On Thursday, the 2nd Circuit Court of Appeals ruled that rights to "Santa Claus is Coming to Town," the all-time most performed holiday song, will revert to the heirs of J. Fred Coots.

Coots, along with fellow songwriter Haven Gillespie, wrote the song in 1934 and made a deal with Leo Feist, who ran a publishing company that was eventually acquired by EMI.

If it was not for copyright term extensions, "Santa Claus is Coming to Town" would be in the public domain, which would come as a relief to the many musicians including Bruce Springsteen, Destiny's Child, Green Day, Justin Bieber, Lynyrd Skynyrd, and the Beach Boys who have made versions and pay royalties.

But thanks to amendments to copyright law, the song will be protected until 2029. This case involves who benefits from that longer copyright term. In 1976, Congress allowed authors or their heirs to terminate copyright grants to publishers after 35 years of the original publishing.

During the long history of "Santa Claus is Coming to Town," Coots' family and EMI's predecessors made various agreements with each other. In particular, Coots granted renewal rights in 1951 and made a $100,000 rights deal in 1981 that allowed the publisher to continue to exploit the song.

That latter 1981 deal came after Coots attempted a termination, but the notice was never officially recorded. In the face of a new termination notice, EMI argued that the 1951 agreement remained operative and that under the 1976 Copyright Act, the Coots heirs couldn't terminate the renewal period of a pre-78 grant. At the district court, the publisher prevailed.

The challenge for the 2nd Circuit was deciding whether EMI owned rights under the 1951 agreement or the 1981 agreement.

In reversing the district court's decision, 2nd Circuit judge Debra Ann Livingston rules that the later agreement is most important — that the "1981 Agreement made it sufficiently clear that the parties intended to replace the earlier contract." Further, she writes in her opinion that Coots's failure to record a termination notice in 1981 is "irrelevant," and that's what's most essential is that EMI's rights flowed from the 1981 agreement.

As such, because this is a post-1978 copyright grant, the Coots heirs are able to enjoy the fruits of the extended copyright term on the holiday classic. The 2nd Circuit finds a 2007 termination notice to be valid, which will mean EMI loses rights in 2016.