Estate Planning and Digital Music: Copyright Termination Rights

I’ve written before about estate planning for digital intellectual property rights and specifically about estate planning and digital music. An August 15, 2011, article in The New York Times by Larry Rohter titled “Record Industry Braces for Artists’ Battles Over Song Rights” talks about the upcoming January 1, 2013, date when copyright “termination rights” start to take effect under the 1976 Copyright Act, and how those rights could impact the music industry.

In general, under the 1976 Copyright Act, an author or artist who has transferred or licensed a work that was created after 1977 has a right under 17 U.S.C. § 203(a)(1) to terminate that transfer or license during a five–year period starting thirty–five years after the date that the rights are transferred or licensed. So, for works created on and also transferred or licensed on January 1, 1978, that five–year period starts January 1, 2013. If the author or artist is deceased, the person’s heirs (who are determined under 17 U.S.C. § 203(a)(2)) have the right to terminate the person’s lifetime copyright transfers or licenses.

As the article mentioned above points out, the termination rights in music recordings created after 1977 could have significant value, and artists and their heirs should consider their options to protect and maximize the value of the works. However, the article also points out that the record companies and the Recording Industry Association of America generally believe that these copyright termination rights do not apply to most sound recordings. Instead, they believe the master recordings are works for hire that belong to the record company not the artists—works for hire are excluded from the termination rights under 17 U.S.C. § 203(a).

As I’ve mentioned before, digital music sales are expected to exceed retail sales of CDs soon, which could make these music copyright termination rights even more valuable. So, if you are working with a musician or a musician’s estate, consider the options available for termination rights in their copyrighted works.

Also, separate from the issue of termination rights, consider whether the artist’s publishing contract pre–dated digital music distribution. Although record companies typically take the position that the same contract terms apply to both physical sales of CDs and to digital music sales, some artists have been challenging this and have been attempting to renegotiate the terms of their digital music sales.

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