Fred Ahlert Music Corp. v. Warner/Chappell Music, Inc.

Dixon and Henderson coauthored the song “Bye Bye Blackbird” (song). In 1953, each author assigned their interest in the song to Remick Music Corporation, the predecessor-in-interest to Warner/Chappell Music, Inc. (Warner) (defendant). In 1956, Dixon died. In 1969, Warner granted a mechanical license to A&M Records to produce a phonorecord of the song with Joe Crocker (the derivative song) and release it as “Record No. SP 4182.” In 1982, Dixon’s heirs terminated Dixon’s assignment to Remick and the domestic rights in the song reverted to Dixon’s heirs. In 1986, Dixon’s heirs assigned their song interest to Fred Ahlert Music Corp. (Ahlert) (plaintiff). In 1993, Warner issued a synchronization and performance license to Tri-Star Pictures, Inc. (TriStar) to use the song on the Sleepless in Seattle soundtrack, and Ahlert issued a synchronization and performance license to TriStar for identical uses of the song. Warner’s license granted foreign rights; Ahlert’s license granted domestic rights. Ahlert then issued a mechanical license to TriStar’s affiliate, Sony Music Entertainment, Inc. (Sony), for use of the song, as embodied in the derivative song, on the Sleepless in Seattle soundtrack album. Ahlert’s agent cancelled and reissued the mechanical license on Warner’s behalf after Warner asserted it retained all rights derived from uses of the derivative song, including mechanical royalties earned from uses of the song, on the Sleepless in Seattle soundtrack album. Sony thereafter paid all royalties to Warner from sales of the Sleepless in Seattle soundtrack album. In 1996, Ahlert sued, arguing Warner had no rights pertaining to the use of the derivative song on the Sleepless in Seattle soundtrack or on the soundtrack album because those uses were not authorized under the terms of the grant and therefore did not fall within the derivative-works exception of § 304 of the Copyright Act.