The Next Termination Battle: It’s Time To Change Sound Recording Contracts (Guest Column)

Salt-N-Pepa recently suffered a loss in their quest to regain control of their sound recordings by exercising their termination rights, a crucial federal copyright provision that allows authors to claw back their works decades after they sell them away. A federal judge sided with their record label, and seemed to endorse the view that “work for hire” language in recording artist contracts can be used to strip artists of that right. We think that decision is wrong, and a reminder that the promise of termination rights is in no way guaranteed.

As we’ve seen first hand in our representation of Cyril Vetter, industry intermediaries often seek to restrict termination rights in legally suspect ways. The “work for hire” exception at issue in the Salt-N-Pepa case (and others) is yet another example of an intermediary clinging to rights that ought to be returned. As disappointing as that may be, what’s more troubling is that we, as artist representatives, have propped up their efforts by including virtually identical “work for hire” language in agreements with producers, side artists, and other studio collaborators. Like record label agreements, this language assumes that the creative contributions of these collaborators can be owned as works made for hire. But, in fact, the law only recognizes two types of works made for hire, and neither is typically applicable to these agreements.

In the first category are works made by employees pursuant to bona fide employment relationships.  In that case, the employer – not the creator – is considered the author. However, the vast majority of services provided in the creation of sound recordings are undertaken on an independent contractor basis. This is true as between artists and their labels as well as between artists and their studio collaborators. This lack of an employment relationship renders the first category of works made for hire largely irrelevant.

The second category is limited to a specific set of works made by non-employees. By law, to be an independent contractor work made for hire, the work must be specially ordered or commissioned (in writing) as such and the work must be one of the types of works listed in the Copyright Act as eligible to be a non-employee work made for hire. For example, translations, instructional texts, and test materials are listed as eligible. Crucially, “sound recordings” are nowhere to be found on that list.

Despite this, ownership-based recording agreements like Salt-N-Pepa’s invariably include “work for hire” language. At times, a record label will try to satisfy the requirements of the first category by classifying the recording artist as an employee for purposes of copyright law, but an independent contractor for tax and other purposes. This seems like an impossibly small needle to thread and is almost certainly unenforceable. Far more frequently, labels attempt to squeeze into the second category by taking the position that the creative contributions of recording artists can be owned as contributions to a “collective work” – a type of work that is on the list of eligible non-employee works made for hire.

This “collective work” argument has been around for a long time, but has been largely rejected by the courts in cases outside of the termination rights context. The labels know they’re on shaky legal ground. It’s why the recording industry unsuccessfully tried to amend the Copyright Act in the late ‘90s to expressly include sound recordings on the list of eligible works. It’s also why labels have generally been pretty quick to settle termination rights litigation brought by recording artists. But the Salt-N-Pepa case is a wake up call. What most of us may have considered a flimsy legal argument now has traction. And, as artist representatives, we shouldn’t assume that future courts won’t accept a legally suspect industry practice simply on the basis that it’s commonplace and longstanding.

So what to do? We’re not naive enough to think that “work for hire” language can be negotiated out of ownership-based record deals. But we should no longer allow record labels to control the narrative. Continuing to use their preferred language in our collaborator contracts is tantamount to an endorsement of a legal argument used to deny artists their termination rights.

The alternative we’ve adopted is simple: instead of “work for hire” language, we include an unconditional and irrevocable disclaimer by the collaborator of any intent to be a joint author of the sound recording copyright. Courts have held that a written contract between creative collaborators evidencing intent to be or not to be joint authors is dispositive of the issue. Therefore, a written waiver of joint authorship status by the collaborator leaves the principal artist with sole copyright ownership of the sound recording from inception, thereby accomplishing what “work for hire” language dubiously attempts. But to remove any doubt, immediately following the waiver of joint authorship, we tack on a contingent copyright assignment by the collaborator in favor of the artist. With that safety valve, this alternative becomes unimpeachable.

There are, of course, likely other alternatives and we welcome further discussion on the best way forward. Most importantly, however, any alternative must avoid the doublethink required to argue, on one hand, that record deal “work for hire” language is ineffective and can’t be used to avoid statutory termination rights, but on the other, that artists can use that same language in agreements with their collaborators. At bottom, we urge our artist representative colleagues to treat the sound recording “work for hire” language as the shell game that it is. A good start would be to stop making each other play the game.

Loren Wells and Tim Kappel are the founding partners of the law firm Wells Kappel, where they represent creators, professionals and businesses in the music industry. They recently secured a landmark victory on global termination rights, in the case Vetter v. Resnik, that artist advocates hailed as a “game-changer for music creators.”