The Ray Charles Foundation v. Raenee Robinson , 795 F.3d 1109 ( 2015 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
THE RAY CHARLES FOUNDATION, a No. 13-55421
California Corporation,
Plaintiff-Appellant, D.C. No.
2:12-cv-02725-
v. ABC-FFM
RAENEE ROBINSON, an individual;
RAY CHARLES ROBINSON, JR., an OPINION
individual; SHEILA ROBINSON, an
individual; DAVID ROBINSON, an
individual; ROBERT F. ROBINSON, an
individual; REATHA BUTLER, an
individual; and ROBYN MOFFETT, an
individual,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
Audrey B. Collins, District Judge, Presiding
Argued and Submitted
February 12, 2015—Pasadena, California
Filed July 31, 2015
2 THE RAY CHARLES FOUND. V. ROBINSON
Before: David Bryan Sentelle,* Morgan Christen,
and Andrew D. Hurwitz, Circuit Judges.
Opinion by Judge Christen
SUMMARY**
Copyright
Reversing the district court’s dismissal for lack of
jurisdiction, the panel held that the Ray Charles Foundation,
the sole beneficiary of Ray Charles’s estate, had standing to
challenge the validity and effectiveness of notices of
termination of copyright grants conferred by Charles to the
predecessor of Warner/Chappell Music.
The panel held that the Foundation had Article III
standing and that the suit was ripe. The panel held that the
Foundation did not have standing to challenge the termination
notices as a beneficial owner. Nonetheless, the Foundation
was a real party in interest because the termination notices
affected its right to royalties, and its claims fell within the
statutory zone of interests. Accordingly, it had standing to
sue to challenge whether the underlying works were works
made for hire and thus not subject to the termination
*
The Honorable David Bryan Sentelle, Senior Circuit Judge for the U.S.
Court of Appeals for the District of Columbia Circuit, sitting by
designation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
THE RAY CHARLES FOUND. V. ROBINSON 3
provisions of 17 U.S.C. §§ 203 and 304(c). The panel
remanded the case for further proceedings.
COUNSEL
Mark Daniel Passin (argued), Yakub Hazzard, and Daniel G.
Stone, Robins, Kaplan, Miller & Ciresi LLP, Los Angeles,
California, for Plaintiff-Appellant.
Marc Toberoff (argued), Toberoff & Associates, P.C.,
Malibu, California, for Defendants-Appellees.
4 THE RAY CHARLES FOUND. V. ROBINSON
OPINION
CHRISTEN, Circuit Judge:
When music legend Ray Charles died, he left behind
remarkable legacies in music and philanthropy. This appeal
arises from the intersection of the two. Seven of Charles’s
heirs purported to terminate copyright grants that Charles
conferred while he was alive. The Ray Charles Foundation,
the sole beneficiary of Charles’s estate, filed suit to challenge
the terminations. The district court dismissed the suit for lack
of jurisdiction, and the Foundation now appeals. We reverse
the district court’s order and remand for further proceedings.
BACKGROUND1
I. Charles’s Copyright Interests
In the 1950s, Ray Charles Robinson, young and early into
his career, entered into several contracts with music publisher
Atlantic Records and its subsidiary, Progressive Music
Publishing Co. The contracts indicated that Charles was an
employee of the publishers, who owned all copyright interests
in Charles’s work. Under the contracts, Charles was entitled
to advance payments and future royalties.
By 1980, Charles had achieved considerable success and
renown. That year, he renegotiated his copyright grants with
1
Because the Foundation appeals the district court’s decision on a
motion to dismiss, we “accept all allegations of fact in the complaint as
true and construe them in the light most favorable to the plaintiff[].”
Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir.
2003).
THE RAY CHARLES FOUND. V. ROBINSON 5
Progressive’s successor in interest. The renegotiation
pertained to songs Charles had previously conveyed to
Progressive, as well as published and unpublished works that
he had not yet assigned to any publisher. The 1980 grant
entitled Charles to royalties and another advance payment.
Charles founded a nonprofit corporation now known as
The Ray Charles Foundation. The Foundation was
established for “scientific, educational[,] and charitable
purposes.” It provides research and scholarship grants for the
benefit of deaf, blind, and underprivileged youths.
At the time of his death, Charles had twelve adult
children, seven of whom are involved in this case as
Defendants-Appellees.2 In 2002, Charles informed all of his
heirs that he would establish irrevocable trusts of $500,000
for each of them if they agreed to waive further claims to his
estate. Each of the heirs, including all of the Terminating
Heirs, signed a contract providing:
My father, Ray Charles Robinson, has told me
that he will set up an irrevocable trust for my
benefit, to be funded with $500,000. This gift
is my entire inheritance from him and I
understand that I will not inherit anything
further under my father’s estate plan and that
I am waiving any right to make a claim
against his estate.
2
We use the term “Terminating Heirs” to refer to the seven Defendants-
Appellees who served the termination notices. We use “Charles’s heirs”
to refer to all twelve of the artist’s adult children, including those not
involved in this suit.
6 THE RAY CHARLES FOUND. V. ROBINSON
Charles passed away in 2004. According to the
complaint, Charles’s will named the Foundation as his sole
beneficiary and devised “all of [Charles’s] rights in his works
and rights under contracts, including the compositions that
are the subject of this action, to The Foundation.” The
Foundation is precluded from accepting private donations. It
relies on royalties from Charles’s works to fulfill “the wishes
of Ray Charles and [t]he Foundation’s purpose.”
II. Relevant Statutory Provisions
Sections 203 and 304 of the Copyright Act of 1976
govern termination of copyright grants. 17 U.S.C. §§ 203,
304(c), 304(d). The provisions were designed to “safeguard[]
authors against unremunerative transfers . . . needed because
of the unequal bargaining position of authors, resulting in part
from the impossibility of determining a work’s value until it
has been exploited.” H.R. Rep. No. 94-1476, at 124 (1976);
see also 3 Melville B. Nimmer & David Nimmer, Nimmer on
Copyright § 11.07[E][4][b] (Matthew Bender, rev. ed. 2014)
(observing that the provisions were intended to protect
“authors and their spouses, children, and grandchildren
against unremunerative transfers and improve their
bargaining position”).
Section 203 pertains to grants and transfers made after
1978: “In the case of any work other than a work made for
hire,[3] the . . . grant of . . . any right under a copyright,
3
A work made for hire is:
(1) a work prepared by an employee within the scope of
his or her employment; or
THE RAY CHARLES FOUND. V. ROBINSON 7
executed by the author . . . , otherwise than by will, is subject
to termination under [specified] conditions.” 17 U.S.C.
§ 203(a) (emphasis added). Under this statute, termination of
a copyright grant may be effected at any time during a five-
year period, starting 35 years after the execution of the grant.
Id. § 203(a)(3). Because the 35-year period began with grants
made in 1978, opportunities to execute termination notices
under § 203 started to accrue “for the first time on January 1,
2013.” U.S. Copyright Office, Analysis of Gap Grants under
the Termination Provisions of Title 17 at 8 (Dec. 7, 2010),
available at http://www.copyright.gov/reports/gap-grant-
analysis.pdf.
Subsection 304(c) covers grants made before 1978:
In the case of any copyright subsisting in
either its first or renewal term on January 1,
1978, other than a copyright in a work made
for hire, the exclusive or nonexclusive grant
of a transfer or license of the renewal
copyright or any right under it, executed
before January 1, 1978, by any of the persons
designated by subsection (a)(1)(C) of this
(2) a work specially ordered or commissioned for use as
a contribution to a collective work, as a part of a motion
picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation, as an
instructional text, as a test, as answer material for a test,
or as an atlas, if the parties expressly agree in a written
instrument signed by them that the work shall be
considered a work made for hire.
17 U.S.C. § 101.
8 THE RAY CHARLES FOUND. V. ROBINSON
section, otherwise than by will, is subject to
termination under [specified] conditions.
17 U.S.C. § 304(c) (emphasis added). The subsection is “a
close but not exact counterpart of section 203.” See H.R.
Rep. No. 94-1476, at 140. Under § 304(c), terminations may
be effected during a five-year period starting 56 years from
the date the copyright was secured, or January 1, 1978,
whichever is later. 17 U.S.C. § 304(c)(3). Most existing
case law on copyright termination pertains to § 304(c)
because opportunities to terminate copyright grants became
ripe under this statute earlier than grants subject to § 203.4
The Copyright Office’s regulations provide:
A copy of the notice of termination shall be
recorded in the Copyright Office before the
effective date of termination, as a condition to
its taking effect. However, the fact that the
Office has recorded the notice does not mean
that it is otherwise sufficient under the law.
Recordation of a notice of termination by the
Copyright Office is without prejudice to any
party claiming that the legal and formal
requirements for issuing a valid notice have
not been met, including before a court of
competent jurisdiction.
4
There are some other distinctions between the termination rights
conferred under § 203 and § 304(c), but they are not relevant to this
appeal. See H.R. Rep. No. 94-1476 at 140–42 (discussing differences).
A third termination provision not relevant to this case exists in 17 U.S.C.
§ 304(d).
THE RAY CHARLES FOUND. V. ROBINSON 9
37 C.F.R. § 201.10(f)(6). Effective termination causes “all
rights . . . that were covered by the terminated grants [to]
revert to the author, authors, and other persons owning
termination interests [as provided in previous clauses].”
17 U.S.C. § 203(b). A deceased “author’s surviving children
. . . own the author’s entire termination interest unless there
is a widow or widower . . . .” Id. § 203(a)(2)(B); see also id.
§ 304(c)(2)(B).
Both § 203 and § 304(c) are silent on who may challenge
the validity of termination notices.
III. The Subject Termination Notices
In March 2010, the Terminating Heirs filed 39 notices
under § 203 and § 304(c) to terminate pre- and post-1978
grants authorized by Charles. They served the notices on
various parties, including Warner/Chappell Music,
Progressive’s successor in interest. The notices served on
Warner/Chappell pertain to the 51 compositions at issue in
this case. Those works include some of Charles’s greatest
hits, such as “I Got A Woman,” “A Fool for You,”
“Blackjack,” “Leave My Woman Alone,” and “Hallelujah, I
Love Her So.” The notices have staggered effective dates,
ranging from April 1, 2012 through September 28, 2019.
Each notice specifies a date on which it purports to terminate
all rights tied to the copyright grants, at which point those
rights will revert in proportionate shares to each of Charles’s
heirs. See 17 U.S.C. §§ 203(b), 304(c)(6). The Terminating
Heirs issued multiple termination notices for some of the
compositions, thereby purporting to subject individual works
to multiple termination dates. For example, three termination
notices were issued for the song “Mary Ann,” each asserting
10 THE RAY CHARLES FOUND. V. ROBINSON
a different termination date: April 1, 2012, November 15,
2015, and May 3, 2019.
The Copyright Office recorded the termination notices in
January 2012. See U.S. Copyright Office, Public Catalog,
Recorded Document Nos. V3603D883 (§ 203 notices),
V3603D884–898, V3603D904–905, V3603D909–910,
V3603D914, V3603D916–917, V3603D919, V3603D924,
V3604D349 (§ 304 notices); see also Harris v. Cnty. of
Orange, 682 F.3d 1126, 1132 (9th Cir. 2012) (“We may take
judicial notice of undisputed matters of public record.”).
IV. District Court Proceedings
In March 2012, the Foundation brought suit to challenge
the termination notices. Its complaint asserts state law claims
for breach of contract and breach of the implied covenant of
good faith and fair dealing, and a federal claim for
declaratory and injunctive relief. The district court granted
the Terminating Heirs’ motion to dismiss the state law claims
under California’s anti-SLAPP statute, and the Foundation
does not appeal that ruling.
The federal claim is the only one at issue in this appeal.
In it, the Foundation requests “a judicial determination of the
validity and effectiveness of the termination notices and its
rights and obligations.” It also seeks a declaratory judgment
establishing:
(1) the compositions at issue are excluded
from the termination provisions because they
were works made for hire; (2) if the
compositions were not works made for hire,
then the 1980 agreement constituted a
THE RAY CHARLES FOUND. V. ROBINSON 11
renegotiation of the transfer of most of the
songs, satisfying the statutory right of
termination; (3) the notices pertaining to
unpublished works are invalid because the
right of publication of those songs were not
exercised within five years of the 1980
agreement; (4) the 1980 agreement constituted
a new transfer and all termination deadlines
should be calculated from that date; and
(5) the Court should determine which of the
multiple termination notices for each
composition is operative, if any.[5]
Further, the Foundation seeks to enjoin the Terminating Heirs
from claiming that they are, or will become, the rightful
owners of the copyright interests; entering any agreement that
would transfer those interests; and using the compositions in
ways not permitted by parties who do not own copyright
interests.
The Terminating Heirs moved to dismiss. They argued
that the Foundation lacked standing to bring its federal claim
because it was really asserting the rights of Warner/Chappell,
Progressive’s successor in interest and the current copyright
owner. The Terminating Heirs relied in part on the
inalienable nature of termination rights, which cannot be
waived through contract. See 17 U.S.C. §§ 203(a);
304(c)(5)–(6)(B). They highlighted the fact that Congress
enacted the current statutory termination provisions when it
5
The complaint also seeks a declaration that the Terminating Heirs
breached their contracts with Charles. Because the district court dismissed
the state law contract claim, it also dismissed the request for that
declaration. The Foundation does not appeal these decisions.
12 THE RAY CHARLES FOUND. V. ROBINSON
extended copyright renewal terms because it intended to
benefit authors and their statutory heirs, not grantees. See
H.R. Rep. No. 94-1476 at 140. In opposition, the Foundation
asserted that it alleges injury to itself, and that there is no
authority supporting the Terminating Heirs’ position that
copyright ownership is a prerequisite for challenging a
termination notice.
During oral argument on the motion to dismiss, the
Foundation alternatively argued that even if the 51 works
were not created as works made for hire, the Foundation is a
beneficial owner6 with standing to sue for copyright
infringement and that it should therefore have standing to
challenge the termination notices. The Terminating Heirs
argued that the concept of beneficial ownership is not
relevant here because beneficial ownership pertains only to
copyright infringement. After oral argument, the district
court ordered supplemental briefing on two issues:
(1) Assuming that the works at issue were not
works made for hire and the Foundation is a
“beneficial owner” of the copyrights, does the
Foundation have standing under the Copyright
Act to challenge the termination notices under
§§ 304(c) and 203(a) as a “grantee” of an
“exclusive or nonexclusive grant of a transfer
or license” of any right under the copyrights?
6
Beneficial owners include, “for example, an author who had parted
with legal title to the copyright in exchange for percentage royalties based
on sales or license fees.” Warren v. Fox Family Worldwide, Inc.,
328 F.3d 1136, 1144 (9th Cir. 2003) (quoting H.R. Rep. No. 94-1476, at
159).
THE RAY CHARLES FOUND. V. ROBINSON 13
(2) Given the allegations in the current
complaint, can the Foundation allege facts to
support a claim that the works were not works
made for hire consistent with Rule 11?
After the parties filed their supplemental briefs, the
district court issued an order granting the motion to dismiss,
concluding that the Foundation lacked standing to bring this
action. The court first observed that the Terminating Heirs
did not challenge the Foundation’s constitutional standing
and “the Foundation has at least plausibly alleged that it
exists here.” The court then moved to what it termed
“prudential standing.” Applying the zone-of-interests test,
the court concluded that the Foundation’s asserted interests
were not among those protected by § 203 and § 304(c). The
court reasoned: “Those sections do not define who may
challenge termination notices, although, by their terms, they
only contemplate that certain parties will be involved in the
termination process.” The court noted that the sections do not
mention parties that acquire by bequest the right to receive
future royalty streams. The district court concluded that this
“indicate[s] that only authors, statutory heirs owning a
termination interest, and grantees of transfers and their
successors fall within the ‘zone of interests’ Congress
contemplated in enacting these provisions.”
Thus, the court reasoned that the Foundation could only
claim third-party standing because it was “only asserting
Warner/Chappell’s interests in the termination notices,” not
its own. The district court did not address the Foundation’s
interest in the continued receipt of royalties. Because the
Foundation did not show that it had a close relationship with
Warner/Chappell, or that Warner/Chappell was incapable of
protecting its own interests, the court concluded that the
14 THE RAY CHARLES FOUND. V. ROBINSON
Foundation did not have third-party standing to challenge the
termination notices. See Powers v. Ohio, 499 U.S. 400,
410–11 (1991) (“We have recognized the right of litigants to
bring actions on behalf of third parties, provided three
important criteria are satisfied: The litigant must have
suffered an injury in fact thus giving him or her a sufficiently
concrete interest in the outcome of the issue in dispute; the
litigant must have a close relation to the third party; and there
must exist some hindrance to the third party’s ability to
protect his or her own interests.” (citations and internal
quotation marks omitted)).
In response to the Foundation’s alternative theory that it
has standing as a beneficial owner of the copyright interests,
the district court concluded that because the Foundation’s
complaint alleged that the compositions were created as
works for hire, it was not a beneficial owner and thus did not
have standing to challenge the termination notices.7 The
court denied leave to amend, pretermitting whether the
Foundation could amend its complaint to allege that the
compositions were not works made for hire because in either
event, the Foundation’s interests did not fall within the
termination provisions’ zone of interests, and the Foundation
lacked third-party standing to assert the interests of
Warner/Chappell.
The Foundation timely appealed. We have jurisdiction
under 28 U.S.C. § 1291, and we reverse the district court’s
decision.
7
A creator of a work made for hire does not qualify as a beneficial
owner even if he or she is entitled to royalties. See Warren, 328 F.3d at
1144–45.
THE RAY CHARLES FOUND. V. ROBINSON 15
STANDARD OF REVIEW
“We review de novo a district court’s order dismissing a
complaint for lack of jurisdiction under Rule 12(b)(1).”
Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139
(9th Cir. 2003). At this stage, the Foundation “need only
show that the facts alleged, if proved, would confer standing
upon” it. Id. at 1140.
ANALYSIS
There is no challenge to the Foundation’s Article III
standing. The “irreducible constitutional minimum of
standing” requires that (1) the Foundation suffer a concrete,
particularized, and actual injury in fact; (2) there be “a causal
connection between the injury and the conduct complained
of”; and (3) a favorable decision will likely redress that
injury. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61
(1992). The Foundation’s complaint satisfies these
requirements: it establishes that the Foundation relies on
royalties from the copyright grants; the Terminating Heirs’
notices sought to terminate those grants; the terminations, if
valid, would deprive the Foundation of its income stream; and
a declaration of the terminations’ invalidity would redress
that deprivation.
Although neither party argued ripeness, “it is our duty to
consider sua sponte whether [a suit] is ripe, because ‘the
question of ripeness goes to our subject matter jurisdiction to
hear the case.’” Haw. Newspaper Agency v. Bronster,
103 F.3d 742, 745 (9th Cir. 1996) (alteration omitted)
(quoting Shelter Creek Dev. Corp. v. City of Oxnard,
838 F.2d 375, 377 (9th Cir. 1988)); see also Ctr. for
16 THE RAY CHARLES FOUND. V. ROBINSON
Biological Diversity v. Kempthorne, 588 F.3d 701, 708 (9th
Cir. 2009) (“[R]ipeness . . . is not waivable.”).
The Foundation’s suit is ripe. The Foundation’s claims
pertain to termination notices for grants governing 51
different works, executed in different contracts, at different
times. Termination notices do not automatically terminate
grants; the effective dates of termination depend on the date
of each grant and the validity of the notices. See 17 U.S.C.
§§ 203(a)(3), 304(c). The Terminating Heirs issued the
termination notices in March 2010, the Copyright Office
recorded the notices in January 2012, and the earliest asserted
termination date passed on April 1, 2012. That asserted date
pertained to at least seven of Charles’s works, including “I
Got A Woman,” one of Charles’s most famous songs. The
Foundation filed its complaint on March 28, 2012, and the
district court granted the Terminating Heirs’ motion to
dismiss on January 25, 2013. The asserted termination dates
for 12 of the 51 works had passed by the time of the district
court’s order, and the dates for a total of 23 works have
elapsed as of the issuance of this opinion.
The Foundation alleges that the notices of termination
immediately clouded its ability to assess its future income
stream and to rely on the royalties. Its complaint presents
questions regarding the nature of the underlying works, such
as whether they were works made for hire, and if so, when
their respective termination dates would be effective. Review
of these questions does not require us to engage in abstract
inquiries about speculative injuries. See Wolfson v. Brammer,
616 F.3d 1045, 1057 (9th Cir. 2010) (“The ripeness doctrine
is peculiarly a question of timing, designed to separate
matters that are premature for review because the injury is
speculative and may never occur from those cases that are
THE RAY CHARLES FOUND. V. ROBINSON 17
appropriate for federal court action. Through avoidance of
premature adjudication, the ripeness doctrine prevents courts
from becoming entangled in abstract disagreements.”
(alteration, citations, and internal quotation marks omitted));
see also id. at 1058 (identifying the question of ripeness as
“whether the issues presented are ‘definite and concrete, not
hypothetical or abstract’” (quoting Thomas v. Anchorage
Equal Rights Comm’n, 220 F.3d 1134, 1139 (9th Cir. 2000)
(en banc))). We accept as true the Foundation’s allegation
that the effects of the termination notices “have been felt in
a concrete way” because the notices have “created an
enormous cloud over the future copyright ownership” of the
51 works and made it “very difficult, if not impossible, to
exploit the valuable copyrighted assets.” The Foundation’s
complaint is therefore not premature. It would be an
inefficient use of judicial resources to compel the Foundation
to file a different suit after each termination date has passed.
We recognize that, as in cases in which suits were found
unripe for adjudication, the record contains no determination
by the Copyright Office of the validity of the termination
notices. See Smith v. Casey, 741 F.3d 1236, 1244–45 (11th
Cir. 2014). But the parties made clear in the district court
that “there [i]s nothing pending before the Copyright Office”
because the Office does not typically hold proceedings to
adjudicate the validity of termination notices. The Copyright
Office has expressly stated “it does not issue or enforce
notices of termination,” but “only serves as an office of
public record for such documents.” Compendium of
Copyright Office Practices III § 2305 (2014). “The fact that
a document has been recorded is not a determination by the
U.S. Copyright Office concerning the validity or the effect of
that document. That determination can only be made by a
court of law.” Id. (emphasis added). And “the fact that the
18 THE RAY CHARLES FOUND. V. ROBINSON
[Copyright] Office has recorded the notice does not mean that
it is otherwise sufficient under the law”; recordation “is
without prejudice to any party claiming that the legal and
formal requirements for issuing a valid notice have not been
met, including before a court of competent jurisdiction.” 37
C.F.R. § 201.10(f)(6).
Satisfied that this suit meets the threshold requirements of
constitutional standing and ripeness, we proceed to the only
remaining issue: whether the Foundation may sue to
challenge the termination notices.
I.
The Foundation argues that it has standing to challenge
the termination notices as a beneficial owner. It bases this
argument on its status as the sole beneficiary of Charles’s
will.8 The Foundation reasons that because the Copyright Act
accords standing to beneficial owners in the context of
infringement, beneficial owners have standing in the context
of termination. We disagree. The term “beneficial owner”
comes from 17 U.S.C. § 501, which is titled “Infringement of
copyright.” Subsection 501(b) provides that a beneficial
owner is entitled “to institute an action for any infringement.”
See also Silvers v. Sony Pictures Entm’t, 402 F.3d 881, 885
(9th Cir. 2005) (en banc) (reasoning that only a legal or
beneficial owner may sue for infringement). The district
8
If some or all of the works were not made for hire, then Charles was
likely a beneficial owner of those works because he would have been “an
author who had parted with legal title to the copyright in exchange for
percentage royalties based on sales or license fees.” Warren v. Fox Family
Worldwide, Inc., 328 F.3d 1136, 1144 (9th Cir. 2003) (quoting H.R. Rep.
No. 94-1476, at 159) (internal quotation marks omitted).
THE RAY CHARLES FOUND. V. ROBINSON 19
court relied in part on the concept of beneficial ownership
when it granted the motion to dismiss, but the Foundation’s
claims are about termination of copyright grants, not
copyright infringement. The argument that the Foundation
may be a beneficial owner lends no support to its claim to
standing.
II.
The Terminating Heirs argue that the Foundation must
satisfy the requirements for third-party standing because the
complaint actually asserts the interests of Warner/Chappell.
The Foundation argues that it is a “real party in interest and
[that it is] not asserting rights of a third party.” We agree
with the Foundation.
Historically, courts have treated the limitation on third-
party standing as a prudential principle that requires plaintiffs
to assert their own legal rights. See Erwin Chemerinsky,
Federal Jurisdiction § 2.3.4 (6th ed. 2012). “[E]ven when the
plaintiff has alleged injury sufficient to meet the ‘case or
controversy’ requirement, th[e Supreme] Court has held that
the plaintiff generally must assert his own legal rights and
interests, and cannot rest his claim to relief on the legal rights
or interests of third parties.”9 Warth v. Seldin, 422 U.S. 490,
9
Lexmark International, Inc. v. Static Control Components, Inc., 134 S.
Ct. 1377 (2014), removed the zone-of-interests inquiry from the prudential
standing doctrine, but Lexmark did not pertain to third-party standing. Id.
at 1387 n.3 (“This case does not present any issue of third-party standing,
and consideration of that doctrine’s proper place in the standing firmament
can await another day.”). We conclude, in unison with all other courts to
have spoken on the issue, that the third-party-standing doctrine continues
to remain in the realm of prudential standing. See, e.g., HomeAway Inc.
v. City & Cnty. of S.F., No. 14-cv-04859-JCS, 2015 WL 367121, at *7
20 THE RAY CHARLES FOUND. V. ROBINSON
499 (1975). This rule ensures that “plaintiffs possess such a
personal stake in the outcome of the controversy as to assure
that concrete adverseness which sharpens the presentation of
issues upon which the court so largely depends for
illumination of difficult constitutional [or statutory]
questions.” Thinket Ink Info. Res., Inc. v. Sun Microsystems,
Inc., 368 F.3d 1053, 1057 (9th Cir. 2004) (internal quotation
marks omitted).
It is undisputed that copyright ownership lies with
Warner/Chappell, but just as the termination notices affect
Warner/Chappell’s ownership of copyrights, they also
directly affect the Foundation’s right to royalties. See
17 U.S.C. §§ 203(b), 304(c)(6); Larry Spier, Inc. v. Bourne
Co., 953 F.2d 774, 780 (2d Cir. 1992). The Foundation is the
sole recipient of royalties flowing from Charles’s copyright
grants and effective termination would deprive it of the right
to receive prospective royalties. See Larry Spier, 953 F.2d at
780. We thus have little difficulty concluding that the
Foundation is litigating its own stake in this controversy.
This conclusion is buttressed by comparing the
Foundation’s interests to Warner/Chappell’s. The publisher’s
interests will be prejudiced only if Charles’s heirs are
(N.D. Cal. Jan. 27, 2015) (unpublished) (declining to extend “Lexmark to
invalidate a prudential standing doctrine that it explicitly did not reach,”
and observing that the holding “is consistent with a number of other courts
that have interpreted Lexmark as leaving the prudential doctrine of third-
party standing unaffected”); Chandler & Newville v. Quality Loan Serv.
Corp. of Wash., No. 03:13-cv-02014-ST, 2014 WL 2526564, at *4 (D. Or.
Jun. 3, 2014) (unpublished) (“Because Lexmark did ‘not present any issue
of third-party standing,’ the Court did not decide the ‘doctrine’s proper
place in the standing firmament,’ leaving it as part of the prudential
standing inquiry.”).
THE RAY CHARLES FOUND. V. ROBINSON 21
successful in their efforts to terminate the existing grants and
then either agree to grant copyright ownership to another
publisher, or renegotiate grants with Warner/Chappell on
terms less favorable to the publisher than the terms of the
existing grants. Otherwise, it makes no difference to
Warner/Chappell whether it continues to pay royalties to the
Foundation under the current grants, or to Charles’s heirs
under new grants. In their brief on appeal, the Terminating
Heirs recognize that if they decide to renegotiate grants with
Warner/Chappell, the publisher’s interests will be largely
unaffected: “A terminated grantee may well be more
interested in maintaining an amicable relationship with the
terminating author or statutory heir to facilitate re-licensing.”
Indeed, the statutory termination provisions reflect
Warner/Chappell’s interest in remaining friendly to the
Terminating Heirs, by giving negotiating priority to
terminated grantees:
A further grant, or agreement to make a
further grant, of any right covered by a
terminated grant is valid only if it is made
after the effective date of the termination. As
an exception, however, an agreement for such
a further grant may be made between [a
majority of the statutory heirs] and the
original grantee or such grantee’s successor in
title, after the notice of termination has been
served as provided by clause (4) of subsection
(a).
17 U.S.C. § 203(b)(4). Because Warner/Chappell’s interests
are not necessarily at risk, it has diminished reason to litigate,
particularly because challenging the Terminating Heirs might
endanger its interests.
22 THE RAY CHARLES FOUND. V. ROBINSON
In this case, the party presenting the most concrete
adverseness to the Terminating Heirs is the Foundation. The
Foundation “plainly asserts its own legal rights and interests,
not those of another, thus making immaterial any question
about the jurisdictional character of ‘third-party standing.’”
See Lifestyle Enter., Inc. v. United States, 751 F.3d 1371,
1376 (Fed. Cir. 2014) (citations omitted).
III.
We now turn to the zone-of-interests test, which looks to
the statutory provisions at issue and asks whether Congress
authorized the plaintiff to sue under them. See Lexmark Int’l,
Inc. v. Static Control Components, Inc., 134 S. Ct. 1377,
1387–90 (2014). The crux of the Foundation’s complaint is
that § 203 and § 304(c) do not apply to the underlying works
because they are works made for hire. See 17 U.S.C.
§§ 203(a) (“In the case of any work other than a work made
for hire . . . .” (emphasis added)), 304(c) (“In the case of any
copyright subsisting in either its first or renewal term on
January 1, 1978, other than a copyright in a work made for
hire . . . .” (emphasis added)). The Terminating Heirs argue
that the Foundation’s suit does not fall in the termination
statutes’ zone of interests because the termination statutes
were intended to benefit authors’ surviving spouses and heirs.
But this ignores the central premise of the Foundation’s suit,
which is that the termination provisions do not apply at all.
As the holder of legal rights and interests that will be
truncated if the termination notices are valid, the Foundation
has standing to challenge whether the underlying works are
subject to the termination provisions. If the compositions are
works made for hire, the termination statutes do not apply.
See 17 U.S.C. §§ 203(a), 304(c). Further, as we explain
below, even if we assume that the compositions are not works
THE RAY CHARLES FOUND. V. ROBINSON 23
made for hire and that the underlying grants are subject to
termination, we would conclude that the Foundation’s suit
falls under the statutory provisions’ zone of interests.
The Supreme Court first articulated the zone-of-interests
test in Association of Data Processing Service Organizations
v. Camp, 397 U.S. 150 (1970). There, the court stated that
standing “concerns, apart from the ‘case’ or ‘controversy’
test, the question whether the interest sought to be protected
by the complainant is arguably within the zone of interests to
be protected or regulated by the statute or constitutional
guarantee in question.” Id. at 153. The Court later explained:
[T]he test denies a right of review if the
plaintiff’s interests are so marginally related
to or inconsistent with the purposes implicit in
the statute that it cannot reasonably be
assumed that Congress intended to permit the
suit. The test is not meant to be especially
demanding; in particular, there need be no
indication of congressional purpose to benefit
the would-be plaintiff.
Clarke v. Sec. Indus. Ass’n, 479 U.S. 388, 399–400 (1987)
(footnote omitted).
In the past, the Supreme Court has characterized the test
as one pertaining to “prudential standing.” See, e.g., Fed.
Election Comm’n v. Atkins, 524 U.S. 11, 20 (1998); Bennett,
520 U.S. at 163; cf. Erwin Chemerinsky, Federal Jurisdiction
§ 2.3.6 (6th ed. 2012). But in Lexmark International, Inc. v.
Static Control Components, Inc., 134 S. Ct. 1377 (2014), the
Supreme Court rejected the idea that the test bears on
prudential standing or jurisdiction:
24 THE RAY CHARLES FOUND. V. ROBINSON
Although we admittedly have placed that test
under the “prudential” rubric in the past, it
does not belong there . . . . Whether a
plaintiff comes within “the ‘zone of
interests’” is an issue that requires us to
determine, using traditional tools of statutory
interpretation, whether a legislatively
conferred cause of action encompasses a
particular plaintiff’s claim. As Judge
Silberman of the D.C. Circuit recently
observed, “‘prudential standing’ is a
misnomer” as applied to the zone-of-interests
analysis, which asks whether “this particular
class of persons has a right to sue under this
substantive statute.”
Id. at 1387 (alteration and citations omitted). The Court
recast the zone-of-interests inquiry as one of statutory
interpretation, holding that the question is whether a plaintiff
“has a cause of action under the statute.” Id. It further
explained that the “standing” label was misleading because
“‘the absence of a valid (as opposed to arguable) cause of
action does not implicate subject-matter jurisdiction, i.e., the
court’s statutory or constitutional power to adjudicate the
case.’” Id. at 1387, 1388 & n.4 (quoting Verizon Md., Inc. v.
Pub. Serv. Comm’n of Md., 535 U.S. 635, 642–43 (2002));
see also Pit River Tribe v. Bureau of Land Mgmt., —F.3d—,
2015 WL 4393982, at *8 (9th Cir. 2015) (“[T]he [Lexmark]
[C]ourt . . . made clear that whether a plaintiff’s claims are
within a statute’s zone of interests is not a jurisdictional
question.”).
Notably, the Court suggested that a heightened standard
for the zone-of-interests test might apply in non-APA cases:
THE RAY CHARLES FOUND. V. ROBINSON 25
We have made clear, however, that the
breadth of the zone of interests varies
according to the provisions of law at issue, so
that what comes within the zone of interests of
a statute for purposes of obtaining judicial
review of administrative action under the
generous review provisions of the APA may
not do so for other purposes.
Lexmark, 134 S. Ct. at 1389 (quoting Bennett, 520 U.S. at
163) (internal quotation marks omitted). The Court did not
articulate exactly how the zone-of-interests inquiry differs for
non-APA actions like this one, but the above passage does
suggest that the relevant question for such actions is whether
there exists “a valid (as opposed to arguable) cause of
action.” See id. at 1387–89 & n.4. This question bears on
whether a claim may be maintained by the party asserting it,
not the court’s jurisdiction to consider the claim. See id. at
1387.
Lexmark looked to the Lanham Act’s “‘unusual, and
extraordinarily helpful[]’ detailed statement of the statute’s
purposes.” Id. at 1389. The Court observed “the Act’s goal
of protecting persons engaged in commerce within the control
of Congress against unfair competition,” and of redressing
“injuries to business reputation and present and future sales.”
Id. at 1389–90 (alterations and internal quotation marks
omitted). It thus held that “to come within the zone of
interests in a suit for false advertising under § 1125(a), a
plaintiff must allege an injury to a commercial interest in
reputation or sales.” Id. at 1390.
The Supreme Court also articulated a second requirement
to bring suit for false advertising under § 1125(a) of the
26 THE RAY CHARLES FOUND. V. ROBINSON
Lanham Act. It termed this the proximate cause requirement,
and explained that it “is controlled by the nature of the
statutory cause of action,” and centers on the question
“whether the harm alleged has a sufficiently close connection
to the conduct the statute prohibits.” Id.; see also id. at 1394
(“‘Where the injury alleged is so integral an aspect of the
violation alleged, there can be no question’ that proximate
cause is satisfied.” (alteration omitted) (quoting Blue Shield
of Va. v. McCready, 457 U.S. 465, 479 (1982))). In the
context of the Lanham Act’s prohibition on false advertising
and unfair competition, the Court held “that a plaintiff suing
under § 1125(a) ordinarily must show economic or
reputational injury flowing directly from the deception
wrought by the defendant’s advertising; and that that occurs
when deception of consumers causes them to withhold trade
from the plaintiff.” Id. at 1391. Applying the zone-of-
interests test, the Court held that the plaintiff in Lexmark fell
“within the class of plaintiffs whom Congress authorized to
sue under § 1125(a)” because the plaintiff alleged injuries “to
precisely the sorts of commercial interests the Act protects,”
and because it “adequately alleged proximate causation.” Id.
at 1393–94.
The Copyright Act does not expressly provide for a
private right of action under § 203 and § 304(c), but we
conclude that an implied private cause of action exists under
the termination provisions. The Supreme Court has indicated
that an implied right of action requires that “the statute
manifest[] an intent ‘to create not just a private right but also
a private remedy.’” Gonzaga Univ. v. Doe, 536 U.S. 273, 284
(2002) (quoting Alexander v. Sandoval, 532 U.S. 275, 286
(2001)). A private right and remedy are contemplated by the
termination provisions; the statutes plainly accord authors and
statutory heirs the ability to terminate prior grants and
THE RAY CHARLES FOUND. V. ROBINSON 27
recapture copyright ownership for works that were not made
for hire. See 17 U.S.C. §§ 203, 304(c). In contrast to
schemes that can only be enforced by a government agency,
the termination provisions can be enforced by private action.
See 37 C.F.R. § 201.10(f)(6) (“Recordation . . . is without
prejudice to any party claiming that the legal and formal
requirements for issuing a valid notice have not been met,
including before a court of competent jurisdiction.”).10 Other
courts have entertained suits challenging termination validity
under these statutory provisions. See, e.g., Marvel
Characters, Inc. v. Kirby, 726 F.3d 119 (2d Cir. 2013)
(terminated grantee’s challenge of statutory heirs’ § 304(c)
termination notices); Penguin Grp. (USA) Inc. v. Steinbeck,
537 F.3d 193 (2d Cir. 2008) (challenge to statutory heirs’
termination notice asserted by grantee’s assignee); Milne ex
rel. Coyne v. Stephen Slesinger, Inc., 430 F.3d 1036 (9th Cir.
2005) (suit filed by author’s grandchild and prime beneficiary
of trust that received royalties from underlying grant, seeking
declaration that termination notice was valid); Larry Spier,
Inc. v. Bourne Co., 953 F.2d 774 (2d Cir. 1992) (suit between
two publishers: one an assignee of the author’s right to renew,
the other an assignee of the author’s heirs’ copyright
interests, after a termination attempt); Bourne Co. v. MPL
Commc’ns, Inc., 675 F. Supp. 859 (S.D.N.Y. 1987) (suit
between two publishers: the original grantee and a post-
termination grantee who received rights through agreement
with the beneficiary of the author’s widow’s estate).
10
The Foundation argues that the Copyright Office’s use of “any party”
instead of “grantee” constitutes an agency interpretation that “any party”
may challenge termination notices. We are not persuaded. This provision
indicates only that recordation of a termination notice does not bar
challenges to the validity of termination notices. It says nothing about
who may bring suit.
28 THE RAY CHARLES FOUND. V. ROBINSON
Because we conclude that there are legislatively conferred
causes of action under these termination statutes, the next
question is whether the statutory causes of action encompass
the Foundation’s claims. See Lexmark, 134 S. Ct. at 1387.
We begin with the statutory purposes of the termination
provisions, which were intended “to ‘safeguard authors
against unremunerative transfers’ and improve the
‘bargaining position of the authors’ by giving them a second
chance to negotiate more advantageous grants in their works
after the works had been sufficiently ‘exploited’ to determine
their ‘value.’” Milne, 430 F.3d at 1046 (alteration omitted)
(quoting H.R. Rep. No. 94-1476, at 124). The improved
bargaining position and “more advantageous grants”
generally provide to authors a greater share of the royalties,
which other courts have recognized as “the most valuable part
of the termination rights.” See MPL Commc’ns, Inc., 675 F.
Supp. at 863.
The Foundation’s claim centers on its right to continue
receiving royalties. If it is determined that some or all of the
works are subject to the termination provisions because they
were not made for hire, the Foundation’s ability to maintain
this action to challenge the notices depends upon whether
Congress intended to allow a party receiving royalties under
a contractual assignment or will to challenge the validity of
termination notices.
The Terminating Heirs argue that the interests asserted by
the Foundation in this case are not an ideal match for the
legislative intent of these provisions because the purpose of
§ 203 and § 304(c) was to enhance authors’ bargaining power
and protect their ability to exploit their works. See H.R. Rep.
No. 94-1476, at 124; Milne, 430 F.3d at 1046; MPL
Commc’ns, Inc., 675 F. Supp. at 863. Because the
THE RAY CHARLES FOUND. V. ROBINSON 29
Foundation is neither the grantee nor Charles’s statutory heir,
the Terminating Heirs are correct that the Foundation is not
a party expressly mentioned in the termination statutes. But
whether the Foundation’s interests are explicitly identified in
the statute is not dispositive. Instead, the central question is
whether the Foundation alleges injuries “to precisely the sorts
of . . . interests the Act protects.” Lexmark, 134 S. Ct. at
1393–94 (emphasis added). Because the Terminating Heirs
issued “multiple notices of termination pertaining to the same
compositions, not all of which can possibly be valid,” the
Foundation alleges that the notices make “it very difficult, if
not impossible, to exploit the valuable copyright assets at
issue.” Thus, the Foundation alleges injury to its interest in
continuing to receive the royalty stream generated by
Charles’s works, which is the same interest that the
Terminating Heirs seek to redirect to themselves. This
interest is the one Congress contemplated, regulated, and
protected in enacting the termination provisions. See H.R.
Rep. No. 94-1476, at 124; Milne, 430 F.3d at 1046; MPL
Commc’ns, Inc., 675 F. Supp. at 863. We therefore conclude
that the Foundation does “come[] within the zone of
interests” of § 203 and § 304(c). See Lexmark, 134 S. Ct. at
1387 (internal quotation marks omitted).
Even if we concluded that Congress did not authorize a
party in the Foundation’s position to challenge the validity of
termination notices, the Foundation’s complaint also seeks a
judicial determination establishing when the terminations
come into effect for each of the 51 different works. This
determination is particularly important because the
Terminating Heirs issued duplicate notices with inconsistent
termination dates. As the Foundation argued in the district
court, “even if the Court were to determine that th[e]
terminations are valid and effective, the Foundation would,
30 THE RAY CHARLES FOUND. V. ROBINSON
nonetheless, need a Declaration as to the timing so that it
would know when, [or] if at all, its rights to continue to
receive the writer share of the income might cease to exist.”
We agree. The Foundation is at least entitled to a declaration
establishing when the right to receive royalties reverts to
Charles’s heirs.
It is unclear whether the Supreme Court intended the
proximate cause test to be part of the zone-of-interests
inquiry. Compare Lexmark, 134 S. Ct. at 1388–90, with id.
at 1390–91 (assessing “Zone of Interests” and “Proximate
Cause” in separate sections). But Lexmark did indicate that
the Court “generally presume[s] that a statutory cause of
action is limited to plaintiffs whose injuries are proximately
caused by violations of the statute”; “Congress . . . is familiar
with the common-law rule” of proximate cause “and does not
mean to displace it sub silentio”; and “federal causes of
action in a variety of contexts [are construed] to incorporate
a requirement of proximate causation.” Id. at 1390.
Proximate cause “bars suits for alleged harm that is ‘too
remote’ from the defendant’s unlawful conduct.” Id. (quoting
Holmes v. Secs. Investor Prot. Corp., 503 U.S. 258, 268–69
(1992)). There is no remoteness here. Termination, if
effective, would directly extinguish the Foundation’s right to
receive prospective royalties from the current grants. Far
from barring the Foundation’s suit, the proximate cause test
suggests that the Foundation is indeed a party “whose injuries
[may have been] proximately caused by violations of the
statute.” See id.
THE RAY CHARLES FOUND. V. ROBINSON 31
CONCLUSION
The Foundation properly asserts its own claims, which
fall within the statutory zone of interests. We therefore
reverse the district court’s judgment and remand for further
proceedings.
REVERSED AND REMANDED.