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District court dismisses claims by rap and hip-hop group Salt N-Pepa seeking declaration they had validly terminated grant of copyright in sound recordings to UMG Recordings' predecessor and alleging possessory interest in master recordings.
Plaintiffs Cheryl James and Sandra Denton, professionally known as the rap and hip-hop group Salt-N-Pepa, entered into a recording agreement in 1986 with Noise In The Attic Productions, Inc. (NITA), a company owned by their producer, Herb Azor. Under the recording agreement, plaintiffs agreed that NITA "shall be the sole and exclusive owner of any and all rights, title and/or interest in and to master recordings recorded hereunder, including but not limited to the worldwide sound copyrights therein."
At the same time, Azor entered into a distribution agreement with Next Plateau Records Inc. (NPR), in which Azor agreed to produce and deliver physical sound recordings embodying plaintiffs' performances, known as "sides," to NPR. The distribution agreement stated that Azor was "the sole and exclusive owner of" any sides already in existence and assigned to NPR all of Azor's rights, title and interest in and to those sides. The agreement further provided that all sides created thereafter would, "from the inception of their creation, be entirely the property of [NPR] in perpetuity, ... and [NPR] shall have the right to secure the sound recording ... copyright in and to the Sides in [NPR]'s name as the owner and author thereof."
Finally, James and Denton signed an inducement letter addressed to NPR in which they "specifically guarantee[d] the performance by [Azor] of all of the warranties and representations and covenants made in [the distribution agreement]." Plaintiffs further stated in that letter that they "make all of the warranties and representations made to [NPR] in [the distribution agreement], grant [NPR] all of the rights and remedies therein granted to [NPR,] and agree to perform all of the obligations therein undertaken to be performed for [NPR] and undertake to be bound thereby as though [Plaintiffs were] a party to [the distribution agreement]."
Over the four decades following the execution of the recording agreement, the distribution agreement and the inducement letter, plaintiffs recorded numerous popular and critically acclaimed albums and songs as Salt-N-Pepa. Pursuant to those documents, the group's albums and songs were recorded for NPR and, after a 1992 assignment, for London Records. Both NPR and London Records were predecessors-in-interest to defendant UMG Recordings Inc.
In March 2022, James and Denton served UMG with termination notices pursuant to Section 203 of the Copyright Act, seeking to regain control over the copyrights to the sound recordings of their music. UMG responded with a counter-notice, and plaintiffs later filed a lawsuit seeking (1) a declaration that their termination notices were valid and that plaintiffs should be able to regain control of the sound recording copyrights and (2) damages, on a conversion theory, for UMG's alleged "intentional[] and substantial[] interfere[nce] with Plaintiffs' possession of their Master Tapes." UMG moved to dismiss both claims, arguing that plaintiffs did not have termination rights under Section 203 of the Copyright Act because they never owned a copyright interest in their works and never assigned such rights to Azor or others.
Section 203 provides authors the opportunity to terminate prior grants or assignments of copyrights 35 years (in the case of post-1978 grants) after the grant or assignment was executed. That provision, however, does not apply to grants or assignments made by someone other than the original author, nor does it apply to "works made for hire." Thus, the central questions before the district court were whether (1) James and Denton could be considered the original authors of the sound recordings in question and (2) whether the sound recordings constituted works made for hire.
The district court answered the first question in the negative, which obviated the need to answer the second. The court looked at the plain language of the agreements and concluded that James and Denton never held any ownership interests in their sound recordings. As the court highlighted, the recording agreement expressly stated that NITA "shall be the sole and exclusive owner of any and all rights, title and/or interest in and to master recordings," and the distribution agreement further confirmed NITA's ownership prior to its assignment of rights to NPR.
James and Denton raised two arguments: first, that the recording agreement constituted a present transfer of their rights to NITA, and second, that the inducement letter constituted a transfer of rights directly from them to NPR and specifically included a grant to NPR of "all of the rights and remedies" granted in the distribution agreement. The district court held that the first argument was contradicted by the plain language of the recording agreement, which expressly affirmed NITA's original ownership of the copyrights to the sound recordings and made no mention of plaintiffs having any ownership rights. On the second argument, the court held that the inducement letter merely included a promise by plaintiffs to abide by all the representations and warranties included in the distribution agreement, including NITA's representation that it was "the sole and exclusive owner" of the sound recording copyrights. In short, the district court concluded that the plain language of the agreements left it with no choice but to conclude that plaintiffs were never authors of the sound recordings in question and therefore had no termination rights to exercise under Section 203.
As a final matter, the district court disposed of James and Denton's claim for damages regarding the master recordings. Plaintiffs' claim was predicated on a theory of conversion, but that required a plausible allegation that plaintiffs at some point had ownership over the masters. For the same reason that plaintiffs could not demonstrate ownership over the sound recording copyrights, they likewise could not plausibly allege that they had ever owned the masters. Indeed, the recording agreement and distribution agreement expressly provided that NITA owned the masters and was assigning ownership to NPR.
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