Tuesday, July 15, 2014

The Intersection of Copyright Law and Collection Law or Bow Wow Wow Yippee Yo Yippee Yea Part 2

One could create an entire law school curriculum on the legal battles of George Clinton.  The latest reported case from the United States Court of Appeals for the Ninth Circuit illustrates the unique relationship between entertainment law, copyright law and creditor's rights.

            Apparently George Clinton owed his former lawyers, Hendricks & Lewis over 1.7 million dollars in legal fees.  The firm sued Clinton, received a judgment and was able to convince the trial court to appoint a receiver and take custody of four of Clinton's iconic master recordings including "The Electric Spanking of War Babies" and "One Nation Under A Groove" for the purpose of maximizing "the income stream from the Funkadelic master sound recordings without selling or otherwise permanently disposing of the copyrights".  (Note that this is different from the initial press reports that seemed to indicate that the law firm ended up with ownership of the masters).  The goal apparently is for the receiver to exploit the recordings, pay the judgment creditor and then return the masters to Clinton.

            The copyright portion of the case is fascinating.  Clinton signed the typical recording agreement with Warner Brothers in 1975 acknowledging that the records were "works made for hire" or alternatively agreeing that he had assigned all rights in the recordings to the label.  Warner Brothers in turn reassigned the recordings to Clinton in 1993. 

            Clinton argued that the assignment of his recordings by the Court to the receiver violated Section 201(e) to the Copyright Act which prevents authors from "involuntary transfers" of their copyrights.  However Section 201(e) clearly states that it only applies "when an individual author's ownership of a copyright or of any of the exclusive rights under a copyright has not been previously transferred voluntarily by that individual author."  By the terms of the Warner Brothers agreement Clinton was either not the original "author" of the sound recording or being the original author he voluntarily assigned his rights to the record company, thereby losing the protections of Section 201(e). 

            The case is primarily relevant  because it establishes the important point that in some instances copyrights can be subject to execution to satisfy judgments and that although copyright is in the  exclusive domain of federal law the courts will look to state law to interpret how the execution will proceed from state to state.  This is important to both collection lawyers and to artists and writers and other copyright owners seeking to protect their copyrights in the event of litigation.

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