On July 9, 2024, the U.S. Copyright Office published a final rule regarding termination rights under the Music Modernization Act (“MMA”), almost two years after the Copyright Office issued a notice of proposed rulemaking. The rule took effect on August 8, 2024.

Under specific circumstances, the Copyright Act permits authors of songs (or their heirs) to terminate grants of copyright. However, when derivative works (e.g., translations, medleys, remixes) authorized by the original author are prepared before termination of those grants, the Act also excepts those derivative works from the right to terminate. The MMA authorized the Mechanical Licensing Collective (“MLC”) as the only entity responsible for administering compulsory blanket licenses and distributing royalties. As explained by the Authors Alliance, this created a discrepancy: “as long as a publisher had actively licensed the work and used it at least once before the termination date, the publisher would forever receive royalties from the MLC, and not the creator who terminated rights.”

In issuing its new rule, the Copyright Office notes that “the copyright owner who is entitled to blanket license royalties is the owner at the time a musical work is used by a digital music provider, and not necessarily the owner at the time the MLC makes a royalty distribution.” This confirms that the termination exception does not apply to blanket licenses and requires the MLC to correct previous overpayments made based on what the Copyright Office considered a conflicting set of rules. The MLC will administer “corrective adjustments” by notifying pre- and post-termination parties and encouraging them to resolve adjustments with each other. Otherwise, the MLC will mandate the appropriate corrective actions itself.

This clarifying rule has widely been considered a victory for songwriters as copyright law continues to attempt to evolve with exponentially advancing technology in the music industry.

For our three-part series about the Music Modernization Act, please visit:

• Part One: Introduction and Glossary

• Part Two: Guide for Digital Music Providers

• Part Three: Guide for Copyright Owners