Intellectual PropertyMedia & Entertainment

Copyright reversion rights: A contractual perspective

copyright reversion rights

Copyright reversion rights (also known as copyright termination rights) are, and will be continue to be, an important intellectual property and media law issue in the entertainment industry for the foreseeable future.

My previous article examined in detail the raft of recent copyright termination cases being brought by recording artists. Thee are also important contract law elements and alternatives to enforcement of copyright termination rights that artists can explore.

Copyright reversion rights – The Times are a Changin’

Copyright reversion rights provide hope for artists who signed up to a one-sided record deal more than three decades ago.

Under section 203 of the US Copyright Act 1976 if the author of a work signed away the copyright in his or her songs to a record label after 1 January 1978 then, 35 years from the date of execution of the grant, he and his heirs can terminate the assignment of copyright. This is known as ‘copyright reversion rights’ or ‘copyright termination rights’ or  and essentially means that the US copyright in the work will revert back to the author (or his heirs).

There is a window of five years for artists to recapture their copyright. The artist (or their heirs) must record a notice of termination with the US Copyright Office not less than two or more than ten years before the date they wish to recapture their copyright interests.

Who has already filed to recapture their rights?

Living artists and groups as diverse as Bob Dylan, Kris Kristofferson and The Village People and have already filed in respect of their 1978 and 1979 musical output. In respect of those musicians who has passed away the heirs of Ray Charles have also filed to recapture copyright in his back catalogue.

Why do copyright reversion rights take precedence over a signed contract?

Copyright grants are not forever. Although section 203 does not apply to a ‘work for hire’ (explained below), it otherwise takes precedence over a written publishing contract. This is true even if the contract is drafted as having effect for perpetuity.

While initially this may seem unbelievable to those at law school who are taught that the law will “mend no men’s bargains”, section 203 attempts to remedy the unequal bargaining power between the record label and the artist. Impressionable and desperate musicians often sign up to bad deals as they have no other choice.

Copyright reversion rights are therefore quite similar to an insurance policy for artists who signed away their artistic catalogue for less than adequate compensation before they were famous. It gives them a second chance to realise the value of their work, as at the time of signing an agreement the long-term market value of the work was not known.

Record label counter argument: work-made-for-hire

The major record companies like Universal, Sony and Warner are naturally trying to resist the loss of revenue they will suffer result if all of their legacy artists try to invoke their copyright reversion rights. This is especially true since recent trends show that old albums from their major artists with substantial back catalogues are now outselling new albums for the first time.

One of the main legal arguments filed by the record labels is that the recording artists produce the musical works while in the employment of the record label.

Generally, when an author:

  • is an employee and creates a work in the scope of their employment; or
  • is an independent contractor and both the author and person enganging him agree in writing that that the work will be a work-made-for-hire,
  • the work will be classed as a work-made-for-hire. In Siegel v Warner Bros it was held that copyright cannot be terminated in a work-made-for-hire under section 203 as “the copyright in such a creation never belonged to the artist in the first instance to grant; instead, it belonged at the outset to the party that commissioned the work.”

Alternative to copyright reversion rights: Settling out of court

Undoubtedly, the big three record labels have deeper pockets than individual artists. However, there is the potential for hundreds of copyright reversion claims that the label may have to defend in the near future.

In my view, rather than the expense of litigating, we may see the record companies and artists taking a practical approach and settling out of the court by simply negotiating new publishing contracts that are more balanced (and including a settlement and release as part of the new agreement).

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