I don't know that I'd call this "a lawsuit for the ages," like the New York Times does. But that's mainly because around here that title is reserved for the four-year struggle over a $65 million legal claim that the plaintiff called a "public interest lawsuit by a private attorney general" but the court called "a personal vendetta against a dry cleaners over a pair of pants." So the bar is pretty high.
But a copyright lawsuit claiming that "Happy Birthday to You," arguably the most recognized and most-often-performed song in the English language and possibly in any language, is actually in the public domain could definitely be in the same ballpark as the Pants Suit.
You deadbeats who have singing this thing every year without paying a dime are mostly in the clear, because non-commercial uses of "Happy Birthday" would be considered "fair use." So you won't need to argue, as most people probably would, that you had no idea "Happy Birthday" was copyrighted and that can't possibly be right, can it? The fact is that millions of dollars in "Happy Birthday" royalties have been paid over the years, pursuant to a copyright currently claimed by Warner/Chappell, a subsidiary of Warner Music Group. The royalty apparently varies, but the NYT says that the use of the song in the movie "Hoop Dreams" cost the filmmaker $5,000.
The complaint (linked in this Billboard article) was filed by another filmmaker who is making a documentary about "Happy Birthday"—tentatively titled "Happy Birthday"—and argues that in fact the song has been in the public domain for a long time. The suit seeks a declaration saying so, as well as an order that Warner/Chappell refund all the fees it has collected on the thing over the past four years (maybe $8-10 million). It's a class action, so if you have paid royalties for "Happy Birthday," this might be good news for you.
The history behind the song, and the relevant legal arguments, are set forth exhaustively in this excellent 2010 article by Robert Brauneis (PDF) a law professor at George Washington University. It's a really interesting read even—maybe especially—if you are only interested in the history. It explains that the song was written for kindergarten students by two sisters in the late 19th century. Originally it was called "Good Morning to All," and was first published in 1893. The words were different, obviously, but the melody was the same (each can get separate copyright treatment). At some point, the lyrics mutated to the familiar "happy birthday" ones, and Brauneis says the old melody and the new words then formed a new work for copyright purposes. Who owns that, though, if anyone, is not clear. To cut to the chase, Brauneis concludes in his article that the song has probably been in the public domain since 1963 at the latest.
This could be a problem for Warner/Chappell, who has been collecting an estimated $5,000 per day in royalties on the song for years. It charged the plaintiff $1,500 for using "Happy Birthday" in the new movie, which is the basis for standing in the new lawsuit. Plaintiff is seeking, first, a declaration under federal law that Warner/Chappell does not own the copyright, and also restitution of any fees paid, under both federal and state law. The state law, not at all surprisingly, is California's Unfair Competition Law.
Why is a case filed in New York alleging violation of a California law? Partly because Warner/Chappell is located in California, but also because, as I've mentioned before, the UCL is an extremely broad "consumer protection" statute (this is one of my practice areas), and that breadth is sometimes fine but also encourages utterly stupid lawsuits like the hopefully now infamous "Crunch Berries" case. Here, this case is not stupid and the plaintiff may have a perfectly good copyright argument, but I'm having trouble seeing how the defendant has committed an "unfair, unlawful, or deceptive practice" (what the UCL prohibits) as long as it had an arguable claim to the copyright. Just because you assert a legal claim that a court later disagrees with doesn't mean you acted "deceptively." A bigger problem for the plaintiff, though, is that it has to show it relied on a deceptive practice when it paid the fee. If it paid the fee knowing there was a significant dispute over the copyright—possibly even planning to challenge the copyright—then the state claim should be dismissed.
In any event, the federal copyright claim is the real action here. If the plaintiff wins, everybody can sing "Happy Birthday" for free. If not, somebody will be collecting on it until at least 2030.