The US Supreme Court will not intervene in the music industry’s big dispute over the termination right in American copyright law, leaving a songwriter-friendly ruling in the Fifth Circuit Appeals Court standing. 

Though that’s because of an interesting technicality caused by BMG’s involvement in the final phase of this dispute with songwriter Cyril Vetter, and the fact it is in common ownership with Penguin Random House, which has published books by four of the Supreme Court’s judges. 

Given a similar thing happened last year in another Supreme Court copyright case involving Bertelsmann – owner of BMG and Penguin Random House – you’d think someone might have anticipated that problem sooner, especially as BMG actively chose to get involved in this case, it wasn’t there at the start. 

But, for some reason, no one seemed to notice. Which is bad news for BMG and its major publisher buddies, but actually rather good news for songwriters.

It emerged yesterday that four of the nine judges in the Supreme Court had recused themselves from considering the Vetter case, because of their commercial connections with Bertelsmann via Penguin Random House. That was a problem because at least six judges are required for Supreme Court cases. 

As a result, the remaining five judges concluded that the case “couldn’t be heard and decided” during the next year, which then activated a rule that basically keeps the Fifth Circuit’s judgement in place. 

The publishing companies owned by Universal, Sony and Warner – along with BMG – only got involved in this dispute after the Fifth Circuit’s judgement, it having begun as a legal battle between songwriter Vetter and independent publisher Resnik Music Group. 

They took over the case because the Fifth Circuit ruling makes the termination right much more impactful, in a positive way for songwriters but in a negative way for publishers. So negative, in fact, that the publishers said the appeals court had endorsed a “fringe legal theory” which would result in “chaos” that would “benefit no one”. No one except, of course, songwriters looking to exercise their termination right. 

As the bigger publishers chose to get involved – and didn’t need to include BMG – presumably the majors will be mightily pissed off that none of the BMG legal team anticipated the conflict of interest issue. Especially given that case last year where something similar happened. 

In that Supreme Court copyright case, involving Bertelsmann and the author Ta-Nehisi Coates, the same four judges recused themselves due to their Random House connections, albeit that time in a way that favoured the media company. 

Needless to say, those representing and supporting Vetter are very happy with the outcome, even if it was achieved via a technicality. 

Vetter’s lawyer Tim Kappel says he is “very pleased” with the latest developments, while the Songwriters Guild Of America and Music Creators North America say in a joint statement, “we are all proud to have participated in ensuring this victory for America’s music creators, and for songwriters, composers and lyricists throughout the world”. 

The termination right in US copyright law means that any creator who transfers ownership of a copyright to a business partner – such as a songwriter assigning rights to a music publisher through a publishing deal – can terminate the transfer and reclaim the rights after 35 years (56 years for pre-1978 works). 

US songwriters regularly reclaim copyrights by exercising the termination right. However, music industry convention has long held that the termination only applies to the copyright within the US. Which means, if the writer originally granted a publisher global rights, the publisher still owns the rights in the rest of the world. Which, in an increasingly global music market, can be very valuable for the publisher. 

However, Vetter’s legal team argued that music industry convention was wrong and that the termination should apply globally. 

The legal dispute specifically centred on Vetter’s song ‘Double Shot (Of My Baby’s Love)’. Resnik ended up being the publisher of that song, but Vetter exercised his termination right. Things came to a head when ABC wanted a multi-territory sync licence to use the song. That prompted a dispute over whether or not Vetter could issue a licence for the world, or whether Resnik still owned the rights outside of the US. 

When the case got to court, Vetter’s team successfully convinced a district court and then the Fifth Circuit that their interpretation of the termination right was correct, meaning that songwriters who terminate past copyright transfers can reclaim the rights on a global basis. Which meant Vetter now controlled the rights in ‘Double Shot’ all over the world.  

At that point the bigger publishers got involved, obviously aware a precedent had been set that could see them lose global control of any works subject to the termination right, not just US control. Which would mean they no longer financially benefit from the use of those songs in every other country.  

The big publishers insisted that the Fifth Circuit’s ruling “departed from bedrock copyright law”, and favoured a “fringe” legal theory that “bucks the common industry reading of the statute”, and urged the Supreme Court to step in and overturn the ruling. 

To take over the case, the majors and BMG bought Resik’s stake in ‘Double Shot’. Given the current iteration of BMG has previously sought to distinguish itself from the majors, insisting it is a more creator friendly music business, its involvement in the legal bid to block a pro-songwriter copyright precedent was interesting. Though no one anticipated how consequential its involvement in the case would be. 

The Fifth Circuit court hears appeals of cases initially filed with district courts in Louisiana, Mississippi and Texas. Other termination right cases could as yet go to other appeal courts elsewhere in the US, which might reach a different conclusion on how the termination should be interpreted. 

Vetter’s team previously argued that the Supreme Court shouldn’t get involved in this matter at all until that has happened, so that there would be a dispute between different appeals courts to settle. But the majors and BMG argued that the Fifth Circuit precedent was going to cause so much “chaos” in the music industry, that the top court should get involved much sooner than that. 

We will now have to wait and see if any other termination right cases appear in courts in other parts of the US. Vetter’s lawyer Kappel told Billboard that, while “our fight for Cyril may be ending”, there is “still work to do”, before adding, “we remain confident in our legal arguments and committed to seeing the Fifth Circuit’s opinion take hold elsewhere and for the benefit of all creators”. 

Meanwhile songwriter groups SGA and MCNA insisted that “any attempts to overturn this precedent will be met with similar vigour” to the songwriter campaigning that backed and supported Vetter’s legal battle, first with Resnik, and then with the majors and BMG. 

Beyond the copyright law implications of yesterday’s developments, the technicality that prevented the Supreme Court from considering the Vetter case is also likely to prompt much debate in American legal circles.

Gabe Roth from Fix The Court, which campaigns for fairer and more transparent federal courts in the US, told NewsWeek, “today’s recusals make clear that the Supreme Court’s current disqualification standards need review”.

He went on, “Am I happy the justices are recusing in cases involving their book publisher and its parent company? Yes – as Penguin Random House authors, they have financial ties to PRH’s parent company Bertelsmann, which owns BMG. But is this practice sustainable? No, for multiple reasons”. 

“This result either means that Bertelsmann and PRH cases are immune from Supreme Court review”, Roth added, “or the justices will try to carve out some ‘duty to sit’ exception in a future case of theirs that will more likely than not look ridiculous”. 

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