On February 5, 2019, UMG Recordings (UMG) and Sony Music Entertainment (Sony) were sued by a group of musicians in a class action separately in Southern District of New York for violation of musicians’ right to a “second chance” under 17 U.S.C. §203, and thus violated §106 for copyright infringement, by refusing to honor termination notices stating their intention to reassert their copyrights over certain works. The group of musicians, with named plaintiffs John Waite, a solo artist and former lead singer of the 1970s group The Babys, and Joe Ely, recorder of 18 albums, in the suit against UMG, and David Johansen, John Lyon and Paul Collins in the suit against Sony, are asking for injunction, declaratory relief and actual damages.

The well-known “second chance” provision allows a second chance for authors (or their heirs) to reclaim copyrights from unwise grants made early on when they did not have much bargaining powers and not able to “determining his work’s prior value until it has been exploited.” H.R. Rep. No. 94-1476, at 124 (1976). Under this provision, creators may, after 35 years of the execution of granting others copyright, by written notice and recording with the Copyright Office, terminate such grant. However, the most important exception to a “second chance” under §203 is “works made for hire.” Under the definition in 17 U.S.C. §101, a “work made for hire” is “a work prepared by an employee within the scope of his or her employment,” or “a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.”

In some other cases, a §203 notice invites renegotiation for more favorable royalty arrangements. But according to the Complaints, UMG and Sony “routinely and systematically refuse to honor that,” contending that the sound recordings at issue are “works made for hire,” because of the contractual language in the recording agreements at issue. As a result of UMG and Sony’s policy, according to the Complaints, UMG and Sony have refused to acknowledge that any recording artist has the right to take over control of the sound recordings, or enter into an agreement with a different label for the exploitation of recordings, after effective date of termination. On the other hand, the musicians allege that sound recordings cannot be “works made for hire” because they are not included in the definition. Therefore, continued exploitation of the sound recordings after the effective termination date is willful copyright infringement and destroyed the post-termination rights in the recordings that the Copyright Act expressly guarantees.

The main dispute is over whether the sound recordings are “works made for hire” and whether a foreign choice of law provision in a recording agreement has any effect on the application of United States copyright law. It may be argued that the sound recordings are “collective works” or “compilations,” so they are “works made for hire” under the Copyright Act’s definition. According to §101 definition, a collective work is a work, such as a periodical issue, anthology, or encyclopedia, in which a number of contributions, constituting separate and independent works in themselves, are assembled into a collective whole. And a compilation includes collective works, meaning a work formed by the collection and assembling of preexisting materials or of data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship. It may be argued that a sound recording is in no way like a periodical issue, or anything of those collection of existed creation, but a newly created work. But on the other hand, it may be argued that a sound recording is the collection of preexisting rhythm, melody, etc., and an album is a combination of preexisting sound recordings. Courts have held that musical compositions created by creator at behest of corporation were “works made for hire” within meaning of §101, Warren v. Fox Family Worldwide, Inc. (2003, CA9 Cal), but songwriters who transferred rights by assignment, and who were listed on original copyright registration as authors, did not compose song on a work-for-hire basis. Marascalco v. Fantasy, Inc. (1990, CD Cal). The plaintiffs have asked for a jury trial. We will see whether they will go for it or settle the dispute. If the plaintiffs win, it will be good news for many song writers.

Yuning Zhou is a JD candidate, 2020, at NYU School of Law.

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