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.
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
By 1980, Charles had achieved considerable success and renown. That year, he renegotiated his copyright grants with 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 The renegotiation pertained to songs Charles had previously conveyed to Progressive, as well as published and unpublished works that he had not yet assigned to any publisher.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.
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."
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,[
Subsection 304(c) covers grants made before 1978:
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.
The Copyright Office's regulations provide:
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.
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
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.").
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:
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
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 owner
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
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.
The Foundation timely appealed. We have jurisdiction under 28 U.S.C. § 1291, and we reverse the district court's decision.
"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.
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, 112 S.Ct. 2130, 119 L.Ed.2d 351 (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 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
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 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 [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
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.
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.
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."
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 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:
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.
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).
We now turn to the zone-of-interests test, which looks to the statutory provisions at issue and asks whether Congress
The Supreme Court first articulated the zone-of-interests test in Association of Data Processing Service Organizations v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (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, 90 S.Ct. 827. The Court later explained:
Clarke v. Sec. Indus. Ass'n, 479 U.S. 388, 399-400, 107 S.Ct. 750, 93 L.Ed.2d 757 (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. Akins, 524 U.S. 11, 20, 118 S.Ct. 1777, 141 L.Ed.2d 10 (1998); Bennett, 520 U.S. at 163, 117 S.Ct. 1154; cf. Erwin Chemerinsky, Federal Jurisdiction § 2.3.6 (6th ed.2012). But in Lexmark International, Inc. v. Static Control Components, Inc., ___ U.S. ___, 134 S.Ct. 1377, 188 L.Ed.2d 392 (2014), the Supreme Court rejected the idea that the test bears on prudential standing or jurisdiction:
Id. at 1387 (alteration and citations omitted). The Court recast the zone-of-interests
Notably, the Court suggested that a heightened standard for the zone-of-interests test might apply in non-APA cases:
Lexmark, 134 S.Ct. at 1389 (quoting Bennett, 520 U.S. at 163, 117 S.Ct. 1154) (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 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, 102 S.Ct. 2540, 73 L.Ed.2d 149 (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 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, 122 S.Ct. 2268, 153 L.Ed.2d 309 (2002) (quoting Alexander v. Sandoval, 532 U.S. 275, 286, 121 S.Ct. 1511, 149 L.Ed.2d 517 (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 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.").
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
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 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, 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
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, 112 S.Ct. 1311, 117 L.Ed.2d 532 (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 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.
17 U.S.C. § 101.