–Catlan McCurdy, Attorney

Macho macho man!

As we approach the mid point of 2012, I can’t help but look forward to 2013 and the copyright issues yet to surface. Of course, I speak of the right-that-shall-not-be-named: termination.

Briefly, termination (also called reversion) rights were built into the Copyright Act in Section 304(c) to protect authors of older works from having to live with a bad contract they entered into when they were just starting out and unable to really bargain with entities that held all the negotiating power, i.e., record labels, publishing houses, etc. I think the government took a step back, realized that we don’t all have Marlon Brando as a godfather and negotiator, and voila! Termination rights were created to give authors a second chance at negotiating old agreements. The one catch is that this right to terminate former grants of copyright does not apply if the work was a work made for hire.

That being said, 2013 marks the year that the first copyrights for works created after 1978 become eligible for termination. Grants and assignments of work created after 1978 may be terminated during the five year period beginning 35 years after the grant was made. In order to exercise this right of termination, the author (or if the author is deceased, family member) must give written notice no less than two or more than ten years from the intended termination date. The devil is literally in the details.

Those issues I referenced anticipating are the lawsuits that are sure to result out of artists attempting to terminate copyright grants with record companies. The death toll is already sounding for the traditional record company, and I’m sure those in the industry view the upcoming termination rights as another nail in the coffin. In the infinite wisdom of an industry completely out of touch with reality, certain record companies are now claiming that the artists were employees of the record company, thus the work is a work for hire and the grant is not eligible for termination.

Scorpio Music and Can’t Stop Productions initially claimed just as much in litigation with Victor Willis. Willis, as the original lead singer of the Village People, filed his notice of termination with the companies for 32 of the band’s songs, including everyone’s prom favorite, the “Y.M.C.A.” Scorpio and Can’t Stop sued Willis last year from terminating the rights to the songs he signed over just about 35 years ago. The case is currently before a Judge Moskowitz in the Southern District of California and some are predicting a ruling as early as this month.

As one of the first cases concerning the upcoming termination rights, Judge Moskowitz’s ruling could set the tone for how publishers and record companies will handle an author’s notice of termination.  Scorpio and Can’t Stop dropped their initial claim that Willis was an employee and now only allege that Willis cannot terminate the rights, because he was one of three authors who wrote the majority of the songs at issue. Willis assigned his rights to Can’t Stop, and the other authors signed agreements with Scorpio.

I think these set of facts make this “test case”, if you will, even more applicable for litigation to come, as many copyrighted works are the result of creation by one or more authors. If anything, Scorpio and Can’t Stop demonstrated the weakness in the work for hire argument by dropping that allegation, and hopefully other companies will follow suit when evaluating an author’s termination notice. Scorpio and Can’t Stop seemed to have lost sight of the purpose behind the termination rights in filing this lawsuit. Termination rights allow for a role reversal in negotiating power, and these two companies are attempting to circumvent the checks and balances explicitly built into the Copyright Act. Here’s to hoping they find their way soon, or Judge Moskowitz points them there.