Academic journal article The Review of Litigation

Termination of Sound Recording Copyrights & the Potential Unconscionability of Work for Hire Clauses

Academic journal article The Review of Litigation

Termination of Sound Recording Copyrights & the Potential Unconscionability of Work for Hire Clauses

Article excerpt


The classic story of a young artist entering into an unfair record deal and receiving pennies on the dollar for his work after years of recording and touring resonates throughout the music community. Although these stories are potentially exaggerated, there are certainly disparities in the compensation granted compared to the value of an artist's work. Even successful, established artists often wish to regain control of their copyrights. What if there was an opportunity for an artist to escape these arrangements?

The 1976 Copyright Act includes a provision that allows artists to recapture their copyrights thirty-five years after assigning their work to a third party, such as a publisher or record label. Congress recognized the disparity in bargaining power between authors and assignees and provided a "practical compromise" that would recognize the interests of both sides.2 In addition, the termination right acknowledges the impossibility of determining the value of a work until it has been exploited by the assignee.3 Ideally, artists would have the opportunity to sign new deals after the value of their work is recognized.

Significantly, works for hire are not subject to the right of termination.4 As an obvious result, record companies prefer to own a copyright as a work for hire, rather than as an assignment.5 If a sound recording is considered a work for hire, then the record company retains full copyrights for the entire duration of the copyright - up to ninety-five years.6 If sound recordings are considered a work for hire, artists completely lose the right to recapture the copyrights in their master recordings.7 Often, young or inexperienced artists are forced into a contract that does not fully compensate them for the value of their work.

Termination rights for works transferred on or after January I, 1978, will begin in 2013.8 However, notice of termination may be served between two and ten years before the thirty-five year mark.9 Therefore, notices of termination for pre- 1978 works could have been served as early as 2003. 10 There is little clarity as to whether recording agreements will be construed as creating works for hire. It will likely take a high court decision or legislative action to determine if sound recordings are works for hire and therefore ineligible for copyright termination.

This paper will examine the work for hire doctrine and the potential impact of the termination of sound recordings. Part II provides an overview of the pertinent history of copyright law in the United States. Part III describes Sections 203 and 304(c) of the Copyright Act and the problems that these termination rights bring forth. Part IV outlines the factors of the work for hire doctrine as applied to artist contracts. Part V describes legislative changes to the right of termination. Finally, Part VI considers defenses available to artists if the work for hire doctrine is found to apply to recording contracts.

II. Copyright History

A. The Copyright Act ofl 790

The Constitution empowers Congress to promote the "useful Arts, by securing for limited Times to Authors ... the exclusive Right to their respective Writings . . . ."

The first federal Copyright Act was passed in 1790.12 This act was based upon the system of formalities and restrictions of the English Statute of Anne.1 The Statute of Anne was enacted in 1710 and was a considerable shift in law because it recognized the rights of authors, rather than just the rights of printers and booksellers.14 The statute provided the author with the exclusive right to print his works for fourteen years and included an additional renewal term of fourteen years for a living author.15 These structural provisions combined with the recognition of a creator's rights formed the basis for future copyright legislation.16

B. The Copyright Act ofl 909

The Copyright Act of 1909 extended the duration of copyright from fourteen years to twenty-eight years from the date of publication.17 The Act also included a renewal term of twenty-eight years that could be exploited by the author and his heirs. This maximum copyright term of fifty-six years applies to many older copyrighted works today. Additionally, the second renewal term is now automatic. Thus, the author does not forfeit the additional twenty-eight years if he or his heirs fail to renew.19 For works created before 1978, the copyright was secured on the earlier of the publication or registration dates.20

C. The Copyright Act of 1976

The Copyright Act of 1976 was created in response to the technological changes associated with the development of the motion picture, phonograph, radio, and television.21 Compounding this development were mounting pressures to conform to international copyright treaties and standards.22 Although there have been numerous amendments over the past several decades, the Copyright Act of 1976 serves as the basis for modern American copyright law.

The Copyright Act of 1976 "marked a significant philosophical departure from the centuries-old traditions" of the Statute of Anne and previous United States Copyright Acts.23 One of the more fundamental changes was the shift from static terms of protection to a system extending copyright protection to the life of the author plus fifty years.24 This extension conformed to the duration requirements of the Berne Copyright Convention, an international standard originally adopted in 1886 by Belgium, France, Germany, Italy, Luxemburg, Spain, Switzerland, Tunisia, and the United Kingdom.25 It also extended the protection of the works covered by the 1909 Act - works created before January 1, 1978 - by nineteen years, granting those works a total of seventyfive years of protection.26

The Sonny Bono Copyright Term Extension Act of 1998 further extended copyright protection. For works created after January 1, 1978, the term was extended to the life of the author plus seventy years.27 Additionally, twenty-five years of further protection was granted to pre- 1978 works, for a total of ninety-five years. The constitutionality of the Sonny Bono Copyright Term Extension Act was sustained by the United States Supreme Court in Eldred v. Ashcroft(TM) Various individuals and corporations, which used works that were in the public domain before the extension, challenged the constitutionality of the amendment on the basis of the "Limited Times" clause of the Constitution.30 The Court found that the extension was a rational exercise of legislative authority, especially considering it brought United States copyright law in line with the Berne Convention standards.31

The constitutionality of increased copyright duration leaves open the possibility of future extensions. The continuous extension of copyright duration benefits the holder of a copyright by prolonging the amount of time he can exclusively exploit the work. This begs the following question: should a record label retain the copyright for the entire term of protection or should the copyright revert to the artist who created the work before the end of the term of protection?

III. Statutory Termination Rights

A. Section 304(c) - Pre-1978 Works

One of the most artist-friendly provisions of the Copyright Act of 1976 is the right to recapture assigned copyrights.32 Under the 1909 Act, the main purpose of the original and renewal terms was to allow the author and his heirs to enjoy ownership of the work after the initial term.33 Section 304(c) grants authors an inalienable right to terminate a grant in a copyright fifty-six years after the original grant.34

Termination of pre- 1978 copyrights is less of a looming issue for the music industry than is termination for post- 1978 works.35 Federal law did not recognize copyrights in the transference of sound recordings until February 15, 1972, and thus the earliest termination could not occur until fifty-six years after that date - February 2028.36 Sound recordings created before February 15, 1972, are generally protected under state law.37

An author seeking to terminate a grant in copyright must serve advance notice in writing to the grantee.38 Notice of termination may be served at any time during a five-year period beginning at the later of either fifty-six years from the date of copyright, or January 1, 1978.39 The notice must also be given between two and ten years before the effective date of termination.40 The time window was created "so that the only rights to the copyright affected thereby were those to the 19-year extension in the renewal term created by the 1976 Act, leaving undisturbed the grantee's vested interest to the original 28-year renewal term . . . .'^1

This interpretation recognizes the importance of allowing a grantee to exploit the copyright for the length of time for which he bargained. However, it also values the reversionary interest of an author and allows him to take advantage of the copyright extensions. This is of great importance to the music industry because the 1976 Act benefits record companies that failed to provide adequate consideration at the initial bargaining stage, but which may enjoy the subsequent extensions.

B. Section 203 - Post 1 978 Works

Section 203 of the United States Code operates as a substitute for the § 304(c) renewal term reversion; it serves as "a provision safeguarding authors against unremunerative transfers."42 Congress recognized the disparity in bargaining power between recording labels and artists, as well as the difficulties in determining a work's value before commercial exploitation.43 The statute provides for an inalienable right of termination at the end of thirty-five years from the date of publication.44

The termination is not automatic, and notice of termination must be provided in writing within the specified time limits.45 The termination right for pre- 1978 works is automatic, but the post- 1978 provision necessitates affirmative action on the part of the author or his heirs.46

A major exception of the right of termination is that works made for hire may not be terminated.47 In a work for hire, the employer who orders the work is considered the author and owns all of the rights in the copyright, unless the parties have agreed otherwise. This concept will be explored more thoroughly, as it is extremely important with regards to the music industry's relationship with the right of termination.49 If it is determined that a sound recording is a work for hire, artists lose their right to terminate any grants of copyright assignment in that work.

Section 203(b)(1) provides a further limitation: a derivative work prepared before the termination may "continue to be utilized . . . but this privilege does not extend to the preparation" of other derivative works based on the original, terminated work.50 Essentially, this provision enables the grantee to use in perpetuity any new works the grantee created from the original granted work during the period before termination.

C. Problems With the Statutes

The two-headed termination statute is necessary due to changes in copyright law. However, the 1978 bifurcation has created confusion over which statute to apply to a given agreement. A typical scenario is as follows: an artist signs a recording deal in 1975 and creates sound recordings through 1985.51 Are songs written after January 1, 1978, subject to § 203 (thirty- five years until termination), or are they included under § 304 (fifty-six years until termination) because the agreement took place before the new Copyright Act?

Section 304(c) of the Copyright Act applies where work "subsists" in its first or renewal term.52 It is unclear how a work can subsist before it has been created, or how a work could be exempt from termination by falling in between the two statutes. In fact, Charlie Daniels has sent a termination notice for his song "The Devil Went Down to Georgia," which he wrote in 1979 under an agreement he signed in 1976.53 Daniels sent his termination notice on the theory that his song falls under § 203' s thirty-five year termination provision, because, as his attorney points out, there is no reason why Congress would "obviate a whole group of works from a termination provision."54

Despite Daniels's eagerness, the termination right has barely been used in practice. In Siegel v. Warner Bros. Entertainment, the United States District Court for the Central District of California addressed the lack of termination notices while attempting to clarify the notice requirements for termination.55 The court noted that authors are forced to jump through hoops because termination is no longer automatic, as it was under the Copyright Act of 1909.56 As a result, only "approximately 0.72% of [termination] transfers have been recorded, as required, with the Copyright Office."57 Although Congress has attempted to clarify the notice requirements,58 it is still easy for an author or his heir to miss the termination window or not include sufficient information to make the termination effective.

Other countries' copyright laws do not have a termination right similar to the United States. However, some civil law countries, such as Germany and France, recognize a right of retraction as one of the moral rights of an author.5 An author may choose to retract his work from publication because of changed opinion.60 However, the author must indemnify the publisher and the publisher usually has the first option to re-sign the author.61 The United States does not recognize such "moral rights,"62 but perhaps the concept of indemnifying the grantee for lost profits could be implemented in future legislation.


The Copyright Act of 1976 states that if a copyrightable work is a work made for hire, the employer or person for whom the work is prepared owns the copyright, unless the parties have agreed otherwise.63 Accordingly, any agreement under which the employee is to own the rights must be in writing and signed by the parties.64 The work for hire doctrine is important for musicians because artists lose their termination right if their assigned work is determined to be a work for hire.65

The stated rationale behind the doctrine recognizes the idea that if an employer pays an employee for the purpose of creating a work, the employer should reap the benefits of the payment.66 In Community for Creative Non-Violence v. Reid, the United States Supreme Court addressed the doctrine's profound impact on freelance artists and the music industry.67 Classifying a work as a "work for hire" determines the initial ownership of the copyright, the duration of copyright protection, the owner's renewal rights, and of course, the termination rights enjoyed by the author.68 The test for determining whether a work is a work for hire is two-pronged and stringent: the first prong requires that specific conditions constituting an employer-employee relationship are met; the second prong requires that the work fit into one of nine narrow categories.69

The "employment prong" and the "independent contractor prong" are mutually exclusive, so courts must determine whether the work was prepared by an employee or by an independent contractor using common law agency principles.70 The Supreme Court used the Restatement (Second) of Agency to determine the hiring party's right to control the "manner and means" by which the final product is accomplished.71

In determining whether a hired party is an employee under the law of agency, the Supreme Court considered several factors (the CCNV test): the skill required to produce the work; the source of instrumentalities and tools used to produce the work; the location of the work; the duration of the relationship between the parties; whether the hiring party had the right to assign additional projects; the hired party's discretion on when and where to work; the method of payment; the hired party's role in hiring and paying assistants; whether the work was part of the regular business of the hiring party; the provision of employee benefits; and the tax treatment of the hired party.72 Later decisions have added "actual control" as a factor.73 No single factor is determinative of whether there is an employeremployee relationship in a particular case.74

At least one court has cautioned that the CCNV test may be misapplied when determining whether a work is a work for hire because some factors will have little or no significance in a given case.75 In Aymes v. Bonelli, the Second Circuit stated that the CCNV factors should not be tallied, but rather weighed according to their significance under the particular circumstances.76 The court went on to hold that the following five factors are most probative of the "true nature of the employment relationship" and are therefore entitled to more weight in an agency analysis:

1) The hiring party's right to control the manner and means of creation;

2) The skill required;

3) The provision of employee benefits;

4) The tax treatment of the hired party; and

5) Whether the hiring party has the right to assign additional products to the hired party.77

How a court analyzes the question of whether a work is a work for hire will depend on the determination of whether the work was created within the employment relationship or by an independent contractor. If the court finds that the work was created through an employer-employee relationship, it must then determine if the work was done in the scope of employment. If the work was created in an employer-employee relationship but not in the scope of employment, it is likely not a work for hire. If the work was created by an independent contractor, the court must then determine if (a) the work falls into one of nine limited categories, (b) the work was specially ordered or commissioned, and (c) there was a written agreement between the parties stating that the work is a work for hire.78

A. Employment Prong

If a court finds that an employee, rather than an independent contractor has done the work, the court must determine if the work was done within the scope of employment.79 Although the Copyright Act of 1976 does not define "employee" or "scope of employment," the Reid Court articulated that "[wjhere Congress uses terms that have accumulated settled meaning under ... the common law, a court must infer, unless the statute otherwise dictates, that Congress means to incorporate the established meaning of these terms."80 The Court further explained that, though Congress had not defined the term "employee" in the past, the legislation "intended to describe the conventional master-servant relationship as understood by common- law agency doctrine."81

The Court adopted Congress's use of the term "scope of employment" to further support its determination that agency law was the appropriate guide for this prong.82 The Court cited § 228 of the Restatement (Second) of Agency for the common law definition of "scope of employment."83 The Restatement's three-part test asks whether the conduct in question (1) was of the kind the employee is employed to perform, (2) occurred substantially within the authorized time and space limits of the employment, and (3) was actuated, at least in part, to serve the employer.84

The employer must prove each element of the Restatement test in order to show that the employee's work was created within the scope of employment, and should thus be considered a work for hire. Although a recording artist is not a traditional employee of a record label, such as an executive, secretary, or janitor, the artist's conduct may nevertheless be analyzed under these agency principles.

While the first and third factors of the Restatement Test are satisfied fairly easily, the second factor is a closer question. Recording music is typically the main task musicians are employed to perform. Although they may have other responsibilities, such as touring, promotional appearances, and product endorsement, these activities derive their value from the recorded work. Thus, the first factor of the Restatement Test, that the conduct in question be of the sort the employee is employed to perform, is likely satisfied in the case of an artist creating a sound recording. The third Restatement factor - that the conduct is actuated, at least in part, to serve the employer - is related to the first. A label enters into a recording agreement with the expectation that an artist will provide sound recordings that the company may then commercially exploit. Thus, the third requirement under the Restatement is arguably met.

Less clear is the second factor, which pertains to the authorized temporal and spatial limits of the conduct. Recording artists are not generally given "working hours" like a traditional employee. In addition, artists are usually free to record their work at any given studio, as long as the expense is within the recording budget. The term "substantially" thus leans in the artist's favor, even though recording contracts generally include a required delivery date for the work. Ultimately, a court could find that the nature of the music industry requires a less strict interpretation of the authorized time and space provision.

After weighing the various arguments and circumstances, a court is likely to find that a recording artist is an independent contractor rather than the employee of a record label. The agency factors described in the previous section support a finding that artists are independent contractors. Therefore, the employment prong of the work for hire test likely does not apply to recording artists.

B. Independent Contractor Prong

As described above, courts consider several agency factors to determine if a work is the product of an employee or an independent contractor.86 No single factor is dispositive, and the factors should be weighed relative to their significance in the case.87 This section will analyze several applicable factors to show why courts will likely find that artists are independent contractors, rather than employees.

1. Hiring Party's Right to Control the Manner and Means By Which the Product is Accomplished

The hiring party's control over the manner and means of production cuts against viewing the hired party (i.e., the artist) as an employee.88 This factor is one of the most heavily weighed, but the absence of a hiring party's exercise of control does not mean that the artist is not an employee.89 The Restatement (Second) of Agency commentary points to many occupations where, given the nature of a profession, the employer would not normally control the employee's work.90 For example, "the full-time cook is regarded as a servant although it is understood that the employer will exercise no control over the cooking."91 It remains to be seen if an artist will be considered in the same manner.

The experience and creative control of an artist will likely be determinative for this factor. A new artist tends to retain less creative control, but may still select the songs to be recorded and participate in other creative decisions, subject to the approval of the record label.93 On the other hand, a more established artist will only be limited by certain contractual parameters.94 Record companies often do not exercise the full gamut of their control rights over artists in an effort to retain "relational goodwill" between the artist and the label.95

Additionally, artists generally select the producer of the work.96 The producer is responsible for "maximizing the creative process" and bringing the product into tangible, marketable form.97 This fact also favors the artist with regard to the hired party's role in hiring and paying assistants. Labels retain the right to approve the final product, but courts give more weight to detailed decisions rather than general objectives.98 Therefore, courts will likely find that artists control the manner and means of creation.

2. The Skill Required

An artist is more likely to be found an independent contractor if a high level of skill is required to complete the work." This factor also favors the artist because artists are hired solely for their musical talent. In contrast, the ordinary staff at a record company presumably lacks the musical skill necessary to produce a commercially successful sound recording.

3. The Source of Instrumentalities and Discretion on When and Where to Work

If an artist provides the instrumentalities and tools used to produce the sound recording, that artist is more likely to be considered an independent contractor.100 A typical rock band generally owns its own instruments, although additional instruments may be rented for the recording project. Artists typically choose the recording studio (within the limits of the recording budget) because record companies generally do not own studios for artists to use.101

The funding for recording comes from an "advance," which is negotiated when a record deal is signed.102 The artist spends the advance on the album and keeps any amount that is left over.103 However, the record label is able to recuperate the amount of the advance by withholding money owed to the artist in the form of royalties.104 Although the label pays for the recording initially, the artist eventually pays the label back. The fact that recording and production are partially self-funded endeavors likewise suggests that artists are independent contractors.

Artists generally have discretion over when and where to work, which also favors the finding that an artist is an independent contractor. As described above, the artist generally chooses where to record the work. The only limitation is a deadline for delivery of recordings, which most independent contractors would also face. 05

4. Method of Payment & Tax Treatment

If an artist is paid and taxed like a conventional employee, this factor indicates that an artist is an employee. In Reid, the Supreme Court stated that "Congress meant to refer to a hired party in a conventional employment relationship."106 As described above, artists are generally paid through advances, rather than regular wages or hourly rates, as a conventional employee would be. An artist must pay income tax on the advance. However, artists are generally taxed as "self-employed."108 They receive 1099 tax forms from the label and other sources of income, and often must pay selfemployment and federal income taxes on any income.109 Occasionally there will be a provision added to the agreement by the record company which (a) confirms that the label will not be withholding, (b) obligates the artist to be responsible for his own taxes on such payments, and (c) requires the artist to indemnify the label if the label suffers any penalties or other payment obligations as a result of not withholding. 110

Record labels generally do not deduct payroll or social security taxes from their artists. As the Second Circuit Court of Appeals noted in Aymes v. Bonelli, the failure to treat hired parties as employees for payroll (and employee benefit) purposes is given significant weight and is a "virtual admission" by the employer that they do not consider the hired party to be an employee.111

5 . Provision of Employee Benefits

This factor is important to the independent contractor analysis because, as the Second Circuit pointed out, "every case since Reid that has applied the [Supreme Court's multi-factor] test has found the hired party to be an independent contractor where the hiring party failed to extend benefits or pay social security taxes."112

Record labels typically do not provide artists with standard employee benefits.113 On the other hand, record labels do provide conventional employee benefits to their permanent staff, which illustrates how unconventional the relationship between record labels and musicians is in practice.114 Some labels have agreements with musicians' unions that require the record company to contribute to the union's health insurance and retirement funds.115 However, these benefits are "minimal" compared to companies' benefit plans for their regular employees.116

6. Work As Part of the Regular Business of the Hiring Party.

This is the factor most likely to favor the record label. If a court finds that the recording was created as part of the regular business of the record label, this factor will probably favor the finding that an artist is an employee.117 It is undeniable that record labels are in the business of distributing sound recordings. Their staffs are focused on finding, developing and utilizing artists and their works. Although this factor tends to favor the record label, no one factor is indicative of how a court should rule.118

7. Work for Hire Clauses.

Recording contracts often include clauses stating that the artist's work is commissioned as a work for hire or that the artist is a record company employee.119 A typical work for hire clause states:

Artist acknowledges that all of the Masters recorded and produced hereunder, all of the Records manufactured therefrom, together with the performances embodied thereon, and all artwork created by or for [Record Company] for use in connection therewith, shall be considered works "made for hire" for [Record Company] within the meaning of the United States Copyright Act. If it is determined that a particular Master does not so qualify, then such Master, together with all rights therein (including the sound recording copyright), shall be deemed transferred and assigned to [Record Company] by this Agreement.120

Nevertheless, courts often look to the actual relationship between the parties, rather than the language of the contract.121 The strength of the independent contractor argument suggests that a court overturn potentially unconscionable work for hire agreements. This concept will be explored more thoroughly as a potential defense for artists that wish to dispute an unconscionable recording agreement.122

Interestingly, record contracts often define artists as independent contractors for liability purposes.123 A standard clause includes: "In entering into this agreement and in providing services pursuant hereto, you . . . have and shall have the status of independent contractors and nothing herein contained shall contemplate or constitute you ... as Company's agents or employees."12 This admission could be a strong factor in favor of finding artists to be independent contractors, rather than employees retained to create works for hire.


A court will likely determine that an artist is an independent contractor, rather than a record label's employee. In order for an independent contractor to create a work for hire, the work must fit into one of nine specific categories, be specially ordered or commissioned, and the agreement commissioning the work must be in writing.125 Musical works are not one of the specified categories of works.126

However, in 1999, the Intellectual Property and Communications Omnibus Reform Act added "sound recordings" to the enumerated categories of §101. The provision was added as a "technical amendment" and passed without hearings or debate. Artists and supporters "went ballistic" 129 because of the impact the provision would have on the music industry.130 If sound recordings remained as an enumerated work for hire category, an artist would be deemed to be employed by his record label and likely unable to terminate his grant of rights in sound recordings. In response to the backlash, Congress quickly reversed the action and removed sound recordings from the Act.131

The Code's definition of "work made for hire" now states:

In determining whether any work is eligible to be considered a work made for hire under paragraph (2), neither the amendment contained in section 1011(d) of the Intellectual Property and Communications Omnibus Reform Act of 1999 . . . nor the deletion of the words added by that amendment (A) shall be considered or otherwise given any legal significance, or (B) shall be interpreted to indicate congressional approval or disapproval of, or acquiescence in, any judicial determination . . . .132

Congress determined that these amendments should be considered as if they were "never enacted."133 If Congress had conducted hearings, it would have been forced to consider the scope of negotiations behind the Copyright Act of 1976 and common law precedent.134 Legislative history reveals that Congress weighed the interests of book publishers and authors in creating the original enumerated classes of commissioned works.135 Book publishers argued that they exert a great deal of effort compiling freelance authors to create textbooks and encyclopedias. Authors countered by demanding a narrower scope of defined commissioned works, in recognition of the fact that freelance authors rarely have the bargaining power to negotiate around work for hire clauses.137

The resulting list of works reflects categories that require intensive diligence on the part of publishers to coordinate and compile, often requiring the efforts of many people.138 Recording contracts are different from encyclopedia contracts; there are fewer parties to negotiate with and the compilation process is less labor intensive.

Case law also supports the proposition that sound recordings are not a work for hire and should not be included on the list of enumerated categories.140 In Bailas v. Tedesco, the United States District Court for the District of New Jersey analyzed an infringement claim by an artist and found that the sound recordings a producer created were not a work for hire.141 One of the main points the court made was that sound recordings "do not fit within any of the nine enumerated categories,"142 which reflects the fundamental difference between sound recordings and the works that producers must work harder to compile.

A district court in California addressed sound recordings in the Napster copyright litigation.143 The court pointed to the "glaring omission in the statutory requirements" and suggested that the works of the artists claiming infringement are not works for hire.144 The court also commented on the music industry's recent failed attempt to add sound recordings to the list of works covered by the independent contractor prong of the work for hire doctrine.145

By contrast, in Moran v. London Records, the Seventh Circuit found that the announcer whose voice was featured in a television commercial was not the owner of the commercial. 146 The announcer's employment contract explicitly provided that he had no "right, title, or interest of any kind or nature whatsoever in or to the commercial."147 The court held that the plaintiff could have secured an interest in the copyright by expressly negotiating that he would have an ownership interest in the commercial.148

However, this decision took place before Reid, in which the United States Supreme Court spelled out the work for hire two-prong test.149 Commentators have surmised that, given the facts of the Moron case, it appears unlikely that the announcer would be considered an employee in light of the Court's distinction between employees and independent contractors.150 This idea is striking in light of the lack of creative control that many announcers exercise as compared to the high level of creative control applied by many artists. Presumably, artists would have a stronger case under Reid. Moreover, the court's view that the plaintiff could have contracted around the employment provision is not realistic given the minimal bargaining power that artists have in contract negotiations.


As explained above, the work for hire agency analysis tips in favor of artists who wish to terminate their assignments of copyright to record labels. However, the analysis may not end there, as record companies have several defenses available to rebut the independent contractor determination. Despite these defenses, the argument favoring artist termination rights remains strong.

A. Enforceability of Work for Hire Clauses

As previously described,151 recording contracts typically include language similar to "[the copyrighted works] shall be considered works 'made for hire' for [the record company] within the meaning of the United States Copyright Act."152 Courts are reluctant to find a term unenforceable when parties bargain for the term and a lack of enforcement will frustrate a party's legitimate expectations and reliance upon that term.153 However, courts will intervene if "there is a corresponding benefit to be gained in . . . avoiding an inappropriate use of the judicial process."1 4

Section 178 of the Restatement (Second) of Contracts describes when and how a term will be found unenforceable on public policy grounds:

(1) A promise or other term of an agreement is unenforceable on grounds of public policy if legislation provides that it is unenforceable or the interest in its enforcement is clearly outweighed in the circumstances by a public policy against the enforcement of such terms.

(2) In weighing the interest in the enforcement of a term, account is taken of:

(a) the parties' justified expectations,

(b) any forfeiture that would result if enforcement were denied, and

(c) any special public interest in the enforcement of the particular term.

(3) In weighing a public policy against enforcement of a term, account is taken of:

(a) the strength of that policy as manifested by legislation or judicial decisions,

(b) the likelihood that a refusal to enforce the term will further that policy,

(c) the seriousness of any misconduct involved and the extent to which it was deliberate, and

(d) the directness of the connection between that misconduct and the term.155

The Section reflects the conflict between the law's traditional interest in enforcement and the need to protect the interests of the parties against the "abhorrence" of unjust enrichment. 56 As a result, the Restatement includes several considerations that must be considered independently of each other. First, "legislation" is used broadly and may include statutes, administrative regulations, and, importantly, foreign laws (to the extent they do not conflict with United States law).157

The comments for the section indicate that legislation rarely expressly provides that a term is unenforceable based on public policy.1 8 Congress has been unwilling to take a stance on the enforceability of work for hire clauses with regard to sound recordings.159 This is evidenced by the current definition of "work for hire" in the Copyright Act.160

Courts are in a position to conclude that a term is unenforceable when it is necessary to protect some aspect of the public welfare.161 The provision has been applied in cases ranging from serious criminal charges to constitutional rights violations.1 2 It is unclear if courts will consider a non-beneficial recording contract clause as contrary to public policy. The decision will require a careful balancing of the general interest in enforceability against the public policy underlying the term of the contract. Additionally, courts must consider the effect unenforceability of the term will have on the remainder of the agreement.16

Courts should consider the parties' justified expectations, any forfeiture that would result if enforcement were denied, and any special public interest in enforcement of the particular term.1 Record labels will likely fare well in these considerations. First, labels justifiably expect to exploit the works for the duration of copyright. Whether or not the terms seem fair to an outsider, the industry has allowed this type of deal to continue for decades. Second, record companies will lose an immeasurable amount of expected profits if copyright terminations are able to proceed. In response to the loss of future earnings, labels will likely make the front end of contracts even less favorable to artists in order to make up for the lost revenue. Finally, there may be a public interest in preventing the undoubtedly vast amount of litigation that will ensue if work for hire clauses are deemed unenforceable and copyright grant terminations become actionable.

On the other hand, artists may argue that allowing artists and labels to contract around an inalienable termination right with work for hire language violates public policy and the language of the Copyright Act.165 If judicial proceedings or legislation determine that a work for hire clause should be unenforceable due to the unfair bargaining position of artists, the Copyright Act strongly supports that policy. The inconclusiveness of this section underscores the necessity for a clear decision from either courts or Congress on whether sound recordings are considered a work for hire.

B. Unconscionability of Work for Hire Clauses

Artists may counter a determination that work for hire clauses are enforceable by raising the defense of unconscionability. The Uniform Commercial Code provides:

(1) If the court as a matter of law finds the contract or any term of the contract to have been unconscionable at the time it was made, the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable term, or it may so limit the application of any unconscionable term as to avoid any unconscionable result.

(2) If it is claimed or appears to the court that the contract or any term thereof may be unconscionable, the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect to aid the court in making the determination.167

The commentary indicates that the court may remove terms it finds unconscionable rather than attempt to achieve its result by manipulating the language of the statute or by finding the term contrary to public policy. 168

If an artist can successfully argue unconscionability, future artists could more easily use this argument (rather than the Restatement' s enforceability standard) to find a work for hire clause unenforceable, or at least limit the clause's applicability. The UCCs basic test is whether "in the light of the general commercial background and the commercial needs of the particular trade or case, the term or contract involved is so one-sided as to be unconscionable under the circumstances existing at the time. . . ."169 This standard is easier to prove than the "clearly outweighfing]" standard articulated by the Restatement.170 Record labels presumably have not engaged in the serious misconduct necessary to outweigh the interest in enforcing parties' expectations in contract negotiations.

However, it is not clear if courts will consider work for hire clauses to be unconscionable in light of music industry trade practices. In negligence considerations, courts look to whether the defendant acted in accordance with the uniform customs of the business.171 If the defendant acted in accordance with uniform customs, he will not be found negligent unless the court finds that the particular industry custom is negligent.172

As in negligence cases, courts must examine the industry standard to determine whether work for hire clauses are unconscionable. A record label undeniably acts in accordance with the uniform customs of the music industry by including a work for hire clause in recording contracts. Less clear is whether a court would find that the entire industry is behaving unconscionably by using these clauses. Industry negligence cases often involve abandoning safety in order to save money,173 but it is nevertheless possible to draw a comparison to that of artists with low bargaining power who are forced into inflexible recording agreements so that labels may make more money. This harsh position that many artists face is unconscionable when compared to the value created by their work.

C. Other Considerations

1 . Derivative Work Loophole

Section 203(b)(1) of the Copyright Act of 1976 provides a potential loophole for record labels. A derivative work prepared before termination may "continue to be utilized ... [as the] privilege does not extend to the preparation" of other derivative works based on the original, terminated work.174 A "derivative work" is a work based on one or more preexisting works, "such as a . . . sound recording ... or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a 'derivative work.'"175 In Mills Music Inc. v. Snyder, the Supreme Court held that the "critical point" in determining if a derivative work survives the termination of a transfer of copyright is whether the derivative work was "prepared" before termination.176

Record labels could potentially argue that any post-delivery remastering or mixing of a sound recording could be considered a derivative work, thereby allowing free reign over the commerciallyreleased work. Labels may look to Mills Music for support, where the potential derivative work was created before termination of the grant of copyright. However, record labels will likely lose this argument given that any addition to the preexisting work must be able to stand alone as an original work, and minimal changes to a sound recording will not suffice. In addition, the derivative work must be more than a "stylized version" of a copyrighted sound recording; in essence, a derivative work requires the addition of new material. 179

2. Equitable Considerations

Both the artist community and the recording industry have strong arguments for retaining the copyright in sound recordings.

As explained,180 some civil law countries allow indemnification of publishers when authors choose to retract their publication rights. Perhaps this right could create a compromise between the interests of record labels and artists. However, a potential drawback is the expense and subjectivity in determining the future earnings of an artist. Indeed, the lack of consideration of an artist's worth is one of the main reasons artists wish to terminate their original copyright grants.


The right to terminate an assignment of copyright under the bifurcated Copyright Act is a confusing concept for artists, their heirs, their record labels, and even their attorneys. Despite the confusion, it is important to recognize the value of the right. Congress recognized the disparity in bargaining power between artists and grantees when it created the termination right.

Adding to the confusion is the fact that works for hire are not eligible for termination. The work for hire doctrine requires an indepth analysis of the relationship between the contracting parties. Nevertheless, the structure of the typical artist-record label relationship suggests that an artist is an independent contractor, and, therefore, his work is ineligible as a work for hire because sound recordings are not included in the list of enumerated works in § 101 of the Copyright Act.181

Despite this analysis, record companies include clauses in recording contracts that explicitly refer to artists' works as works made for hire, which are therefore owned by the label. Courts may be willing to overturn this type of clause if they find that the interest in enforcing the clause is outweighed by public policy considerations, or if the court finds the clause to be unconscionable.

These crucial issues will not be clarified without a judicial or legislative determination as to whether sound recordings are works for hire. Hopefully, the increased visibility of the termination right and notice requirements will bring more cases to the fold and force either Congress or the courts to make a final decision on these open factors.

1. 17 U.S.C. § 203(a)(3) (2006).

2. H.R. REP. NO. 94-1476, at 124 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5740.

3. Id.

4. 17 U.S.C. § 203(a).

5. Ryan Ashley Rafoth, Limitations of the 1999 Work-For-Hire Amendment: Courts Should Not Consider Sound Recordings to be Works-For-Hire When Artists' Termination Rights Begin Vesting in Year 2013, 53 VAND. L. Rev. 1021, 1028 (2000).

6. See 17 U.S.C. § 203 (listing conditions for termination for works other than works made for hire).

7. This paper focuses on the termination of copyrights for sound recordings, rather than copyrights for musical compositions. To clarify, musical works are the music, as well as any accompanying words. U.S. Copyright Office, CIRCULAR 56A, Copyright Registration of Musical Compositions and Sound RECORDINGS 1 (2009), available at The author is generally the songwriter or composer. Id. A sound recording is the fixation of music in a tangible medium, and the author is the performer of the work. Id. Musicians who write their own songs typically own the copyright in the musical composition (or assign the rights to a publisher), but assign their copyright in the sound recordings to the record label. PASSMAN, infra note 26, at 206-07, 308-09.

8. See 17 U.S.C. § 203(a)(3) ("Termination of the grant may be effected at any time during a period of five years beginning at the end of thirty-five years from the date of execution of the grant.").

9. Id. at § 203(a)(4)(A).

10. Lee Phillips, a name partner at Manatt, Phelps & Phillips, vowed to begin issuing termination notices for huge acts, such as The Eagles, Journey, and Barbra Streisand. Eriq Gardner, Copyright Battle Comes Home, IP LAW & BUS., Oct. 8, 2009, available at 1202434372952&pos=ataglance.

11. U.S. CONST, art. I, § 8, cl. 8.

12. Act of May 31, 1790, 1 ch. 15, 1 Stat. 124.

13. Robert A. Gorman & Jane C. Ginsburg, Copyright: Cases and Materials 4-5 (Robert C. Clark et al. eds., 7th ed. 2006).

14. Id. at 2-3.

15. Id. at 2.

16. E.g., Copyright Act of 1909, 17 U.S.C. § § 1-216 (2006); Copyright Act of 1790, 17 U.S.C. 101-810(2006).

17. 3 Mellvile B. Nimmer & David Nimmer, Nimmer on Copyright § 9.03[B] (1997).

18. Id. § 9.08.

19. Copyright Renewal Act of 1992, 17 U.S.C. § 304(a)(l)(C)(iv) (2010) (detailing conditions for renewal of the copyright).

20. Copyright Act of 1909, 17 U.S.C. § § 10, 12 (1909). But see 17 U.S.C. § 302(a) ("Copyright in a work created on or after January 1, 1978, subsists from its creation . . .") (emphasis added). In essence, copyright registration is now less important for the purpose of proof of ownership, but it nevertheless provides for certain rights, such as statutorily-defined damages in the event of infringement. Id.

2 1 . Gorman & Ginsburg, supra note 1 3, at 7.

22. Id.

23. Id. at 8.

24. 17 U.S.C. § 203(a) (2006).

25. JA.L. Sterling, World Copyright Law, 765-66, 792 (3d ed., 2008). The Berne Convention created common rules to adjust to the increased globalization of copyright. Id. The Convention requires that copyright protection be automatic (i.e., protection is granted without a registration requirement). Id. The minimum life of copyright protection is the life of the author plus fifty years. Id. at 765, 792-93.

26. Donald S. Passman, All You Need to Know About the Music Business 291 (6th ed., 2006).

27. (Sonny Bono) Copyright Term Extension Act § 102(b)(1), Pub. L. No. 105-298, 112 Stat. 2827. On the other hand, the duration of copyright in the United Kingdom for sound recordings is the life of the author plus fifty years, while other types of works are protected for seventy years after the death of the author. Kenneth D. Crews & J acque Ramos, Comparative Analysis of World Copyright Law: Issues for University Scholarship 21-22 (2006), available at ChartZwolle


28. § 102(b)(3).

29. 537 U.S. 186(2003).

30. Id. at 186; see U.S. CONST, art. I, § 8, cl. 8. ("[B]y securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries . . . .").

31. Eldred, 537 U.S. at 205-08.

32. See 17 U.S.C. § § 203(a)(3), 304(c) (2006) (detailing rights and conditions of copyright termination).

33. GORMAN & Ginsburg, supra note 13, at 447.

34. See 17 U.S.C. § 304(c) (detailing the rights and conditions of an author's copyright termination).

35. See Randy S. Frisch & Matthew J. Fortnow, Termination of Copyrights in Sound Recordings: Is There a Leak in the Company Vaults?, 17 COLUM.-VLA J.L. & Arts, 211, 214 (1993) (reasoning that termination of pre- 1978 transfers is not important for sound recordings because federal law did not recognize copyrights in sound recordings until 1972, and thus there is no immediate threat of termination of recordings made fifty-six years ago).

36. See Sound Recording Act of 1971, Pub L. No. 92-140, 85 Stat. 391 (1971) (marking the legislation that led to the recognition in the transference of sound recordings); see also Frisch & Fortnow, supra note 35, at 214.

37. Frisch & Fortnow, supra note 35, at 214 (indicating state law claims were based on common law principles such as unfair competition, misappropriation, and anti-piracy).

38. 17 U.S.C. § 304(c)(4) (2006).

39. Id. at § 304(c)(3).

40. Id. at § 304(c)(4)(A). The termination notice provisions for works created after January 1, 1978, are virtually identical. 17 U.S.C. § 203(a)(4).

41. Siegel v. Warner Bros. Entm't Inc., 542 F. Supp. 2d 1098, 1117 (CD. CaI. 2008).

42. H.R. Rep. No. 94-1476, at 124 (1976).

43. See id. (noting the need for a provision like Section 203 because of the unequal bargaining position of authors caused by the impossibility of determining a work's value until after it has been exploited).

44. 17 U.S.C. § 203(a)(3), (4) (2006). Copyright grants in the music industry almost always cover publication, but the statute also provides for termination forty years after the grant if the work is never published. Id. ; PASSMAN, supra note 26, at 302.

45. 17 U.S.C. § 203(a)(3). The notice timing requirements are identical to the provisions for pre- 1978 works. Termination notice may begin at any time during a five-year period beginning at the end of thirty-five years, but must take place two to ten years before the effective date of termination. See supra notes 38-41 and accompanying text.

46. H.R. REP. No. 94-1476, at 125 (1976).

47. See 17 U.S.C. § 203(a) (detailing conditions for termination for works other than works made for hire).

48. 17 U.S.C. § 201(b).

49. See infra Part IV.

50. 17 U.S.C. § 203(b)(1).

51. See generally, Ben Sheffner, Songwriters v. Publishers, BILLBOARD, Apr. 17, 2010, at 4 (setting forth a scenario "ripe for conflict," where an exclusive songwriting agreement overlaps the 1909 Copyright Act and the 1975 Copyright Act).

52. 17 U.S.C. § 304(c). The first term is twenty-eight years while the renewal term is an additional sixty-seven years. 17 U.S.C. § 304(a)(1)(A) & (a)(2)(A). See also Bank One v. Mr. Dean MV, 293 F.3d 830, 837 (5th Cir. 2002) ("The word 'subsists' becomes essential here, because it does not mean 'springs into being' but rather 'exists' in the sense of 'persists' or 'continues.'").

53 . Sheffner, supra note 5 1 , at 4.

54. Id.

55. 690 F. Supp. 2d 1048, 1057-58 (CD. CaI. 2009).

56. Id. at 1050 (citing William F. Parry, The Failure of the American Copyright System: Protecting the Idle Rich, 72 NOTRE DAME L. REV. 907, 922 (1997)).

57. Id.

58. See 37 C.F.R. § 201.10 (2009) (listing the requirements for notices of termination of transfers and licenses).

59. Sterling, supra note 25, at 398. Moral rights, as opposed to economic rights, relate to the protection of the integrity of the author's work and personality. Id. at 392. Other moral rights include divulgation, paternity, integrity, and destruction rights. Id. at 395-98.

60. Id. at 398.

61. Id.

62. Id. at 408-10.

63. 17 U.S.C. § 201(b) (2006).

64. H.R. REP. No. 94-1476, at 124 (1976).

65. 17 U.S.C. § 203(a).

66. Scott K. Zesch, Annotation, Application of "WorL· for Hire" Doctrine Under Copyright Act of 1976, 132 A.L.R. Fed. 301, 311 (1996).

67. 490 U.S. 730, 737 (1989).

68. Id.

69. 17 U.S.C.A. § 101 (2010). A work is a work for hire if it is a work prepared by an employee within the scope of his or her employment, or a work created by an independent contractor that is, (1) a contribution to a collective work, (2) a part of a motion picture or other audiovisual work, (3) a translation, (4) a supplementary work, (5) a compilation, (6) an instructional text, (7) a test, (8) answer material for a test, or (9) an atlas that is specially ordered or commissioned and there is a written agreement between the parties specifying that the work is a work made for hire. Id.

70. Reid, 490 U.S. at 750-51.

71. Id.

72. Id. at 751-52. See RESTATEMENT (SECOND) OF AGENCY § 220(2) (1958) (setting forth a non-exhaustive list of factors relevant to determining whether a hired party is an employee).

73. Marco v. Accent Publ'g. Co., 969 F.2d 1547, 1550 (3d Cir. 1992).

74. Reid, 490 U.S. at 751-52.

75. Aymes v. Bonelli, 980 F.2d 857, 861 (2d Cir. 1992).

76. Id.

77. Id.

78. 17U.S.C.A§ 101 (2006).

79. Id.

80. Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 739 (1989) (quoting NLRB v. Amax Coal Co., 453 U.S. 322, 329 (1981)).

81. Id. at 739-40 (citing Kelley v. S. Pac. Co., 419 U.S. 318, 322-23 (1974); Baker v. Texas & Pac. Ry. Co., 359 U.S. 227, 228 (1959); and Robinson v. Baltimore & Ohio R.R. Co., 237 U.S. 84, 94 (1915)).

82. Id. at 740.

83. Id.


85. City of Newark v. Beasley, 883 F. Supp 3d, 8 (D.N.J. 1995) (citing Avtec Sys., Inc. v. Peiffer, 21 F.3d 568 (4th Cir. 1994)).

86. See supra Section IV.A.

87. Aymes v. Bonelli, 980 F.2d 857, 861 (2d Cir. 1992).

88. Cmty. for Creative Non- Violence v. Reid, 490 U.S. 730, 737 (1989).

89. Martha Graham Sch. & Dance Found., Inc. v. Martha Graham Qr. of Contemporary Dance, 380 F.3d 624, 642 (2d Cir. 2004).

90. Restatement (Second) of Agency § 220(1) cmt. a (1958) (discussing the relationship and control between an employer and employee).

91. Id.

92. Rafoth, supra note 5, at 1033.

93. See id. (comparing the likelihood of artists with great creative control to be classified as independent contractors, as opposed to artists with little creative control).

94. See id. (indicating that parameters include a delivery date, minimum song requirements, and recording budgets).

95. Id.

96. PASSMAN, supra note 26, at 120.

97. Id. at 1 14.

98. See Rafoth, supra note 5, at 1034 n.46 ("The hiring party in Hi-Tech had control over 'artistic objectives,' but the court found that the importance of this fact was diminished by the '[high level] of . . . skill required of the [hired party], as well as the [hired party's] artistic contributions to the product.'" (citing Hi-Tech Video Prods., Inc. v. Capital Cities/ABC, Inc., 58 F.3d 1093, 1097 (6th Cir. 1995))).

99. See Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 737 (1989) (holding a sculptor was an independent contractor based on various factors, including the fact that sculpting is a skilled occupation).

100. Id. at 751.

101. Frisch & Fortnow, supra note 35, at 220.

102. PASSMAN, supra note 26, at 88-91.

103. Id.

104. Id. at 78.

105. Reid, 490 U.S. at 753 ("Apart from the deadline for completing the [work, the artist] had absolute freedom to decide when and how long to work."); Frisch & Fortnow, supra note 35, at 220; see also, Marco v. Accent Publ'g. Co. Inc., 969 F.2d 1547, 1550 (3d Cir. 1992) (finding that the imposition of deadlines is not considered to affect an independent contractor's discretion over personal work hours).

106. Reid, 490 U.S. at 743.

1 07. Passman, supra note 26, at 80.

108. Geoffrey P. Hull, The Recording Industry 1 49 (2d ed. 2004).

109. Peter J. Riley, Musicians and Singers, RlLEY ASSOCIATES P.C., available at (last visited Apr. 22, 2010).

110. E-mail from Edward Z. Fair, entertainment attorney, to author (Apr 25, 2010, 11:29 CST) (on file with author).

111. 980 F.2d 857, 862-63 (2d Cir. 1992).

112. Id. at 863 (citations omitted).

113. Frisch & Fortnow, supra note 35, at 219.

114. Id.

115. Id. (citing AFTRA, National Code of Fair Practice for Phonograph Recordings, § 34 (1977)).

116. Id.

117. See Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 752 (1989) (listing factors that are relevant to determining whether a hired party is an employee).

118. Id. at 751-52.

119. See Joseph B. Anderson, The Work Made for Hire Doctrine and California Recording Contracts: A Recipe for Disaster, 1 7 HASTINGS COMM. & ENT. LJ. 587, 592 (1995) (discussing the relevance of "work made for hire" clauses in recording and publishing contracts).

120. 25B West's Legal Forms, Intellectual Property § 23:74.

121. See Robert A. Kreiss, Scope of Employment and Being an Employee Under the Work-Made-for-Hire Provision of the Copyright Law: Applying the Common-Law Agency Tests, 40 U. KAN. L. REV. 1 19, 145-46 (1991) (noting that contractual attempts to designate a party as an employee are ineffective because the "Copyright Act, not the contract" determines if the creator is an employee). Cf. Bartels v. Birmingham, 332 U.S. 126 (1947) (holding that musicians performing at a hotel were under the control of their band leader and were not employees of the hotel for purposes of the Social Security Act in spite of a contractual provision purporting to give the hotel control over musicians); Rev. Rul. 68-303, 1968-1 CB. 165 ("[A] contractual arrangement will not be determinative of the employer-employee relationship where the realities of the situation contradict the terms of the contract.").

122. See infra Part VLB.

123. Frisch & Fortnow, supra note 35, at 221.

124. Alan H. Kress & Samuel J. Fox, Entertainment Industry Contracts: Negotiating & Drafting Guide 159-112, Form 159-1 (Donald C. Färber & Peter A. Cross eds., 1986) (emphasis added).

125. 17 U.S.C. §101(2006).

126. Id.

127. H.R. CONF. REP. No. 106-464, at 105-106 (1999).

128. Rafoth, supra note 5, at 1023-24 ("Discussion of the work-for-hire amendment in the Congressional Record went no further than to adopt the Conference report." (citing 145 Cong. Rec S 14,836 (daily ed. Nov. 18, 1999), 145 CONG. REC S14,712 (daily ed. Nov. 17, 1999), and 145 CONG. REC Hl 1,769, Hl 1,811-18 (daily ed. Nov. 9, 1999))).

129. Passman, supra note 26, at 289.

130. See 146 CONG. REC H7772 (daily ed. Sept. 19, 2000) (statement of Rep. Conyers) ("Without the benefit of committee hearings or other debate, the change terminated any future interest that artists might have in their sound recordings and turned them over permanently to the record companies. We have since learned that we should never do business this way.").

131. Work Made for Hire and Copyright Corrections Act of 2000, Pub. L. No. 106-379 § 2(a)(1), 1 14 Stat. 1444, 1444 (2000).

132. 17U.S.C.A. § 101(2006).

133. Id.

134. See generally Rafoth, supra note 5, at 1023-35 (indicating that Congress did not thoroughly investigate the implication of the work-for-hire amendment).

135. Id. at 1048-49 (detailing different issues advocated by publishers and authors).

136. Id.

137. Id.

138. Id.

139. Id. at 1049.

140. See In re Napster, Inc., 191 F. Supp. 2d 1087, 1097-98 (N.D. CaI. 2002) (explaining sound recordings are not among the nine listed works); Bailas v. Tedesco, 41 F. Supp. 2d 531, 541 (D.N.J. 1999) ("[P]laintiffs argument that the sound recordings were a work for hire is without merit.").

141. Bailas, 41 F. Supp. 2d at 541.

142. Id.

143. Napster, 191 F. Supp. 2d at 1092.

144. Id. at 1097.

145. Id. at 1097-98.

146. Moran v. London Records, 827 F.2d 1 80, 1 83 (7th Cir. 1 987).

147. Id.

148. Id.

149. Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 737 (1989).

150. Scott K. Zesch, Annotation, Application of "Works for Hire" Doctrine Under Copyright Act of 1976, 132 A.L.R. FED. 301, § 18[a] (1996).

151. See supra Part IV.B.

152. 25B West's Legal Forms, Intellectual Property § 23:74.

153. Restatement (Second) of Contracts § 178 cmt. b (1981).

154. Id. at cmt. e.

155. Restatement (Second) of Contracts § 178 (1981) (emphasis added).

156. Id. atcmt. b.

157. Id. at cmt. a. (citing Restatement (Second) Conflict of Laws §203,203(1971)).

158. Id. at cmt. b.

159. See 17 U.S.C. § 201 (2006) (declining to specifically reference sound recordings).

160. Id. § 101.

161. Id. §201.

162. See, e.g., Town of Newton v. Rumery, 480 U.S. 386 (1987) ("The threshold question is whether compelling [a party to waive constitutional rights] impairs to an appreciable extent any of the policies behind the rights involved." (quoting Crampton v. Ohio, 402 U.S. 183 (1971))).

163. Restatement (Second) of Contracts § 178 cmt. f (1981) ("[T]he question of the effect of such a determination on the rest of the agreement is sometimes a complex one.").

164. Restatement (Second) of Contracts § 1 78 ( 1 98 1 ).

165. Rafoth, supra note 5, at 1 030; see 1 7 U.S.C § 203(a)(5) (2006) (stating that termination of a grant may be effected notwithstanding any agreement).

166. 17 U.S.C. § 203(a)(5)(2006).

167. U.C.C. § 2-302 (2004).

168. Id. atcmt. 1.

169. Id.

170. See RESTATEMENT (SECOND) OF CONTRACTS § 178 (1981) (stating that a contract should not be enforced when public policy concerns "clearly outweigh" the benefits of enforcement).

171. 57A AM. JUR. 2D Negligence § 1 64 (2004).

172. Id.

173. See Tug Ocean Prince, Inc. v. United States, 584 F.2d 1151, 1155 (2d Cir. 1978) (discussing liability in a boating accident pertaining to the vessel's seaworthiness); Frank Mastoloni & Sons, Inc. v. U.S. Postal Service, 546 F. Supp. 415, 421-22 (S.D.N.Y. 1982) (granting post office's motion for summary judgment even though defendant did not check the signature when delivering a package).

174. 17 U.S.C. § 203(b)(1) (2006).

175. Id. § 101.

176. 469 U.S. 153, 173(1985).

177. Id.

178. See Anderson v. Stallone, No. 87-0592 WDKGX, 1989 WL 206431, *23-25 (CD. CaI. Apr. 25, 1989) (analyzing use of the Rocky character in a new work); PASSMAN supra note 26 at 66-67 (describing the technical process of mastering).

179. Woods v. Bourne Co., 841 F.Supp.l 18, 121 (S.D.N. Y. 1994).

180. See supra Part HLC.

181. 17 U.S.C. § 101(2006).

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