There have been two key judgements in recent weeks relating to the termination right under US copyright law, which allows creators to reclaim copyrights they previously transferred to business partners like record labels and music publishers.
One of those judgements - involving songwriter Cyril E Vetter - has been hailed as a major boost for creator rights under US law, though the other - involving rappers Salt N Pepa - is arguably more of a set back.
Indeed, in new analysis of the judgement in Salt N Papa’s termination rights dispute with Universal Music, law firm Wobble Bond Dickinson concludes that a precedent set in the case could “pose a threat to artists’ abilities to reclaim sound recording rights in the future”.
That’s because the case demonstrated that ambiguities in old artist contracts can be used by labels to argue that the termination right should not apply, and therefore artists can’t reclaim rights in old releases.
To that end, lawyers at the firm advise artists to ensure that, in any future deals with labels, they include clear provisions about the status of the rights in their recordings, and “explicit acknowledgement” that the transfer of those rights is subject to future termination under the US Copyright Act.
Because of the American termination right, whenever a US-based creator transfers or ‘assigns’ the copyright in a work they have created to a business partner - such as a label or publisher - they can subsequently terminate that assignment and reclaim the copyright after 35 years (56 years for works created before 1978).
In music publishing, it is pretty common for songwriters who signed long-term publishing deals decades ago to exercise the termination right and reclaim their copyrights.
However, it has long been music industry convention that the termination right only applies within the US. So if a songwriter does a global publishing deal, assigning their copyrights to a publisher worldwide, they can only subsequently reclaim their rights within the USA.
The legal battle between Cyril E Vetter and his publisher Resnik Music Group challenges that industry convention, arguing that US copyright law does not in fact restrict termination in that way. A judge agreed with Vetter’s interpretation of the law last year and earlier this month that judgement was upheld on appeal.
Music Creators North America called that appeal ruling an “enormous victory”, because - future appeals pending - it means songwriters exercising the termination right could now push to reclaim their copyrights on a global basis.
On the sound recordings side, there is a different controversy regarding the termination right. Some labels argue that in many scenarios it is the producer or the label that is the default first owner of the copyright in any one recording, rather than the artist. Which means there is no assignment of copyright in record deals and, as a result, there is nothing to terminate after 35 years.
That position is based on the specific wording of any contracts between the artist and their business partners, and/or with the argument that artists are basically employed on a ‘work for hire’ basis when they sign a record deal, so they are simply being hired by a producer or label to perform on a recording. That is key because the termination right does not apply in work for hire scenarios.
In the Salt N Pepa case, the judge agreed with Universal Music that the wording of the duo’s 1980s contract with the producer behind their early recordings meant he and his company were the default first owners of the copyright, not the rappers.
Universal also argued that Salt N Pepa performed on a work for hire basis. Though, having already sided with the major on the contract wording point, the judge didn’t actually rule on the work for hire argument.
However, according to Womble Bond Dickinson, “the court’s commentary on the work made for hire issue” was possibly the most “daunting” bit of the judgement.
It goes on, “while the court ultimately declined to rule on whether the sound recordings constituted a work made for hire, as defined under the Copyright Act, it did suggest that the sound recordings likely did qualify as a work made for hire based on the 1986 contract’s language”.
“The court’s analysis”, it adds, “detours significantly from well-settled law that sound recordings, standing alone, cannot qualify as a work made for hire”.
Which is why, the lawyers advise, US artists should ensure they are protected in new contracts when it comes to future termination rights. Of course, these days many artists sign much shorter term deals with labels, meaning they may well get the rights back long before 35 years anyway.
But where that is not the case, write the lawyers, artists should ensure their record contracts confirm there is a transfer of rights happening within the deal; clearly state that the artist is not working on a work for hire basis; and include “an explicit acknowledgement from the record label that the artists may timely file notices of termination pursuant to Section 203 of the Copyright Act”.