WALLACE E.J. COLLINS III, ESQ.



 

TERMINATION OF COPYRIGHT TRANSFERS LOOMS ON THE HORIZON

BILLBOARD Magazine 2012


Just as the record business is staggering back to its feet after the digital assault, another hard blow to the record industry business model is lurking just around the corner. In a few short years recording artists and songwriters will be entitled to terminate their contractual transfers and demand back their copyrights – and the time to plan for the coming onslaught to record company and music publishing catalogs is upon us.

The 1976 Copyright Act, in a provision that has generally been overlooked until now, provides for the termination of copyright transfers. Even if an artist or songwriter signed a contract with a record company or music publisher that purports to transfer all rights in a work in perpetuity, the Copyright Act provides that the author can terminate that grant and demand that the rights revert to the author in a shorter period of time.

Generally speaking, for copyright grants made on or after January 1, 1978 (the effective date of the 1976 Copyright Act) the termination period is 35 years under Section 203 of the Copyright Act. For pre-1978 works the termination period is 56 years after copyright was originally secured under Section 304 (c)-(d). For grants on or after 1978, termination may be exercised anytime during a 5 year period beginning at the end of 35 years from the execution of the grant or, if the grant concerns the right of publication of the work, then the period begins on the sooner of 35 years after publication or 40 years after execution of the grant. Although there are certain formalities which must be complied with to effectuate transfer, this essentially means that recording artists and songwriters can start exercising their right of termination as soon as 2013 – which may effectively decimate many record company and music publishing catalogs.

Back when the 1976 Copyright Act was drafted few of us could envision a world where the artists might not need the record companies to finance, manufacture, promote and distribute their records. Back then the expectation was that, although any particular artist could exercise the termination right, what would effectively happen is that the label and artist would simply be forced to renegotiate a deal to continue working together. Now in the digital age, however, this is no longer true. Any artist can demand back their masters and then simply offer them on their own website or license the rights to an online aggregator with little or no expense. This is particularly true in the case of catalog recordings since the artist would not even need the record company to finance the recording costs. The more digital the music business becomes the more obsolete the large record labels become for established artists. High profile artists with already established fan bases and large catalogs like Blondie, the Cars, Bruce Springsteen and others would have no need for much in the way of advertising and marketing, and no need for manufacturing, distributing or warehousing of the product. Simple ownership and possession of the digitized masters would be sufficient.

Those familiar with record contracts know that, unlike song publishing contracts which generally provide for the assignment and transfer of a song copyright to the publisher, most record contracts provide that the sound recording is created as a “work for hire” for the record label. Under the 1976 Copyright Act the termination provision is not applicable to a genuine work for hire grant. However, this does not preclude recording artists from exercising their right of termination. Just a few years ago I litigated a case where the Court held that a sound recording does not qualify as a work for hire. Without getting into all the applicable legal employer/employee issues involved, there is a great deal of case law which addresses the subject of “work for hire” and holds that whether a work created by an employee is a work for hire or not depends on various factors other than just the language of the contract. This area of law appears to be ripe for litigation by recording artists who want to exercise their termination rights where the facts suggest that no genuine work for hire relationship ever existed. From what I have seen it appears that in most cases the artist will prevail over the record company on this point.

The termination rights of an artist or songwriter are generally subject to a 5 year window. Termination must be made effective within the termination window or the right to terminate the grant is forfeited. To be effective, the artist or songwriter must serve a written notice of termination on the original record company or publisher (or its successor) no more than 10 and no less than 2 years prior to the effective date stated in the notice. The notice of termination must state the effective date of termination. Perfection of the termination requires that a copy of the written notice also be filed with the U.S. Copyright Office prior to the effective date of termination

Although the termination rights of an artist under the 1976 Copyright Act would only be effective for the U.S. territory, the size of the U.S. consumer market for recorded music still makes this a valuable right to reclaim. However, what is good for the artist might further erode the influence of the major record labels and prove detrimental to the industry in the future, so labels would be well advised to start planning for the onslaught of 2013 now.


2012-2013
Wallace E. J. Collins III, Esq.

Wallace Collins is a New York lawyer specializing in entertainment, copyright, trademark and internet law.
He was a recording artist for Epic Records before attending Fordham Law School.
T:(212)661-3656

http://www.wallacecollins.com/



Please read my article in Billboard Magazine below about "Termination of Copyright Tranfers".

"Termination of Copyright Tranfers" - Reversion of Copyrights - COPYRIGHT D-Day Billboard

 
 
 



Specializing in Entertainment Law & Intellectual Property Matters


Wallace E. J. Collins III, Esq.
250 East 39th St. (Suite 9K)
New York, New York 10016
Tel: 212 661-3656

Email: Wallace Collins

http://www.wallacecollins.com/

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