took aim at the opposing lawyers themselves, Tim Kappel and Loren Wells. Clement quoted repeatedly from a legal article the pair wrote about the Vetter case, in which they noted that their lawsuit had advanced a previously “fringe” theory that ran counter to existing precedents.

“Disruption was the whole point of this lawsuit: As respondents have forthrightly admitted, their ‘ultimate goal’ was to ‘give terminating songwriters leverage they never had before’ — and to sow confusion about the status and validity of innumerable author-publisher agreements, many decades old and worth millions,” Clement wrote. “The resulting chaos benefits no one.”

In a response statement to Billboard on Wednesday, Kappel said: “As one would expect, the petition is well-written. But it covers no real new ground and traffics in the same arguments that were rejected by the courts below. We look forward to responding.”

Following the petition, Vetter will have a chance to file his own brief in response by next month. When he does so, Kappel and Wells will be joined by Joshua Rosenkranz, an elite Supreme Court litigator at the law firm Orrick. Rosenkranz has handled several major SCOTUS copyright cases, including winning this year’s big decision for Cox Communications in a billion-dollar piracy case filed by the major labels.

After briefing, the justices will then privately vote on whether to take the case, releasing their decision at some point in the next few months. Though it has big implications for the music business, the chances of Supreme Court review aren’t great in any case. The justices hear only a small fraction of the thousands of petitions they receive each year, and the high court might instead prefer to wait for another case that directly conflicts with the Vetter ruling before tackling the issue.