Legal Interpretation of Music Royalties in Marital Settlement Agreement

Cher recently won a major lawsuit over her music royalties from her divorce from Sonny Bono. Join Weintraub attorneys Scott Hervey and Jamie Lincenberg on today’s episode of “The Briefing” as they break down this case and its implications for copyright law.

Get the full episode on the Weintraub YouTube channel here or listen to this podcast episode here.

Show Notes:

Scott

Cher recently won quite a big victory in a lawsuit over whether a copyright termination in various Sonny Bono compositions could terminate her share of music royalties that were accorded to her in the divorce settlement between her and Sonny. I’m Scott Hervey from Weintraub Tobin, and I’m joined by frequent Briefing contributor Jamie Lincenberg. We are going to talk about this case on today’s episode of “The Briefing.”

Jamie, welcome back to “The Briefing.”

Jamie

Thanks for having me, Scott.

Scott

Let’s jump into the facts of this case. In 2016, Mary Bono, that’s Sonny Bono’s widow, issued a notice of copyright termination under Section 203 of the Copyright Act to various music publishers that held rights in Sonny Bono’s compositions. Under Section 203, authors or their successors may terminate copyright assignments and licenses that were made on or after January 1, 1978. Upon termination, all rights in the work that were covered by the grant revert to the author. However, any derivative works that were prepared under the authority of the grant before its termination may continue to be utilized under the terms of the grant after that grant is terminated. Apparently, though, in September 2021, Mary Bono notified Cher that pursuant to the copyright termination and their rights, Cher was no longer entitled to the 50% of royalties she was accorded under the divorce settlement agreement. Cher ended up suing for declaratory relief to enforce her rights under the marital settlement agreement she had with Sonny Bono.

Jamie

There is some important language in the marital settlement agreement. Let’s highlight that first. The agreement, which is governed by California law, gave Cher a 50% interest in any record royalties, which is all contingent receipts payable after July 14th, 1978, from Atlantic Recording Corporation under the agreement dated August 30th, 1966, from Liberty, U. A. Inc, under the agreements dated from and after November 1, 1964, and from MCA Records Inc, under agreements dated January 1, 1972, and February 11th, 1971. It also gave a share of 50% interest in any composition royalties, which is the contingent receipts payable after July 14, 1978, from musical compositions and interests therein written and composed in whole or in part by Sonny or others prior to February 1, 1974, and/or were acquired by Sonny and certain other entities prior to the couple’s separation.

Scott

That’s right, Jamie. The marital settlement agreement also states that any of Sonny’s successors and interests or assigned are also subject to share rights in both the record royalties and the composition royalties. So, in Cher’s lawsuit for declaratory relief, she sought from the court a declaration that Mary Bono’s copyright termination notice did not terminate and could not have terminated the marital settlement agreement and its assignment to share 50% of the composition royalties. Mary Bono took the position that Section 304(c) of the Copyright Act, the copyright termination section, preempts state contract law as to the rights to the renewal terms of the copyrights at issue. And as a result, the marital settlement agreement is now preempted and lacks effect.

Jamie

The key question before the court was whether the composition royalties and certain approval rights under the marital settlement agreement constitute copyright grants that were affected by the notice of termination.

Scott

Right. Now, the court did find that the marital settlement agreement is linked to the musical compositions and Sonny’s corresponding property interests. However, the granting of a royalty and the approval rights that are within the marital settlement agreement did not refer to and were not a grant of a transfer or license of the underlying copyrights, and shares rights under the marital settlement agreement arise solely under state law. Section 304 of the Copyright Act expressly provides that it in no way affects rights arising under any other federal, state, or foreign law. As such, the notice of termination issued by Mary Bono cannot affect share’s contractual rights to receive financial compensation as was set forth in the marital settlement agreement.

Jamie

Right. This does align with the holdings of other courts finding that a right to receive royalties is distinct from a grant of copyright.

Scott

Yeah, that’s right. I think this case is a good reminder for those of us that may be involved in a dispute that involves copyright assets. So clearly, in any marital settlement agreement, when the community property involves copyright interest, it’s probably not the best course of action to transfer any interest in the copyright. But this also goes beyond the marital settlement situation and can include any type of settlement situation.

Jamie

Yeah, that’s interesting and definitely a good reminder.

Scott

Yeah. Well, Jamie, thanks for joining us today.

Jamie

Thank you for listening to this episode of “The Briefing.” We hope you enjoyed the episode. If you did, please remember to subscribe, leave us a review, and do share this episode with your friends and colleagues. If you have any questions about any of the topics that we covered today, please leave us a comment.