Sony Music has settled one of the big termination right test cases, which involved New York Dolls singer David Johansen and centred on the dispute over whether or not US artists can terminate old record deals after 35 years.
Under American law, creators who assign copyrights to business partners can reclaim their US rights after 35 years, however there is a disagreement over whether that applies to record deals.
Had it got to court, this lawsuit could have set an important precedent that clarified the rights of American artists, benefiting those musicians not in a position to pursue their own legal action. It could also have potentially resulted in the major record companies losing control of a significant portion of their older catalogues. That is why record companies always prefer to settle test cases of this kind out of court, with any settlements kept confidential.
Johansen, and the other artists involved in this case, ultimately agreed to take the matter to arbitration, overseen by mediation firm JAMS. In a letter sent to the court on Friday, Sony’s lawyer said that that had resulted in an “agreement in principle”, which should be finalised by the end of May. As a result, the letter added, “the parties respectfully request that the court stay all further proceedings in this action”.
The current termination right in American copyright law was added in the 1970s and only properly kicked in 35 years later in the early 2010s. Since then, plenty of songwriters have filed the paperwork that is required to reclaim their song copyrights.
However, when it comes to artists and record deals, many labels argue that the termination right does not apply. This is on the basis that record deals are work for hire agreements, meaning the label owns the recording rights by default. If that is the case, then there is no assignment of rights from the artist to the label to terminate.
Many artists, and their managers and lawyers, have countered that record deals aren't really work for hire agreements at all, and therefore the termination right should apply.
Some bigger name artists have been able to force a renegotiation of old record deals under the threat of testing that argument in court, knowing that the labels do not want a big test case that could set a catalogue-wide precedent. For example, it was rumoured that it was the threat of a termination rights action that persuaded Warner Music to renegotiate its old deals with Prince in 2014.
However, some lawsuits have been filed. Universal Music was also sued by some heritage artists, though, according to Reuters, last December that case was also settled.
With both that case - and the one involving Sony Music - now settled out of court, and with terms of the settlements likely to be kept confidential, the ambiguities over the termination right and recordings remain.