UNDERSTANDING THE OPTION AGREEMENT FOR YOUR SCREENPLAY

Many writers dream that someday their story or script will garner interest from someone who wants to develop it into a feature film or TV project. Usually, the first step is taken when that someone, maybe a producer or a production company or even a movie studio, offers the writer a contract known as an option agreement. As with all such matters where art meets commerce, I always advise that if you are asked to sign anything – other than an autograph – you should have your lawyer review it first. Every writer should have a literary agent and a lawyer advising them about their business dealings once they get to this stage of the process where artistic creation spills over into the business world.

An option agreement at its most basic is a contract whereby the writer grants someone, for a period of time and for a payment, the right to make a film of the writer's screenplay. The three main material issues that usually arise in negotiating such a deal are the length of the option period, the amount of the option payment and the purchase price if the project comes to fruition. How each of these issues will be resolved will vary depending on the negotiating leverage of the respective parties (i.e., whether the writer is a beginner or has had prior success in the industry and whether the producer is an experienced player or just a fledgling production company trying to get traction).

An option agreement will designate an 'option period' or length of time granted to a producer or studio to commence production of the project. It can range from 6 months to 2 years, or longer, depending on the negotiations. Such agreements frequently include additional periods of time for the producer to extend the length of the agreement in consideration of additional payments to the writer.

The option agreement will also set forth an 'option payment', which is the amount to be paid to the writer as consideration for allowing the producer the privilege of utilizing the writer’s screenplay for development purposes. Again, depending on the negotiating strength of each side, this could range from a very small amount (e.g., a few hundred dollars or even one dollar) to a larger payment (tens of thousands of dollars). Then, if the other party wants to extend the option period for an additional length of time there should be additional payments to the writer. In most cases, these additional payments will be negotiated to be substantial even if the first payment is small. The amount of the option payments will vary depending on the negotiation process and other factors such as the writer's track record in the industry and the potential budget of the film or TV project. Some industry experts have said that as a rule of thumb option payments are frequently equivalent to 10% of the purchase price, but these amounts are always negotiable and writers need to be careful not to allow themselves to be taken advantage of in the rush of excitement that surrounds interest in their screenplay.

Another material term in an option agreement is the 'purchase price' which is the amount of money that the writer will receive in the event the screenplay is made into a feature film or TV project. The purchase price is often calculated on a sliding scale as a percentage of the budget, so as the budget of the film project grows, so will the purchase price, although as with all negotiated terms this too can vary greatly. 

When properly negotiated, an option agreement can be a win-win situation for both the writer and the producer. The writer is paid to lease his or her screenplays for a limited period of time, while the producer attempts to get the project green-lighted by a studio or production company. If this happens, the writer will receive a nice purchase price for his screenplay. If it does not happen during the option period, then the writer keeps the option payment or payments paid to date and all rights to the screenplay revert back to the writer. The writer could then decide to option the script again to another producer. From the producer's perspective, an option agreement gives the producer an opportunity to hold on to a screenplay exclusively for a period of time without having to lay out a lot of money up front while trying to get the project off the ground.

Wallace Collins is an entertainment and intellectual property lawyer. He was a recording artist for Epic Records before receiving his law degree from Fordham Law School. Tel: (212) 661-3656; www.wallacecollins.com 

UNDERSTANDING TRADEMARKS: WHAT IS A TRADEMARK? AND WHAT ARE TRADEMARK RIGHTS?

A trademark is a name, slogan or logo which identifies someone's goods or services and indicates source or quality. The purpose of a trademark is to identify and distinguish one person's products or services from those of another. A trademark functions as a symbol of quality and goodwill. Trademark rights accrue to the owner of a mark based on the "use" of a mark and these rights vest in the first user of a mark when the mark is used in connection with the trademark owner's goods or services. In other words, you own rights in your trademark from the moment you start using it to identify your products or services  These rights are applicable in the music business to the names used by rock groups, DJs, and rappers as well as by management, production and record companies.

Just how protectable your trademark is varies depending on whether it is deemed to be: 1) arbitrary and fanciful (the most protectable category); 2) suggestive; 3) descriptive (which is only protectable if "secondary meaning" can be established); or 4) generic (which is given little or no protection). In simple terms, the more unique your name is the more easily protection is available for it as a trademark. That is one reason that some of the strongest trademarks are words that were invented just for the purpose so that they fall into the first "arbitrary and fanciful" category. Such invented names include "Nike", "Rolex", "Exxon", and "Microsoft". When it comes to rock bands, names such as "Smashing Pumpkins", "Foo Fighters" and "Brooklyn Funk Essentials" would obviously fall into this distinctive arbitrary and fanciful category.

The first person to use a trademark has superior rights over a subsequent user of a similar trademark. The criterion for determining infringement of a trademark is the "likelihood of confusion" test. Under the Lanham Act (which is U.S. Federal Law governing trademarks), use of a trademark likely to cause confusion, mistake or deception by the public is prohibited. If your name or mark is deemed to be confusingly similar to a previously existing trademark, the prior user will have grounds for a trademark infringement action against you.

Therefore, before investing too much time, effort and money in establishing your prospective trademark it is a good idea to do a trademark search to make sure nobody else has been using the same or a confusingly similar name before you. Keep in mind that a mere search of current Federal trademark registrations may not be sufficient. In the event that a full nationwide search from one of the companies that specializes in doing such searches is beyond your budget, then at least do an online search through Google and other online search engines.  This is important because trademark rights are based on "first use."  Therefore, even if someone does not file for or procure a Federal trademark registration, certain rights vest in that person under state law from the moment they start using the name.  If they were using a particular name similar to yours prior to when you first started using your name then, under state law, even if you file a Federal trademark registration before that prior user files, he or she could still prevent you from using your name (and prevent or limit the release of your records under your name). The usual solution to such a problem is to buy out that person's rights, but this can be costly. However, the last thing you want to do is find out of the eve of your first big record release that someone else was using the name you have printed on all of the CD covers before you were using it, and you now have to scrap all of your records.

Once you are sure that the name you want to use is clear, the best way to protect your rights is to file an application for Federal trademark registration. Although certain ownership rights accrue to you in your trademark from the time you first start using it as a source identifier for yourself or your band, Federal registration will give you, among other things, a legal presumption of first use and ownership of the name nationwide. It will allow you to commence legal action in Federal court and may entitle you to injunctive relief (which is an order by the court that the infringer cease using the name until the case is resolved), treble damages and legal fees.

Therefore, having determined that no other person or entity is using the name that you want to use as our trademark, the next step is to file an application for trademark registration in the U.S. Patent and Trademark Office. The filing starts a process that can span several months. Although the time between filing the application and actually receiving your trademark registration certificate could be six months to a year, the effectiveness of the registration is retroactive to the date of first use. Therefore, once you start using a name is it best to continue. In fact, in order to maintain your trademark rights you must continue to use the name and you must police your trademark and beware of others who may use a confusingly similar name to yours.

In summary, the best way for a new artist or group to proceed is to choose as unique a name as you can think of, do a comprehensive search to be sure that it is uniquely your own, and then file an application for Federal trademark registration. Most importantly, remember that trademark rights are based on use so once you choose a name - use it or loose it!

Wallace Collins is an entertainment and intellectual property lawyer based in New York. He was a recording artist for Epic Records before receiving his law degree from Fordham Law School.  www.wallacecollins.com 

This INTERNATIONAL BUSINESS TIMES article quotes me several times starting at paragraph 4

http://www.ibtimes.com/aurous-legal-ad-free-music-streaming-service-was-sued-riaa-it-doesnt-look-promising-2142693

BEWARE THE "CONTROLLED COMPOSITION" CLAUSE IN RECORD CONTRACTS

Under U.S. Copyright law, Congress has seen fit to legislate a minimum statutory mechanical royalty rate for songwriters and their publishers.  Based on an upward-sliding scale tied to a cost-of-living index, the mechanical royalty rate is set by the Copyright Royalty Tribunal on a per song per record basis. The current rate in effective is $.091 per song.  However, most record companies use their substantial leverage over fledgling recording artists to cause them to enter into record contracts which purport to reduce this minimum rate pursuant to the "controlled composition" clause - and this provision might also be made to apply to producers and songwriters who do work for those artists.

The controlled composition clause is one of the most insidious of a plethora of royalty-reducing provisions in any record contract. It reduces the mechanical rate for a songwriter/recording artist and its publisher on songs written or otherwise "controlled" by the artist.  Most such clauses not only reduce the payment per song, but may also put a limit on the total number of songs on which such payment will be made and may fix the point in time at which such calculation will be made (thereby circumventing the cost of living index increase). This is an issue not only for the songwriter/recording artist but for the producer/songwriter and for non-contractual songwriters who may chose to collaborate with an artist who is signed to a recording agreement with a controlled composition clause.

A full analysis of a controlled composition clause is beyond the scope of this article.  However, for a simplified example of how it works, lets assume a typical clause where the songwriter/artist will receive 3/4 of the minimum statutory mechanical rate (assuming the minimum rate is 6 cents per song at the time) on a maximum of 10 songs per LP. The mechanical royalty on the artist's entire LP usually has a "cap" of 68.25 cents (3/4 of $.091x 10 songs) so that, even if the songwriter/artist writes 12 songs for its own album, the artist's publishing is not worth $1.09 per album ($.091 x 12 songs) but only 68.25 cents.

To further illustrate, assume the 12 song album has 6 songs written by the artist and 6 songs from outside publishers. Unless otherwise agreed, the outside publishers are not subject to the artist's 3/4 rate so the 6 outside songs get the full rate and are entitled to a total of 51 cents. Since the mechanical royalty on the entire LP has a "cap" of 68.25 cents, the songwriter/recording artist is limited to applying the remaining 13 cents to the songwriter/artist's 6 songs, so that the artist's publishing is worth a little more than 2 cents per song. And keep in mind, if the artist's producer agreement has language tying the record producer to the artist's controlled rate or an outside songwriter's mechanical license has similar language, then both the producer and the outside writer would also be subject to the reduced rate and the "cap."

To take it one step further, imagine a case where 8 of the 12 songs on the LP were from outside publishers. The outside publishers would be entitled to at least 72 cents in mechanical royalties ($.091 x 8 songs).  Since the artist's contractual cap is 68.25 cents, then for each LP sold the songwriter/record artist would actually lose mechanical royalties and owe its record company a few cents for each record that sells which would be deducted out of the songwriter/artist's recording royalties. The net effect is that the songwriter/artist's own 4 songs receive no mechanical royalties at all.

A controlled composition clause may also contain language which further reduces the mechanical rate on mid-priced and budget sales, etc., providing for a 3/4 rate on the 3/4 rate.  In addition, record contracts often contain several subparagraphs that eliminate royalty payments for free goods and records sold below wholesale price, etc.  Several of these categories would ordinarily be subject to mechanical royalties absent the controlled composition clause.  Moreover, although this provision reduces mechanical royalties on the artist's publishing, it does not reduce payments to outside publishers since they are not subject to the clause.

The most treacherous dilemma for the songwriter/artist is that, even if the record company does not acquire the artist's publishing in its contract, the value of the artist's publishing may so greatly be reduced by the controlled composition clause that the artist may find it difficult to get a publishing deal elsewhere.  This is especially true if the mechanical royalties are cross-collateralized with the artist royalties since, until the artist is recouped, no mechanical royalties will be payable to the songwriter/recording artist or its publisher.

The foregoing scenarios raise numerous legal issues including antitrust, interference with prospective financial advantage and restraint of trade.  Another issue raised is whether, under partnership law (where one partner can bind the partnership), a co-writer who is not actually a signatory to the record contract is subject to the 3/4 rate by virtue of being a "partner" in the song's creation.

These days almost every record contract contains a controlled composition clause.  Although certain aspects of a controlled composition clause can be made less onerous by some persistent negotiation (such as escalations of the rate based on sales thresholds), record companies are generally inflexible in their insistence *on this provision and their position can only be tempered by their desire to sign a particular artist or by an artist's importance and stature. This provision should be reviewed very carefully by an artist and his lawyer; any artist's lawyer who failed to discuss this clause and explain its ramifications to the client (under the assumption that it is "standard" in every record contract) would certainly be inadequately representing the client, and may suffer the consequences when the actual effect of the provision is eventually revealed to the artist.

In fairness to record companies, with the exorbitant cost and high risk of the record business, record companies need to cut costs where they can to try to make a profit on the few artists who do succeed.  However, the question is one of whether devaluing the artist's publishing is a fair way of doing it.  Record companies contend that, since they are financing the production and marketing of the artist's recordings, the artist should give them a break on the publishing royalties they would otherwise have to pay.

By way of analogy, imagine a particular record company, in order to cut costs, decided that, despite the Federally mandated minimum wage, any employee who wanted to work for that label would have to accept three-quarters of the minimum wage.  It is unlikely such a preposterous policy would hold up in court.  When it was tried by calling in an "internship program" the Courts did now permit it. Whether the contractual reduction by a record company of a Congressionally legislated minimum royalty rate would hold up in a court of law has yet to be tested.

Wallace Collins is an entertainment and intellectual property lawyer with more than 30 years of experience based in New York. He was a recording artist for Epic Records before receiving his law degree from Fordham Law School. Tel: (212) 661-3656; www.wallacecollins.com 

Rick Ross Loses Legal Claim Over LMFAO’s ‘Shufflin’ Shirts

An interesting Federal Court decision on summary judgment was handed down this week in Florida. Judge Kathleen Williams, a Federal Judge in Florida, shot down a big part of the lawsuit from hip-hop superstar Rick Ross over LMFAO’s chart-topping 2010 song “Party Rock Anthem,” which contains the phrase “Everyday I’m shufflin’ “ in the chorus.

Ross had alleged that the Los Angeles-based electro-pop duo’s hit is a copyright infringement of his own chart-topper “Hustlin" which contains the lyric “Everyday I’m hustlin’.” The song was released on Ross’ 2006 debut album, Port of Miami. U.S. District Judge Kathleen Williams was asked to address on summary judgment whether Ross’ three-word phrase is original enough to be copyrightable.

In making the determination, the Judge stated that “The question presented, however, is not whether the Iyrics of Hustlin’, as arranged in their entirety, are subject to copyright protection... the question is whether the use of a three word phrase appearing in the musical composition, divorced from the accompanying music, modified, and subsequently printed on merchandise, constitutes an infringement of the musical composition Hustlin’. The answer, quite simply, is that it does not.”
The Judge's decision points out other cases where short phrases like “you got the right one," "uh-huh,” “holla back,” “we get it poppin’,” and “caught up” failed to meet the originality threshold when divorced from the music. She also writes there’s evidence that Ross wasn not the first to come up with the lyric “Everyday I’m hustlin’.”

The Judge added that even if Ross’ phrase was copyrightable for this merchandise context, he would fail the intrinsic test, the one where ordinary observers judge similarity. “The average lay observer
would not confuse t-shirts bearing the phrase ‘everyday I’m shufflin’’ with the musical composition Hustlin’, nor without reference to Party Rock Anthem and Hustlin’, would an average lay observer
recognize the merchandise as having been appropriated from Hustlin’.” The Federal lawsuit will now continue but will only be about the songs.

Wallace Collins is an entertainment and intellectual property lawyer. He was a recording artist for Epic Records before receiving his law degree from Fordham Law School. Tel: (212) 661-3656; www.wallacecollins.com 

THE IMPORTANCE OF CREATING A PAPER TRAIL WHEN SUBMITTING YOUR WORK

When pitching a project, whether a TV program or game show concept, a video game idea, a proposal for a book or magazine article or circulating a demo of your song, it is a good idea to file a copyright registration on it before making it public. It is also important to create a paper trail in order to keep track of where and to whom your work is submitted. In the event that you someday decide that someone stole your work or "infringed" your copyright you will need to prove two things in order to win a copyright infringement lawsuit: (1) access to your work and (2) substantial similarity between your work and the allegedly infringing work.

"Substantial similarity" is a legal term of art which compares one work to another to decide if they are too similar or so similar that the connection is strikingly similar. However, most cases are thrown out before the issue of substantial similarity is proven because they fail to show access.  The threshold of "access" basically means that the person who you think infringed your copyright actually had access to your work before they created or developed their work. In other words, unless your work was already widely accessible (e.g., a Top 10 hit record or a website broadcast show) you are going to have to show that the alleged infringer somehow had access to your work.

Although you can prepare a confidentiality or non-disclosure agreement, it is unlikely that most people you contact will be willing to sign it in advance. In fact, some of the bigger media corporations have a policy whereby they insist that before they will accept or review any submission you sign a document waiving any claims you might later have against them (although their position is they might already be working on a similar idea and do not want to be sued such agreements must still be approached with great caution as they tend to be ambiguous and overly broad in scope).

I am not suggesting that you plan a lawsuit, just that you be prepared in case someone infringes your work. You can create a paper trail by following these procedures:

- keep a journal or daily diary of who you give or send your work to, and start a correspondence file of your own keeping copies of all your cover letters (and even the rejection letters you might receive as they also show access).

- mark all submitted materials with the appropriate copyright notices.

- if you are lucky enough to get an appointment to present your work in person, write a self-serving letter to confirm the meeting and retain a copy of the letter for your file.

- if there is a visitor's log available, upon arrival sign in and note the date and time of arrival.

- take note who is in attendance at the meeting and their positions with the company.

Again, I am not suggesting that you start any frivolous lawsuits but it can be an unscrupulous business and you should be prepared for every eventuality. It is good practice to get in the habit of keeping a paper trail in the ordinary course of doing your business. It just might come in handy if something goes wrong somewhere down the line.

Wallace Collins is an entertainment and intellectual property lawyer based in New York. He was a recording artist for Epic Records before receiving his law degree from Fordham Law School. Tel: (212) 661-3656; www.wallacecollins.com 

ENTERTAINMENT LAWYERS: WHO? WHAT? WHEN? WHERE? & HOW MUCH?

            As an artist or creator in the entertainment industry you do not need to know everything about the business in order to succeed, but you should hire people who do. When I was a teenage recording artist some years back, I can remember being intimidated by the "suits". Now that I am on the other side of the desk, I have a broader perspective. I am here to tell you that those "suits" can help you; provided, however, that like any other aspect of your life, you use your instincts in making your selection.

            The best place for you to start building your "team" of representatives is with a competent lawyer who specializes in entertainment law, which is a combination of contract, intellectual property (copyright and trademark) and licensing law. Eventually, your team could possibly include a personal manager, an agent and a business manager/accountant. Your lawyer can assist you in assembling your team. He may then function as the linchpin in coordinating the activities of your team and insuring that these people are acting in your best interests.

            A good lawyer will navigate you safely through the minefield that is the entertainment industry. Entertainment contracts can be extremely complicated. Proper negotiating and drafting requires superior legal skills as well as knowledge of entertainment business and intellectual property practice. Your lawyer can explain the concepts of copyright and trademark to you and assist you in securing proper protection for your work. In addition to structuring and documenting a deal to maximize the benefits to you, some lawyers also actively solicit deals for their clients. Moreover, if you are not properly compensated in accordance with your contract, you may look to your lawyer to commence a lawsuit to enforce the terms of your contract.

            When looking for a lawyer, you should not be afraid to speak with a few before retaining one. Some lawyers are with large firms but many are solo practitioners. Lawyers have various personalities and legal skills and you should seek out a situation where the "vibe" is right. Although your first contact may be on the telephone or online, most likely you will have an initial consultation for which there may be a modest charge, although some lawyers may not charge for that first meeting depending on the circumstances. Remember, your lawyer's time is money, so be prepared and be on time for your appointment.

            It is not necessary that your lawyer like or even understand your creative endeavors be it an app, a book, music, your film or TV pilot idea. It is more important that you feel he or she is a trustworthy and competent adviser. The lawyer/client relationship is known as a "fiduciary" relationship which means that a lawyer must always act in your best interest and not his own or that of anyone else. Your lawyer is also under a duty to keep your conversations with him confidential. It is often in your best interest that it stay that way.

            Keep in mind that a lawyer with other big name clients is not necessarily the best lawyer for you; if it comes down to taking your calls or those of a superstar, which do you think will get preference? 

             You are probably wondering, "How much will this cost?" Well, remember that the only thing a lawyer has to sell is his time. A lawyer, much like a doctor, is selling services, so if you go to him for advice you should expect to pay. With the odds of success in this business being what they are, very few lawyers will agree to work for you and wait for payment until you are successful and can pay your bills. A lawyer specializing in the entertainment field usually charges an hourly fee or a percentage of the money value of your deal. Hourly rates generally run from $300-$500 and up. Percentages on a pending deal are based on the "reasonable value of services rendered" in connection with a particular contract and generally run around 5-10% of the deal depending on how it is structured. A few lawyers may charge a set fee to review and negotiate certain documents. Check around to see if the fee arrangement proposed is competitive. Most lawyers will require a payment of money in advance or "retainer", which can range anywhere from $500 to $10,000 (and more for litigation matters). Even those who take a percentage of the deal as a legal fee may require that you pay some amount as a retainer deposit. In addition to the hourly fee or percentage, you are usually required to reimburse your lawyer for his out-of-pocket costs, including long distance telephone calls, photocopies, postage, fax, etc. 

            You should realize that in retaining a lawyer you are making a contract even if your agreement is not written. In return for a fee, the lawyer promises to render legal services on your behalf. However, some lawyers may want a fee arrangement in writing (specifically in connection with a percentage deal) and/or a payment direction letter. A cautious lawyer will advise you that you have the right to seek the advice of another lawyer as to the propriety of a percentage fee arrangement.

            You should consult a lawyer if you are asked to sign anything. Too many aspiring creative artists want to get a deal so badly they will sign almost anything that promises them a chance to do it. Even successful careers have a relatively short life span, especially when it comes to careers in music, movie and television. Therefore, it is important for you to get maximum returns in the good years and not sign away rights to valuable income.

            Do not rely on anyone else (or even their lawyer) to tell you what your contract says. Your lawyer will "translate" the deal for you and explain to you exactly what you are getting into. Do not let anyone rush you or pressure you into signing any agreement. There is really no such thing as a standard "form" contract. Any such contract was drafted by that party's attorney to protect that party's interests; your lawyer can help negotiate more favorable terms for you. Everyone needs someone to look out for his or her interests. That is why you need a lawyer. If you believe in yourself and your talents, give yourself the benefit of the doubt, invest in legal representation and do not sign anything without consulting your lawyer and making sure it is the right deal for you.

            As a final piece of free legal advice: never sign anything – other than an autograph - without having your own lawyer review it first.

Wallace E.J. Collins III is an entertainment and intellectual property lawyer. He was a songwriter and recording artist for Epic Records before receiving his law degree from Fordham Law School. Tel: (212) 661-3656; wallacecollins@gmail.com; www.wallacecollins.com 

Sony Music Defeats "Iron Man" Composer's Lawsuit (At Least For Now)

A New York Federal Courts' recent decision concerning a "work for hire" determination could prove controversial. The Court's ruling involved "Iron Man", a rapper from the Wu-Tang Clan and a music composer working in television back in the 1960s.

Federal Court Judge Naomi Buchwald granted summary judgment to defendant Sony Music over plaintiff' Jack Urbont's claims the artist "Ghostface Killah" sampled the "Iron Man Theme" on two tracks of the rapper's second album, "Supreme Clientele.". In ruling in Sony's favor, the Judge examined how Marvel's Stan Lee had set up Urbont to create music for a certain the 1960s television show. She determined that Urbont contributed his materials as a "work made for hire," meaning that Marvel really owns the work and Urbont had no standing to claim an illegal sample. Sony is the beneficiary of this determination, but the opinion steps on controversial territory and might set off a flurry of amicus briefs should Urbont take the matter to a higher authority.

According to The Hollywood Reporter and Billboard, in the 1960s and 1970s, the House of Marvel operated in a loose collaborative working group environment known as the "Marvel Method." In part because of a lack of documentation around the time, there's been many subsequent fights over intellectual property rights. For instance, Marvel fought for years with "Ghost Rider"creator Gary Friedrich and they battled Jack Kirby when the comic book legend attempted to terminate a copyright grant. In those disputes, the issue of whether the artists had created their works as "made for hire" was closely examined, and in the Kirby case, judges applied what is known as the "instance and expense" test, or what happens when the "employer induces the creation of the work and has the right to direct and supervise the manner in which the work is carried out."

Last September, Marvel settled with Kirby just days before the U.S. Supreme Court was scheduled to discuss whether to grant a review. The high court sent out signals that it was indeed interested in picking up this case, and when that happened, there was a flurry of amicus briefs from intellectual property scholars and Hollywood labor guilds arguing a "critically important case" where Judges overseeing the Kirby dispute had applied the wrong standard when looking at commissioned works.
Judge Buchwald's decision over the "Iron Man Theme" raises the prospect of reviving this debate -- although there are wrinkles here that could arguably make it even more important. In coming to her conclusion, the judge addresses Urbont's situation back in the '60s. Urbont, whose later musical work includes That 70's Show, Oprah, 20/20 and The View, wasn't familiar back then with Marvel superheroes before getting in touch with Lee by a mutual friend. The composer wished to create songs for Marvel Super Heroes, and after reviewing comic books, he absorbed the nature of the characters and composed a theme and presented it to Lee's approval. After the songs were accepted, he received $3,000, which he used to record the music including the "Iron Man Theme."
There was no written agreement at the time, and Urbont didn't initially get royalties, but he was issued a certificate of registration. In the 1990s, he sued Marvel for unauthorized use of the theme and came to a settlement agreement, which referred to Urbont as the "owner" and Marvel as the "licensee."

Sony wasn't a party to Marvel's relationship with Urbont, and yet the judge allows the music company to challenge ownership anyway. As Urbont's lawyer put it in a motion brief, "It is outrageous for Sony to claim that the Works are works for hire, when the supposed employer does not itself claim that the Works are works for hire."

Nevertheless, the judge gives Sony standing to argue that "Iron Man Theme" is a work for hire, and once she does, Buchwald applies the same "instance and expense" test that became the focus of an attempted Supreme Court review in the Kirby case. She liberally quotes the 2nd Circuit's language in Kirby in guiding her analysis.

Eventually, she concludes that "the Iron Man Composition was created at Marvel’s instance because it was developed to Marvel’s specifications and for Marvel’s approval. As in the Kirby case, Urbont’s compositions 'were hardly self-directed projects in which he hoped Marvel, as one of several potential publishers, might have an interest...'" She writes that Marvel retained a right to direct Urbont's work and that the composition "was created at Marvel’s expense because Urbont was paid the fixed sum of $3,000 for his work."

This decision could prompt an appellate review -- a motion for reconsideration might be the first step --on the same grounds as the Kirby case, but there's something of further interest here too. As Urbont's briefs to the judge stress, Sony is not the employer and there's no cited cases where "a third party infringer seek[s] a finding that a particular work is a work made for hire when there is no dispute between the supposed contractor and author." Another difference between Urbont and Kirby?
"In Kirby, plaintiff could offer no testimony regarding the understanding of the parties because the plaintiff was deceased," Urbont's lawyers wrote. "In this case, Urbont is able to testify and has testified to a contemporaneous understanding with the producers of the television series that he owned the Works."

In other words, Urbont at least wants the treatment that Friedrich got when the 2nd Circuit vacated a summary judgment ruling and ruled there were triable issues. Judge Buchwald doesn't seem to think it matters what Marvel and Urbont called the working relationship, or how the settlement agreement referred to Urbont as the "owner." She says that a settlement doesn't really mean that Marvel conceded that Urbont was the owner, and further "case law within the copyright infringement context affirms that a licensing or settlement agreement should not supplant a court’s independent determination of copyright ownership." So, as a result of Judge Buchwald's ruling, Marvel seems to be the owner of the "Iron Man Theme" - and didn't even ask for it.

Wallace Collins is an entertainment and intellectual property lawyer based in New York. He was a recording artist for Epic Records before receiving his law degree from Fordham Law School. Tel: (212) 661-3656;  www.wallacecollins.com 

HOW DO I GET MY RIGHTS BACK: TERMINATION RIGHTS UNDER U.S. COPYRIGHT LAW

     The 1976 Copyright Act provides for the termination of copyright transfers. It entitles content creators to reclaim their copyrights - regardless of any contract stating otherwise –after certain time periods. So, even if an author, artist, musician, photographer or songwriter signed a contract which purports to transfer all rights in a work for perpetuity, the Copyright Act provides that the author of the work (or the author's heirs) can terminate that grant and demand that the rights revert in a shorter period of time. Authors and creators are now entitled to terminate their contractual transfers and demand back control of their copyrights: authors can terminate their book publishing contracts, songwriters can demand return of their musical compositions from music publishers and recording artists and record producers can demand return of their sound recordings from the record companies.

            

   Generally speaking, for copyright grants made on or after January 1, 1978 (the effective date of the 1976 Copyright Act) the termination period is 35 years under Section 203 of the Copyright Act. For pre-1978 works Section 304(c) of the Copyright Act, says that a copyright owner (or his or her heirs) can terminate all grants, licenses or transfers of beginning on the 56th year after that assignment was made. Termination may be exercised anytime during a 5 year period beginning at the end of either the 35 year or 56 year period from the execution of the grant (as applicable) or, if the pre-1978 grant concerns the right of publication of the work, then the period begins on the sooner of 35 years after publication or 40 years after execution of the grant. Although there are certain formalities which must be complied with to effectuate transfer, this essentially means that recording artists and songwriters were entitled to start exercising their right of termination on post-1978 works as of the start of 2013. 

       The big exception to the termination right is if a work was done as a "work-for-hire.” Section 101 of the Copyright Act of 1976 delineates what types of works by their nature are incontestably works for hire. It is essentially a two part test: (1) was the work created by an employee within the scope of his or her employment, and; (2) if not, is it (a) one of the nine enumerated work-for-hire classes of works and (b) is there a written agreement signed by the author acknowledging the work for hire relationship. Included on the list of nine enumerated categories of works that are works for hire are collective works, compilations and motion pictures. Not included on this list are books, photographs, songs and sound recordings.

       There are ongoing legal battles over how termination rights affect the book, comic book and motion picture fields. Not unexpectedly, the entertainment business companies are not pleased with the copyright termination provision and the inevitable ramifications thereof.

       With respect to songs and music publishers, some litigation has already been decided. In Scorpio Music S.A. v. Willis (Case No. 11 CV 1557 (C.D. CA 2012), California Federal District Judge Moskowitz determined that original Village People member, Victor Willis, could terminate his transfers and recapture a direct copyright interest in many of his group's songs, including "YMCA." In this case, after Willis notified Scorpio that he was terminating the prior transfers, Scorpio sued arguing that Willis could not terminate because a majority of each song's authors had not also agreed to terminate their transfers. The court sided with Willis, ruling that an author can unilaterally terminate the transfer of his share in a copyrighted work without his co-writers.  Although the Scorpio decision addressed a fairly narrow point concerning multi-author transfers, the decision opens the way for most songwriters to get their composition copyrights returned and sets the stage for the bigger battles looming on the recorded music side of the business. The copyright termination procedures apply to the separate and equally lucrative sound recording copyrights transferred to record labels as part of typical recording artist contracts over the years. Since the term “sound recordings” is not explicitly contained in the enumerated work for hire category list, practitioners representing record companies will need to try to find other ways to justify any claim that sound recordings are indeed works for hire in order to preclude termination by artists.

       The termination rights of the author or creator of a copyrighted work are generally subject to a 5 year window. Termination must be made effective within the termination window or the right to terminate the grant is forfeited. To be effective, the author must serve a written notice of termination on the original record company or publisher (and/or any successors) no more than 10 and no less than 2 years prior to the effective date stated in the notice. The notice of termination must state the effective date of termination. Perfection of the termination requires that a copy of the written notice also be filed with the U.S. Copyright Office prior to the effective date of termination.

       Although the termination rights of an artist under the 1976 Copyright Act would only be effective for the U.S. territory, the size of the U.S. consumer market still makes this a valuable right to reclaim. 

Wallace Collins is an entertainment and intellectual property lawyer based in New York. He was a songwriter and teenage recording artist for Epic Records before receiving his law degree from Fordham Law School. Tel: (212) 661-3656;  www.wallacecollins.com 

WHAT’S THE SCORE WITH SYNCHRONIZATION RIGHTS

As the composer of a film or TV score or as a songwriter, artist or producer whose song is used in a movie, TV show, advertisement, or video game, under the copyright law you own 100% of the copyright in your work from the moment you create the work and "fix it in a tangible medium." However, you must be careful what you sign so that you do not assign those rights away without fair compensation for your work. 

When it comes to the use of music there are two copyrights: one in the musical composition or song and one in the sound recording which is the fixation of the sounds that make up the music. When music is used in synchronization with visual images, whether it is created especially for the particular score or whether it is a pre-existing song that the director wants to use in a scene in a TV show or a theatrical motion picture or film, this is referred to as the "synchronization" of music with visual images. Permission in the form of a synchronization license (sometimes referred to as a “synch license”) must be procured by the makers of the audio/visual production from both the owner of the sound recording (the artist or record company) and from the owner of the song copyright (the songwriter or publishing company) Sometimes these are one and the same person or entity, sometimes they are not.

A synchronization license may take various forms. If a show's producer, director or music supervisor decides that a certain pre-existing song is right for a particular scene in a film or TV show or commercial or video game, then a synch license covering the master and the composition would be requested. Depending on the length and prominence of the use, if limited solely to use in the show the amount paid can range from a few hundred dollars to tens of thousand of dollars, or more. If the company also wants the right to include the music on a soundtrack album, then additional provisions would be required for that use which would pay royalties for each record sold. Also, the song should be registered by the author with the performing rights society (e.g., ASCAP, BMI, SESAC, etc.) so that revenues from performances in foreign movie theaters (U.S. movie theaters do not pay performance royalties) and from television broadcast can be collected and paid to the author.

On the other hand, a songwriter may be specifically employed to write incidental music or underscore cues for a film or for a TV commercial or other audio/visual work. Such an arrangement may be structured as a "work made for hire" whereby the songwriter is employed to write specific music which may ultimately be owned by the producer of the film. There is no set fee for such an arrangement - it can range from a few hundred dollars for a small budget project to hundreds of thousands of dollars for a blockbuster film score. However, in such circumstances, since the production company would usually claim ownership of the copyright, the author needs to be sure to try to negotiate to receive the 50% "writer share" of performance monies and have producer only get the 50% "publisher" share - otherwise the author may not be entitled to performance royalties from his or her performing rights society and it would all go to the producer. Issues like this would depend on the careful negotiation of the contract between the parties and their legal counsel.

Since this is a complicated area the details of which are beyond the scope of this article, I would suggest that if such an offer is made to you, an experienced entertainment lawyer would be a good investment on your part.  My advice on such matters is always “don’t sign anything – other than an autograph – unless you have a lawyer review it first!”

Wallace Collins is an entertainment and intellectual property lawyer based in New York. He was a songwriter and recording artist for Epic Records before receiving his law degree from Fordham Law School. Tel: (212) 661-3656;  www.wallacecollins.com 

FAA Ruling For Air Travel: you CAN carry on your guitar!

The U.S. Department of Transportation issued a final rule to implement section 403 of the FAA Modernization and Reform Act of 2012 (Pub. L. 112-95, 49 U.S.C. §41724) regarding the carriage of musical instruments as carry-on baggage or checked baggage on commercial passenger flights operated by air carriers.The final rule does not change the earlier provisions of the Act, but mercifully puts a period at the end of the sentence: "Section 403 of the Act and this final rule provide that "carriers are required to allow passengers to stow their musical instruments in an approved stowage area in the cabin only if at the time the passenger boards the aircraft such stowage space is available."

"With the exception of certain disability assistance devices, overhead bins or under seat stowage space is available to all passengers and crew members for their carry-on baggage on a “first come, first served” basis. Accordingly, carriers are not required to remove other passengers’ or crew members’ carry-on baggage that is already stowed in order to make space for a musical instrument. However, this also means that carriers are not allowed to require a passenger to remove his or her musical instrument that is already safely stowed (e.g., in the overhead bin) to make room for carry-on baggage of other passengers who board the aircraft later than the passenger with the musical instrumenT." Most importantly, "This is true even if the space taken by the musical instrument could accommodate one or more other carry-on items." You can read the entire text of the rule here.

The DOT has also provided a helpful page with links to procedures for complaining to an airline or to the DOT regarding air travel with instruments, and tips for traveling with a musical instrument, available here.

One problem is that on any given day a random gate agent might be having a bad day and decide that he or she does not want to permit your guitar to go on with you as carry-on - and, as a practical matter, there is not a lot you can do in that situation (otherwise, if you get defensive or even ornery, you run the risk that security will be called, etc.). Consider that particular dilemma a bit of bad luck.

Best advice? Print a copy of the rule and carry it on with you when you travel so you can stop arguing with that officious ticket agent who insists that you have to check your guitar as baggage or buy another seat for it.


Wallace Collins is an entertainment and intellectual property lawyer based in New York. He was a recording artist for Epic Records before receiving his law degree from Fordham Law School. Tel: (212) 661-3656; email: wallacecollins@gmail.com.