Monday, July 2, 2007

Trebor’s Bite-Sized Bits: Work Made for Hire Agreements and Sound Recordings

Hi, welcome back to Trebor's Bite-Sized Bits! As our regular readers know, this little blog/newsletter is intended to offer some basic background on copyright law, trademark law and other related areas of interest. It is not intended to be legal advice in any way, shape or form. If you have copyright or trademark issues, always consult an attorney experienced in those areas.

I've gotten a very strong response to my last TBSB offering concerning Work Made for Hire ( hereinafter "work-for-hire") agreements, all of them from persons involved in one way or the other in the music industry.

As you'll recall, there are two branches of work-for-hire agreements under Copyright Law--one relates to employees and the other relates to independent contractors. Under the independent contractor branch, as you may also remember, there are nine narrow categories of works done by an independent contractor that could qualify as works-for-hire.

What I pointed out in my work-for-hire column was that sound recordings are not included as one of the nine narrow categories. Most recording contracts have a work for hire provision but back that provision up with an alternative provision that if the work for hire provision is invalid then the artist assigns his work to the label. (As I pointed out in the last column, there's actually a very substantial difference between an assignment of rights and a work-for-hire but, again, that's a subject worth an entirely different column if you are interested, gentle readers).

Again, a sound recording simply is not one of the categories listed. There has been some argument by the record industry that even if a sound recording isn't listed expressly as a separate category, a recording artist's work should be allowed as a work-for-hire as a contribution to a collection, a category that IS enumerated as one of the nine narrow areas that qualify as works-for-hire.

In the light of court opinions that have held that a sound recording is not a work for hire, in light of the difference between sound recordings and other types of "collections" that have been accepted as works-for-hire and in light of the concern of many (including the Copyright Office it would appear) about the fairness of a theory that would allow the work of recordings artists to become forever the property of record labels, one wonders if the record industry's view is likely to prevail in the courts or find much traction in the legislature. All of us--music industry, recording artists and lawyers-- are going to have to wait and see what develops with said courts and legislature.

However, whether or not a work-for-provision is likely to be valid in the case of a key contributor such as a featured recording artist may be an entirely different proposition than the validity of such a provision in the case of a back-up singer or non-featured musician. In fact, it is entirely possible that non-key contributors may actually fit under the first branch of the work-for-hire statute, as a kind of employee. An employee doesn't have to be someone that gets a W-2 form and benefits to qualify as an employee.

What courts often consider in deciding whether a party is an employee are such factors as: 1) the skill required; (2) the source of the instrumentalities and tools; (3) the location of the work; (4) the duration of the relationship between the parties; (5) whether the hiring party has the right to assign additional projects to the hired party; (6) the extent of the hired party's discretion over when and how long to work; (7) the method of payment; (8) the hired party's role in hiring and paying assistants; (9) whether the work is part of the regular business of the hiring party; (10) whether the hiring party is in business; (11) the provision of employee benefits; and (12) the tax treatment of the hired party.

The courts also weigh in any other factors that seem to make sense, will ignore some of the factors above, or give them extra or different weighting depending on each individual case.
I was particularly asked about the case of demo recording, where producers and artists get together and make a sound recording with the idea of testing it in the market, getting it out there and seeing what industry response is. Well I can't, and wouldn't, comment on an agreement I've haven't read and this column is NEVER intended to give legal advice, just some legal background. Having said that, it is possible that in the case of a pure demo sound recording, the recording may fit under the first (employee) branch of the work for hire doctrine depending on an analysis of the factors noted above. However, if the sound recording, for any reason, fits under the second (independent contractor) branch, you should be very aware by now that the analysis is very different.

Something you should be very cautious about, particularly if you are on the recording/production side of the business: Don't think because everyone in an industry is doing something that it must be legally valid. First, things change. It may be that early on in the recording industry, sound recordings were often clearly works-for-hire. Certainly, the work for hire law prior to the effective date of the 1976 Copyright Act was very different than the law thereafter. Also, labels, by way of example, once had much more control over every aspect of the creation and production of records. But that was then, and this is now.

Secondly, while courts (and the legislature) certainly do consider the practices of an industry in deciding and making law, it does not mean that the practices of an industry dictate what the courts will decide. I'm reminded, by analogy, of the copyright case where a movie industry person assured the court that in his industry, people didn't necessarily put assignments of copyright on paper but just shook hands. While the court recognized that this might be the practice of the industry, since the copyright law specifically required that assignments be in writing, the court found that industry practice was pretty much irrelevant.

So no matter how the music industry conducts itself, be aware, as I said above, as to sound recordings, all of us or going to have to wait and see what happens in the courts and in the legislature.
Oh, also just in passing, I got a query from a songwriter about whether her song was a work-for-hire under a recording agreement. Assuming that the songwriter is not an employee, I'm a little stunned by this question. If anyone out there thinks they have any viable theory that could explain how a songwriter's song could be categorized as a work-for-hire for the purposes of a sound recording, let me hear it.

Well, that's it for now. See you in a month or so with another issue of TBSB. Feel free to forward TBSB as always. Just let 'em know it came from Trebor Lloyd, aka "Big T".

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