On 19 October 2026, the US Supreme Court left one of the music industry’s most consequential questions unanswered. Justices Sotomayor, Gorsuch, Barrett and Jackson took no part in BMG Rights Management (US) LLC v Vetter (No. 25‑1391), a petition brought by BMG and the major music publishers, leaving the Court without the quorum needed to decide the appeal. No reasons were given for their non-participation. However, it has since been reported that Bertelsmann, which owns BMG, also owns Penguin Random House, publisher of books by each of the four justices. Unable to hear the case, the Court left the lower court's judgment in place, without any ruling on the merits.
That leaves open an important question that every catalogue owner and investor needs answered: when a songwriter terminates an old copyright grant, do they recover US rights only, or rights worldwide? The case is over, but the question is not.
The background in brief
In 1963, Cyril Vetter granted Windsong Music Publishers the worldwide rights in 'Double Shot (Of My Baby's Love)', for just $1 and the promise of royalties. Section 304(c) of the US Copyright Act (the “Act”) allows authors of pre‑1978 works to terminate such grants during a five‑year window beginning 56 years after copyright was secured, and Vetter served notice to do so. In January 2026, the Fifth Circuit Court of Appeals held that his termination recovered his rights worldwide, not just in the US. That cuts across the long‑standing industry assumption that termination returns US rights only, and the publisher keeps the rest of the world. The point turns on the statutory wording that termination "affects only those rights covered by the grant that arise under this title”. BMG, along with the publishing arms of Warner, Sony and Universal then acquired the interest of the defendant, Resnik Music Group (Windsong's successor), to seek Supreme Court review.
It is important to be clear about what the Supreme Court's order does and does not do. It does not endorse the Fifth Circuit's reasoning, and it sets no precedent. The Fifth Circuit ruling binds federal courts in Louisiana, Mississippi and Texas; appeal courts across the rest of the US are free to take a different view. This remains a "watch this space" moment, not a settled position.
Why it matters commercially
Catalogue value rests on knowing what is owned, where, and for how long. Music rights are licensed through networks of sub-publishers, administrators and digital services that all depend on knowing who owns which territory. Because global rights carry significant value, any question mark over who owns those rights is also a pricing problem, not just a legal one.
In practice, legal uncertainty in this market rarely shows up in the courtroom first. It tends to surface in negotiations, requests for additional warranties, more cautious pricing of non‑US income, and closer questioning of chain of title. Views differ on how far the Fifth Circuit's decision could affect current market practice. For deal teams, though, the more useful question is not who is right, but how to transact sensibly while the point remains open.
Valuation: test the assumption, don't abandon it
Perhaps the right response is not to rewrite existing catalogue valuation models but to stress‑test them. Where a catalogue includes older grants capable of termination, buyers should ask how much of its value depends on non‑US income, and how that value would hold up if that income proved less secure. Any model that assumes worldwide income through to copyright expiry for older US grants is now making a legal assumption, not just a commercial one, and that assumption deserves its own line in the valuation.
For lenders, the question is simple to state and harder to answer: will the collateral still be there when the loan falls due? Where termination windows open during the life of a facility, tenor, borrowing base and covenants should be set with those dates in view.
Section 304(c) of the Act is, in one sense, a transitional regime. Although it remains in force, its practical significance will diminish as the pool of pre-1978 grants capable of termination continues to shrink. That does not mean the issue disappears. Identical statutory language appears in section 203, which permits termination of post-1978 grants after 35 years. The specific question raised in Vetter may therefore continue to have significance beyond the shrinking pool of section 304(c) grants. Until the position is settled, parties should address expressly in their transaction documents the possibility of termination claims affecting rights outside the United States.
Due diligence: questions for the data room
For buyers of catalogues and royalty income, this does not call for a new due diligence process so much as a sharper focus within the existing one. Pending further judicial guidance, it may be worth giving particular attention to the following:
- Grant dates and authorship. These determine whether, and when, termination windows open.
- Notices already served. This includes any "supplemental" notices that claim to reach foreign rights.
- Previous settlements. Check whether earlier deals expressly dealt with territory.
- The seller's own title. For buyers of royalty income from songwriters, producers and artists, check whether the seller's rights come from older grants that can be terminated, and price that risk explicitly.
This is not only an American question. Many catalogues traded in the UK were built on grants made to or through US publishers, and an English governing law clause will not necessarily take a grant outside the reach of a US termination right. UK sellers should expect sharper questions in diligence, and UK buyers should be asking them.
Possible opportunities
For writers and estates, the ruling raises a practical question about what can be recaptured, and where. Understanding the dates and documents is the first step; if reversion becomes more common, the commercial opportunities could include:
- Services for creators. Creators recovering rights will need administration, financing and promotion. Reverted rights are often under-registered, so proper re-registration alone can unlock income without a single new licence.
- Renegotiation. The uncertainty may prompt some grantees to renegotiate with writers now, rather than live with an open question over who owns what.
- New deal flow. Reversion is a re-pricing event, not just a risk. For administrators, funders and rights acquirers, that could mean a new source of deals with creators, provided those deals are structured to work whichever way the territorial question is eventually resolved.
Practical takeaways
- Look for opportunity. Consider whether reverted rights could create future acquisition, administration or financing partnerships.
- Assess termination risk in due diligence. Map grant dates, notices served and the territorial terms of past settlements.
- Draft for both outcomes. Use warranties, indemnities, price adjustments or escrow so that deals work whether termination is ultimately held to be US‑only or worldwide.
Until the territorial reach of termination is settled, the safest assumption is that it remains open. For anyone buying, financing or licensing music rights, that is reason enough to revisit how rights outside the US are being valued, documented and protected.
