Recording Studios & Works For Hire: US Law
Statement of Marybeth Peters
The Register of Copyrights before the Subcommittee on Courts and Intellectual Property Committee on the Judiciary
United States House of Representatives 106th Congress, 2nd Session
May 25, 2000
Sound Recordings as Works Made for Hire
Mr. Chairman, members of the Subcommittee, I am pleased to testify today on the issue of sound recordings as works made for hire, and I commend the Subcommittee for holding this hearing and providing those most interested in this contentious issue the opportunity to present their views.
Late last year, an amendment incorporated into the Satellite Home Viewer Improvement Act of 1999, enacted as part of Pub. L. No. 106-113, 113 Stat. 1501 (1999), added sound recordings to the list of commissioned works that may be considered works made for hire. Performers are concerned about this change because a grant of rights may be terminated by an author at a time specified in the Copyright Act unless the author's contribution is considered a work made for hire. Before the stated date of termination, the author or performer can renegotiate for a better deal with his original record company, or upon termination he can make a new deal with a new record company. Performers argue that their contributions to a sound recording, when made as a result of a contract as opposed to an employment relationship with a record company, should not be considered works made for hire. The record industry believes that the amendment simply clarifies what was existing law, and confirms that a record company will not be held hostage by one of many performers or others who may be joint authors of a sound recording, who may terminate his or her rights even though all of the other contributors have no desire to terminate.
What I would like to do today is to provide the Subcommittee with the historical and legal context relevant to the recent amendment and to offer my evaluation of the merits of the amendment. In order to understand the significance of the amendment, it is necessary to understand the nature, purpose and history of the concept of works made for hire, the author's right to terminate transfers of rights in copyrighted works, copyright protection for sound recordings, and some other important copyright law doctrines. It is also necessary to understand developments in the recording industry over the past few decades.
It is understandable why the recording industry desired the enactment of this amendment. The amendment was designed to address the prospect that the rights of record companies to continue to exploit many popular sound recordings would be in doubt -- and indeed, that it would be unclear who would have the right to exploit those sound recordings. However, for reasons that I will discuss later, this was a substantive amendment to the law, not a technical amendment as some have claimed. I believe that on reflection it is also apparent that the solution offered by the recent amendment was an imperfect one, and that Congress should consider further amendments that would create the proper balance of rights among record companies, performers and others involved in the creation of recorded musical performances. In the 20th Century, there have been two comprehensive revisions of the copyright law. The first revision, the Copyright Act of 1909, was in effect from 1909 through 1977. The second revision, the Copyright Act of 1976, went into effect in 1978 and made many fundamental changes in copyright law. The 1976 Copyright Act has been amended many times and remains in effect today.
The revision process that led to the enactment of the 1976 Copyright Act spanned many years, beginning in 1955 with studies by the Copyright Office. To understand the status of sound recordings in the 1976 Act, it is necessary to review the history of that revision process. But first, one must understand certain principles of law that were in effect during the era of the 1909 Act.
Sound Recordings as Copyrightable Subject Matter
Under the 1909 Copyright Act, sound recordings were not protected under the federal copyright law. They were protected, if at all, under state law. In the revision process that led up to the 1976 Act, the status of sound recordings was the subject of much discussion. As early as 1961, the Register of Copyrights recommended that sound recordings "be protected against unauthorized duplication under copyright principles."(1) This topic was controversial, and sound recordings were not included in the 1963 preliminary draft. However, they were included as copyrightable subject matter in the 1964 revision bill.(2) Congress, although reluctant to carve out any portion of the general revision bill which would eventually result in the 1976 Act, responded to the increasingly urgent complaints made by the recording industry regarding widespread record and tape piracy. A bill extending limited copyright protection to sound recordings was passed by Congress and signed into law on October 15, 1971.(3) It took effect four months later on February 15, 1972.
It is important to note that the 1971 Act did not fix the beneficiaries of protection in sound recordings. The legislative history states:
The copyrightable elements in a sound recording will usually, though not always, involve 'authorship' both on the part of the performers whose performance is captured and on the part of the record producer responsible for setting up the recording session, capturing and electronically processing the sounds, and compiling and editing them to make the final sound recording. There may be cases where the record producer's contribution is so minimal that the performance is the only copyrightable element in the work, and there may be cases (for example, recordings of birdcalls, sounds of racing cars, etc.) where only the record producer's contribution is copyrightable. As in the case of motion pictures, the bill does not fix the authorship, or the resulting ownership, of sound recordings, but leaves these matters to the employment relationship and bargaining among the interests involved.(4)
Works Made for Hire
The work made for hire doctrine provides that under certain circumstances, the law will deem the employer of the person or persons who actually created a work to be the "author" of the work. The consequence of the work made for hire doctrine was and is that the employer can exercise all the rights of ownership of the work and avoid the consequences of other provisions of copyright law that have permitted the persons who actually created the work to recapture those rights. I will discuss those other provisions in a moment.
The 1909 Copyright Act stated that "the word 'author' shall include an employer in the case of works made for hire."(5) The Act did not expressly address commissioned works, which left a broad scope for interpretation. In the cases regarding commissioned works decided under the 1909 Act, rights were generally held to vest with the hiring party.(6)
The 1976 Act, however, made a clear distinction between works prepared by employees in the course of their employment and works prepared on commission, a distinction that is still maintained today. Works prepared by employees in the course of their employment are categorized as works made for hire, with authorship, and thus ownership as well, recognized in the employer. In contrast, commissioned works can only be considered works made for hire if they fall within certain specified categories, and even then, only if the person commissioning the work and the person or persons accepting the commission agree in writing that the work to be created will be considered a work made for hire.
In the 1976 Act, the types of commissioned works which may be considered works made for hire under section 101 were limited to: a contribution to a collective work, a part of a motion picture or other audiovisual work, a translation, a supplementary work, a compilation, an instructional text, a test, answer material for a test, and an atlas. The first four categories were agreed upon in 1965, early in the copyright law revision process. Compilations, instructional texts, tests, and atlases were added by the House Committee on the Judiciary in 1966.(7) "Answer material for a test" was added upon the enactment of the 1976 Act. I will discuss how the 1976 Act's approach to works made for hire came about in a few moments.
The Termination Right
The Copyright Act permits an author to transfer any or all of his exclusive rights. Typically an author would do so in return for financial compensation -- perhaps a single payment or a continuing royalty. As a protection to authors, the law requires that the transfer be made by means of a signed written conveyance.
Under the 1909 Act, copyrights could be renewed, after 28 years, for a further 28 years, resulting in a total of 56 years of protection for works whose copyrights were renewed. An important feature of renewal was that even if an author had assigned all of his rights to a publisher or a record company or somebody else during the first term, by operation of law the author reacquired those rights at the beginning of the renewal term. Case law qualified this right to recapture the copyright in some circumstances, but as a general proposition the renewal copyright belonged to the original author or his heirs as specified in the copyright statute.
Renewal copyright served an important goal of copyright law: to protect the author against unfavorable transfers by giving the author of a work the opportunity to renegotiate his contract and enjoy the fruits of his creative labors. An unknown author might sell a publisher all the rights in what might become the Great American Novel for a pittance; the renewal term provided him with the opportunity to renegotiate those rights and obtain a greater share in the success of the work. Most works were not renewed presumably because they had not increased in value during the 28 year first term of copyright or they were no longer being commercially exploited; however, for those works that did increase in value or still had commercial viability, the author or more frequently his widow and/or children did use their second chance to share in the increased value of the work.
Although the general rule was that the author was entitled to renew the copyright, there were some exceptions. The most important exception was for works made for hire. The renewal copyright in a work made for hire belonged not to the person who created that work, but to the proprietor of the copyright at the end of the first term, who would be either the original employer or someone who had obtained the copyright from the employer.
The 1976 revision of the copyright law abandoned the two-term copyright for all works created in 1978 and thereafter, and adopted a single term running for the life of the author plus fifty years. In the case of a work made for hire, which was not deemed to have a natural author, the term was 75 years from the year of the work's first publication or 100 years from the year of its creation, whichever expired first. In 1998, these terms were extended by an additional 20 years.
In abandoning the renewal copyright, Congress did not intend to deprive authors of the right they had always had to recapture their rights years after their works were originally exploited. In place of the author's right to renew the copyright after 28 years, Congress gave the author (or his widow and children) the right to terminate grants of copyrights made by the author and reclaim those rights at certain points in the life of the copyright. These termination rights can arise in two contexts.
Section 203 of the 1976 Copyright Act provides that a grant of a transfer or license of a copyright that was made by an author in or after 1978 may be terminated by that author (or his widow and/or children) after 35 years (or up to 40 years in certain circumstances.). This ability of an author to terminate his grant of rights is critical to the scope of his protection under the Copyright Act. The legislative history of the 1976 Act recognized the importance of the termination right to all authors:
The provisions of section 203 are based on the premise that the reversionary provisions of the present section on copyright renewal should be eliminated, and that the proposed law should substitute for them a provision safeguarding authors against unremunerative transfers. A provision of this sort is needed because of the unequal bargaining position of authors, resulting in part from the impossibility of determining a work's value until it has been exploited.(8)
With certain exceptions, section 203 provides that transfers executed on or after January 1, 1978 may be terminated 35 years after the date of the grant. Authors must give notice of their intent to terminate not less than two or more than ten years from the intended termination date. Termination of grants made in 1978 could begin, therefore, in 2013, with notices first served in 2003.(9) An author has a five-year window from the end of the 35-year period of the grant in which to exercise his termination right.(10) If he fails to do so, all the rights covered under the existing grant will continue for the term of the copyright.
A second termination right, set forth in section 304, applies to transfers executed before January 1, 1978. The 1976 Copyright Act extended the copyright term for pre-1978 works by 19 years. Congress decided that the beneficiary of that 19-year extension should be the author, rather than the assignee of rights in a work. Congress accomplished this by giving the author (or his heirs as specified in the statute) a right to terminate a pre-1978 transfer of the renewal copyright effective at any time within a five-year period commencing fifty-six years after the copyright had been secured. The author must give notice of his intent to terminate between two and ten years before the effective date of termination. Because sound recordings were first eligible for copyright protection in 1972, the first date terminations under this provision could be effective will be in the year 2028, and the first notices of such terminations can be served in 2018.(11)
Typically, a commercial sound recording will be a work of joint authorship by a number of contributors. Section 101 of the Copyright Act defines a joint work as "a work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole." Section 201, on ownership of copyright, states that "authors of a joint work are co-owners of copyright in the work." Legislative history elaborates: "Under the bill, as under the present law, coowners of a copyright would be treated generally as tenants in common, with each coowner having an independent right to use or license the use of a work, subject to a duty of accounting to the other coowners for any profits."(12)
Although joint owners of a copyright may independently and concurrently license any of their rights in the work, such licences are necessarily nonexclusive unless all of the joint owners join in the grant. Thus, in the absence of contractual restrictions, each of the joint authors of a sound recording could grant a different record company the right to distribute the sound recording, subject only to a duty to account to the other joint authors for their share of the profits. Of course, the general practice in the record industry is for all the performers and other contributors to sign work-made-for-hire agreements as well as to assign all of their rights to a single record company, which then has the exclusive right to distribute and otherwise exploit the sound recording.
The exercise of termination rights in works of joint authorship presents special problems. If each of the coauthors of a work has the independent right to terminate a grant of rights, the grantee who originally received exclusive rights from all of the coauthors will be transformed into a nonexclusive licensee when even a single coauthor exercises the termination right and the other coauthors do not.
In recognition of the problems that might result if any one of a potentially large number of coauthors terminates a transfer, the drafters of Section 203 limited the right of termination in such situations. Section 203 specifies that "[i]n the case of a grant executed by two or more authors of a joint work, termination of the grant may be effected by a majority of the authors who executed it." For example, in the case of a rock band, if five band members were to sign a single transfer agreement, as is standard practice in the recording industry, at least three out the five members would have to agree to terminate for the termination to be effective. The minority members would be bound by the decision of the majority to terminate and would receive a proportionate share of the reverted rights whether or not they had signed onto the notice of termination. Legislative history explicitly acknowledges "the dangers of one or more beneficiaries being induced to 'hold out.'"(13)
However, the members of the band could be joint authors with a producer as well, although he likely would have transferred his rights in a separate document. If that transfer was not in the same document as the transfer from the members of the band, the producer would have an independent right to terminate his transfer. But as long as at least one of the coauthors (or, in the case of coauthors who jointly assigned rights, a group of coauthors) has not terminated his rights, the record company could, irrespective of the termination of a co-owning artist or producer, continue to exploit the work. If one but not all artists or producers who jointly authored a work chose to terminate with the original record company and negotiate terms with a new company, multiple versions of a single sound recording could in theory be on the market simultaneously, competing with each other.
In contrast to the Section 203 termination right for transfers executed in or after 1978, the termination right under section 304 may be exercised by any of the coauthors of a joint work, even if all the coauthors executed the same original grant of rights. Such a termination shall affect only that "particular author's share in the ownership of the renewal copyright." 17 U.S.C. �304(c)(1).
The Copyright Act offers limited guidance as to who may qualify as a joint author. Section 101 defines a "joint work" as "a work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole." The trend in recent cases has been to limit the number of people who, when contributing to the creation of a copyrightable work, can claim to be joint authors. For example, in Childress v. Taylor, 945 F.2d 500, 509 (2d Cir. 1991), the court held that "equal sharing of rights should be reserved for relationships in which all participants fully intend to be joint authors. The sharing of benefits in other relationships involving assistance in the creation of a copyrightable work can be more precisely calibrated by the participants in their contract negotiations regarding division of royalties or assignment of shares of ownership of the copyright . . . ." The court concluded that a prerequisite of joint authorship is a mutual understanding among the contributors that they are to be regarded as joint authors. 945 F.2d at 508. The importance of control over the finished work has also been emphasized in determining authorship.(14) To the extent that there is a trend that limits the nature or number of contributors who can claim joint authorship, the courts are indirectly ameliorating the problem caused by the existence of concurrent rights of termination among coauthors.
Sound Recordings as Works Made for Hire in Legislative History of the 1976 Act
As already mentioned, during the Copyright Law Revision efforts of the 1960s, the old work-for-hire doctrine of the 1909 Act was revamped. After extensive negotiations supervised by Congress and the Copyright Office, representatives of authors, composers, book and music publishers and motion picture studios succeeded in redefining the concept of works made for hire. They settled upon the two-pronged approach to works made for hire discussed above, which encompassed both traditional works made by employees in the course of their employment and certain classes of specially commissioned works.(15)
With respect to specially ordered or commissioned works, each category was proposed by a particular copyright industry and each proposed category was fully debated. The question considered was why should a particular type of work be treated as a "work made for hire." Works included in these categories tend to be works done by freelance authors at the instance, direction, and risk of a publisher or producer where it was argued that it would be unfair to allow such authors to terminate assignments of rights. Other exceptions (contributions to collective works, parts of motion pictures), were based on the fact that the resulting work involved numerous authors and that permitting terminations of grants of rights to such works would cause chaos.
Although sound recordings were being contemplated as copyrightable subject matter contemporaneously with the mid-1960's debate over works made for hire, they were never proffered as a category to be added to the list of commissioned works.(16) Thus, sound recordings were never considered for inclusion as a category in the specially ordered or commissioned work made for hire provision. Had the recording industry suggested inclusion of sound recordings, it is unclear what the result might have been given that work made for hire is an exception to the general rule of recognizing the creator as the author. When they were discussed in a work-for-hire context at all, it was peripherally.
Recording Industry Practice
Although the recording industry has changed considerably since the 1960s, the contracts signed between record companies and performers appear to have changed very little. Most contracts contain clauses specifying that the works produced by performers are works made for hire. Such contracts generally contain an additional clause providing that if the work created is found by courts to fall within neither prong of the definition of works made for hire, that the performer assigns all his rights to the record company.
Under the law as it existed before the 1999 amendment, courts assessing whether an individual sound recording was a work made for hire had to determine whether sufficient evidence existed of an employer/employee relationship to qualify the sound recording under the first prong of the definition or whether the sound recording could be placed within one of the categories of commissioned works which could be considered works made for hire under the second prong.
In the 1960s, record companies exercised a great deal of control over the creation of a sound recording, employing back-up singers and engineers and owning the studio space in which featured artists would record. In this framework, record companies uniformly asserted an employment for hire relationship with featured artists.(17) It seems possible that because of this employment relationship, record companies did not seek to include sound recordings as a category in the specially ordered or commissioned prong of the work made for hire definition.
That level of involvement by the record companies in the creation of sound recordings has generally diminished over the last few decades, so that now, in many cases, record companies simply provide funds at the "front-end," and distribution at the "back-end," of a sound recording's production. By hiring or acting as producers, by retaining back-up singers, musicians and engineers, and by recording in their own studios or at independent studios, featured artists have increasingly come to control the creative elements of a sound recording, making it considerably more difficult now for record companies to characterize artists as employees producing works within the scope of their employment. This is particularly true given the factors used by the Supreme Court to distinguish between employees and independent contractors in Community for Creative Non-Violence v. Reid.(18)
Another trend in the record industry that may just be beginning, but which may have an equally significant impact on the issue of sound recordings as works made for hire, is a possible change in the way in which sound recordings are distributed. For most of the period since sound recordings were given federal copyright protection, sound recordings have been distributed predominantly in the form of albums, first as long-playing vinyl records and later as compact disks. That distribution model may be changing with the advent of the internet and other means of digital distribution of sound recordings. Consumers may no longer purchase sound recordings in the form of albums containing performances of a dozen or more songs. Instead, they may purchase individual performances by downloading them from the internet or by copying them onto a compact disk at an electronic kiosk in a record store, perhaps in the form of customized albums containing a selection of performances chosen by the consumer. This trend may have serious implications for a theory that record companies relied on before the recent amendment to support their claims that specially commissioned sound recordings qualify as works made for hire: the theory that a record album is a collective work or compilation.
Pre-November 29, 1999, Recordings
My conversations with representatives of both performers and record companies have confirmed my previous understanding: recording contracts almost always contain provisions which deem the sound recordings and any contributions to them works made for hire. Copyright Office records show that claims to copyright for sound recordings filed by record companies in the 1970's named a record company as author by virtue of the work made for hire doctrine and that today featured artists as well as record companies have filed claims to copyright listing themselves as authors by virtue of the work made for hire doctrine.(19) However, the fact that work-for-hire agreements and copyright registrations as works for hire have been made does not lead to the legal conclusion that the sound recordings that are the subjects of those agreements and registrations are indeed works made for hire. If a specially ordered or commissioned work does not fall within one of the categories set forth in the second part of the statutory definition, the agreement of the parties cannot transform it into a work made for hire. With respect to copyright registration, the Copyright Office does not inquire whether a sound recording meets all the requirements for a work made for hire. Additionally, the fact that the recent amendment to the definition of works made for hire corresponds to record industry practice does not make it a technical amendment if that industry practice did not correspond to the legal requirements for works made for hire.
Record companies have argued that even under the law as it existed before last November, the vast majority of commissioned sound recordings qualified as works made for hire because they were contributions to collective works or compilations, two categories of works included in the statutory definition. This theory may well be valid under traditional distribution models. A record album may well be considered a collective work, and a sound recording of each performance included on the album therefore may well be a contribution to a collective work. The courts have not yet addressed this issue, although several courts have stated that sound recordings as such are not among any of the nine categories of specially ordered or commissioned works.(20) Some representatives of performers have rejected the theory that an individual sound recording on an album can usually be considered a contribution to a collective work, arguing that an album of songs by the same artist, delivered by that artist to a record company, does not qualify as a collective work.
Even if most sound recordings do qualify as contributions to collective works, it does not make the recent amendment, which added sound recordings as a new category in the definition of works made for hire, a technical amendment.(21) In fact, if the future distribution models that may abandon the concept of the album come to pass, the amendment adding sound recordings to the list of candidates for work-make-for-hire status will prove to be anything but technical.
In any event, I take no position today on whether sound recordings will usually qualify as contributions to collective works. It will be up to the courts to resolve that issue. It is certainly likely that at least some contributions to sound recordings will be deemed to be contributions of individuals who did not work for hire. In such cases, these authors will have the right to terminate their contracts and may elect to do so in the exceptional case where the value of their rights has substantially increased.
Analysis of Amendment and Recommendation
As I have just stated, I do not consider the recent amendment to have been a technical amendment. It changed existing law by adding sound recordings as a category of commissioned works which may be considered works made for hire.
However, because that amendment has already been enacted, the more important question is whether it has substantive merit. I believe that there is much merit to the amendment. Most sound recordings will have a number of potential coauthors, including all of the musicians who perform on the recording, the producer of the recording, and perhaps others. There could easily be a dozen or more potential coauthors of a single sound recording. If the sound recording was not a work made for hire, any one of those coauthors (or, in the case of coauthors joining in a single grant, any group of coauthors) would have a right to terminate pursuant to section 203. Even where many of the performers have joined in a single grant, there are likely to be a number of other contributors to the performance who were not parties to the same contract and who could independently exercise the right of termination.(22)
If any one of a number of coauthors has the right to terminate the grant of rights, the record company might be faced with a situation in which it can be held hostage to the demands of the individual artist who knows that he can deprive the record company of the exclusive right to exploit the work simply by assigning his nonexclusive rights to another record company, or by exercising those rights himself, despite the fact that the original record company continues to enjoy its grants of rights from his coauthors. The original record company's incentive to continue to exploit the work under such circumstances will be greatly reduced if somebody else is also in a position to exploit the identical recording.
Thus, record companies have legitimate grounds to fear that even if only one of the many potential claimants to the status of "author" of a particular sound recording elects to terminate the assignment of his interest in the copyright, neither the original assignee nor anybody else will be able to exercise exclusive rights in the work, and the existence of a multiplicity of owners of nonexclusive rights is likely to make many if not most works unmarketable when a single coauthor terminates. The addition of sound recordings to the list of works eligible to be commissioned works made for hire offers a solution to this problem.
However, I am not persuaded that the recent amendment achieves the proper balance. It is a basic principle of copyright law that authors should be able to terminate their initial grants of rights. Consistent with the 1976 Act, in the absence of a specific reason for making sound recordings works made for hire, the right to terminate should remain with authors. With respect to works other than sound recordings, authors have already terminated grants under section 304, and the practice seems to have achieved Congress' goal and not caused undue harm.
The Copyright Office believes that those who contribute significant authorship to a sound recording should have the right to terminate. I will refer to these persons as "key contributors." I use the term "key contributors" because, as the recording industry has correctly emphasized, permitting every contributor to a sound recording to exercise termination rights could make the exploitation of a sound recording unworkable. I do not proffer this term as a proposed statutory term, nor do I offer any specific legislative language at this time. Rather, I offer it as a concept that should seriously be explored.
Who is a "key contributor"? It is someone who has made a major contribution of copyrightable expression to a sound recording. Ordinarily, it would include the featured performer or performers. For example, Frank Sinatra and Madonna would clearly be key contributors of authorship to the sound recordings on which they perform. Each of the members of the Beatles and Metallica would also be key contributors. In contrast, a background musician would not be a key contributor. Exempting those key contributors from the work made for hire provisions should result in only a limited number of potential terminations. This could be accomplished by retaining the inclusion of sound recordings among the categories of works eligible to be commissioned works made for hire, but excluding the contributions of these key contributors from work-made-for-hire status. The result would be that the sound recording would be a joint work that is in part a work made for hire and in part a work of individual authors.(23)
This concept is similar to the approach that has been suggested to me by representatives of performers; the language shown to me would exclude a featured recording artist who is defined as "... an artist, whether an instrumentalist or vocalist, who has a royalty contract with respect to the distribution of the sound recording." This definition may not sufficiently limit the class with termination rights because secondary performers may also receive royalties.
Consideration should also be given to whether producers of sound recordings should, at least in some circumstances, also be able to terminate as key contributors. There are many examples of producers, such as Quincy Jones, Phil Spector, and Babyface, whose contribution of authorship to a sound recording can equal or even exceed that of the featured artist. The voices of record producers have not yet been heard in this debate, and their views and contributions should be considered.
I believe that this approach could address both the record industry's understandable concern that rights to sound recordings may be placed in limbo due to the multiplicity of potential claimants with a right to terminate, and the performers' complaint that the recent amendment has deprive them of the right enjoyed by all other authors to recapture the value of their creative contributions. It should the exception rather than the rule where there will be so many key contributors to a sound recording that record companies and performers will experience great difficulty in sorting out the consequences of a coauthor's exercise of the right of termination. And those performers who common sense tells us are, as a practical matter, the real "authors" of sound recordings would be able to exercise the termination rights enjoyed by all other authors.
If the Subcommittee finds that my suggestions are worth exploring, I would be pleased to work with the Subcommittee and with representatives of the record companies, performers, producers and other interested parties in an effort to resolve this contentious issue.
1. Copyright Law Revision Part 1: Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law, House Comm. on the Judiciary, 87th Cong., 18 (Comm. Print, 1961).
2.Copyright Law Revision Part 5: Supplementary Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law: 1964 Revision Bill, House Comm. On the Judiciary, 89th Cong., 7 (Comm. Print, 1965).
3. Pub. Law. No. 92-140, 85 Stat. 391; see Omnibus Copyright Revision: Comparative Analysis of the Issues 64-65 (Arthur B. Hanson, ed.) (1973).
4. H.R. Rep. No. 92-487, at 5 (1971); S. Rep. No. 92-72, at 5 (1971).
5. Act of March 4, 1909, ch. 319, 35 Stat. 1075 (codified in 1947 as 17 U.S.C. � 26; repealed 1978).
6. See Melville B. Nimmer and David Nimmer, Nimmer on Copyright, � 5.03[B][c].
7. H.R. Rep. No. 89-2237, at 116 (1966).
8. H.R. Rep. No. 94-1476, at 124 (1976).
9. It should be noted that the provisions of section 203 do not affect the ability of the parties to terminate a contract before the 35-year grant period has expired. Any new grant of rights by an author would trigger a new termination right.
10. However, the law provides that a derivative work prepared under the original grant can continue to be utilized under the terms of that grant.
11. A similar termination right was recently added with respect to the 20-year extension of the term of copyright enacted in 1998. Pub. L. No. 105-298, 112 Stat. 2827.
12. H.R. Rep. No. 94-1476, at 120 (1976).
13. H.R. Rep. No. 94-1476 at 125 (1976).
14. See, e.g., Aalmuhammed v. Lee, 202 F.3d 1227 (9th Cir. 1999).
15. The 1963 preliminary draft defined a work made for hire as "a work prepared by an employee within the scope of the duties of his employment, but not including a work made on special order or commission." The last phrase was vehemently opposed by book publishers and others. The 1964 bill attempted to solve the problem by including in the definition "a work prepared on special order or commission if the parties expressly agree in writing that it shall be considered a work made for hire." This approach was rejected by representatives of authors.
16. Telephone interview with Barbara Ringer, former Register of Copyrights, (May 16, 2000).
17. See, e.g.,Copyright Law Revision Part 3: Preliminary Draft for Revised U.S. Copyright Law and Discussions and Comments on the Draft House Comm. on the Judiciary, 88th Cong., 352-358 (comments, Sidney A. Diamond, London Records, writing on his own behalf, February 11, 1963).
18. Community for Creative Non-Violence v. Reid, 490 U.S. 730, 751-752 (1989) ("the source of the instrumentalities and tools; the location of the work; duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party's discretion over when and how long to work; the method of payment; the hired party's role in hiring and paying assistants; whether the work is part of the regular business of the hiring party . . .").
19. While most registrations of sound recordings are filed by record companies as employers for hire, some registrations are filed by performers as employers for hire. Bruce Springsteen is an example of a performer who is registered as an employer for hire.
20. See, e.g., Staggers v. Real Authentic Sound, 77 F. Supp. 2d 57 (D.D.C. 1999); Ballas v. Tedesco, 41 F. Supp. 2d 531 (D.N.J. 1999); Lulirama Ltd. v. Axcess Broadcast Services, Inc., 128 F. 3d 872 (5th Cir. 1997).
21. Representatives of performers have expressed concern that the fact that the recent amendment was labeled a "technical amendment" might influence some court in the future to conclude that Congress must have intended sound recordings to be a category of works eligible to be commissioned works made for hire even before the amendment was made. I do not believe that the fact that this amendment was labeled as "technical" carries any weight in interpreting the state of preexisting law. In determining whether sound recordings were intended to be an eligible category for works created from 1978 through November 29, 1999, it is the language of the 1976 Copyright Act and the intent of the 94th Congress that enacted that law that is relevant.
22. The termination right under section 304 gives each coauthor a right to terminate, whether or not the coauthor joined in a single grant. But because that right pertains only to grants made before 1978, when most if not all sound recordings probably were works made for hire under the more liberal definition of the 1909 Act, the section 304 termination right is not likely to be significant for sound recordings.
23. This would be nothing new. Already it is possible for two or more persons to collaborate on a work, and for one of the collaborators to be contributing as an employee for hire and another to be contributing as an author in his own right.
U.S. Copyright Office
What is the Orrin G. Hatch-Bob Goodlatte Music Modernization Act?
The Music Modernization Act updates the music licensing landscape to better facilitate legal licensing of music by digital services. It also provides certain protections (and exceptions to those protections) to pre-1972 sound recordings, and addresses distribution of producer royalties.
What does the Music Modernization Act do?
The Music Modernization Act has three main sections:
- Title I – The Musical Works Modernization Act, which creates a blanket license for interactive streaming services, and establishes a mechanical licensing collective (MLC) as well as a digital licensee coordinator (DLC), making it easier for services to obtain licenses and for creators to collect royalties.
- Title II – The Classics Protection and Access Act, which created federal rights for owners of sound recordings made before February 15, 1972.
- Title III – The Allocation for Music Producers Act (AMP Act), which creates a path to collect certain royalties for music producers, mixers, and sound engineers.
Title I – The Musical Works Modernization Act
What is the mechanical licensing collective?
The mechanical licensing collective (“MLC”) is a nonprofit entity that will administer the new blanket licensing system established by the Music Modernization Act beginning on the “license availability date”—that is, January 1, 2021. The MLC will receive notices and reports from digital music providers, collect and distribute royalties, and identify musical works and their owners for payment. It will establish and maintain a publicly accessible database containing information relating to musical works (and shares of such works) and, to the extent known, the identity and location of the copyright owners of such works and the sound recordings in which the musical works are embodied. In cases where the MLC is not able to match musical works to copyright owners, it is authorized to distribute the unclaimed royalties to copyright owners identified in the MLC records, based on the relative market shares of such copyright owners as reflected in reports of usage provided by digital music providers for the periods in question.
What is the digital licensee coordinator?
The digital licensee coordinator (“DLC”) is a nonprofit entity that coordinates the activities of the licensees and designates a representative to serve as a non-voting member on the board of the MLC. The DLC is authorized to participate in proceedings before the Copyright Royalty Judges to establish the administrative assessment to be paid by digital music providers to operate the MLC.
What entities have been designated as the MLC and the DLC?
Mechanical Licensing Collective, Inc. (“MLCI”) is designated as the MLC. Digital Licensee Coordinator, Inc. (“DLCI”) is designated as the DLC. Before making these selections, the Copyright Office conducted a public proceeding in which it received proposals from entities seeking to be designated, as well as more than 600 comments from stakeholders throughout the music industry. Information about the designation process is available here. Contact information for the MLC and DLC is available here.
Why did the Register designate MLCI and DCLI?
The Register designated MLCI as the MLC because it demonstrated that it meets each of the statutory criteria, and it was only candidate that satisfied the statute’s endorsement requirement. MLCI also demonstrated that it is well positioned to carry out the MLC’s administrative and technological functions, including receiving notices and reports from digital music providers, collecting and distributing royalties, matching copyright owners to sound recordings, and maintaining a publicly accessible database. The Register also determined that each of MLCI’s proposed board members is well qualified to serve on the board in accordance with the statutory criteria.
Similarly, the Register determined that DLCI fulfills each of the statutory criteria for designation. It was endorsed by service providers and licensees representing the greatest percentage of the relevant market, and it demonstrated the administrative and technological capabilities to perform its required duties. The Register found each of its individual board members to be well qualified.
Who pays for the operational costs of the MLC?
The operational costs of the MLC will be paid for by digital music providers through voluntary contributions and an administrative assessment set by the Copyright Royalty Judges. The MLC and the DLC will be authorized to participate in proceedings before the Copyright Royalty Judges’ proceedings to establish the administrative assessment paid for by digital music providers to operate the MLC.
Will the MMA change the rates for the compulsory license under section 115?
The new legislation does not change the rates for the compulsory license under section 115. However, the legislation does establish a new rate setting standard to be applied by the Copyright Royalty Judges. The new market-based willing buyer / willing seller rate setting replaces the policy-oriented 801(b)(1) rate-setting standard. The Copyright Royalty Judges will apply the new standard to rate determination proceedings that commence on or after October 11, 2018.
Can I still file a NOI with the Copyright Office?
The existing system for filing notices of intention to obtain a compulsory license for making and distributing phonorecords of nondramatic musical works (NOIs) with the Copyright Office on a song-by-song basis will remain in place for non-digital uses (e.g. CDs, vinyl).
However, the Copyright Office will no longer accept NOIs to obtain a compulsory license for making a digital phonorecord delivery of a musical work, such as in the form of a permanent download, limited download, or interactive stream. Instead, after a transition period, during which the Register will issue relevant regulations and designate key entities to carry out administration of the license, the new license becomes available on a blanket basis (covering all musical works available for compulsory licensing). Digital phonorecord deliveries are obtained under the new blanket license by submitting a notice of license to the mechanical licensing collective (MLC). In the interim before the blanket license is available from the MLC, the liability for digital music providers will be limited so long as they comply with certain requirements, including engaging in good-faith, commercially reasonable efforts to identify and locate each copyright owner of a musical work they use on their service. See the below FAQ on what happens during the transition period for more details.
What happens during the transition period?
Prior to the availability of a blanket license from the MLC, a digital music provider can enjoy a limitation of copyright infringement liability for use of a musical work for which the digital music provider was unable to identify or locate the musical work copyright owner, so long as the digital music provider engages in good-faith, commercially reasonable efforts to identify and locate musical work copyright owners. The digital music provider must also be prepared to pay accrued royalties to the musical work copyright owner once they are located. As part of engaging in good-faith, commercially reasonable efforts to identify musical work copyright owners, the digital music provider is required to use one or more bulk electronic matching processes, and must continue using these processes on a monthly basis for so long as the musical work rights owner is unidentified. If the musical work copyright owner is identified or located during this search process, then the digital music provider is required to report and pay that copyright owner any royalties owed. If the musical work copyright owner remains unidentified between the date of enactment and the date the blanket license is available, then the digital music provider is required to provide a cumulative usage report and accrued royalties to the mechanical licensing collective.
How will I claim my royalties from the MLC?
Once established, the MLC will establish and administer a process by which copyright owners can claim ownership of musical works (and shares of such works). Once an owner of an unmatched work has been identified and located in accordance with the procedures established by the MLC, the musical works database and the other records of the MLC will be updated accordingly. The MLC dispute resolution committee will implement policies and procedures to address and resolve disputes relating to ownership interests in licensed musical works.
The Copyright Office will update its website with more educational information on claiming works.
If I have already registered my work for copyright, do I need to do anything?
Yes, even if you already have a copyright registration, you will still need to register with the MLC (once it is up and running) to receive certain royalties for your work.
My work has not been registered with the Copyright Office. Can I still register with the MLC?
Yes. Musical works do not need to be registered with the Copyright Office to be eligible for certain statutory royalties paid through the MLC. However, to obtain statutory royalties for certain non-digital uses (e.g. CDs, vinyl), your musical works must be in the Copyright Office’s records, which may be accomplished through registration. Registering a work for copyright, does offer certain additional protections, such as the ability to pursue statutory damages and attorneys’ fees in infringement lawsuits.
My work was used in the past without my permission. Can I seek compensation?
Past infringement liability is limited to royalties due if the digital music provider complies with certain requirements, including good-faith attempts to identify and locate the copyright owners. The U.S. Copyright Office does not offer legal guidance on specific infringement cases.
How does the MMA affect terrestrial broadcast radio?
The MMA does not directly affect terrestrial broadcast radio. The existing section 114(i) provision that prohibits performing rights organization (PRO) rate courts from considering licensing fees paid for digital performances of sound recordings in its rate setting proceedings for the public performance of musical works is partially repealed. However, this repeal does not apply to rate settings for terrestrial broadcast radio.
Title II of the MMA, the Classics Protection and Access Act, expressly preserves the current preemptive effect, or lack thereof, that title 17 may have regarding any cause of action arising from the nonsubscription broadcast transmission of sound recordings under the common law or statutes of any State for activities that do not qualify as covered activities under Chapter 14 of title 17.
How does the MMA affect performing rights organizations or the ASCAP and BMI consent decrees?
The section 114(i) provision that prohibits PRO rate courts from considering licensing fees paid for digital performances of sound recordings in its rate setting proceedings for the public performance of musical works is partially repealed. This repeal does not apply to radio broadcasters. Additionally, the legislation changes how judges in the Southern District of New York are assigned to the rate court proceedings set forth in the consent decrees for ASCAP and BMI, by assigning each new rate dispute on a rotating basis instead of all disputes being handled by the same judge.
Title II Classics Protection and Access Act (Federal remedies for pre-1972 sound recordings)
What is the term of protection for pre-1972 sound recordings?
The federal remedies for unauthorized use of pre-1972 sound recordings shall be available for 95 years after the year of first publication of the recording, subject to certain additional periods. These periods provide varying additional protection for pre-1972 sound recordings, based on when the sound recording was first published:
- For recordings first published before 1923, the additional time period ends on December 31, 2021.
- For recordings first published between 1923-1946, the additional time period is 5 years after the general 95-year term.
- For recordings first published between 1947-1956, the additional time period is 15 years after the general 95-year term.
- For all remaining recordings first fixed prior to February 15, 1972, the additional transition period shall end on February 15, 2067.
Do I need to register pre-1972 sound recordings?
No. There is no obligation to register. However, to be eligible to recover statutory damages and/or attorneys’ fees, the new section 1401(e)(5) typically requires that rights owners file schedules listing their pre-1972 sound recordings with the Copyright Office (a rule recently established the Office’s filing requirements). This requirement takes the place of a formal registration requirement that normally applies to claims involving statutory damages. Rights owners filing these schedules must include the rights owner’s name, the sound recording title, featured artist, and, if known and practicable, the International Standard Recording Code (“ISRC”). The rule also establishes how individuals may request timely notification of when rights owners file such schedules with the Office. Note that in cases where a transmitting entity has filed a valid and timely notice of contact information, a rights owner may be eligible to obtain statutory damages and/or attorneys’ fees only after sending the transmitting entity a notice stating that it is not legally authorized to use the pre-1972 sound recording, and identifying the pre-1972 sound recording in a schedule conforming to the requirements set forth in the rule.
What is the noncommercial use exception for pre-1972 sound recordings?
The legislation establishes a process for lawfully engaging in noncommercial uses of pre-1972 sound recordings that are not being commercially exploited. To qualify for this exemption, a user must submit a notice of noncommercial use after conducting a good faith, reasonable search, and the rights owner of the sound recording must not object to the use with 90 days.
After soliciting three rounds of public comments through a notice of inquiry and a notice of proposed rulemaking, the Office issued a final rule identifying the specific steps that a user should take to demonstrate she has made a good faith, reasonable search.
How long will it take for the Office to index the schedules of pre-1972 sound recordings submitted by rights owners under the interim rule?
The Copyright Office will index a schedule of pre-1972 sound recordings promptly following receipt of the schedule in proper form, and the prescribed fee.
Title III Allocation for Music Producers Act (payment mechanism for producers, mixers, and engineers)
What does the AMP Act mean for producers, mixers, or engineers?
Title III of the MMA, the Allocation for Music Producers Act (“AMP Act”), will allow music producers, mixers, or engineers who were part of the creative process that made a sound recording but who were not by statute receiving royalties under section 114, to receive compensation from royalties collected for uses of sound recordings under the section 114 statutory license. It does this by codifying a process wherein the collective designated to collect and distribute royalties (currently, Sound Exchange) will distribute a portion of royalty payments directly to a producer, mixer, or engineer pursuant to a “letter of direction” from an authorized artists payee. The AMP Act also directs the collective (SoundExchange) to adopt a policy that, in the absence of a letter of direction, allows for statutory royalties for certain pre-1995 sound recordings to be paid to producers, mixers, or engineers from the featured artist’s share if certain requirements are satisfied, including that the artist payee is notified and does not object.