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Copyright Termination Rights: The Looming Battle for Music Industry

By Lesley Chuang

2013 is going to be a big year for the music industry.

An amendment to the Copyright Act in 1976 gave musicians and songwriters the ability to unilaterally terminate any previous grant of transfer or license of copyright after 35 years. Since the amendment went into effect in 1978, the first set of copyright grants governed by the Act will become eligible for termination on January 1, 2013.

In the front and center of the copyright termination battle is Victor Willis, the original lead singer of the Village People. The New York Times recently covered Willis' attempt to regain control over his share of "Y.M.C.A." and 32 other songs. (http://www.nytimes.com/2011/08/17/arts/music/village-people-singer-claims-rights-to-ymca.html?pagewanted=all) "Y.M.C.A." reportedly generates upwards of $1 million per year. As the hits from the late 1970s continue to earn profits for the music industry, many predict a battle over termination rights in the years to come.

Termination Right Under §203

In 1976, Congress amended the Copyright Act to give creators of copyrighted material termination rights. For musicians and songwriters who, at the early stage of their careers, handed over their rights without much bargaining power, the amendment was intended to give them another bite of the apple.

Specifically, 17 U.S.C. §203 covers any "exclusive or non-exclusive grant of a transfer or license," such as assignments, exclusive and non-exclusive licenses. The section applies to any grant made by an author on or after January 1, 1978. Effectively, the provision limits a conveyance of rights to 35 years.

Invoking Termination Rights

Termination is an option and not automatic. Once the termination date is calculated, musicians and songwriters must give their publishers a statutory termination notice at least two years (up to 10 years) in advance. Without notice, previous grants will not be terminated. Importantly, termination rights are inalienable, even if there are contract provisions to the contrary.

Scope of Termination Rights

Termination rights are not limitless. For instance, a music publisher may continue to utilize derivative works prepared pursuant to the previous grant. In addition, termination rights are effective only in the United States. For a worldwide assignment, the publisher will retain all rights outside of the country. Furthermore, if there are multiple authors, a majority of the authors must agree to terminate the grant.

Works Made for Hire Exception

Termination rights do not apply to works made for hire. An example of a work made for hire is a work prepared by an employee within the scope of his or her employment. A commissioned work may also be considered as a work for hire. For works made for hire, the employer is considered the author and owns the copyright, unless the parties agree otherwise. This exception is the main area where most of the battle will take place, as companies are gearing up to challenge terminations as for hire.

Victor Willis' Case

In January 2011, Willis provided a termination notice to Can't Stop Productions for a number of his musical works, including "Y.M.C.A." and "In the Navy" and "Go West." In July, Can't Stop Productions and its French affiliate, Scorpio Music, filed a complaint for declaratory relief in the Southern District of California. (Case No. 11CV1557 BTM RBB.)

Can't Stop Productions and Scorpio Music first argue that Willis was employed as a writer for hire. They claim that The Village People were a concept group created by the companies, and Willis was an employee. Specifically, Willis was hired to "translate the lyrics of and/or create new lyrics for certain musical compositions ..." and he was provided with the material and a studio to record. Secondly, the companies claim that Willis does not have the right to terminate because he is only one of several authors of joint works. As mentioned earlier, a majority of the authors is required by law to terminate a grant.

Willis currently earns $30,000 to $40,000 annually from The Village People recordings. According to the New York Times, that could triple or quadruple if he succeeds in recapturing his rights to those recordings. The outcome of this case could have serious implications for the music industry.

Looking Ahead

Termination rights give musicians and song writers a second chance to earn royalties, because of "... the unequal bargaining position of authors, resulting in part from the impossibility of determining a work's value until it has been exploited." (http://tmtblog.minterellison.com/2011/09/born-in-usa-recording-artists-in.html) In addition to Willis, some of the biggest stars from the same era - for example, Bruce Springsteen, Billy Joel, Tom Petty, and the Eagles - are reportedly beginning to invoke termination rights on their recordings and compositions.

On the one hand, some recording companies will suffer monetary loss because of terminated grants. Termination rights may exacerbate the loss in revenue from unauthorized file sharing and the decline in record sales. On the other hand, many recordings and compositions will be on the market for the first time since their creations, which could represent an opportunity for music publishers to negotiate a deal that will broaden or diversify their catalogs. As more musicians and songwriters invoke their termination rights, the year 2013 will signal the beginning of a long legal battle. Only time will tell the impact of termination rights on the evolution of the music industry.

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This page contains a single entry from the blog posted on October 4, 2011 1:52 PM.

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