With Damon Dash Roc-A-Fella Auction Looming, Can Jay-Z Take Back Rights To ‘Reasonable Doubt’?

Attorneys for Jay-Z are now sparring with lawyers for New York City over whether he can use copyright termination to retake control of his debut album Reasonable Doubt – a crucial question ahead of court-ordered auction of Roc-A-Fella Records co-founder Damon Dash’s one-third stake in the label.

The city’s child services agency, which wants to collect the more than $193,000 that Dash owes in unpaid child support, warned a federal judge in court filings last week that Jay-Z was using “false” threats of an approaching termination to drive down the price of Dash’s stake in his company.

“Jay-Z’s statements to the press have poisoned the environment for the auction,” wrote Gerald Singleton, an attorney for the city. “Those statements are false and extremely damaging to the City’s interests in ensuring that the auction will generate sufficient funds to satisfy all existing child support arrearages and secure future child support payments.”

But on Monday, longtime Jay-Z lawyer Alex Spiro fired right back on behalf of Roc-A-Fella, saying neither the rapper nor his company had issued any such statements and that there was “no merit to NYC’s accusations.” But he also confirmed that Jay-Z was in fact seeking to use termination to take back the album, Reasonable Doubt, in 2031 – and that prospective buyers could make up their own minds about what that means.

“Potential bidders have every right to assess whether they believe the notice of termination would be effective in 2031,” Spiro told the judge.

As early as next month, the U.S. Marshals Service will sell off Dash’s 33.3% interest in Roc-A-Fella Inc., an entity whose only real asset is the sound recording copyright to Reasonable Doubt. Though the court-ordered auction was originally intended to pay off an $823,000 judgment in a civil lawsuit, New York City jumped into the case over Dash’s child support debt. The state of New York later did the same, claiming Dash owes more than $8.7 million in back taxes and penalties.

The owners of the other two-thirds of Roc-A-Fella — label co-founders Jay-Z (Shawn Carter) and Kareem “Biggs” Burke — have already attempted to stop the auction, including making changes to the company’s bylaws and intervening in the lawsuit. But a federal judge rejected such opposition in February, and the sale could take place as early as Oct. 21.

As the auction approaches, a minimum purchase price has been set at $3 million. But it has remained unclear what exactly a potential winner would be buying.

Streaming and other royalties from Reasonable Doubt would likely provide a buyer with a revenue stream; since its 1996 release, the album has racked up 2.2 million equivalent album units in the U.S., according to Luminate, including 21,500 units so far this year. But the eventual buyer also would be a minority owner in a company controlled by hostile partners, with little ability to perform typical due diligence on the asset they’re about to purchase.

Another key question mark for buyers – and the source of this week’s dispute with NYC – is just how long Roc-A-Fella will continue to own its only real asset.

The termination right, a provision created by congress in the 1970s, empowers authors to reclaim ownership of copyrighted works decades after selling them away. If Jay is eligible for it, termination would allow him to win back the rights to his sound recording of Reasonable Doubt roughly 35 years after he released the album, meaning 2031.

But in their court filing on Friday, attorneys for New York City child services said Jay-Z was not, in fact, eligible for termination. They argued that he had created the album as so-called “work for hire” under a written contract with Roc-A-Fella – meaning the company had always been the legal owner of the copyright, and there were no rights to Jay to take back in the first place.

“He has claimed that he has a termination right under the Copyright Act and that the rights to Reasonable Doubt will revert to him in six years,” wrote Singleton, the NYC attorney. “In fact, he has no such termination right and RAF is entitled to the renewal term [and] will own the copyright rights until the year 2098.”

To address the problem, the city asked the judge to issue a definitive ruling on whether Jay-Z is eligible for termination – and to postpone the auction until he does so.

But in his response Monday, Spiro argued that the city “has no right to seek such a ruling.” He said the demand was premature, since Jay-Z will not formally take back the album until 2031, and that a city agency had no legal standing to raise such questions in court.

“Put simply, this is not the appropriate time, forum, or case to litigate any issues relating to Jay-Z’s notice of termination,” Spiro wrote. “This Court should therefore reject NYC’s request for an impermissible advisory opinion as to the effectiveness of Jay-Z’s notice of termination.”

Related Images: