IP Law Daily, COPYRIGHT—9th Cir.: Religious organization validly terminated copyright license granted by its late founder, (Feb 4, 2025)

By Thomas Long, J.D.

Although the founder had granted unrestricted rights to a church member to distribute his teachings, he bequeathed the copyrights to the organization when he died, and the organization was permitted under state law to terminate the license at will.

A nonprofit religious organization will have a chance to show that a former member infringed copyrights owned by the organization when he uploaded teachings by the organization’s founder and spiritual leader after the termination of a license agreement. According to the U.S. Court of Appeals for the Ninth Circuit, the organization validly terminated the license in a 2001 letter, approximately two years after the founder’s death, meaning that any continued posting of the copyrighted materials to websites could constitute copyright infringement. A district court that dismissed the organization’s copyright claims improperly applied conditions contained in the Copyright Act’s rights-transfer termination provision, Section 203, 17 U.S.C. § 203, in determining that the license had not been effectively terminated. Section 203’s conditions, the appellate court explained, apply only to statutory heirs, whereas the organization had obtained its founder’s copyrights via will. The appellate court affirmed findings that the organization did not own the materials from the outset as works made for hire; that the founder retained copyrights in them as their author; and that the founder had validly granted a license in 1985 to the former member to use the works without restriction. The case was remanded for further proceedings regarding possible liability for infringement after the termination of the license (Aquarian Foundation, Inc. v. Lowndes, No. 22-35704 (9th Cir. Feb. 3, 2025)).

Keith Milton Rhinehart founded the Aquarian Foundation, a nonprofit religious organization, in 1955. Rhinehart died in 1999 and bequeathed his estate to Aquarian via will. At issue in this case were 177 manuscripts, sound recordings, and audiovisual materials created by Rhinehart, with copyrights registered between 1958 and 2007, along with 44 of what Aquarian claimed to be “proprietary works” for the church and its members. Aquarian filed suit against Bruce Lowndes after learning that he had uploaded copyrighted works by Rhinehart to various websites. Lowndes has been an active member of Aquarian from the 1970s until 1997.

At trial, the district court determined that Rhinehart had transferred rights to use the works in a license granted to Lowndes in 1985. Although Rhinehart’s copyrights passed to Aquarian under the will, the district court concluded that Aquarian failed to properly terminate the license in a letter to Lowndes in May 2001. Therefore, the district court dismissed the copyright infringement claims. Both sides appealed various aspects of the district court’s judgment. The primary issue before the appellate court was ownership of the relevant copyrighted works.

Authorship. Rhinehart did not write the teachings as works made for hire, the Ninth Circuit held, affirming the district court. Although part of Rhinehart’s role with Aquarian was that of an employee, the many pamphlets, sermons, lectures, and other religious materials created by Rhinehart in the 1970s and 1980s were almost entirely registered only in his name, with just two works jointly registered in the names of Rhinehart and Aquarian. The registration certificates naming Rhinehart as sole author were themselves evidence that the materials were not works for hire. Aquarian’s current president and ecclesiastic head stated in a declaration that copyrights to all published and unpublished works were to be registered in only Rhinehart’s name while he was alive. The reason for this practice was, according to Aquarian’s president, to preserve Rhinehart’s discretion as author of the materials. There was no testimony contradicting this statement, which strongly suggested that Rhinehart was not merely a traditional employee or functionary, in the appellate court’s view. Rather, the evidence showed that there was a nonhierarchical relationship between Aquarian and Rhinehart. This foreclosed a finding that the works made prior to 1978 met the works-for-hire test under the 1909 Copyright Act. Nor did the later works meet the test in the 1976 Act. The Ninth Circuit explained that “nothing in the record indicates that the composition, recording, and discretionary publication of spiritual teachings were work typically expected of his designated employment as ‘secretary of the board’ or ‘president’ at the organization.” Therefore, the copyright initially vested in Rhinehart, not Aquarian.

Transfer of ownership. The appellate court also agreed with the district court that the evidence showed that Rhinehart transferred the works to Aquarian by will after his death in 1999. There was, the Ninth Circuit explained, “ample evidence that Rhinehart’s copyrights were properly bequeathed and distributed to Aquarian as the sole beneficiary named in the will.” Therefore, Aquarian became the owner of the copyrights after Rhinehart’s death.

Licensing agreement. The appellate court turned to the question of the validity of the 1985 license that Rhinehart granted to Lowndes. The court rejected Aquarian’s argument that Rhinehart lacked the authority to execute the license without the church board’s approval. Rhinehart was the owner of the copyrights in 1985; he, and not the board members, had the authority to grant the license to Lowndes. The Ninth Circuit also rejected the argument that Lowndes breached the license by posting the works online. The agreement’s plain language anticipated “a coming World Wide Network” and granted Lowndes permission to use the copyrighted materials “without restriction.”

Termination of license. The Ninth Circuit reversed, however, the district court’s determination that, under 17 U.S.C. § 203(a), Aquarian did not terminate the license in a May 7, 2021, letter from the church’s counsel. Section 203 provides that authors or their statutory heirs may terminate a license agreement of unspecified duration 35 years from the date of execution, subject to certain conditions. The Ninth Circuit had held that Section 203 preempted state contract law and prevented owners of the termination interest from ending licenses before the passage of 35 years. However, the Ninth Circuit pointed out that Section 203’s termination requirements were limited to authors and statutory heirs. Aquarian was not a statutory heir, having acquired the copyrights by will. The Copyright Act did not address the termination rights of non-statutory heirs, leaving the question up to state law. The law of the potentially relevant states—Colorado and Washington—provided that contracts of unspecified duration are terminable at will. Because the license termination was valid, Aquarian could prevail on its claim for infringement for any continued uses by Lowndes after the termination. The Ninth Circuit therefore remanded the case for further proceedings concerning any infringement that may have occurred after license termination. The district court also was directed to revisit the issues of injunctive relief and attorney fees under the Copyright Act.

The case is No. 22-35704.

Judge: McKeown, M.

Attorneys: Tim J. Billick (TBillick Law PLLC) for Aquarian Foundation, Inc. Bradley S. Wolf (Bauman & Wolf PLLC) for Bruce Kimberly Lowndes, a/k/a Sankacharya Sunkara.

Companies: Aquarian Foundation, Inc.

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