Termination of Assignments in Sound Recordings, Works Made for Hire and The Need For Certainty

We are all looking for certainty in a world full of chaos.  One of the resources that I often turn to for reassurance is the 1976 Copyright Act, a roadmap to  a world where everything makes sense and if it doesn't make sense, at least it has a definition.  Except for Sections 203 and 302.

 

When the Copyright Act was amended in 1976, it provided for the first time for a termination provision which allowed authors to terminate earlier assignments of their works.  This right of termination is deemed inalienable (i.e. you can’t sign it away)  except in the case of a so-called "work made for hire," in which case the employer is deemed to be the author of the work for copyright purposes.  Like all important terms "work made for hire" is specifically defined by the Copyright Act: 

        (1) a work prepared by an employee within the scope of his or her employment; or

(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation , as an instructional text , as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. For the purpose of the foregoing sentence, a “supplementary work” is a work prepared for publication as a secondary adjunct to a work by another author for the purpose of introducing, concluding, illustrating, explaining, revising, commenting upon, or assisting in the use of the other work, such as forewords, afterwords, pictorial illustrations, maps, charts, tables, editorial notes, musical arrangements, answer material for tests, bibliographies, appendixes, and indexes, and an instructional text is a literary, pictorial, or graphic work prepared for publication and with the purpose of use in systematic instructional activities

Notice  that you don’t see the words “sound recordings”  in there. The big issue for years has been whether or not sound recordings can be deemed to be "works made for hire" and therefore, incapable of termination of assignment.  Every  recording agreement drafted after January 1, 1978 states that the sound recordings being assigned thereunder are, in fact, works made for hire.  But copyright practitioners have assumed that because the Copyright Act does not include sound recordings under the definition of works  made for hire, then they are no such animal.  The problem is that we have had no court decision on the issue-only anecdotal stories and rumors.  

That may be about to change. 

Recently, lawyers in New York have filed two class action lawsuits, one in which my friend, John Waite, is the lead plaintiff.  This is a suit against Universal Music Group.  There is a companion case filed against Sony which lists Southside Johnny as one of the lead plaintiffs.  In each case, the facts are similar.  The record artist sought to exercise their statutory termination rights only to be rebuffed by the record companies for a number of reasons.  

This caused the plaintiffs to seek declaratory relief from the court--  essentially asking the question "whether sound recordings can ever be considered 'works made for hire' as that term is defined by the Copyright Act because the definition set forth in Section 101 of the Copyright Act does not include sound recordings as being one of the types of works that can be a work made for hire."   and “whether the release of sound recordings that were created by a particular recording artist in "album" form, as is typical in the musical industry, constitutes a contribution to a collective work-or creates a "compilation" as that term is used in Section 101 of the Copyright Act, thereby transforming these sound recordings into "works make for hire".  

There are several important issues poised by these lawsuits but these are the most important.  I don't know the status of these cases but they appear to have major implications for the United States recording industry (it being understood that this is a function of U.S. Law and has no real application to the rest of the world).  I look forward to having a little more certainty and clarity on the issue regardless of the outcome.  

Clash Over Clash Cash

One is always running into the bizarre intersections of entertainment law and other areas of the law but here is a case I didn't know about.  Despite the fact that the Clash were one of my favorite bands ever (seeing them live in 1980 was life-changing) I did not know much about their history past the time they kicked Mick Jones out of the group. 

 Apparently sometime after the famous Bernie Rhodes quit managing the band, Paul Simonon's wife Tricia Ronane began to manage the group's affairs.  When the couple's divorce was resolved in 2010, she was awarded a 50 percent interest in Cut Throat Productions, Ltd., a company which controlled all of Simonon's Clash income.  Ms. Ronane recently went to court in London seeking permission to sell her interest in the venture to a British investment firm.  One of Ms. Ronane's major issues was that her ex-husband won't communicate with her – which could in fact make it difficult to co-manage whatever assets they jointly own and control.  

 It appears that the issue before the court was whether or not the divorce settlement allowed either party to sell their respective interest in the company – and the court concluded that such a sale was "inconsistent and incompatible" with the terms of the divorce settlement.

 These types of disputes arise all the time within closely held family businesses – be they involved with real estate, retail stores or the royalties fromLondon Calling and Sandinista. One can understand why the former band members would not want outsiders involved in their business dealings and it is ironic to think of British investment  bankers having a say in the Clash's business affairs. On the other hand, one can sympathize with Ms. Ronane; its usually impossible for former spouses to continue to work together running a business. It would be interesting to see the actual language contained in the divorce settlement agreement or to know what day-to-day responsibility Ms. Ronane and Mr. Simonon had to deal with within the Clash organization.  It would also be interesting to know what Joe Strummer would have to say about all of this.

A Release is a release is a release

I recently read an interesting article about the politicians and public figures who were lining up to sue Sacha Baron Cohen, the chameleon-like satirist behind "Da Ali G Show," "Borat," "Bruno," and recently "Who is America?"  Infamous political figures like Roy Moore, Sarah Palin and Dana Rohrbacher have either sued Cohen or  have threatened to sue him as a result of pranks he has pulled on them (from getting them to play with sex toys to having them advocate for the arming of small children).  As lawyers, we know that much of what Cohen does is protected by the First Amendment and that public figures have a higher bar than ordinary people in order to try to prove libel or slander.  However, Cohen's real safeguard is that according to an article in the New York Timeshe gets his "victims" to sign releases – acknowledging that they are agreeing to appear by their own free will.

As anyone who has ever read a release for a reality TV show or one of the myriad of competition shows can tell you, these documents are as comprehensive and exhaustive and usually give the producers the unbridled right to ridicule the participants and to show them in any type of light they wish.  These release documents exist in order to protect the producers and networks from liability;  they are an important part of the production process, and they are generally always effective.  Good filmmakers get releases from everybody and for everything. I am not sure what theory one can put forth to set aside a release, other than fraud.

  I was in court once representing a defendant who had been sued by a former business associate despite the fact that they had earlier settled this dispute and executed a complete mutual release.  The judge seemed to wonder why we were there and then dismissed the case saying "a release is a release is a release". I am not sure why politicians especially seem to get offended by satirical attacks after they have adopted polarizing opinions to try and get themselves elected.  But given the President's recent attacks on the First Amendment and at least one Supreme Court justice's apparent belief that our libel laws are without history or legal precedent, this is something we need to watch very carefully. In the interim, always get a release!

A Discourse on FUCT

The Supreme Court is hearing a number of interesting cases this term – not the least of which is the clothing manufacturer FUCT's case against the United States Patent and Trademark Office for its refusal to allow trademark registration of the mark FUCT (which is said to stand for "Friends You Can't Trust").  

  

I am pretty sure that I did some legal work back in the 1980s for a band called F.U.C.T .and I am glad they didn't ask me to try and register their trademark at that time.

  

 The current dispute has its roots in a federal law which has been on the books for over 100 years which allows the USPTO to refuse registration to marks which are "immoral, deceptive, or scandalous". The question appears to be whether or not this statute conflicts with the First Amendment.  Traditional understanding of trademark law was disturbed by the 2017 decision in Matal v. Tam which allowed trademark registration for the group name "The Slants", a case which according to the New York Times also effectively allowed registration for the Washington Redskins' previously vilified trademark).  It's actually kind of amazing to see examples of marks that have been allowed registration.  As every trademark practitioner knows dealing with the examiners at the Patent and Trademark Office and the attorneys at the Trademark Trial and Appeal Board can often be unpredictable.  The reality though is that society is probably evolved to the point where the majority of people would not find the trademark "FUCT" as offensive as they might have in the 1980s.  I am still trying to figure out  those French Connection United Kingdom jackets. This will be an interesting case to watch.  

Clarence Thomas, Donald Trump and New York Times v. Sullivan

Like so many Americans, I constantly find myself troubled by the current administration and its seemingly daily assault on our values.  However, I am usually confident that this is just an aberration and that the ship of state will ultimately right itself.  I don't spend a lot of time expressing my political opinions but this gave me a chill.   

In a concurring opinion this week Justice Clarence Thomas appears to advocate overturning New York Times v. Sullivan.  This landmark 1964 case held that in order for public figures to prevail in a libel case they must prove that a statement made against them was false, that it damaged their reputation and that the statements were made with actual malice (knowledge that the statements were false or made in reckless disregard for the truth).  New York Times v. Sullivan effectively ended the practice of politicians and other people in power using threats to stop the press from doing its job and citizens from seeking the truth.  

Freedom of the press is such a bedrock piece of American democracy that it is actually shocking to me that the concept can be questioned in 2019.  Most public figures and journalists working today have spent their entire careers understanding this principle.  Why then is Clarence Thomas taking issue with it?  He apparently believes that there is nothing in the First Amendment that should  limit the authority of individual states to protect the reputation of their citizens through designing their own libel and defamation laws.  Thomas states in his concurring opinion, "We did not begin meddling in this area until 1964, nearly 175 years after the First Amendment was ratified."  Thomas is flat out wrong.  Justice Brennan's opinion in New York Times v. Sullivanpainstakingly examines the precedent which allowed the justices to determine that many states' libel laws ran afoul of the First Amendment in  an opinion which went back to the writings of Madison and Jefferson.  

What is really terrifying about Thomas' remarks are that they come at the same time that President Trump tweets about wanting to sue theNew York Timesand the Washington Post"and win money" or complains that the government needs to get involved because he can't stand a satirical piece on Saturday Night Live.  These are really scary times and it is often comforting to take instruction from the past. All Americans should read the court's opinion in New York Times and Sullivan, especially its citation of Justice Brandeis' concurring opinion in Whitney v. Californiawherein he wrote

            Those who won our independence believed. . . that public discussion is a political duty, and that this should be a fundamental principle of the American government.  They recognized the risks to which all human institutions are subject.  But they knew that order cannot be secured merely through fear of punishment for its infractions; that it is hazardous to discourage thought, hope and imagination; that fear breeds repression; that repression breeds hate; that hate menaces stable government; that the path of safety lies in the opportunity to discuss freely supposed grievances and proposed remedies, and that the fitting remedy for evil counsels is good ones. Believing in the power of reason as applied through public discussion, they eschewed silence coerced by law. . the argument of force in its worst form.  Recognizing the occasional tyrannies of governing majorities, they amended the Constitution so that free speech and assembly should be guaranteed. 

I will take Brandeis over Clarence Thomas any day.  

Aretha, Prince and the Simple Need for Estate Planning

I was not especially surprised to learn that Aretha Franklin died without a will. It's becoming a common occurrence and  I sort of expected the Queen of Soul to live forever .I bet she did too.  I knew that Aretha was divorced and had four sons, all adults – so the division of her assets seemed straightforward to me.  But then I read that one of her sons might have special needs and that Ms. Franklin had a long-term companion whom she apparently made no provision for.  

 

I hate to say it  but this is irresponsible.  An artist like Aretha Franklin, with a sizable estate and a royalty income stream that will carry on for years should have had an estate plan – at the very least a simple will and a special needs trust if one was warranted.  As the New York Timesnoted , she could have set up a revocable trust, avoided the probate process and accomplished an ideal distribution of her property.  I have been reading a great deal about the Prince estate – he also died without a will – and it seems like his income is going to  lawyers and the IRS instead of his heirs (perhaps not having a surviving spouse or a living child he didn't care – who knows?). 

I am constantly preaching the need for estate planning and this is especially true for artists, songwriters, princes and queens.  Don’t put this stuff off. 

Gratitude

To My Clients:

I wanted to thank you for your continued support as I enter my 35th year of practicing law. I still remember driving down to the Board of Law Examiners on Church Street with my friend Ken Levitan  when they used to post the names of those who passed the Bar Exam  on a certain October day.  I think we were both a little surprised and very relieved. This is a very different business than the one I entered back in 1983 but I continue to be intrigued by the practice and the opportunity to be of service to my clients.

As a way of trying to show gratitude for the past thirty five  years of practice, I am offering  a complimentary document review for any of my clients who might want to review older contracts such as old record deals or  publishing agreements, licenses, trademarks – you name it.   If you were wondering what an agreement meant but didn’t  want to spend the money to find out—this is your opportunity. If this is of interest to you, just let me know.