The IP Law Blog Focusing on legal trends in data security, cloud computing, data privacy, and anything E

Recording Industry Braces For Potential Impact of 1976 Copyright Act Termination Rights

Posted in Copyright Law

By: Zachary Wadlé

The recording industry has been hard hit over the past decade.  With the advent of mp3s, iPods, and iTunes, the entire industry business model has been upended.  Unfortunately for record labels, the hits just may keep on coming.  Courtesy of the Copyright Act of 1976, record labels could soon lose copyrights over hugely popular songs authored from the late 1970’s forward that generate substantial licensing cash for the industry.  Beginning in 2013, some of the most popular musical works of this era will likely be at the center of a hard-fought battle over future ownership rights.

The Copyright Act of 1976 permits the artists of copyrighted works to terminate a grant of rights and reclaim their ownership of the works under certain conditions.  For works created on or after January 1, 1978, artists can reclaim rights to these works beginning 35 years after the original grant, which starts in 2013.  The previous copyright law required artists to wait at least 56 years to reclaim their rights.  Congress’s move to revise the copyright law in1976 and shorten the time artists must wait to reclaim rights was driven by the belief that new artists tend to sign bad deals when they’re young, hungry, and largely unknown to the public.  Congress determined that such artists deserved the option to own their compositions sooner than allowed under the previous copyright law, especially should their tunes prove to be popular (and lucrative to the record label who signed them to a presumably one-sided deal).

To enforce termination rights under the 1976 Copyright Act, a formal termination notice must be filed between two and ten years prior to the date the termination is to become effective.  For songs authored in the late 70’s, the termination notice process has already begun.  If an author properly terminates the original grant, the copyright reverts to the author and the record labels and music publishers who license the song(s) to third parties no longer control them and the monetary stream generated by the licensing rights.  It isn’t so simple for the artists, however.  The recording industry has lawyers of its own, and they have advanced two primary arguments so far in an attempt to keep their valuable rights to the songs. 

The first defense is that the songs were created as works-for-hire, which are not subject to termination under the 1976 Act.  The work-for-hire doctrine applies to two types of works: 1) works created by employees within the scope of their employment; and 2) works specially commissioned by a third party, if specific conditions are met.  Record labels argue that the musicians involved in the creation of sound recordings were employees at the time the works were created, and therefore the songs constitute works-for-hire.  Determining whether musicians and vocalists were employees of the record labels involves a fact-intensive inquiry based on various circumstances unique to each case.  As for specially commissioned works, musical works are not among the categories that qualify for work-for-hire status, so the record labels must argue that they are contributions to a collective work in order to qualify for protection.  The labels claim that all sound recordings are collective works or compilations, because there are multiple separate contributions made in the creation of a sound recording, and/or because the record label may rearrange the master recordings of individual compositions delivered by the artist.  Artists counter that while multiple people may work on the creation of a sound recording, the work that they provide does not necessarily rise to the level of an original work of authorship. The fact that the record label may rearrange the order of compositions on a recording, or even choose to eliminate compositions, no more renders the sound recording a compilation than does the fact that a book publisher edits an author’s novel or rearranges chapters in a book.  This determination is also a heavily fact dependent inquiry based upon the unique arrangement between the artist and the recording company at issue.

The second defense advanced by the recording industry centers on the concept of joint works.  This defense was recently tested against Victor Willis, the “motorcycle cop” lead singer of the Village People and co-author of wedding reception staple “YMCA,” among other disco era hits.  Last year, Willis began the process of reclaiming his copyright(s) to almost three dozen disco-era songs, including YMCA.  Willis claimed he co-wrote the songs, and contended that he’s eligible to reclaim the copyright to them in 2013.  The record companies who owned the rights to the songs disagreed, and filed a complaint in the Southern District of California last years seeking a declaratory judgment that Willis doesn’t have the right to reclaim the copyrights.  The companies argued that Willis can only terminate the copyrights if the majority of the authors of the songs also agree to do so.  In the case of Willis’ songs, multiple artists contributed to their creation.  The 1976 Copyright Act says that if two or more people execute a grant of copyright, the majority must agree to a termination.  But Willis argued that executing a grant isn’t the same as writing a song, in effect claiming that two or more people can write a song together, but each can separately execute a copyright grant to that song.  In that situation, Willis argued that each person who granted a copyright should be able to terminate the grant separately under the 1976 Act. 

The second defense advanced by the recording industry centers on the concept of joint works.  This defense was recently tested against Victor Willis, the “motorcycle cop” lead singer of the Village People and co-author of wedding reception staple “YMCA,” among other disco era hits.  Last year, Willis began the process of reclaiming his copyright(s) to almost three dozen disco-era songs, including YMCA.  Willis claimed he co-wrote the songs, and contended that he’s eligible to reclaim the copyright to them in 2013.  The record companies who owned the rights to the songs disagreed, and filed a complaint in the Southern District of California last years seeking a declaratory judgment that Willis doesn’t have the right to reclaim the copyrights.  The companies argued that Willis can only terminate the copyrights if the majority of the authors of the songs also agree to do so.  In the case of Willis’ songs, multiple artists contributed to their creation.  The 1976 Copyright Act says that if two or more people execute a grant of copyright, the majority must agree to a termination.  But Willis argued that executing a grant isn’t the same as writing a song, in effect claiming that two or more people can write a song together, but each can separately execute a copyright grant to that song.  In that situation, Willis argued that each person who granted a copyright should be able to terminate the grant separately under the 1976 Act.     

Last week, U.S. District Judge Barry Ted Moskowitz in San Diego dismissed the lawsuit brought by the recording companies against Willis, but let the publisher re-file its claim to determine what percentage of the rights Willis owns.  According the Judge Moskowitz, “Willis’s termination affects only the copyright interests that he previously transferred, his undivided interest in the joint work, …The copyright interests transferred by other co-authors will not be affected by Willis’s termination.”  As a result, Willis can reclaim his portion of the copyrights to the songs in question, but the publisher may have future rights to use the songs depending upon whether the other copyright holders elect to terminate their grant(s).  On balance, Judge Moskowitz’s decision is likely to be viewed as a loss for the recording industry.  The exercise of termination rights would be much harder if an artist had to secure the agreement of every potential copyright holder in the song for the termination.  Instead, presuming Judge Moskowitz’s decision stands, individual artists will be able to reclaim their piece of each song they contributed to, and whittle away at the record labels’ licensing revenue in the process.