Mills Music, Inc. v. Snyder

Background

A music publisher (Mills) and the heirs of a songwriter (the Snyders) disputed who should receive royalties from many sound recordings of a song. In 1940 the songwriter granted renewal rights to the publisher in exchange for an agreement to split mechanical royalties fifty-fifty. The publisher licensed record companies to make about 400 recordings before the heirs exercised a statutory termination right created by the 1976 copyright law.

Reasoning

The key question was whether the author’s termination also ended the publisher’s contractual right to share royalties on those already-made recordings. The Court read the statute’s “derivative works” exception to allow derivative works prepared under the original grant to continue to be used “under the terms of the grant.” The majority concluded that those terms include the original grant plus the licenses made under it, so the publisher keeps its contractual share of royalties from the pretermination sound recordings. The Court reversed the court of appeals and ruled for the publisher.

Real world impact

The decision means royalties from recordings made before a termination will be paid according to the old contracts, not reassigned to heirs simply because copyright ownership reverted. It preserves existing license obligations for pretermination derivative works. The ruling does not allow preparation of new derivative works after termination under the old grant and does not change that rule.

Dissents or concurrances

Justice White, joined by three colleagues, dissented, arguing Congress intended to protect only the users of derivative works (like record companies), not intermediate publishers, and that the termination provisions favor authors reclaiming rights.