Members of the rap group 2 Live Crew, including Mark Ross, created five albums between 1986 and 1989. Through a written agreement, the group assigned the sound recording copyrights to Luke Records, a company owned by one of the group’s members. In 1995, following Luke Records’ bankruptcy, these copyrights were sold to Lil’ Joe Records. In 2000, Mark Ross filed for Chapter 7 bankruptcy; his termination interests in these copyrights were never listed or addressed in his bankruptcy proceedings. Years later, within the statutory window, Ross, another group member, and heirs of a third served a notice attempting to terminate the copyright grants to Luke Records, as permitted by the Copyright Act.

The United States District Court for the Southern District of Florida initially concluded that Ross’s termination interests did not enter his bankruptcy estate, interpreting the Copyright Act and Bankruptcy Code to exclude them. The court denied both parties’ motions for summary judgment on the effectiveness of the termination notice, and the case proceeded to trial. After the jury’s factual findings, the district court concluded the termination notice was valid. Lil’ Joe Records appealed the district court’s final judgment, the denial of its motion for summary judgment, and the denial of its motion for reconsideration.

The United States Court of Appeals for the Eleventh Circuit held that Ross’s termination interests were property of his bankruptcy estate under the Bankruptcy Code, notwithstanding the Copyright Act’s inalienability restriction. Because these interests were never scheduled or administered by the bankruptcy court, they remained with the bankruptcy estate when Ross attempted to exercise them. As a result, Ross could not validly sign the termination notice, and the group did not have the required majority to terminate the copyright grants. The Eleventh Circuit reversed the district court’s judgment and remanded the case for further proceedings. View “Lil’ Joe Records, Inc. v. Won” on Justia Law