Lessons Learned from the ‘Happy Birthday’ SongSeptember 24, 2015
Have you ever noticed that the popular birthday song Happy Birthday To You is rarely sung by the waiters at restaurant birthday parties, or broadcast over skating rink loudspeakers during birthday announcements, or sung by movie characters during birthday scenes? Although the melody is in the public domain, the lyrics have long been subject to a claim of copyright by Warner/Chappell, which charges royalties for public performances of the song. According to media reports, Warner/Chappell has received as much as $50,000 for use of the song in a single film.
That may be about to change. On Tuesday, September 22, in Marya v. Warner/Chappell Music, Inc., Case No. CV 13-4460 (C.D. California, Sept. 22, 2015), a California federal judge ruled that Warner/Chappell did not actually hold the rights to the lyrics.
The copyright status of the lyrics to Happy Birthday To You has long been questioned, due in part to its uncertain history. The melody was originally written in 1893 by a Kentucky schoolteacher, Patty Hill, and her sister Mildred, for kindergarten students, but the original song was titled Good Morning To You and had different lyrics. The sisters published the music and lyrics to Good Morning To You in a book called Song Stories for Kindergarten and sold the copyright to the publisher, Clayton F. Summy, Co.
In 1935, Summy Co. registered a copyright to the lyrics of Happy Birthday To You. Warner/Chappell acquired the rights in the lyrics pursuant to an acquisition of Summy Co.'s successor, Birchtree Ltd., in 1988. However, in the Marya case decided on Tuesday, the court concluded that there was no evidence that Summy Co. ever actually acquired the rights to the lyrics. While the court considered a number of issues arising under copyright law, including the uncertain authorship of the lyrics and mistakes in the original 1935 registration certificate, the conclusion was fundamentally based on the absence of any documentary evidence of a transfer of the original copyright from the author to Summy Co. Accordingly, due to the break in chain of title, the Marya court found that Warner/Chappell acquired no rights to the song in the Birchtree acquisition.
For the moment, the song lyrics have effectively entered the public domain, but the case is far from over. Warner/Chappell has the option of appealing the decision, and documents evidencing ownership of the work may yet surface. Regardless, media reports anticipate that class actions will soon be filed against Warner/Chappell to recover royalties paid.
The case provides instructive lessons. Warner/Chappell ultimately lost because of a break in the chain of title – while Summy Co. had registered the copyright in 1935, there was no document that clearly and unambiguously transferred to Summy Co. the rights to the lyrics. Due to the long lapse in time, Warner/Chappell had little choice but to rely on the strength of the record that accompanied its acquisition of Birchtree, but if documentary evidence of a transfer was clear, this case may have turned out differently for Warner/Chappell. This is an important lesson in due diligence, as the price paid for the intellectual property rights should reflect the risk of invalidation, which is in turn based on the completeness of the paper trail proving title.
As shown in the Marya case, title to acquired assets can be a fundamental issue if proper documentary evidence does not exist. Copyrights in particular may be implicated by poor documentation, since they are actually a "bundle" of related rights defined by statute, and each of those rights can be sold and licensed separately from one another. For example, copyright owners can license the right to copy a protected work but not the right to distribute or publicly display, or any number of other combinations of less-than-all of the rights to a work. It is therefore crucial to review closely copyright assignments and licenses in any acquisition to ensure that all expected rights are actually held by the seller and acquired in the transaction.
Lawyers are a key element of this process, applying both intellectual property and transactional expertise to scrutinize closely assets in due diligence before proceeding with an acquisition. Too often, purchasers take well-intentioned shortcuts involving intellectual property, whether relying on form documents found on-line or using non-legal personnel to modify prior documents for use. Such measures can be tempting, particularly where a transaction is believed at the time to have little financial consequence. However, because the value and scope of intellectual property can increase over time, assets once thought to have little value can become core elements of an enterprise.
Intellectual property is ultimately about protecting creation and ingenuity. An idea that is ahead of its time may appear small and inconsequential only to later become incredibly valuable. After all, the Hill sisters could not have anticipated that a six-word song written in a 19th century Kentucky kindergarten class would blossom into one of the most famous and widely performed works in the country.
If you have any questions about your intellectual property rights and transactional documents, please contact one of our intellectual property or mergers and acquisitions attorneys.