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Copyright Terminations: What Rights’ Owners Need to Know

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Categories: Articles, Legal Issues, Music Industry, Music Publishing, Terminations, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

By:  Erin M. Jacobson, Esq.

This article was originally posted on Synchtank.

The window is open for authors and heirs to recapture ownership of their copyrights.  Terminations create a lot of new movement for copyrights in the marketplace and rights’ owners need to be just as knowledgeable as authors and heirs in order to stay competitive.

Statutory Requirements

Statutory terminations come with many complexities, but the basics are as follows:

In the United States, termination of a grant can be effected during a five year period: (1)  Beginning 56 years after the original copyright date of the work for grants made before January 1, 1978; or (2) Beginning 35 years after the date of the grant for grants executed on or after January 1, 1978.*

Both of these categories of termination require that proper notice be sent anywhere between ten and two years before the effective date of termination and notices must also follow strict requirements.  Works for hire and grants by will are not terminable and terminations under U.S. copyright law only apply to U.S. rights.

Outside of the U.S., there are some other countries that have their own rules regarding terminations, most notably, the British Commonwealth countries.  British Reversionary Rights are generally uniform throughout the Commonwealth, but vary slightly per country and must be assessed on a case-by-case basis. Other countries do not have any termination rights included in their copyright laws.

Information on the recapture of music rights usually refers to composition rights only, as whether master recordings rights can be recaptured is the subject of an ongoing debate in the U.S. that will only be solved by litigation or a change in copyright law.

Information on the recapture of music rights usually refers to composition rights only, as whether master recordings rights can be recaptured is the subject of an ongoing debate in the U.S. that will only be solved by litigation or a change in copyright law. The issue here is that, as stated above, works for hire are not terminable, and most recording agreements state that the masters are works for hire for the record company.  However, U.S. law requires that for a work to truly be a work for hire, it must be either created by an employee within the scope of employment, or specially ordered or commissioned by the company, with an agreement in writing stating the work is a work for hire, and the type of work must fall within nine categories established in the law.  The problem here is that artists are not employees of record labels and master recordings are not one of the nine categories required for works to qualify as works for hire.  Until this point, labels have been successful in retaining the masters by arguing the masters qualify as collective works or compilations, and by giving artists a few additional royalty points.  However, at the time of this writing, there is a class action lawsuit pending in California to decide this very issue.

The Real Reason Why Authors and Heirs Want to Recapture Their Rights

Although the legal requirements for termination are imperative to navigating the copyright recapture landscape, most discussions on this topic fail to address why authors and heirs are so keen to exercise their termination rights in the first place.  The answer to this question is that authors and heirs are terminating because they are not happy with their current publisher or label.  This unhappiness normally is caused by the companies’ lack of attention paid to the catalogues, which results in significantly decreased earnings for those catalogues.

Authors and heirs are terminating because they are not happy with their current publisher or label.  This unhappiness normally is caused by the companies’ lack of attention paid to the catalogues, which results in significantly decreased earnings for those catalogues.

Large companies, typically the “majors”, tend to focus their efforts on acquisitions and growth, which is not bad, but they fail to increase staff and training at the same rate as their growth.  This leaves many compositions lost at these large companies because they are not being actively exploited and, in many cases, the staff isn’t even aware of the compositions.  Further, when creators or heirs do try to get a company’s attention, their efforts are often ignored because the company does not want to spend time and resources on low-earning compositions.  To further exacerbate the situation, many of these companies are not even accounting properly to the creators or heirs, and again, won’t take the time to investigate or remedy the situation because their efforts are focused solely on the highest earning compositions and further growth.

On the master side, not only are the royalty rates from the labels paltry, but in many cases, the albums are out of print and not being sold, and therefore the creator or heirs really just want a chance to do something with the music again instead of accepting the music’s fate of being locked in a vault, with the original tapes rotting away, never to see the light of day again.

In my experience, independent publishers tend to receive fewer termination notices because they do a better job with attending to and exploiting their catalogues, and usually make fewer mistakes in collection and accounting.  I work with many independent publishers (both those I represent and those who work for my author/heir clients) who do a fabulous job making sure these works continue to stay relevant and earn income.

Handling Terminations

Some companies think they can prevent authors from terminating their rights by inserting provisions in their contracts whereby the authors waive their rights of termination. However, this practice is completely ineffective because the right to terminate cannot be waived via contract. Some companies also try to prevent terminations by making new, and equally unfair, deals with aging authors and heirs.  I’ve even seen major companies effectively force creators or heirs into a new deal by using the threat of litigation against them when these companies know full well that their opponents do not have the resources to fight to reclaim their rights.

The other tactic companies take is to ignore received notices of termination or wait until right before the effective date to raise objections in an effort to deprive the authors/heirs with ample time to respond.  It’s a common joke throughout the subset of attorneys dealing with terminations that the fastest way to be ignored by a company is to send them a termination notice (or tell them they owe you money).

When rights’ owners receive a termination notice, they should address it and engage good counsel who knows how to deal with the dynamics of these situations.  Typically, once companies can no longer ignore the notices, they then dispatch the same few lawyers to repeatedly make the same narrow deals.  When I represent music publishers, I work with them on specific strategies to address the catalogue at issue and craft a deal that benefits both parties in each situation, whereby the company can retain the work and continue to reap the financial benefits, but whereby the author or heirs also feel their needs are satisfied.

Music will always be the foundation of the music business, but the music business is not the same as it was 56 or 35 (or even 10) years ago. Music has a life and legacy of its own and how these copyrights are handled can either set them up to flourish or be forgotten.

Music has a life and legacy of its own and how these copyrights are handled can either set them up to flourish or be forgotten.

The changing times require changing ways and my practice focuses on this innovation to benefit both the rights’ owners and creators so that both can continue to benefit from these magnificent musical creations.

 

* Technically, section 203 of the U.S. Copyright Law says the window opens at the end of 35 years after the date of execution of the grant, or if the grant covers the right of publication, then at the end of 35 years after the date of publication or at the end of 40 years after the date the grant was executed, whichever is earlier.

Note:  This article does not constitute legal advice.

 Erin M. Jacobson, known as “The Music Industry Lawyer”, represents and protects independent, established, and legacy songwriters and artists (including their heirs and estates), distinguished legacy catalogues, independent music publishers, Grammy and Emmy Award winners, and other music professionals at her law practice based in Beverly Hills, CA.  For more information, visit www.themusicindustrylawyer.com.

 

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Attention Legacy Artists: 6 Things You Need to Know to Recapture Your Copyrights

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Categories: Articles, Business, Copyright, Legacy, Legal Issues, Music, Music Catalogues, Music Contracts, Music Industry, Music Publishing, Royalties, Terminations, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

By:  Erin M. Jacobson, Esq.

This article was first published on Billboard.com.

There has been a lot of buzz recently about songwriters and artists (or their heirs) recapturing copyright ownership of their songs – and youcanbelieve the hype.  Copyright law provides a chance for authors (or heirs of authors) to recapture ownership of the copyrights to works granted away many years ago, and the window allowed by the law to recapture those rights is now.[1] Recapturing rights can allow for an author or author’s heirs to negotiate better deals with higher royalty splits in their favor, sell catalogues for large sums of money, or finally regain control of how a catalogue is exploited and increase profits with the right team in place.

However, recapturing rights is a complicated business filled with many requirements and nuances.  Here are six things authors need to know about recapturing rights.

  1. Dates Matter

An author (or author’s heirs) can terminate grants of copyrights made before January 1, 1978 during a window beginning 56 years and ending 61 years from the original copyright date.[2]  However, notice of termination must be served on the current owner anytime between ten and two years before the date the author intends the rights to revert.[3]  For grants made after January 1, 1978, the calculation of when rights can be recaptured is based on the date of the grant, not the original copyright date.   These post-1978 grants may be terminated beginning at 35 or 40 years after the grant date (depending on the language in the grant)[4]with a five-year termination window. Again, notice of termination must be served on the current owner anytime between ten and two years before the date the author intends the rights to revert.[5]

Being proactive is one of the most important factors when it comes to recapturing rights.  As mentioned above, serving notice on the current owners of the copyrights is required to recapture rights.  Because of the additional requirement that this notice must be sent between ten and two years beforethe date the rights will revert, anyone intending to recapture rights must look at leasttwo years ahead.  If someone intending to recapture rights misses the notice window – rights cannotbe recaptured and the opportunity is forever lost. 

  1. Works for Hire Need Not Apply

If an author signed a work for hire agreement for the works in question, don’t bother.  Copyright Law specifically states that works for hire are not eligible for termination.[6]

  1. U.S. Rights Only

The termination provisions that are the subject of this article are part of United
States Copyright Law and therefore only apply to U.S. rights.  That means one can recapture U.S. rights, but not foreign rights.  Also, as of this writing, the chance to recapture is only applicable to U.S. contracts.[7]

  1. Masters are an Uphill Battle

Most discussions around recapture of copyrights refer to composition copyrights because compositions are generally more straightforward to recapture than master recordings.  Most record company contracts say that masters are works made for hire for the record company, and as explained above, works made for hire are not eligible to be terminated.  However, copyright law dictates that works made for hire must meet certain requirements to qualify as a work made for hire:  (a) it must be made by an employee within the scope of their employment, or (b) it must be specially commissioned by the owner of the work for hire, it must be agreed in writing, and the type of work must fall within one of nine categories designated by the law.[8]  “Master recordings” is not one of those nine categories.

While there have been a few instances where labels have quietly relinquished rights to masters and sworn all parties to secrecy, most record labels refuse to release rights to masters and instead negotiate with the artist to increase their royalty rates.  A higher royalty rate does not help artists whose masters are not being exploited and not earning money, but it is all in an effort for the labels to avoid setting a precedent.   Master recordings are record labels’ main assets and businesses cannot give away their assets without also giving away power and profit.

Unfortunately, this is an issue that will only be decided by litigation and/or copyright reform, and neither of those has happened yet.

  1. Relationships Matter

For pre-1978 grants, one author’s share may be terminated, rather than requiring co-writers to terminate together.  However, if an author’s heirs are the ones effecting termination, then a majority of those heirs must terminate together.

Post-1978 grants signed by more than one author require a majority of those authors to terminate the grant together, and if any one of more of those authors is deceased, then a majority of the heirs of each deceased author must sign instead.   However, there are exceptions to this rule if separate grants were signed.

Requiring multiple parties to sign the termination notices can be problematic if co-writers, or heirs fighting about estate issues, no longer speak.  Even if the parties may have lost touch over the years, it benefits everyone involved to coordinate and cooperate to recapture rights.

  1. Don’t Try This at Home, Kids

If not already apparent by reading this article, assessing eligibility for filing terminations and carrying out the proper procedures to recapture rights is extremely complex.  Furthermore, there are numerous nuances and requirements not discussed here that could also affect whether an author or an author’s heirs may recapture rights. Anyone seeking to recapture copyrights needs an attorney specifically focused on the music industry that also has extensive experience with assessing these issues and recapturing rights.  Not all entertainment attorneys understand music and not all music attorneys are experienced with terminations.

I regularly recapture rights for my clients, as well as advise them on protecting and revitalizing their catalogues, as I am in a unique position where I am deeply familiar with both older music and how to navigate those catalogues within today’s marketplace.  Being in this space also means I frequently see legacy artists and their heirs who have been misguided, who have lost their chance to recapture their rights, who don’t realize their catalogues are under-earning, and who don’t know where to start.   The right advisors are tantamount to a successful recapture process and future for the catalogue.

There is only one chanceto recapture copyrights, one chanceto regain control of one’s legacy, and one chance to get it right.  Choose wisely.

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[1]Depending on the circumstances of each individual work, as some works are not yet eligible, no longer eligible, or not eligible at all to recapture.

[2]U.S.C. 17 §304(c)(3) (1992).

[3]U.S.C. 17 §304(c)(4)(A) (1998).

[4]Post-1978 grants are terminable at 35 years after the date of the grant, however, if the grant’s language includes the right of publication for the work, then that five-year period begins either on 35 years after the date of publication, or 40 years after the date of the grant, whichever is earlier.

U.S.C. 17 §203(a)(3) (1998).

[5]U.S.C. 17 §203(a)(4)(A).

[6]U.S.C. 17 §304(c) (1992); U.S.C. 17 §203 (1998).

[7]There have been a couple of high profile disputes on this matter involving U.K. contracts (namely Duran Duran in one instance and Sir Paul McCartney in another), but Duran Duran lost in a U.K. lower court and subsequently settled, and McCartney settled without litigation.  Some other countries do have their own provisions for recapture of rights, but they vary by country and differ from U.S. law.

[8]U.S.C. 17 §101 (1992).

 

Disclaimer:  This article does not constitute legal advice.

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You’ve Inherited a Song Catalogue, Now What? (What Heirs Need to Know)

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Categories: Articles, Copyright, Music Contracts, Music Industry, Music Publishing, Royalties, Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

By: Erin M. Jacobson, Esq.


I see many spouses or children that inherit a song catalogue from a songwriter relative, and are not familiar with the music business or how to administer intellectual property rights of music.

Here is the first thing to do: Hire a music attorney experienced with managing catalogues and music publishing.

When I work with heirs on how to manage a catalogue they’ve inherited:

  • I assess the catalogue. I work with my client to know exactly what they have in the catalogue. I find out whether the heir owns the copyrights to the songs – either because the original writer never granted them away or recaptured them at a certain point before inheritance. If the heir doesn’t own the songs, I determine who does have ownership and the terms of the deals with those owners.
  • I review the old contracts and assess whether the current publisher or administrator is doing the best job for the catalogue or if the catalogue might be better at a new home.
  • I assist with inventory of all the titles, copyright years, and registration numbers (if possible); and determine all sources from which the heir receives statements and royalties. Keeping everything organized is essential to either managing or selling the catalogue.
  • I assess whether certain provisions of the copyright law apply so that an heir who doesn’t own the catalogue may be able to reclaim ownership of those copyrights, after which I can negotiate a new deal with the best publisher to manage the catalogue.
  • I coordinate a valuation appraisal of the catalogue for potential sale.

Selling the catalogue is a personal decision, it depends on whether one would rather receive royalty checks or instead receive a lump sum upfront in exchange for the catalogue. This depends the circumstances of each individual situation, both from a financial standpoint and whether the heir wants to have a continuing relationship to the catalogue.

Inherited catalogues are special for family legacy reasons, but also because they come with their own set of decisions. Many heirs have not had previous experience with the music publishing business, and either miss important milestones that would put the catalogue in a better position, or they rely on existing deals with companies that are no longer looking out for the best interests of the catalogue. Banks and other trustees often complicate matters, as well as representatives not experienced in music publishing and copyright management. Many of these personnel only look at the numbers. I personally love older music and understand the sentimental value of a catalogue beyond the income it brings in each year, as well as whether and how it can be profitable in today’s market.

Again, the first step in dealing with a catalogue you have inherited is hiring a music attorney experienced with music catalogues and who can make the right plan for your catalogue.

 

Disclaimer: This article is for educational and informational purposes only and not for the purpose of providing legal advice. The content contained in this article is not legal advice or a legal opinion on any specific matter or matters. This article does not constitute or create an attorney-client relationship between Erin M. Jacobson, Esq. and you or any other user. The law may vary based on the facts or particular circumstances or the law in your state. You should not rely on, act, or fail to act, upon this information without seeking the professional counsel of an attorney licensed in your state. 

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