Copyright Society of the USA-Rocky Mountain Chapter presents: Nazi Looted Art Event

On April 12, 2018, (Yom HaShoah, Holocaust Remembrance Day), the Rocky Mountain Chapter of the Copyright Society of the USA, for which our attorney, Shirin Chahal, serves as a co-chair, hosted NYC-based attorney Raymond J. Dowd and University of Denver Professor Elizabeth Campbell for a fascinating presentation on how artwork stolen during WWII bankrolled the Nazi war machine, and legal efforts since WWII to return this artwork to heirs of Holocaust victims.

The timing of the event could not have been better, as Mr. Dowd had secured that very same week a major legal victory involving the artworks of Austrian painter Egon Schiele. You can read more about that here: https://www.bbc.com/news/world-us-canada-43665737.

Some photos from the memorable evening are here:

Left to right: Dave Rein, Esq.; Shirin Chahal, Esq.; Prof. Elizabeth Campbell; Raymond Dowd,Esq.; Katie Roenbaugh Schwalb, Esq.; and Mindy Sooter, Esq.

Raymond Dowd and Elizabeth Campbell during the Q&A portion of the evening.

Monetizing Internet Memes & Copyright Law

When our Intellectual Property/Arts & Entertainment team presents at one of its legal workshops (and we typically do these for various arts groups along the Front Range), sometimes we tell the story of  Carlos Ramirez, the creator of the Trollface meme.

In 2008, Carlos was procrastinating on a college term paper and drew a face in MS Paint to post on an online message board. People seemed to like it.

In 2010, Carlos registered his drawing with the U.S. Copyright Office, and thereafter successfully monetized his work in a wide variety of ways. You can read more about Carlos’s fascinating tale here. In short, as of mid-2015 Carlos had made over $100,000 through various exploitations of the Trollface (both merchandise licensing, as well as settlements under claims of copyright infringement he brought against various parties).

We like to share Carlos’s story at our workshops because it illustrates how beneficial copyright laws can be to professional artists and even lucky doodlers, like Carlos. If you create an image that becomes a viral meme, are savvy enough to register it with the U.S. Copyright Office, and put in the time to actively market, license and police the use of your work, you too could make six figures! Or so we say.

However, maybe Carlos and his Trollface meme lucked out during the “OH! The Internet Is a Thing!” stage, which appears to have ended several years ago now.  The Atlantic just published a story about how making money off Internet memes is becoming harder and harder. The pace of online trends and the time frame for what people think is funny (or at least, funny enough to spend some money on) is too fast to keep up with. “It feels like the internet is all moving a lot quicker.” “Today, memes come and go sometimes faster than T-shirts can be printed, and there’s nothing more mortifying than donning a T-shirt with a dated phrase.”

As attorneys, we think we will probably still teach our workshop attendees about Carlos and Trollface, because it’s a funny and unusual story, and helps people learn about how they can reap real legal benefits if they know how to make copyright law work for them. We just may no longer promise the potential for them to make riches off their memes!

If you have questions about copyright law or operating an e-commerce business, contact our Intellectual Property or Small Business team today.

SESAC, SoundExchange, SoundScan: Why Are Music Royalties So Confusing?

Many indie artists are confused about the difference between ASCAP, BMI, SESAC and SoundExchange, not to mention SoundScan, the Harry Fox Agency, and the role of their own publishing company and record label when it comes to collecting and paying money under the exploitation of their music.

The problem with not understanding these concepts is that you could get taken advantage of by unscrupulous players in the business or just simply lose out on valuable revenue.  A 2015 Berklee College of Music report found that anywhere from 20-50% of music payments do not make it to their rightful owners!

This post aims to provide independent songwriters and musicians some basic information to help them understand various music royalty issues.

Music Copyright Basics

To understand music royalties, it helps to understand the underlying legal framework behind music copyright in the U.S.

Under our Copyright Act, any musical work that has been reduced to a recording has two copyrights: (1) one for the sound recording embodying the performance, and (2) one for the underlying composition (musical arrangement and lyrics).

 

Happy Birthday Composition
Happy Birthday Sound Recording

A composition or sound recording copyright gives you the following bundle of rights:

  • The right to reproduce the work (make physical or digital copies)
  • The right to distribute the work (sell, share or give away for free)
  • The right to make derivative works (made other arrangements or cover versions)
  • The right to publicly perform the work (a “performance” can be live or a replay of the recording of the work)

Additionally, there is one more right specially provided in the law for only for sound recording copyrights:

  • The right to perform the copyrighted work publicly by means of a digital audio transmission.

A lot of the confusion regarding music royalties comes from the fact that each of these distinct rights may produce royalty money for the copyright holder or the performer (or both!).   Moreover, over the years, different organizations have taken charge of managing or administering these rights for songwriters and performers, and certain “rules” have been established not based on the law, but on industry practice.

One example: the industry divides composition copyrights into a 50% “publisher’s share” and a 50% “songwriters share”, even though there is nothing in the Copyright Act dividing legal rights in this way.

Another example: composition copyrights are often assigned to publishing companies, whereas sound recording copyrights are often owned by the record label who paid for the production and promotion of the recording.  Meanwhile, a number of special royalty-collecting organizations have sprung up to address the practical realities of monitoring the use and performance of music on a nation-wide scale.

The Public Performance Right (Traditional vs. Digital)

ASCAP (American Society of Composers, Authors, and Publishers), BMI (Broadcast Music, Inc.)[1] and SESAC (formerly, the Society of European Stage Authors and Composers) are U.S. public performance organizations (PROs) who help copyright holders collect performance royalties for the public performance of music compositions.

Radio stations, concert venues, sports arenas, bars, restaurants, malls – any place where the public is generally free to enter and music might be played – all pay fees to PROs.  In exchange, they get a blanket public performance license that gives them permission to play live or recorded music at their location.  The PROs pass these collected license fees on to the composition copyright owners.

Complicating the understanding of how PROs work is that they follow the 50% publishers share and 50% songwriters share scheme, so even if a composer or songwriter has assigned 100% of their composition copyright to a music publisher, the composer/songwriter will still get money directly from their PRO.  If a composition copyright owner does not have a publishing company, they will receive both halves from their PRO.[2]

Meanwhile, SoundExchange is a PRO that collects performance royalties under a different right under copyright law.  SoundExchange assist copyright owners of sound recordings (not compositions) under digital performances (not traditional performances) of those works.

While there is huge amount of music that is transmitted over the Internet and other digital formats, it is key to realize that SoundExchange only collects digital performance royalties on non-interactive streaming services where the listener cannot control what they hear (i.e., a DJ or an algorithm is selecting the songs).  Thus, music providers such as SiriusXM, Pandora and cable music stations pay licensing fees to SoundExchange.  SoundExchange splits up the royalties it collects into 50% for the record label, 45% for the “featured artist”, and 5% for the “non-featured artists” (i.e., sessions musicians, background vocalists, etc.).  Again, SoundExchange does not pay royalties to composition copyright owners.

SoundExchange does allow its royalty payments to expire if an artist does not register and collect them within a certain time frame, so if you are an artist who is in any way featured on recorded music, you should create an account with this PRO right away!

The Reproduction and Distribution Right

Songwriters and performers who want to sell their music to the public generally desire contracts with either a record label, record manufacturer or a distribution company (sometimes, a combination of these), in which they will license their rights under copyright to reproduce and distribute their works.  There are many ways to arrange these relationships and if you can, you should negotiate for an arrangement that works best for you.  Then, make sure you have a straightforward written agreement that correctly reflects the understanding you reached with the record label, manufacturer or distribution company.

Most record labels and manufacturers will collect all revenues from any exploitation of the copyrights, then pay royalty payments to the songwriter or artist on a predetermined percentage based on units sold.  A big negotiate point is also whether the label or manufacturer will “advance” money to the artist to produce, press or promote the music, and how they get to recoup those costs.

To keep track of units sold, much of the music industry uses SoundScan, a service that tracks sales of music products throughout the United States and Canada.  Record labels often rely on SoundScan to determine the royalties earned or due to one of its contracted artists.  SoundScan is also the data source for the Billboard music charts.

Mechanical Royalties are payments made for the rights to include a composition in a sound recording (under a copyright owner’s right to copy and distribute).  Under U.S. copyright law, once a song has been published, anyone can record it as long as the statutory mechanical license is obtained and the fee established by the Copyright Act is paid (the current statutory rate is 9.10¢ per copy for songs 5 minutes or less).  Many composition copyright owners (including publishing companies) authorize the Harry Fox Agency to issue mechanical rights licenses on their behalf, and the law treats these royalties for physical products (CDs, vinyl) and digital products the same.

Synchronization or “Sync Licensing” is when a composition copyright owner grants permission to use their work in an audiovisual setting, such as a movie, a TV show, a videogame or in a commercial.  There is no statutory or industry standard rate for this.  It is negotiated based on a number of factors.  Sync licensing is becoming an ever more important source of income for songwriters and publishers.

A “master license” is needed in conjunction with a sync license if someone wants to use the sound recording of the licensed composition as well.  It is possible to get a sync license and simply re-record your own version of the work if you do not want to pay for, or are unable to obtain, the master license for a certain song.

International Royalties

A discussion of the many different music laws, royalty schemes, PROs, and other supporting organizations located outside of the U.S. is beyond the scope of this post, but many international schemes are similar to ours, so if you understand the underlying copyright law and framework here, you will have a leg up as you begin to distribute and sell your music internationally.

If you have questions or corrections about any of this information, or needs assistance with a publishing contract or record contract, give our Arts & Entertainment team a call!

 

 

 

 

 

 

[1] Inside tip: If you’re an artist who constantly performs your own compositions in live concerts, but you’re not on the radio or TV, you can sometimes make special arrangements with BMI (but not ASCAP) to get paid.

[2] Another inside tip: If you sign up with ASCAP without a publishing company, you will need to register a “vanity publishing company” – make something up for ASCAP. If you don’t do this, you will only get half of your money.

DTG at the Colorado Business Committee for the Arts (CBCA) Annual Awards Gala!

The Law Offices of Daniel T. Goodwin was proud to sponsor a table at the annual Colorado Business Committee for the Arts (CBCA) Business for the Arts Awards Gala. This event was held at the Denver Performing Arts Complex, and featured attorney Caroline Kert winning volunteer attorney of the year! Check out some of the photos from this great event! Congrats to Caroline!

Photo credit: Paige Orgel

Colorado governor John Wright Hickenlooper

Photo credit: Amanda Tipton Photography

iZCALLi performing “Solo Se Morir”

Photo credit: Amanda Tipton Photography

Photo credit: Amanda Tipton Photography

Performers Diana Cruz and Nick Jones

Photo credit: Amanda Tipton Photography

Up With the People performing “Party ‘Round the World”

Photo credit: Amanda Tipton Photography

Photo credit: Amanda Tipton Photography

Photo credit: Paige Orgel

Photo credit: Paige Orgel

Can I Embed Someone Else’s Tweet on my Website?

That Tweet that has been making the rounds, and maybe even gone viral, should be fair game, right? Everyone has been retweeting it, so embedding the original tweet into my website isn’t hurting anyone…riiiight?  Well, not so fast. The answer may depend on where the case is heard.

Katherine B. Forrest, a U.S. District Judge for the Southern District of New York, recently issued an interesting order on this issue. Seems that Breitbart News Network, Yahoo, and a number of other online news outlets failed in making the same argument.

It seems that they all embedded a tweet (which had gone viral) into their own online websites. The tweet included a photograph of Tom Brady taken by Justin Goldman, and originally posted by him to Snapchat.

The photograph caught fire and several users uploaded it to Twitter, and eventually landed on the news websites. Goldman argues that he never publicly released or licensed the photograph, so he’s suing for infringement of his exclusive copyrights in the image.

The news outlets claim that they never actually downloaded or copied the photograph because it technically remained housed on the Twitter servers, linked through the embedding code on their own websites.

In what some have labelled a “surprising” decision, Judge Forrest set aside the 9th Circuit’s “Server Test”, which would determine infringement based upon whether an image is hosted on the alleged infringer’s server. Rather, she granted partial summary judgment to Goldman, holding that the fact that the image was never stored on the news websites’ servers was not dispositive.

Judge Forrest did leave the issue open as to whether the news outlets had raised effective defenses against infringement—citing potential arguments under fair use, the Digital Millennium Copyright Act and innocent infringement theories.

In reaching her decision, Judge Forrest examined the exclusive right to display the photograph (as opposed to copy or make a derivative work) granted to Goldman under the Copyright Act of 1976. Her opinion delves into a history of the right to display and the fact the drafters of the Copyright Act wanted it to encompass “new, and not yet understood, technologies,” such as Twitter.

Her decision also references a 10th Circuit decision, out of the U.S. District Court for the District of Colorado, which came to a different result. In Colorado, the District Court has (at least for the time being) applied the “Server Test” to a similar case.

In the 2016 Grady v. Iacullo decision, the Court held that, when a website includes a hyperlink to a copyrighted work, a copy has been created and infringement may have occurred. “transferring a copyrighted work into a computer’s RAM can create a copy under the Copyright Act.” However, the court requested that additional information be provided to it by the parties and a final ruling has not been made.

While final rulings and appeals are yet to be announced, beware the shifting sands of technology…embedding another’s image in your website may be more trouble than it’s worth.

If you have questions about this or any other copyright or licensing issue, contact our Arts & Entertainment Team today.

I Haven’t Been Paid, But They’re Using My Images!

I’ve noticed a recent trend with artists calling to get help resolving a contract issue. The scenario usually unfolds something like this:

  • The Artist had been contacted by a promotor/client/other artist to help capture photos or video.
  • There is no written agreement, other than a few texts back and forth about payment rate and when to show up to the shoot.
  • The Artist does the shoot, edits their product, and provides one or several complete products. This can be a series of photos or a few versions of a promotional video.
  • The client begins using the completed works or forwards them on to their own client. The Artist usually finds this out by seeing the work on a website or FB feed.
  • The Artist never gets paid and receives continued assurances that payment will come once the client receives payment from their own client.

What a horrible position for the Artist to find themselves in, and what an unsustainable reputation for the client to establish within the market!

But, not all hope is lost—copyright law can help the Artist gain some leverage in negotiating a resolution. The main thing the Artist should remember is that copyright in the images remain with the Author until there is an affirmative act to assign or license those rights to another. The Artist is the Author and retains copyright, unless they are 1) the employee of the client or 2) there is a written, signed agreement that defines the work as a Work Made For Hire, assigns the work, or licenses the work.

Without a WRITTEN AGREEMENT, a contract Artist has not given the client any rights to reproduce, display, or otherwise use the work. This can often provide a lot of pressure to get payment when the Artist clarifies this to the client. Without rights in the work, the client is arguably infringing on the Artist’s copyright when reusing the work or selling it to a third-party. In our experience, a well-crafted cease and desist notice to the third party can generate immediate attention and payment.

Even with a written agreement, the doctrine of Work Made for Hire is often misunderstood by artists and their clients. Very few types of projects qualify for treatment as a Work Made for Hire. Even if there is a clause that attempts to identify the client as the copyright owner, it often fails.

Of course, every situation is different and you should contact a lawyer that specializes in artist representation before taking action. Your attorney can help you review communications and written agreements to assess what next steps can help you get paid.

To help minimize the potential for conflict, always get your agreement in writing and clarify when payment is due (payable in stages with various deliverables, and never dependent upon whether the Artist’s client gets paid by a third party).

If you need assistance getting paid for your work or understanding the contract you’re being asked to sign, please contact our Intellectual Property Team today.

 

Internal Investigators: 7 Key Traits

Sometimes, things just go sideways.

Despite the best intentions of your organization’s Board, Officers, staff, and key volunteers, one misstep can threaten the entire mission. Whether there are allegations of financial malfeasance, inappropriate conduct, insufficient entity formalities, or some other variant, the Board of Directors must take quick action to decide if an internal investigation is warranted.

Once you know you need independent inquiry, who should you call to help you?

At the very least, your internal investigator must be unbiased. Ideally, an investigation is conducted by outside counsel or a special committee. And, your choice of investigators is an important as what they uncover.

In order to be productive and get meaningful results, your investigator should:

  1. Understand the culture of your organization.
  2. Commit to interviewing the correct parties, including individuals who were involved with the organization at the time period under investigation.
  3. Be well versed in how to conduct an investigation and how to evaluate credibility.
    –(Remember, this is NOT a case of “he said/she said, so we’ll never know. Part of the investigator’s job is to make credibility assessments).
    –Your investigator should know how to rely on asking open ended questions.
    –Your investigator should have a delicate approach to asking questions that telegraph the subject or intention of the investigation, and should know when to ask them.
  4.  Be adept at conducting interviews with emotional witnesses.
  5. NEVER use the services of an investigator unless they are licensed or subject to a licensing exemption. In Colorado, employees, attorneys, and CPAs for the entity may conduct an investigation under an exemption. Other exemptions do exist. But, for the most part, your wise and level-headed HOA President is not an appropriate person to conduct the investigation without an independent relationship to the organization.
  6. Always work with an investigator who understands the importance of defining the scope and purpose of the investigation with the board at the outset. In particular, you should understand what standards of proof will apply to the findings and recommendations. Miscommunications on scope will not only waste time and energy, but may result in a contaminated investigation. Once interviews have been conducted, it is difficult to revisit witnesses and receive answers that are free from outside influence or revisionist reflection.
  7. Always work with an investigator who has the expertise to identify and recommend ways that your organization can strengthen its policies, procedures, and formal documentation. The most productive investigations will help you minimize risks in the future.

Once your investigator has completed the investigation, the Board of Directors should use the findings and recommendations to come to a good faith, well informed decision about how to respond. Only independent Directors, those who are not implicated in the underlying issue, should make the decision. As always, Directors have a duty to act in the best interests of the organization. Hiring a competent investigator will not only help the organization reach a reasoned decision, but will protect the Board from individual liability.

If your business or nonprofit organization needs assistance with an internal investigation, contact our offices at (303) 763-1600.

HELP! Does Our Art Organization’s Board Need to Do an Internal Investigation?

By: Caroline R. Kert, Esq.

It is a volunteer Board member’s worst nightmare: after dedicating hours and hours of volunteer time supporting your favorite art organization, a scary issue raises its head. If you don’t deal with the concerns, you or your organization might be sued. Is the current Board to blame? What can you do to protect yourself and your organization? It may be time to hire a third party to do an internal investigation.

Arts organizations and nonprofits are unique creatures. The corporate structure is often the same as the largest for-profit companies, but many are headed by volunteers and operate on shoe string budgets. What the key employees or volunteers, Officers, and Directors sometimes lack in corporate governance experience, they make up in passion and belief in the organization’s mission.

Governance missteps can snowball into crucial issues and can leave the Board of Directors confused about what to do next. Even worse, bad PR surrounding the situation may have long term ramifications leading to the loss of committed volunteers, experienced employees, and donors. The types of issues I have helped organizations navigate cover the gambit:

  • A Board Member suggesting that the organization “cook the books”
  • A Board Member running personal expenses through the organization
  • A Board Member comingling corporate assets with those of other organization
  • An organization failing to properly pay employees under wage and hour laws
  • A Board Member accused of physically assaulting a participant at an official event
  • Volunteers serving alcohol to minors at an official event
  • Lead volunteer sexually harassing teammates

When confronted with these types of issues organizations must focus on three simple goals: reducing current liabilities, avoiding costly litigation, and minimizing the collateral damage.

Once a potential issue comes to the attention of the current Board of Directors it should ask, “If we assume the allegations are true, what are the ramifications?” Have local, state, or federal laws been violated?  Can the organization be held liable for an act or failure to act?  Have current or past board members or officers breached their fiduciary duties?  Does the swift resolution of this issue impact your very ability to survive?

If the answer to any of these questions is “Yes,” the Board has a duty to investigate and make a reasonable business decision regarding its response. If the issue is merely a staff dispute or a question of day to day operations, it may be in the Board’s best interest to allow its Executive Director or other leaders manage the problem.

Boards of all organizations have a fiduciary duty to apply good faith, care and loyalty to their actions. Under Colorado’s business judgment rule, officers and directors will not be held accountable for actions “taken in good faith and in the exercise of honest judgment in furtherance of a lawful and legitimate corporate purpose.” So, swift action that demonstrates the Board’s good faith inquiry into the circumstances will go a long way toward protecting the current Board and the organization. In order to fall under this business judgment rule, the action must be:

  • Made by independent/disinterested board members
  • Made in good faith
  • Informed

Hiring in an independent attorney to complete an investigation and present findings to the Board will help fulfill these criteria. If you or your organization need assistance with a current compliance issue or complaint, contact Caroline Kert at 303-763-1600 or carolinekert@danieltgoodwin.com.

Bookmark our page to read more on this topic, including important criteria to consider when selecting your investigator.

Why Should I Bother to Register My Copyright If My Work is Automatically Protected?

We get this question a lot.  Artists, designers and other creative entrepreneurs are busy people!  So, why should you go through the trouble of registering your copyrights and putting copyright notices on your works if, under U.S. Copyright law, you have copyright protection as soon as your work is “fixed” in a tangible medium?

We understand the instinct that you surely have better things to do with your time and money, but notice and registration are what give our copyright law its teeth!

Let’s say you discover that a major fashion retailer has copied your artwork on t-shirts and has been selling it all over the world?  You file a lawsuit and the judge finds in your favor.  You won!

Or maybe you wrote a catchy melody and uploaded a YouTube video of yourself playing your guitar and singing it.  A major brand uses part of your melody in its new commercials for cleaning products.  You file a lawsuit and the judge finds in your favor.  You won!

Having a valid copyright registration may mean the difference of being awarded $100,000 in statutory damages, plus an order that the other side has to pay your attorneys fees, versus having only a piece of paper from the Court saying you were right and a $15,000 bill from your lawyer you now have to pay.

In other words, to really benefit from copyright law, you need to have a copyright registration certificate from the U.S. Copyright Office, and you have to let others know you claim copyright protection in your content.

Statutory Damages and Attorneys’ Fees

Current copyright statutory damages are set out in 17 U.S.C. § 504.  They range from $750 to $30,000 per work, an amount to be determined at the discretion of the Court depending on the facts of the case.  However, if a defendant can show that they were “not aware and had no reason to believe” they were infringing copyright, they may ask the Court to have the damages reduced to $200 per work.[1]  This is why providing notice is key.

If you can show the defendant was willful when it infringed on your copyright – it was deliberate, voluntary and intentional – a judge is authorized to award you damages of up to $150,000 per work![2]

Also, if you did properly place some kind of copyright notice information on or in your work, and the defendant intentionally removed it before they copied you, they could be liable for an additional $200 to $25,000 per occurrence under the Digital Millennium Copyright Act (DMCA)![3]  An example of this would be a website owner cropping your photograph in a way that the copyright notice information you’d place in the bottom corner, and then publishing the image online without your permission.

In other words, statutory damages can really add up, and they allow you to avoid having to hire damages experts to prepare costly reports and testify on exactly how much you were financially damaged by your infringer’s activities.  Moreover, attorneys’ fees provisions means if you are successful in your lawsuit, the other side pays your lawyer’s bill.  Even if a lawsuit is never filed, copyright registration and the mere threat of statutory damages can provide you leverage to protect yourself and your business.

What Is “Notice”?

A good copyright notice lets the public know that (1) the content is protected by copyright; (2) who the author or owner is; and (3) when it was first published.

Beyond this, there is no required form or method for providing this information.

One way is:

Copyright © 2018 Sally Jones.  All rights reserved.

Or simply:

© 2018 Sally Jones

You could also provide more detail:

Copyright by Sally Jones.  Originally published November 29, 2017.  Revised on January 2, 2018.

You may have noticed major movie studios like Roman numerals:

© Time Warner Studio MCMXCVIII

In other words, so long as you provide the required notice, the form and format is up to you.

If you have more questions about registering your copyright, or think your copyright is being infringed upon, give our Intellectual Property team call.

 

[1] 17 U.S.C. § 504(c)(2)

[2] Id.

[3] 17 U.S.C § 1203(d)

What the “This is Spinal Tap” Case Means

We are watching the lawsuit between This is Spinal Tap creators, Harry Shearer, Christopher Guest, Michael McKean and Rob Reiner, and Vivendi very closely. This case revolves around issues that we always pay close attention to for our creative clients: net profit definitions, copyright termination, and work-for-hire.

On October 20, 2017, Shearer, McKean and Reiner joined Guest in a Second Amended Complaint as individual Plaintiffs. This followed the dismissal of their loan-out companies, which were originally named as Plaintiffs, but found to have no standing. The pre-trial grappling will continue over the next months and this case is expected to have far-reaching implications for Hollywood’s “inventive” accounting practices.

Essentially, studios enter internal contracts with their own subsidiaries that fall far short from arms-length transactions. This allows the studios to deduct enormous expenses against the gross profits of a film, sometimes package them together with the expenses of poorly performing films, declare that there are no net profits in a project, and make no payouts under the net profits provisions of contracts with creatives. These accounting practices have meant that actors and writers associated with such “unprofitable” blockbusters as Return of the Jedi, Ghostbusters, Harry Potter and the Order of the Phoenix, and Forrest Gump have had to bring or threaten legal action before receiving their fair cut of royalties.

Not only have the co-creators of This is Spinal Tap requested a proper accounting of the net profits derived from the distribution and merchandizing of the film, but they are exercising their rights to terminate the copyright assignments in their works. Copyright law permits termination of rights 35 years after the assignment, and the co-creators have filed Notices of Termination. Their suit requests confirmation that the copyrights will revert to them in March, 2019. Reversion of the copyrights will entirely cut off the studio’s ability to distribute and otherwise commoditize the film and brand.

Ironically, the studio has now been placed in a position of fighting to retain interests in a “non-profitable” enterprise. The studio is fighting to retain its copyrights in the This is Spinal Tap brand by arguing that the co-creators were never copyright owners in the first place and that there is no assignment to terminate. The studio is relying on the work-for-hire doctrine to show that it was always the copyright owner of the film and music.  At issue is the timing of the development of the copyrighted material—was it already in existence before the studio stepped into the picture, or were the requirements for work-for-hire in place when the material was created?

We love these kinds of cases because they are accessible and interesting to artists, and they help the public understand some of the nuances of copyright law. And, they help the artistic community understand why it is crucial to have an attorney review your contracts and catalogue your creative works.  When we work with clients to review contracts, net profit definitions and work-for-hire provisions are often over-reaching and unfair to our clients. These are complex areas of law and are often misapplied in contract language. We work with artists to understand their rights and renegotiate fair terms. We also help our clients track creative assets and file timely Notices of Termination when the time is right.

If you need support understanding your rights under a film or other entertainment contract, contact our Arts & Entertainment Team today.