By Kristen Johnson, Content Editor

In 2019, artist Taylor Swift posted a raging Tumblr essay in which she called out her record label CEO, Scott Borchetta, for selling the rights to her music to another record label owner, Scooter Braun, before giving her the chance to own her own music. A provision of recording contracts frequently included is one that irreversibly grants the masters rights of all music produced under that contract to the record label. There has been a movement in recent decades that argues this type of provision is entirely unconscionable. An unconscionable contract is one that “shocks the conscience” and generally involves unequal bargaining power, one-sided terms, and inequitable outcomes. Swift revived this discussion in her public feud with Braun, bringing the legal topic of masters ownership into popular media. Swift’s feud raises these questions: what legal remedies exist for artists to regain masters ownership, and how they are being played out?

The House of Representatives acknowledged an unequal bargaining power between artists and large entertainment production companies within the industry when Congress passed the amended U.S. Copyright Act in 1978. This Act included Section 203 governing termination of transfers and licenses. Under this section, artists can terminate, through a termination notice, the grant rights to their work after thirty-five years, enabling the rights and ownership of a work to revert to the creator. The U.S. Senate Committee on the Judiciary wrote that these provisions were “needed because of the unequal bargaining position of authors, resulting in part from the impossibility of determining a work’s value until it has been exploited.”

However, the Act also included an exception to this thirty-five-year rule: the “work made for hire” doctrine. A recording can be deemed a “work made for hire” if it was either “prepared by an employee within the scope of his or her employment” or if “the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.” Under this doctrine, work that qualifies as “work made for hire” will be treated as an exception to the general rule that the copyright of a work vests initially in the author, resulting in the copyright vesting directly in the employer.

Another legal strategy that has been used to counter Section 203 is the statute of limitations. Works created and copyrighted on or after January 1, 1978, but pursuant to an agreement made prior to January 1, 1978, are not covered explicitly under a termination provision and fall into a “gap.” There is ambiguity on whether works within this “gap” are legally terminable under Section 203. Consequently, litigation over an artist’s right to terminate under Section 203 commonly focuses on whether a work is a “work made for hire” and whether the statute of limitations has run out on works that fall into the “gap.” Either finding could prevent termination under Section 203.

One current case in particular may resolve some of these legal issues arising from the applicability of Section 203. Class action Plaintiffs in Waite v. UMG Recordings allege UMG Recordings (“UMG”) engage in a standard practice of continuing to exploit the Plaintiffs’ recordings while refusing to acknowledge their termination notices. Plaintiffs in this class action include Leonard Graves Phillips from California punk rock band The Dickies and Syd Straw from the Golden Palominos.After granting UMG exclusive rights per their recording contracts, each of these Plaintiffs sent a termination notice in compliance with the 1978 Copyright Act to UMG in order to exercise their termination rights and reclaim ownership of their masters. UMG’s legal department notified Plaintiffs on “virtually identical” grounds that the label would not honor the termination notices.Specifically, the label notified several Plaintiffs that the works constituted “works made for hire” and that the statute of limitations had run out to challenge the ownership status of their works.

In this case, Judge Kaplan’s August 2020 opinion for the Southern District of New York in response to the first amended complaint provides some guidance for musicians sending termination notices for works created during the “gap.” The question of whether gap grants are terminable under § 203 has been left to the courts or Congress. Since Congress has not acted, Judge Kaplan decided this ambiguity issue and concluded that such works were terminable under § 203 because of Congress’s original intent. Judge Kaplan reasoned that since Congress created § 203 with the intent an artist could “have an opportunity to share in the economic success of his or her works decades later,” it seems “unlikely” that Congress would have intended to bar that opportunity on a technicality like the “gap.” This opinion looks favorable for artists sending termination notices on works that fell in the “gap.”

Case law is still developing that shows the practicability of Section 203 as artists seek to terminate the grant rights to their work, thirty-five years after it has been created.

Works cited:

Amanda Arnoid and Melinda Fakuade, Untangling the Incredibly Complicated Taylor Swift—Scooter Braun Feud, N.Y. Mag.: The Cut (last updated Nov. 22, 2019), https://www.thecut.com/2019/11/taylor-swift-scooter-braun-justin-bieber-feud-explained.html.

Colleen McCullough, Comment, Unconscionability As a Coherent Legal Concept, 164 U. Pa. L. Rev. 779, 781 (2016).

Elizabeth Vulaj, Singing a different tune: Taylor Swift & other artists’ fight for music ownership, Practitioner Insights Commentaries, Aug. 28, 2020, 2020 PRINDBRF 0225.

Eriq Gardner, Judge Will Clarify Whether Musicians Can Reclaim Rights From Record Labels, Hollywood Reporter, (Aug. 11, 2020), https://www.hollywoodreporter.com/business/business-news/judge-will-clarify-musicians-can-reclaim-rights-record-labels-1306773/.

17 U.S.C.S. § 203 (LexisNexis 1976).

Ian Brereton, Note, Beginning of a New Age?: The Unconscionability of the “360-Degree” Deal, 27 Cardozo Arts & Ent. L.J. 167, 176 (2009).

Waite v. UMG Recordings, Inc., No. 19-cv-1091 (LAK), 2020 U.S. Dist. LEXIS 125059 (S.D.N.Y. July 13, 2020).

Kuryakyn Holdings v. Ciro, 242 F. Supp. 3d 789, 803 (W.D. Wis. 2017).

Plaintiff’s Memorandum of Law in Opposition to Defendant’s Motion to Dismiss the First Amended Complaint, Waite v. UMG Recordings, Inc., 450 F.Supp.3d 430, (2020) (No. 19-cv-1091), 2019 WL 6704061.

Sedosoft, Inc. v. Mark Burchett Ltd., 221 F. Supp. 3d 195, 197 (D. Mass. 2016) (Citing Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 737 (1989)).

Williams v. Walker-Thomas Furniture Co., 350 F.2d 445, 449 (U.S. App. D.C. 1965).