In a long-awaited decision, the court allows Cher’s royalty lawsuit to proceed despite copyright termination notices from Sonny Bono’s heirs.
UPDATE—May 30, 2024—Judge to Cher: “I Got You Paid,” as court rejects Mary Bono’s bid to use copyright recapture to overturn a decades-old divorce settlement. Full story here.
A Central District of California judge has denied Mary Bono’s motion to dismiss a lawsuit over composition royalties Cher claims are owed under her 1978 marital settlement agreement with Sonny Bono. The court’s March 14 ruling (read here) rejected the defendants’ assertion that copyright terminations served by Bono’s heirs effectively preempted Cher’s state law contract rights.
This one has been a long-time coming: The defendants’ motion to dismiss was originally filed 15 months ago, way back in December 2021. At this rate, the Cher-Bono litigation may end up lasting longer than the couple’s marriage.
Cher v. Mary Bono
As I explained in an earlier article about the lawsuit, at the time of their divorce in 1978, Sonny and Cher entered into a marital settlement agreement (MSA) (read here) in which they agreed to an equal division of community property assets under California law. Per the agreement, Sonny assigned Cher a 50% interest in musical composition and record royalties in the songs he had written or acquired during their marriage. During his lifetime, Sonny paid these royalties to Cher, and after Sonny died in 1998, his widow, Mary Bono, continued to do the same.
But in 2016, Sonny Bono’s heirs issued a notice of termination under Copyright Act section 304(c) on various music publishers to whom Sonny had previously assigned rights in his musical compositions. Representatives of Mary Bono and the Bono Collection Trust then asserted that these termination notices also had the effect of terminating the stream of composition royalties Sonny had previously agreed to pay to Cher in their MSA. Bono refused to pay royalties on the terminated compositions, prompting Cher to sue Mary Bono and the Bono Collection Trust for declaratory relief and breach of the MSA.
Mary Bono’s Motion to Dismiss
Mary Bono’s motion to dismiss was premised on the supremacy of federal copyright law over state contract law and the inalienability of statutory copyright termination rights. She argued that while, in 1978, “Sonny could grant Cher his then-current rights, including a 50% royalty interest in his copyrights,” he could not have legally “signed away” his heirs’ future rights of termination. “The heirs’ right to terminate under the Copyright Act preempts Cher’s state law breach of contract claim,” Mary’s lawyers wrote. “Therefore, her claim fails.”
In opposing the motion, Cher conceded that Sonny’s heirs had every right to terminate his prior copyright grants, but argued that doing so didn’t relieve Mary of the contractual obligation to continue paying Cher’s royalty interest from the future exploitation of the compositions. Cher’s lawyers argued that copyright termination only affects rights that arise under the Copyright Act, while Cher’s royalty interests arise from the MSA. They also pointed out that the copyright termination statute expressly excludes “rights arising under any . . . state laws” from its scope.
The court’s ruling rests on a distinction between the MSA’s treatment of “Record Royalties,” which flowed from particular master recording agreements with Sonny’s record labels, and “Composition Royalties,” which were perpetual and not tied to any specific agreement.
Record Royalties
As to the Record Royalties, the court held that “these royalties are only relevant if the agreements with the record companies remain in force,” and that the “practical effect of the termination notice is that [Cher] no longer receives royalties for the copyright grants that no longer exist.”
This makes sense as a matter of logic. As I noted in my earlier article, if the MSA only entitled Cher to royalties generated from a specific copyright license, it stands to reason that she would stop receiving royalties if that particular license were terminated. As the same result would also occur if the pertinent license simply expired, the court’s conclusion really doesn’t appear to hinge on any unique aspect of copyright law.
In fact, it’s not clear that Record Royalties are even implicated by Cher’s lawsuit. Based on my quick review of Copyright Office records, the termination notice served by Sonny Bono’s heirs in 2016 looks to be directed solely at his publishing agreements, not any master recording agreements. In addition, Cher’s complaint only references copyright termination in the context of Composition Royalties. Indeed, in granting Mary Bono’s motion to dismiss as to the Record Royalties, the Court granted Cher leave to amend her complaint, expressly noting that “it is possible that Plaintiff could plead additional facts to show . . . that the Record Royalties are not based on the now-terminated agreements.”
Composition Royalties
The Court’s more impactful ruling is with respect to the Composition Royalties, which, per the parties’ MSA, apply to “all agreements with third parties” for the exploitation of Sonny’s musical compositions, from all sources, in perpetuity. The Court ruled that “On their face, these provisions would not fail simply because Sonny’s heirs have terminated his agreements with certain record companies.”
The court concluded that “Because Plaintiff’s rights are linked to the musical compositions themselves and to Sonny’s corresponding property interests, with respect to the allegations in the Complaint, the termination notices at issue do not affect the Composition Royalties.”
The court left open the possibility that Mary Bono could present evidence as to the meaning of MSA provisions dealing with Composition Royalties, and therefore didn’t rule on the merits. That said, the plain language of the MSA seems to clearly provide that Cher is entitled to share in composition royalties regardless of when or how they’re generated, so the court’s rejection of Mary Bono’s argument tips the scales decidedly in Cher’s favor.
The Bottom Line
The court’s ruling largely sidesteps some of the thornier conflict preemption issues and avoids a conclusive determination of whether the right to receive royalties is a right that “arises under a copyright.” The judge didn’t appear persuaded by the argument advanced by Cher that contractual royalty rights could never be affected by copyright termination.
Nevertheless, the court found that Cher’s right to Composition Royalties was not extinguished by the Bono heirs’ termination notices in this case, as “[t]he Composition Royalties appear to arise solely from the MSA.” The court also noted that the termination notices couldn’t have directly terminated the MSA, as they were served under the termination statute applying to pre-1978 assignments, while the MSA was executed on August 10, 1978. The bottom line is that assuming the court doesn’t change its mind later, it looks like Mary Bono is going to have to share with Cher.
And at least for now, the beat—and the case—go on.
As always, I’d love to know what you think. Let me know in the comments below or @copyrightlately on social media.
Something’s off here. Mary Bono served the notices of termination on the publishers, not on Cher?
Then whether or not Bono is still obligated to pay royalties is governed by their agreement. It’s contract interpretation. Not the Copyright Act. What difference would it make that the MSA was executed in 1978? That’s not the agreement she’s terminating.
It’s late. I have to read this again in the morning.
Correct Mark – no termination notices served on Cher, just the publishers. The issue of whether Mary needs to pay should be governed by ordinary rules of contract interpretation, unless the judge were to rule that the MSA is somehow an agreement to the contrary or on some sort of preemption ground — which he doesn’t appear inclined to do.
Aaron, I’m getting back this, as this dispute edges closer to trial.
The court’s decision on the motion to dismiss seems right to me, and not as complicated an issue as I initially anticipated. If Mary Bono wants to stop the payments to Cher, she’d have to file a separate termination notice under 203 directly to Cher. But Mary Bono would still lose if Cher challenged the termination, with the 2nd Circuit Merrill decision as precedent.
My question is well over a year since your original post. Not sure of a reply. If Cher will continue to receive 50 percent of Sonny’s compositions while they were married, will that continue on to her heirs or will it cease because the agreement is solely with her? Thanks.
Cher recently sold her right to composition royalties under the Marital Settlement Agreement – per a declaration that Cher submitted in the litigation, the court’s decision as to whether the composition royalty stream was cut off by Mary Bono’s copyright termination notice will affect the value of the property she assigned to the buyer and what she receives in exchange.
5 comments
Something’s off here. Mary Bono served the notices of termination on the publishers, not on Cher?
Then whether or not Bono is still obligated to pay royalties is governed by their agreement. It’s contract interpretation. Not the Copyright Act. What difference would it make that the MSA was executed in 1978? That’s not the agreement she’s terminating.
It’s late. I have to read this again in the morning.
Correct Mark – no termination notices served on Cher, just the publishers. The issue of whether Mary needs to pay should be governed by ordinary rules of contract interpretation, unless the judge were to rule that the MSA is somehow an agreement to the contrary or on some sort of preemption ground — which he doesn’t appear inclined to do.
Aaron, I’m getting back this, as this dispute edges closer to trial.
The court’s decision on the motion to dismiss seems right to me, and not as complicated an issue as I initially anticipated. If Mary Bono wants to stop the payments to Cher, she’d have to file a separate termination notice under 203 directly to Cher. But Mary Bono would still lose if Cher challenged the termination, with the 2nd Circuit Merrill decision as precedent.
My question is well over a year since your original post. Not sure of a reply. If Cher will continue to receive 50 percent of Sonny’s compositions while they were married, will that continue on to her heirs or will it cease because the agreement is solely with her? Thanks.
Cher recently sold her right to composition royalties under the Marital Settlement Agreement – per a declaration that Cher submitted in the litigation, the court’s decision as to whether the composition royalty stream was cut off by Mary Bono’s copyright termination notice will affect the value of the property she assigned to the buyer and what she receives in exchange.