by : May 2013, Music Law

An Update on Reversion Rights

An Update on Reversion Rights

What do Tom Petty, Bryan Adams, Tom Waits, Kris Kristofferson, and Bob Dylan all have in common? They released iconic albums that generated millions of dollars and are now requesting copyright transfer termination from their labels and publishers. Thanks to the Copyright Act of 1976, artists have a chance to reclaim their song rights.  Copyright transfer reversion is and will continue to be an issue in the music industry for years to come. There will be many examples in the coming years of how copyright reversion will ultimately play out as precedents unfold.

The Copyright Act of 1976 allows for copyrights transferred on or after January 1, 1978 to be reclaimed by their creators thirty-five years later. There is a five-year window to reclaim those rights.  This year will mark the first rounds of copyright transfer termination requests.

So far, this is not a cut and dry arrangement.  Publishers and labels are obviously not fond of losing all of their copyrights, especially the rights to successful legacy artists. For this reason, they are actively searching for a legal response to fight the termination notices.

The most prevalent response has been the “Work-for-Hire” argument.  “Under the Copyright Act of 1976, any grant, license or assignment made on or after January 1, 1978 may be terminated by the author thirty-five years from the date of such transfer if the work was not originally created as a work-made-for-hire for an employer.” 1

Artists and authors will argue that their agreements do not fall under the Work-For-Hire category while some publishers and labels will claim the opposite.  Work-For-Hire agreements are common in film scoring situations, where an artist is paid a fee to score a film and the resulting music and rights are granted to the film studio.  Some copyrights are very important to the livelihood of the music companies and so, in some cases, these companies might try to misconstrue the nature of the advance given to songwriters and artists as a salary or fee.

There has already been one high publicity ruling made on copyright reversion. This copyright transfer termination request was made by Victor Willis (member of the Village People and co-author of such hits as “Y.M.C.A.”) in January 2011 to French music publisher Scorpio Music S.A and their US administrator, Can’t Stop Productions, Inc. In return, Can’t Stop Productions filed suit challenging the validity of Willis’s terminations.

Scorpio first argued that Willis’s work should be classified as work-for-hire.  However, the music publisher withdrew that claim for undisclosed reasons.  Next, Scorpio argued that since Willis was only one author of the joint works, a termination would be required by all authors in order for it to be valid. The Southern Court of California disagreed. It decided that a joint author, who independently transfers his or her copyright ownership, could also independently terminate that transfer. Anything to the contrary would conflict with the purpose of the Copyright Act.

This ruling set some important precedents. The first being that joint authors may separately request transfer termination – any artist wishing to request termination does not need to do so in conjunction with co-writers or producers. Also, Victor Willis managed to successfully regain control of his copyright, representing a critical win for songwriters and setting a positive precedence for future cases.

There are many cases to come and depending on the situation, there are several different possible results. The most likely is settlement outside of court. A copyright reversion case will only go to court if there is enough money involved with the song or catalogue for the litigation fees to be worth the result.

Even in the cases regarding major artists, labels and publishers will be reluctant to go to court because of a lack of precedent. The first cases to go through court and be ruled upon will set those precedents. Labels and publishers are afraid to set a bad standard for future cases and potentially initiate disastrous consequences.  This is most likely why Scorpio withdrew their work for hire argument in the Victor Willis case.

“Rather than taking the fight to court, it is far more likely
that a copyright termination notice from an artist will serve
as a jumping-off point for negotiations with the label on a
new contract”, said Eric Custer, a music industry lawyer.2 Unless an artist is really at odds with their label or wants to move in their own artistic direction, the parties will most likely try to work together on a settlement and a new contract.

According to Ed Christman of Billboard, publishing companies are apparently being much more receptive to copyright transfer termination requests. There are less legal loopholes involved; so many publishing companies are cooperating. Additionally, many publishers are retaining copyrights but at a reduced profit rate, making the deals more favorable for the artists.3 Some labels, on the other hand, are being more difficult and ignoring the requests from artists.

Should an artist or songwriter be able to reclaim their rights, they will be in a powerful position. Song catalogs by legacy artists represent a large slice of the music industry pie. In 2012, catalog sales represented 49% of album sales and 55% of single sales.4

With this type of leverage, legacy artists would have several options to exploit their songs.  Artists that still command a strong audience today would have the clout to sign with a publishing company or label under much more beneficial terms, putting them in a position to earn substantially more money from songs that are already selling well. It is unlikely that artists would attempt to take on the time consuming task of exploiting their songs by themselves.

The reclaiming of these rights will modify the landscape of the industry as the music creators enter into a new balance of power, giving them leverage over labels and publishers as they decide upon the best way to profit from their music.  As of right now, it appears that many artists are choosing to negotiate privately. Other artists are waiting, and opting to take action towards the end of their five-year window in hopes that, by then, a legal precedent will be set.

Many artists sign contracts that will continue to have consequences over the entirety of their careers.  For those who transferred their ownership of song copyrights to a record label or music publishing company thirty-five years ago, 2013 will be an important year.

By Dan Servantes

 

Endnotes

1. Donnelly, Bob. “Everything You Need to Know About Copyright Reversion.” 2012. St. John’s Entertainments, Arts, and Sports Law Journal.

2. Davis, Ryan “Copyright Termination for 70’s Hits Won’t Spark Lawsuit Fever” Law360; November 26, 2012. http://www.earlysullivan.com/copyright-termination-for-70s-hits-wont-spark-lawsuit-fever

3. Christman, Ed “Reversion Rights- Will 2013 Be a Game Changer?” Billboard; December 27, 2012.

http://www.billboard.com/biz/articles/news/1483926/reversion-rights-will-2013-be-a-game-changer

4. Billboard, “The Nielsen Company & Billboard’s 2012 Music Industry Report” January 4, 2013

http://www.dailyfinance.com/2013/01/04/the-nielsen-company-billboards-2012-music-industry/

 

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