[author: Jason Joyal]
Thousands of musicians dream about the moment they will ink their first record deal. For the lucky few who break into the music industry, they are quickly ushered back to reality when, at the time of their “big break,” they realize they have little to no negotiating leverage—potentially resulting in one-sided transactions and a wholesale copyright assignment to a music publishing company.
The Opening (Copyright) Act
Recognizing this issue, the Copyright Act protects authors by allowing, under certain circumstances, an author to “recapture” his or her copyright by unilaterally terminating the underlying grant. When an author can recapture his or her rights depends on when the grant of a copyright transfer or license was made. Provided certain conditions are met, section 203 of the 1976 Copyright Act permits authors to terminate grants of copyright assignments and licenses that were made on or after January 1, 1978. The right of termination may be exercised without consideration and, so long as the work is not a “work made for hire,” cannot be waived. Notices of termination may be served no earlier than 25 years after the execution of the grant or, if the grant covers the right of publication, no earlier than 30 years after the execution of the grant or 25 years after publication under the grant, whichever is earliest. Termination of a grant, however, cannot be effective until 35 years after the execution of the grant or, if the grant covers the right of publication, no earlier than 40 years after the execution of the grant or 35 years after publication under the grant, whichever is earliest.
Under this framework, the first set of copyright assignments governed by the 1976 Copyright Act become eligible for termination on January 1, 2013. As a result, a looming crisis over termination rights is on the horizon. So where can musicians, the music industry and, more importantly, the courts obtain guidance on how to deal with what many are predicting to be a ticking time bomb for the music industry? To find out, we “Go West.”
The Main Act
In Scorpio Music S.A. v. Willis, No. 11-CV-1157- BTM (RBB), 2012 WL 1598043 (S.D. Cal. May 7, 2012), the Southern District of California was asked to decide whether Victor Willis, the popular, and at times enigmatic, front-man of the Village People, could recapture his rights to several musical compositions, including the hit songs “Y.M.C.A.,” “In the Navy,” and “Go West.” The suit, a declaratory relief action filed in July 2011, was initiated by Scorpio Music (Black Scorpio) S.A., a French music publishing company, Can’t Stop Productions, Inc., and Can’t Stop Music, a division of Can’t Stop Productions, Inc. The plaintiffs alleged that, between 1977 and 1999, Willis was hired to create lyrics for various musical compositions that were owned and published in France by Black Scorpio. Upon creating the lyrics, Willis executed various “adaptation agreements,” which transferred his copyright interests in 33 musical compositions to Can’t Stop Music, which thereafter assigned its rights to Black Scorpio. United States copyright registrations for these 33 compositions were subsequently filed, which credit Willis as one of several writers. In exchange for granting the plaintiffs his copyright interests, Willis received royalty payments ranging from 12 percent-20 percent of Can’t Stop Music’s gross receipts from the commercial exploitation of the compositions.
More than 30 years later, in January 2011, Willis served Black Scorpio and Can’t Stop Productions with a notice of termination of his grants in the 33 music compositions. Recognizing the potential financial impact of losing their rights to some of music’s most notorious hit singles, Black Scorpio and Can’t Stop Productions challenged the validity of Willis’ termination and asked a Southern District judge to issue a judgment declaring, among other things, that Willis has no legal interest or title to the music compositions. Willis’ team filed a motion to dismiss the declaratory relief action, which, in a decision that is sending shockwaves through the music industry, was granted on May 7, 2012.
In Willis, the court ultimately held that Willis may terminate his previous grants of his copyright interests to 33 music compositions. Providing insight into what the music industry is about to encounter, the court’s decision addressed a fairly nuanced point in the Copyright Act’s termination provisions. Indeed, as is often the case, songs and other musical compositions are authored by more than one person, with each maintaining an undivided copyright interest in the work as a whole. “In the case of a grant executed by two or more authors of a joint work,” the Copyright Act provides that “termination of the grant may be effected by a majority of the authors who executed it.” 17 U.S.C. § 203(a)(1). Willis was only a joint author of the compositions at issue, and had separately transferred his copyright interests.
The issue in Willis was whether a single author of a joint work may independently terminate a separate grant of his copyright interest in the joint work or whether a majority of all the authors is necessary to terminate that grant.
The Willis court concluded that a single author may independently terminate his separate grant of a copyright interest. The court recognized that co-owners of copyrights are treated generally as tenants in common, with each co-owner having an independent right to use and license the use of a work. As such, each co-owner of a joint work becomes a holder of an undivided interest in the copyright as a whole. Turning to the Act itself, the court also found support. Because section 203(a)(1) refers to a “grant” in the singular, under the plain meaning of the Act, “if two or more joint authors join in a grant of their copyright interests, a majority of the authors is necessary to terminate the grant. If, however, a single joint author enters into a grant of his copyright interest, that author alone can terminate his grant.” Section 203 does not provide, as the court found, “that where two or more joint authors entered into separate grants, a majority of those authors is needed to terminate any one of those grants.” As a matter of statutory construction, then, the court established that Willis, as a joint author who separately transferred his copyright interests, may likewise separately terminate that grant. The copyright interests independently transferred by his co-authors, however, are not affected by Willis’ termination.
Willis’ individual triumph notwithstanding, perhaps the most influential aspect of the Willis decision—and, indeed one that is worthy of concern by music publishers—is the emphatic recognition of Congress’ intent to protect creators of original works. As the court highlighted, the “purpose of the Act was to ‘safeguard authors against unrenumerative transfers’ and addresses ‘the unequal bargaining positions of authors, resulting in part from the impossibility of determining a work’s value until it has been exploited.’” Congress recognized the plight of many breakthrough musicians when it added section 203 to the 1976 Copyright Act. If Willis is any indication, now, too, will the courts.
The Inevitable Encore
So where does this leave the music industry? Many artists who were making music in the late 1970s, including headliners such as Bob Dylan, Tom Waits and the Eagles, have similarly filed notices of termination, informing their publishers and record labels that they intend to recapture their rights. Provided there are no deficiencies in their notices, or that other exceptions do not apply (i.e., a work made for hire), Willis suggests there may be little reason to doubt their success. And as we approach 2013, even more termination lawsuits could be on the horizon. Though too early to tell, some have suggested that music publishers may ultimately alter the manner in which they negotiate first-time deals, or may be more cognizant of individual copyright grants by joint authors. Regardless, as Willis represents the first of what could be many conflicting opinions among the District and Circuit courts on recapturing copyrights, only time will tell how both artists and the industry may adapt.