When the Supreme Court upheld Cyril Vetter’s landmark ruling on copyright termination this week, it created more questions than it answered. Here’s what we know about the weird ruling, what it means, and what comes next.
Issued by the high court on Monday (Oct. 19), the order did one thing for certain: It left in place a first-ever ruling earlier this year in which a lower appeals court declared that artists can use their termination right to win back not only their American copyrights but also overseas ownership rights to the same songs.
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That earlier decision overturned decades of industry practice and conventional wisdom, which held that termination only applied to U.S. copyrights. Musician advocates had hailed it as “a massive win for the principle of fairness,” but labels and publishers had pushed to overturn it, arguing it would destabilize the music industry.
On Monday, the high court’s order refused to do that. But owing to strange procedural quirks, it’s also not the landmark win for artists it might appear to be. To clear things up, let’s answer some of the big questions the industry is asking.
Let’s start with the basics: What is this case about?
The termination right is a crucial provision of federal copyright law that allows all authors, including songwriters and artists, to take back rights they sold away decades earlier. It was designed to give creators a “second bite at the apple” to fix a basic economic imbalance, in which powerful companies can buy up rights from creators who then never get a chance to profit from their own artistry.
But historically, termination had only ever applied to U.S. copyrights and had no effect on foreign countries. Under that approach, music publishers typically continued to own overseas rights even after a U.S. termination, giving them perpetual revenue from those songs, not to mention veto power over cross-border projects in an increasingly globalized music industry.
A few years back, Vetter sued to change that system. Seeking to retake control of his 1963 rock classic “Double Shot (Of My Baby’s Love)” from a small publisher, the songwriter and his lawyers (Tim Kappel and Loren Wells) argued that if a musician had granted global rights to their publisher years ago, then a federal termination required a return of all of those rights.
How did the case get to the Supreme Court?
To the surprise of copyright lawyers and industry execs, Vetter’s argument worked. Federal courts — first a trial judge, then a powerful appeals court — ruled that termination was indeed global, upending decades of settled expectations.
In its January ruling, the U.S. Court of Appeals for the Fifth Circuit ruled that 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 it.
That ruling was obviously a win for artists and songwriters. Irving Azoff‘s Music Artists Coalition (MAC) called it a “seismic shift” and a “game-changer” that could result in “fundamentally altering the economic landscape” for musicians. “If the original deal gave away the world, that second chance must include the world,” MAC director Ron Gubitz said at the time.
But it was just as obviously a loss for music companies and, more recently, the slew of investment firms that have bought up song catalogs. Billions of dollars in collective deals were built around an existing legal framework that said overseas revenue would still go to the old owner, even after termination.
So the major labels forced a showdown at the Supreme Court. Universal Music Group, Warner Music Group, Sony Music and BMG bought out the small publisher who owned Vetter’s music, doing so solely for the purposes of filing such an appeal. In their petition to the court in June, they urged the justices to overturn a “headscratching” and “startling” ruling that would be “every bit as disruptive as it sounds.”
“In a single stroke, the decision below unsettled 50 years of industry practice,” wrote Paul Clement, the elite Supreme Court attorney representing the labels. “[It] immediately calls into question the scope and meaning of countless negotiated agreements backed by billions of dollars.”
What happened this week?
The Supreme Court rejected that request and affirmed the Fifth Circuit’s ruling for Vetter. But it did so in a strange way.
The case was at the so-called certiorari stage, meaning the labels were still merely asking the justices to hear it at all. If the court had agreed — and it only rarely does so — the dispute would have become a full Supreme Court case, with both sides battling over the merits and the court eventually issuing a full ruling that set nationwide law.
But the court didn’t do that. Instead, four of the nine justices recused themselves from considering whether to hear the case. The remaining five justices said that the court thus lacked a quorum and that “the case cannot be heard and determined at the next Term of the Court.” The order cited a federal statute that governs such unusual scenarios. That law dictates that the court automatically affirm the lower court ruling, but also that such decisions carry no national precedential value.
The upshot: Vetter’s big win stands, but it only applies to lawsuits heard in the Fifth Circuit, which covers the federal courts in Texas, Louisiana and Mississippi.
Wait, why did all those justices recuse themselves?
The short answer: Book deals.
Justices Sonia Sotomayor, Neil Gorsuch, Amy Coney Barrett and Ketanji Brown Jackson did not participate in weighing whether to hear the Vetter case. And the Supreme Court’s order itself did not offer an explanation for why they took no part.
But those same four justices have each published books through Penguin Random House, the American publishing giant that’s owned by German media conglomerate Bertelsmann SE. That same parent company owns BMG, creating a potential conflict of interest for those four justices.
That reason, first reported by Bloomberg Law, raises strange implications: Is the current Supreme Court incapable of ever hearing a case involving Penguin Random House or Bertelsmann? That … would be weird. But it at least offers a plausible explanation for the en masse recusals in Vetter’s case.
What comes next?
That explanation won’t offer much comfort to the music industry, which, by virtue of judicial book deals and corporate umbrellas, is now facing a lack of hard answers on an issue that, by the labels’ own estimation, could alter the destination for billions of dollars in royalties.
For now, termination is global if you happen to find yourself litigating in Texas, Louisiana or Mississippi. If you sue or get sued in New York or California, where the vast majority of music lawsuits take place, the case law is less clear — not directly contradictory, but certainly not requiring that those courts decide the case the same way as the Vetter court.
Savvy litigants will no doubt try to exploit that situation to their advantage, a term known in the legal world as “forum shopping.” If you’re a publisher that has a termination battle brewing with a songwriter, it would behoove you to make sure it doesn’t happen in the Fifth Circuit; ditto for a songwriter that’s planning to take back their music, but vice versa.
It wouldn’t be surprising for music firms to pursue favorable test cases in other states, hoping they can win a ruling that directly rejects the Vetter decision and holds that termination applies only to American copyrights. Such a ruling would not only make that circuit a friendly venue for defending termination cases, but would tee up the kind of circuit split that would make the Supreme Court far more likely to finally decide the issue for good.
Until then, the law will remain unsettled. Existing music deals with looming termination dates — typically about 35 years after they were first signed — might see overseas rights stay with the publisher, or they might see them revert to the musician. Investors and publishers will try their best to factor that uncertainty into their financial outlooks, while songwriters and artists will hope they can win back the entirety of their global rights.