Copyright Termination Rights and Bankruptcy

On Monday, July 3, 2023, the U.S. District Court for the Southern District of Florida held a hearing on competing summary judgment motions in the case of Lil' Joe Records Inc. et al. v. Ross et al., in which the plaintiff music label is suing members of the hip-hop group 2 Live Crew in an attempt to prevent them from terminating Lil’ Joe Records’ exclusive licenses to more than 30 of the group’s musical compositions (as well as its trademark rights). In addition to arguing that the works were made for hire and therefore owned by the label, Lil’ Joe Records argued that the defendants fully relinquished their rights in a 1996 bankruptcy order "free of…encumbrances." The defendants rebutted the work-for-hire argument, but more importantly argued that Section 203 of the Copyright Act of 1978 permits them to terminate their exclusive licenses during the five-year window that begins 35 years after the work is published. The increase in such disputes over the intersection of termination rights and the work for hire doctrine is due to both the number of works published shortly after passage of the Copyright Act of 1978 and greater awareness of the legal framework. Accordingly, a decision on whether a bankruptcy asset transfer overrides copyright termination rights could significantly alter the outcomes for a number of works for which these licenses were initially negotiated. For more background on termination rights and the work for hire doctrine, see our article on Law360.