U.S. Copyright Affirms Termination Rights For Streaming In New Ruling

WASHINGTON D.C. (CelebrityAccess) — The United States Copyright Office has issued a final ruling that shores up termination rights in favor of content creators in the era of the Music Modernization Act.

The rule addresses what the Copyright Office described as an “erroneous understanding” of copyright rules by the Mechanical Licensing Collective (MLC), the organization established by the Music Modernization Act to administer the statutory mechanical blanket license for digital music services.

While it is a complex aspect of copyright law, termination allows content creators or their heirs to reclaim ownership of a copyrighted work from a licensee after a set period following the original grant.

The MLC, as evidenced by a dispute resolution policy from 2021, determined that music streaming platforms had an existing license in place for those copyrighted works, effectively creating a derivative work of the copyrighted materials. The determination allowed digital music services such as Spotify to continue streaming copyrighted music and paying royalties to the grantee, even after the termination clause was invoked.

However, in their ruling on July 9th, the Copyright Office determined that the derivative works exception to termination rights under the Copyright Act does not apply to the blanket music licensing scheme, meaning that songwriters who have terminated their rights will be eligible for royalties for those ‘derivative’ uses of their compositions under the blanket license.

The ruling also requires that the MLC make future royalty distributions in compliance with new ruling and to start a ‘corrective adjustment’ process to revise previous royalty distributions based on the incorrect interpretation.

According to the Copyright Office, copyright holders are urged to “engage in a voluntary self-administered corrective adjustment” but noted that those parties will have to find a resolution and report it to the MLC by September 9th after which the MLC will issue a mandatory corrective adjustment.

“We are very pleased that the Copyright Office has affirmed the MLC’s practice, which ensures songwriters are properly and expediently paid post-termination. Having clear guidance on this issue will make the MLC and larger industry even more efficient, as it gives a clear roadmap to those who have decided to reclaim their copyrights,” stated National Music Publishers Association President & CEO Davis Israelite.

For the full text of the copyright ruling, click here.

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