Termination of Assignments of Sound Recording Copyrights

A few weeks ago I wrote an article for Billboard Magazine about the Copyright Office amending the rules regarding termination of assignments of copyright. The editor wisely omitted the last sentence where I mused about whether the Copyright Office would ever take a stand on the issue of artists attempting to terminate their assignments of sound recording copyrights.

Now the New York Times has addressed the issue in an August 15 article “Record Industry Braces for Artist Battles Over Song Rights”. The article is a great primer on this complex and controversial matter. While it is clear that one of the purposes of the Copyright Act of 1976 was to give songwriters and other authors the right to recapture their work after 35 years, it is not clear whether or not the same rights apply to recording artists. This is because the termination provision specifically excludes “works made for hire” and nearly every recording contract from the 1970s on refers to sound recordings a “works made for hire”. The problem for the record companies is that the Copyright Act also has a very specific definition of “works made for hire” and sound recordings are not part of that definition. Further most record contracts go to great lengths to state that the artist is an independent contractor and not an employee of the record company, which further damages the work made for hire argument.

The New York Times article also addresses some of the confusing side issues in this debate. For example, how will the law address other “authors” of a sound recording including producers and engineers? How will the law affect artists who sign contracts in other countries subject to different laws (e.g. every major band from England)?

Although there is much discussion and debate on the issue, the battle will properly commence until January 1, 2013 when works created on or after January 1, 1978 become eligible for termination. Things are going to get very interesting. I would urge any recording artist who executed an agreement during the 1970’s to have that contract reviewed by a lawyer asap.

The XM Satellite Radio Litigation

I have had a number of songwriters and artists ask me about the proposed settlement in the XM Satellite Radio Copyright Litigation Class Action pending in the United States District Court for the South District of New York.

The lawsuit essentially claimed that by virtue of its involvement with so-called “XM Recording Devices,” XM Radio facilitated copyright infringement. The case was certified as a class action and was recently settled by XM agreeing to pay out approximately $5 million to various owners of sound recordings and musical compositions broadcast on XM between March 30, 2006 and December 6, 2010. Settlement notices and proofs of claim were sent to potential claimants last week. In the packet I reviewed, the attorneys had identified the sound recordings belonging to my client, although other people have told me that the proof of claim forms they received were left blank.

If you think you might have a stake in this agreement and have not received settlement documents, you should contact the settlement administrator at 877-398-1139 or through their website www.notavxm.com.

Clearly there is some amount of money out there and it would be foolish to leave it on the table.

Sound Recordings: Termination of Assignments and Works Made For Hire

Attorney Wallace Collins wrote a great opinion piece in a recent issue of Billboard about the looming effect of Section 203 of the Copyright Act. This “obscure” section of the law recognizes an author’s right to terminate an assignment of copyright 35 years after the initial grant. The reason that it has been obscure up until now is that it won’t have an effect until 2013. The 1976 Copyright Act did not become law until January 1, 1978. Of course songwriters have been exploring termination issues with respect to old copyrights under the revised Section 204 (which applies to grants of copyright completed prior to January 1, 1978) for some time now.

The termination of assignments with respect to music publishing agreements will no doubt be handled in a fairly straight-forward manner, again, because publishers are used to creating fairly sophisticated arrangements with respect to the termination of pre-1978 copyrights. What promises to be more complex is the application of Section 203 to sound recordings. Anyone who has ever read a major label recording agreement (or a recording agreement modeled on a major label agreement) will recall that there is language in the agreement that states that every recording created under the agreement shall be deemed a “work made for hire.” Most people seem to know that a work made for hire is a work in which the “employer” is deemed to be the author of the work for copyright purposes and the original author has no right to ever terminate the assignment of the work. However, it is less well known that under the copyright act, the “work made for hire” doctrine applies to a limited number of works, and sound recordings are not part of this group. (Although for a brief period of time about a decade ago the recording industry managed to amend the Copyright Act to include sound recordings under this definition.) In other words, presumably, just because a record contract says that masters created under the deal are deemed works made for hire, this does not make it so.

The somewhat uncomfortable part is that none of this has been tested in Court yet, and won’t be tested for several years.

Section 203 provides that the author shall send a Notice of Termination “at any time during a period of five years beginning at the end of thirty-five years from the date of execution of the grant; or, if the grant covers the right of publication of the work, the period begins at the end of thirty-five years from the date of publication of the work under the grant or at the end of forty years from the date of execution of the grant, whichever term ends earlier.”

All of this seems extremely civilized, and as stated above, there is some precedent for this under the industry custom with respect to copyright in musical compositions. However, it is unclear how the record companies will react given their stated position that master recordings are works made for hire.

It is also unclear how the concept of derivative works and joint authorship will apply. For example, producers might begin to assert an authorship right in the sound recording at issue. Also, as many commentators have noted, U.S. law will not apply to exploitation of the recording outside of the United States.

Nobody really knows how this will all play out, but it will be an interesting time to practice law in the music business.