A great deal of controversy arose in the entertainment business over last year's work-for-hire amendment to The 1976 Copyright Act. Hearings were subsequently conducted and President Clinton recently signed legislation rescinding the amendment and returning the Copyright Act to its original form - but the issues raised by the controversy are worth reviewing.
The controversial amendment was inserted into legislation by a House staffer in the last days of the first session of the 106th Congress without any public hearing. This was done at the request of a music industry lobby group, the Recording Industry Association of America (RIAA). This new provision in public law No. 106-13 adds "sound recordings" to the limited list of per se "works made for hire" and, by so doing, eviscerates the creator's right of reversion in those works.
Prior to that amendment, under the termination clause in The Copyright Act of 1976 (which became effective in 1978), an author or creator was permitted to reclaim a work after 35 years. In other words, starting in the year 2013 creators of recordings made in 1978 would have the right to demand return of those works regardless of the contract they originally signed. The only exception to this right of reversion was if a work was classified as a "work made for hire". Merely employing the phrase "work made for hire" in an agreement did not mean that a sound recording was, as a matter of law, a work for hire: there had to be a provable employer/employee relationship or the work had to fit into one of the nine established categories of "specially ordered or commissioned works" listed in the Copyright Act and there had to be a signed, written agreement. By amending the law to add "sound recording" to this list of works that constitute a work made for hire, the new law effectively removes a recording artist's chance of recovering its rights in its master recordings created on or after July 1, 1999.
In the record industry, a fledgling artist usually has no choice but to assign its rights in a sound recording to a record company in the contract. A typical provision in such a record contract might state that the recording is a work made for hire, but have a caveat that, in the event it is determined not to be a work for hire, then the artist assigns its rights to the record company. Notwithstanding such a record contract provision, the 1976 Copyright Act provided that an artist had a right to recapture the copyright in those recordings after 35 years. The legislative intent of this reversion right was to permit an artist or creator to benefit from his work eventually no matter how bad a deal the artist originally made. With regained rights in its master recordings, an artist could then demand appropriate remuneration if a record company wanted to continue to manufacture and sell the artist's recordings.
Before last year's amendment, the existing case law did not support the proposition that a sound recording was a work made for hire. For a sound recording to be deemed a work for hire it had to be created by an employee in the course of an employment relationship. The benchmark U.S. Supreme Court case,Community for Creative Non-Violence v. Reid, suggested that a court look at various factors in making the "employee" determination including: the skill required; the source of the tools used in creation; the duration of the relationship between the parties; the extent of the hired party's discretion over when and how long to work; the method of payment; the provision of employee benefits (including FICA and workers' compensation insurance); and the tax treatment of the hired party.
One of the only pre-amendment cases that dealt with the work for hire issue directly in the sound recording context was Ballas v. Tedesco in the Federal Court for the District of New Jersey. Last March I successfully represented the defendant in this Ballas case where Judge Greenaway determined that a sound recording created by my client, an artist/producer, for a prospective distributor/record company was not a work for hire. Relying on cases such as Community For Creative Non-Violence v. Reid, the Court in Ballas determined that the defendant's sound recordings were not a work made for hire under the Copyright Act. The artist/producer made the recordings in his studio and, despite payment of an advance from the distributor and certain creative input as to the material to be recorded, the court held that the circumstances did not meet the rigorous test required for Ballas to be deemed an "employee" of Ballas, so the sound recordings could not have been "work-for-hire" for the distributor/record company.
The amendment to the Copyright Act defining a "sound recording" as a work for hire would have severely curtailed the rights of recording artists as creators. As amended, artists such as Blondie, The Cars and Foreigner who recorded between 1978 and 1999 would still have had the right to demand reversion of their masters, while artists recording after July 1999 would not. This amendment certainly should not have been signed into law without appropriate public hearings and, with the subsequent public outcry from many major recording artists brought about action from Congress, and the law was returned to its pre-amendment form.
Wallace Collins is an entertainment lawyer . He was a recording artist for Epic Records before attending Fordham Law School.
Wallace E. J. Collins III, Esq.
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