BY:Neil J. Rosini, Michael I. Rudell
(Originally published in the Entertainment Law column in the New York Law Journal on Friday, October 28, 2011)
The year 2013 may be a watershed in the music industry. It is the year that opens a new window in the Copyright Act through which many post-1977 grants of rights under copyright potentially could be terminated.
The termination right applies to grants of rights in all types of copyrighted works, including books, plays, and films, as well as musical compositions and sound recordings. Termination of rights in sound recordings has attracted the music industry’s attention because the Copyright Act does not specify whether grants of rights in sound recordings created by “independent contractors” are subject to termination. If those sound recordings are deemed “works for hire” – which lie outside the bounds of termination — then grants of rights in them cannot be terminated. A recent New York Times article referred to grants of rights in recordings by Bob Dylan, Tom Petty, Loretta Lynn, Tom Waits, Bryan Adams, Kris Kristofferson and Charlie Daniels for which notices of termination apparently have been served.
As to whether sound recordings on albums qualify as works for hire, there are arguments on both sides. How the issue is resolved could make a big difference to music labels that still distribute those classic recordings, or, on the other hand, to the artists who performed in them decades ago.
In this article we will look at the salient issues concerning termination of rights in post-1977 grants of rights in sound recordings, beginning with a quick review of the termination statutes.
Termination of Grants
In 1977, the maximum duration of copyright protection in the U.S. was 56 years – a first term of 28 years followed by a “renewal term” of equal length — for works that were “copyrighted” before the end of that year (that is, published or registered with the U.S. Copyright Office). In 1978 that maximum was increased to 75 years and in 1998 increased again to 95 years owing to extensions of the renewal term. A termination mechanism was created by Congress with the first increase in term of copyright and expanded with the second increase, on the premise that authors or their “statutory successors” should share in the benefits of that extended term of protection through a recapture of the author’s rights.
Sections 304(c) and 304(d) of the Copyright Act relate to termination of pre-1978 grants in pre-1978 works, with effective dates of termination falling in five-year periods that commence in the 56th or 75th years of copyright, respectively. Those mechanisms have been in use for years and the year 2013 has no special significance for them. They are not our focus here.
As for post-1977 grants (respecting both pre-1978 and post-1977 works), one must look to another section, 203(a), which opens its own five-year window for the first time in 2013. The timing of that debut follows from this: 2013 is the 35th year after 1978 when Section 203(a) became effective, and the effective date of terminating a grant under 203(a) can occur no sooner than the 35th anniversary of the grant.
One major difference between 203(a) on the one hand and 304(c) and (d) on the other, is that the opening of the five-year windows under the latter provisions are measured from the date of copyright and the opening of the five-year window under 203(a) generally is measured from the date of the grant. There are other differences, too, but many of the same complicated substantive and procedural details that relate to termination under 304(c) and 304(d) also apply to Section 203(a). Under each section, written notice of an intent to terminate a grant must be given at least two years and no more than ten years prior to the effective date specified in the notice, which must fall within the statute’s five-year window. Notices of termination under Section 203(a) can be sent in 2011 for effective termination dates in 2013 (when the first time window opens up respecting grants made in 1978) through 2021 (ten years from now).
As already noted, the eligibility for termination of grants in sound recordings will turn on whether or not they are works for hire.
Work for Hire Status
The difference between the copyrights in sound recordings and musical compositions should be borne in mind. Embodied in every recording made on or after February 15, 1972, there are two copyrights: a copyright in the recorded performance itself (referred to as a “sound recording” in the Copyright Act), and the copyright in the musical composition that is being performed.
As with other categories of works, there are two pathways to “work made for hire” status for sound recordings under Section 101 of the Copyright Act. If a work is not created as a work for hire by either route, then it will never be a work for hire because after-the-fact contractual agreements can neither create nor undo work for hire status.
The first way a work becomes one for hire is through preparation “by an employee within the scope of his or her employment,” that is, as a “regular” employee. Whether or not the test is satisfied depends on common law agency factors such as the hiring party’s right to control the manner and means by which the product is accomplished, the skill required by the employee, the source of the instrumentalities and tools, the location of the work, the duration of the employment relationship, whether the hiring party has the right to assign additional projects, the extent of the hired party’s discretion over when and how long to work, the method of payment, the provision of employee benefits, and tax treatment. In short, the services of “regular” salaried employees are likely to result in works that are deemed “for hire.”
The argument has been made that featured artists and other contributors to the making of sound recordings should be considered “regular” employees in accord with the common law agency factors. This position is based principally on the facts that labels fund the budgets of sound recordings (albeit as advances that are recouped from artist royalties) and that they exert a degree of control over the results. But despite the labels’ funding of records, their diminishing degree of involvement in the work of production has led Nimmer (among others) to conclude that “sound recordings typically no longer qualify as works by true employees.”
The alternative pathway to creating a work for hire applies not to “regular” employees but to independent contractors, i.e., those whose employment terms do not satisfy the common law test. A work by an independent contractor can become a work for hire only if two conditions are met: first, the work must be “specially ordered or commissioned” for use in one of nine categories, such as “contribution to a collective work”; and second, a “written instrument” must be signed by both employer and independent contractor in which they “expressly agree” that the work shall be considered a work for hire. Accordingly, even if a music label and an artist agree in writing that the artist’s recording would be a “work made for hire” (as most label-artist agreements provide), that agreement carries no weight if the artist’s employment status is that of an independent contractor and the artist’s recording does not fall into one of those nine categories.
Categorizing Sound Recordings
Sound recordings per se are not currently listed among the nine categories, but for a short time, they were. The list of nine categories was amended by the addition of sound recordings as a purported “technical amendment” to the Satellite Home Viewer Improvement Act of 1999, notwithstanding that the amendment was hardly “technical” and had nothing to do with the subject matter of the act. After strenuous objections, the amendment was repealed in less than a year and Congress added language to Section 101 of the Copyright Act to the effect that neither the 1999 amendment nor its repeal should be given any “legal significance” — as if neither had ever existed.
But even without sound recordings’ being added to the group of nine, a recording’s being “ordered or commissioned” for distribution in an album still might be deemed a “contribution to a collective work,” which is defined in Section 101 of the Copyright Act as “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.” Qualifying as a “collective work” seems a far more likely scenario than with any other work for hire category relating to independent contractors. Seven of the categories seem mostly irrelevant to recordings of music: “as a translation, as a supplementary work [which must be “a secondary adjunct to a work by another author…”], as a compilation [of pre-existing material or data, by definition], as an instructional text, as a test, as answer material for a test, or as an atlas.” The ninth category, use “as part of a motion picture or other audiovisual work,” doesn’t apply to sound recordings because the “sounds accompanying a motion picture or other audiovisual work” are not sound recordings by definition. 
At a hearing of the House Subcommittee on Courts and Intellectual Property in 2000, witnesses debated the breadth of the “collective work” category. One witness questioned whether a single artist’s album could ever be a collective work, as distinguished from an album involving different artists. The opposing view held that the contribution of an individual sound recording as one of several in an album ordinarily would qualify as a contribution to a collective work. But given the variety of circumstances that can give rise to an album – which might be primarily the product of a producer, of an artist, or of a group—hard and fast rules are difficult to make. And as Nimmer observes, certain types of albums would unlikely qualify as collective works no matter what — such as “a faithful presentation of a live concert,” or an album with a continuous “story line” like “Tommy” by The Who. Furthermore, permutations in how an individual sound recording comes into existence can move the analysis either way.
Other complications may ensue even if sound recordings are not deemed to be works for hire, thereby making grants of rights in them eligible for termination. For instance, in the absence of a statutory distinction between “key contributors” like featured artists on the one hand, and side musicians, backup singers, sound engineers, and producers on the other, there is no guarantee that a featured artist or group would be deemed the only contributor entitled to terminated rights. All those contributors might be considered co-authors.
The outcome of termination notices addressed to grants of rights in sound recordings —particularly, those sound recordings initially sold as parts of albums – awaits the results of litigation, further changes in the law, or a combination of both. And after one or more of those clarifying events, variations in how individual sound recordings came into existence still will likely influence results.
That featured recording artists have begun to serve termination notices with effective dates in 2013 is only a beginning. As Don Henley predicted in the Times, “it’s going to get more contentious in the next couple of years.”
 Rohter, Larry, Record Industry Braces for Artists’ Battles Over Song Rights, The New York Times, August 15, 2011, athttp://www.nytimes.com/2011/08/16/arts/music/springsteen-and-others-soon-eligible-to-recover-song-rights.html.
 Sound recordings created prior to February 15, 1972 are not protected by copyright in the United States.
 17 U.S.C. §101.
 Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989).
 Nimmer on Copyright, §5.03[B][a], at 5-43.
 See, generally, Nimmer on Copyright, §5.03[B][a].
 17 U.S.C. §101.
 See Nimmer on Copyright, §5.03[B][a], 5-47, 5-48.