Key Takeaways
- • The Fifth Circuit held in Vetter v. Resnik (affirmed January 12, 2026) that U.S. copyright termination under Section 304(c) recaptures everything the original grant conveyed, including non-U.S. rights, overturning the music industry's long-held view that termination reaches only U.S. rights.
- • On October 19, 2026, the Supreme Court, with four Justices recused and no quorum, affirmed the Fifth Circuit judgment under 28 U.S.C. Section 2109 without reaching the merits, so the ruling sets no Supreme Court precedent.
- • The decision binds only federal courts in Louisiana, Mississippi and Texas, but a U.S. declaration of worldwide ownership does not by itself bind foreign courts, collecting societies or licensees.
- • Valuation models that assume foreign catalog income continues indefinitely after U.S. termination may need revisiting, with implications for M&A diligence, royalty securitizations and secured lending.
- • Termination windows are now opening for large parts of 1980s and 1990s catalogs, and the issue may reach a circuit split in the Second or Ninth Circuits.
Summary
A Client Alert analysis addresses the consequences of Vetter v. Resnik for music rights holders. Copyright termination, or reversion, allows authors and heirs to terminate prior grants and recapture rights. Until recently, the industry understood that termination recaptured only U.S. rights, leaving grantees with foreign rights. That understanding shaped catalog valuations, acquisition structures and financings. In Vetter, the Fifth Circuit held on January 12, 2026 that because the 1963 worldwide assignment of "Double Shot (Of My Baby's Love)" was made under U.S. law, termination recaptures everything it conveyed, including non-U.S. rights. The "foreign laws" carve-out in Sections 203 and 304 protects only rights a grantee obtained under foreign law.
The case began when Vetter served a Section 304(c) notice in 2019, effective in 2022. Resnik Music Group conceded U.S. rights but claimed it still controlled the song abroad. The Middle District of Louisiana had granted summary judgment declaring Vetter and Vetter Communications worldwide owners of their respective interests. After the Fifth Circuit affirmed, Universal, Sony, Warner and BMG publishing arms acquired Resnik's interest for standing, were substituted as defendants and petitioned for certiorari on June 11, 2026, warning the decision would disrupt high-dollar industry agreements. On October 19, 2026, with four Justices recused, the Court affirmed under 28 U.S.C. Section 2109. That outcome sets no precedent, and the Fifth Circuit opinion binds only federal courts in Louisiana, Mississippi and Texas.
The analysis outlines impacts across the market. For authors, the ruling may increase the value of termination rights, particularly where foreign income is a large share of catalog revenue, though grant prices may fall if grantees expect to lose foreign rights. Authors may prefer the Fifth Circuit forum while grantees may race to file elsewhere. For rights holders, buyers may broaden diligence to cover the territorial scope of original grants and nexus to the Fifth Circuit, and consider indemnities, escrows and price adjustments, although the "notwithstanding any agreement to the contrary" language limits contractual protection. Royalty securitizations may see shortened expected lives for foreign cash flows, prompting review of chain-of-title representations, substitution and repurchase mechanics, eligibility criteria and risk disclosures, as well as possible triggers for performance tests or early amortization. Lenders should assess borrowing-base treatment of terminable works and notice covenants.
The authors note that termination rights cannot be waived by contract, and that foreign enforcement will depend on local law and on whether foreign tribunals recognize the U.S. result. Developments to watch include shifts in transaction practices, test cases abroad, and further litigation in other circuits, particularly the Second and Ninth, where a circuit split would likely prompt another petition.
The case began when Vetter served a Section 304(c) notice in 2019, effective in 2022. Resnik Music Group conceded U.S. rights but claimed it still controlled the song abroad. The Middle District of Louisiana had granted summary judgment declaring Vetter and Vetter Communications worldwide owners of their respective interests. After the Fifth Circuit affirmed, Universal, Sony, Warner and BMG publishing arms acquired Resnik's interest for standing, were substituted as defendants and petitioned for certiorari on June 11, 2026, warning the decision would disrupt high-dollar industry agreements. On October 19, 2026, with four Justices recused, the Court affirmed under 28 U.S.C. Section 2109. That outcome sets no precedent, and the Fifth Circuit opinion binds only federal courts in Louisiana, Mississippi and Texas.
The analysis outlines impacts across the market. For authors, the ruling may increase the value of termination rights, particularly where foreign income is a large share of catalog revenue, though grant prices may fall if grantees expect to lose foreign rights. Authors may prefer the Fifth Circuit forum while grantees may race to file elsewhere. For rights holders, buyers may broaden diligence to cover the territorial scope of original grants and nexus to the Fifth Circuit, and consider indemnities, escrows and price adjustments, although the "notwithstanding any agreement to the contrary" language limits contractual protection. Royalty securitizations may see shortened expected lives for foreign cash flows, prompting review of chain-of-title representations, substitution and repurchase mechanics, eligibility criteria and risk disclosures, as well as possible triggers for performance tests or early amortization. Lenders should assess borrowing-base treatment of terminable works and notice covenants.
The authors note that termination rights cannot be waived by contract, and that foreign enforcement will depend on local law and on whether foreign tribunals recognize the U.S. result. Developments to watch include shifts in transaction practices, test cases abroad, and further litigation in other circuits, particularly the Second and Ninth, where a circuit split would likely prompt another petition.
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