Who Owns “Funkytown”?: Termination of Copyright Grants
By Tamera H. Bennett
Over the last 32 years, the single “Funkytown” by the group Lipps, Inc. spent four weeks at number one on the BILLBOARD charts in 1980, had two million radio performances, and sold more than 10 million copies. That’s all old news, and who really cares? Steven Greenberg, for one, and every recording artist who released a record since 1978.
Steven Greenberg, who wrote the song and is the mastermind behind the production of the disco hit, doesn’t own the copyright in the song or the copyright in the Lipps, Inc. recording of the song (the “sound recording”). That’s all about to change. Greenberg filed the first Notice of Termination to reclaim a sound recording under 17 U.S.C. § 203 of the Copyright Act, and is paving the way for recording artists to reclaim their U.S. copyrights.
There are two copyrights in a recording: one in the musical composition and one in the recording of the song, including the production elements. Terminations of grants of copyrights for musical compositions have occurred for years. Terminations of grants of the copyrights for sound recordings, protected by federal copyright law since 1972, are beginning to trigger disputes. The first terminations will be effective in 2013.
For anything protected by copyright published after January 1, 1978, the term of copyright is, with some exceptions, life of the author plus 70 years. Most assignments or grants are for the full copyright term. Many artists lack market leverage and enter into one-sided copyright grants. Congress drafted the Copyright Act to allow a second bite at the apple via the ability to terminate assignments and grants. By terminating a grant, authors or their heirs recapture the copyright and potentially benefit from an increased revenue stream in the remaining term of copyright.
Sound recordings are valuable commodities. In 1978 and 1979, the Bee-Gees, Donna Summer, Billy Joel, The Eagles and Michael Jackson released hit singles and albums that continue to earn money. If an artist reclaims the copyright, the artist could increase their revenue stream from 10 percent of net earnings to upwards of 70 percent. With the current state of the record business, record labels are not interested in reducing revenue streams. And, it’s not all about the megahits. Artists without huge commercial success have the opportunity to recapture rights and breathe new life into their sound recordings.
The procedures to terminate are complex. All notices sent must fall within a window of time beginning 35 years from the date of publication or 40 years from the date of transfer. The Copyright Act and Federal Register outline the specifics, including detailed calculations to determine when to send the notice.
Record labels fighting the termination process raise two primary issues: 1) the alleged author is not the author of a sound recording; and 2) an untimely notice of termination. There could be dozens of people involved in a sound recording’s production and creation. While the band members may seem like obvious authors based upon their contribution to the recording, authorship could also extend to the record producer, the drummer, or the “hand clappers” in the background. Record labels generally argue that all authors are employees of the record label and the the sound recording was created in the scope of employment for the label, and is a work for hire exempt from termination.
It is not uncommon for an artist or group to enter into a recording agreement months or years prior to the release of a single or an album. This raises the question of when the assignment of copyright/transfer of grant actually occurred. Is it the date the agreement is signed, even if nothing has yet to be recorded? Or is it the date the sound recording is actually completed and published? Calculating this date is key to sending a timely termination notice.
Filing a Notice of Termination could bring the artist and record label to the table to renegotiate a deal for the remaining copyright term. Agreeing to an upfront advance, perhaps with increased royalties, puts more money in the artist’s pocket and allows the record label to retain the copyright and build upon past successes.
A judicial interpretation of the application of Section 203 may be just around the corner. The unanswered questions have set the stage for appeal of several lawsuits. Without clear answers, artists and their heirs must timely file the Notices of Termination to preserve that “second bite at the apple.”
Tamera H. Bennett practices entertainment, trademark & copyright law and is a past chair of the Sports & Entertainment Law Section. She can be reached at firstname.lastname@example.org.