Music Business

Get it in writing: The importance of music industry contracts

Here, Stephen Carlisle offers a word of caution about the importance of getting copyright agreements in writing, and the expensive and litigation-filled shenanigans that can ensue when one fails to do so.

Guest post by Stephen Carlisle of NOVA Southeastern University

Two recently decided cases show the utmost importance of getting agreements regarding copyright ownership in writing – or else. What kind of “or else”? Spending years in Federal Court, and thousands of dollars litigating the issue.

The problem is that copyright vests automatically upon fixation of the work, 1 and vests in the author or co-authors of the work. 2 However, this is not the case with certain kinds of “works made for hire,” which must be in writing. 3 In addition, transfers of copyright ownership, 4 including splitting a copyright unevenly, 5 must be in writing.

The first case is Yellowcake, Inc. v. Hyphy Music. 6 There, a record company entered into a multi-album agreement with a recording artist, under an oral contract. The agreement lasted for four albums with each side performing its required duties. Then, an interloper, let’s call them the “Acquiring Company,” convinced the Artist (presumably since the agreement was not in writing), that he, not the Record Company owned the rights to the masters, and for a large sum of money “acquired” the copyright in the Masters, offering the Artist an indemnity if things went wrong. 7

Of course, it did go wrong. Demand letters and DMCA takedown notices flew back and forth for over a year between the Record Company and the Acquiring Company, before a copyright infringement suit was filed in 2020.

Record Company had registered the copyrights in the sound recordings as “employer” in a work for hire arrangement. 8 But this is not the case. Sound recordings are never mentioned in Section 101 as being capable of being a work made for hire in an independently created work. Even if they were covered by Section 101, these kinds of works require a writing, a fact not present here.

So, absent a valid “work for hire,” the only way that Artist transfers copyright to Record Company is by written agreement. Again, a fact not present here.

Yet, this does not doom Record Company’s case. The judge notes that the Record Company selected the songs on the albums, as well as producing the recordings in which Record Company gave Artist “artistic direction.” 9 This, in the eyes of the Court, is sufficient to make Record Company “at a minimum…a co-author, co-owner, or joint owner of the copyrights in the albums for the purposes of the Copyright Act.” 10

But, most importantly being a “co-owner” isn’t the same as being the 100% owner. So at best, Acquiring Company only bought half the rights they needed. This decision makes for one unhappy shotgun marriage between Record Company and Acquiring Company, because, as the Court notes, co-owners cannot infringe the copyrights they co-own, and thus have no standing to sue for infringement. 11

Gee, a simple writing would have saved everybody a lot of time and money, not to mention not getting stuck in a shotgun marriage.

Next up is the case of Brooks v. Dash, 12 involving a dispute between a motion picture producer and the director of the film, and once again, no written agreement. (As a side note, the case was withheld from the official reporter and so has limited precedential value). Director is claiming joint authorship and joint ownership of the completed motion picture.

At the outset we can note that motion pictures are one of those types of works that can be deemed a work made for hire, even if there is only an independent contractor relationship. 13 Yet, again there must be a writing to that effect, signed by the person giving up the rights. 14 And yet again, no such writing exists. There were drafts, three to be precise, but they were never executed.

Yet, all the drafts stated that the director was providing “work for hire” services and that Producer had sole discretion on all creative decisions on the film, including final cut. This proved to be very important. Just because one has contributed creative material to a copyrighted work does not necessarily create a co-authorship result.

There are two parts to co-authorship, one a collaboration by two or more people, and two, that this collaboration must be intentional, 15 that is everyone must agree and understand that a work of joint authorship is being created. This is what ultimately saves the case for the Producer.

While there is no doubt Director added creative elements, the ultimate tipping point is that Producer retained 100% creative control, including final cut. Producer could accept, or reject, whatever Director brought to the table. As Producer stated in an email “I am not offering creative control. I am offering a chance for you to bring an edit to the table…I will maintain final approval.” 16

This made Producer in the eyes of the Circuit Court the “dominant author.” And the dominant author decides whether to share the copyright. In this case, the weight of the evidence said there was no such agreement.

Lastly, even if there is agreement to have co-authors, there still needs to be a written agreement if the copyright is going to be split up unequally.

This was the result in Papa’s June Music v. McLean, 17 a dispute between Harry Connick, Jr. and his lyricist Ramsey McLean. The two had previously agreed in a written contract to an uneven split of the copyrights, owing to the much larger fame of Connick. Yet, when the contract expired, they continued to co-write more songs, but never executed a similar agreement. The record company started to pay the royalties 50-50 and Connick sued. But again we go back to section 204 of the Copyright Act. To agree to share the copyright unequally is in effect a mini-transfer of ownership from one co-author to the other. And therefore must be in writing.

This proved useful in my conflict with the MLC over ownership splits in a certain song, as I detailed in a previous blog post. 18 My client was indeed listed on the copyright registration as a co-author, yet the music publishing house was claiming 100% control and an uneven royalty split. My pitch to the MLC was simple: make the music publisher produce the written agreement by which the uneven split was agreed to. Last week, I was notified by the MLC that the publisher had withdrawn their claim, and I should register my client’s pro-rata share of the copyright.

The bottom line is this: if it involves copyrights, and especially issues regarding ownership, shares and splits, get it in writing.

Or else.

Notes:

  1. 17 USC 102
  2. 17 USC 201
  3. 17 USC 101
  4. 17 USC204
  5. Papa’s June Music v. McLean 921 F.Supp 1154 SDNY 1996
  6. 2021 WL 3052535 ED Cal. 2021
  7. Id. at 2
  8. Id.
  9. Id.
  10. Id.
  11. Id. at 7
  12. 2021 WL 2816727 2nd Circuit 2021
  13. 17 USC 101
  14. Id.
  15. Id.
  16. 2021 WL 2816727 2nd Circuit 2021 at 2
  17. Papa’s June Music v. McLean 921 F.Supp 1154 SDNY 1996
  18. The Ins and Outs, the Good and the Bad, of the Mechanical Licensing Collective

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1 Comment

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