Sorting out split copyrights and royalty payments

The year is 2019, and the writer of "Lady Marmalade" has filed suit in the month of April in the federal Central District of California: Copyright infringement, breach of contract, accounting, and declaratory relief. The publishing agreement and other documents included as exhibits are from 1973 and 1974. And the sum of damages being requested is astronomical - as in $20 million.

But at issue are simple principles of copyright law, whether you consider the 1909 law that governed us when Kenny Nolan first signed off on agreements regarding his catalog or whether you consider the 1978 law that is in effect today.

When you split a copyright, the two parties who split must account to one another for the royalties received and must be accountable to each other regarding any transfer in shared interest of copyright. It seems somewhat far-fetched to imagine that a writer and publisher would believe for a moment that they could enter in to a split publishing agreement, divide a copyright at half each, and then expect to be able to transfer or assign the entire copyright without accounting to the other party.

This seems to be what occurred in the scenario giving rise to Nolan's suit against Sony/ATV Publishing, Stone Diamond Music, and EMI. In October of 1973 and the months that followed, Nolan, Bob Crewe, and Stone Diamond entered into a series of agreements that split copyrights to about 77 songs, including "Lady Marmalade" and "My Eyes Adored You".

So we have three parties who all had respective stakes in the respective copyrights. The complaint filed by Nolan says it best as to what is alleged to have happened next: 

"On information and belief, Crewe licensed to Stone Diamond all Music Publishing Rights licensed to him by Nolan pursuant to the Split Publishing Agreement. On information and belief, in transactions unknown to Nolan, Sony/ATV or EMI or divisions, subsidiaries, predecessors, affiliates or entities controlled by, controlling or under common control with Sony/ATV and EMI acquired directly or indirectly from Stone Diamond or each other all Music Publishing Rights licensed to Stone Diamond by Crewe."

Not to mention the obligation to account for royalties. The complaint filed by Nolan through his attorneys alleges breaches and infringement associated with the 77 songs mentioned above and also 53 additional songs composed pursuant to an agreement among Nolan, the Wes Farrell Organization, and the Coral Rock Music Corporation. These compositions were also acquired by Sony/ATV or EMI.

It is somewhat unbelievable, but Nolan alleges that it was not until January 1, 2016, that he realized the failure to account and pay music publishing income due him. This is not good. 

In any event, credit the 9th Circuit Court of Appeals (which includes California in its jurisdiction) for some basic points of analysis in the case Corbello vs. DeVito, which involved copyrights in a written biography of Thomas DeVito of the Four Seasons and the Broadway musical Jersey Boys:

1.  A co-owner of a copyright must account to other co-owners for any profits he earns from licensing or use of the copyright.

2.  Both exclusive licenses and assignments of copyrights are transfers of ownership.

3.  Copyright owners may transfer unilaterally any of the exclusive rights comprised in a copyright that they own exclusively and without split, including any subdivision of any of the rights, as long as the transfer is evidenced by a signed writing.

These basic principles of copyright law will go a long way in determining the outcome of this case and may lead to its settlement in advance.