Tuesday, November 29, 2022

It's A Wonderful Life - A Public Domain Copyright Success Story!

A long time ago in a galaxy far, far away... a box office failure fell into the the public domain, and that eventually lead to its current, massive ubiquity during the holiday season. 

Legend has it that the current popularity of the beloved holiday classic "It’s a Wonderful Life" may be due in part to the fact that its copyright lapsed and it fell into the public domain. At the time of its release, although some film critics took notice of it, the movie did poorly at the box office. Its poor performance upon release resulted in a loss to the film company. The film might have been forgotten if not for a 1974 filing error with the U.S. Copyright Office, when the then copyright owner missed filling a renewal application on time, causing the film to lapse into the public domain. Since no royalties or other payments are due on a public domain work, and there is no restriction on its use, TV networks across America started running it over and over during the Christmas holiday season (since it cost them nothing and filled TV airtime). As many millions of viewers were exposed to "It’s a Wonderful Life" repeatedly on their home television sets, those viewers came to appreciate its artistry, and it became the popular classic that we know it to be today.

The film was based on the story "The Greatest Gift" by author Philip Van Doreen Stern who registered his copyright in 1945. RKO Radio Pictures initially purchased the motion-picture rights to the story, but then the film would eventually become the first release of independent production company Liberty Films. Unable to recoup their production costs of over $2 million, Liberty Films was subsequently purchased by Paramount Pictures in 1947. With this sale, Paramount acquired the copyright interest in "It’s a Wonderful Life." After a number of subsequent acquisitions, Republic Pictures acquired the rights to the film. At the time the movie was filmed and released, under the Copyright Act of 1909, U.S. copyright protection lasted 28 years from publication with proper notice or registration, and could be renewed for an additional 28 years by filing a proper renewal registration with the Copyright Office. But in 1974, when 28 years had passed, Republic Pictures failed to file a renewal for the film’s copyright protection which allowed the film to lapse into the public domain.

When the film lapsed into the public domain it meant anyone could show the film without obtaining permission or paying royalties. As a result, the film was repeatedly broadcast on network television throughout the holidays, and over the years the nearly forgotten film, starring Jimmy Stewart, finally became the holiday classic we know and love today.

Wallace Collins is a New York lawyer practicing primarily in the area of entertainment and copyright law. He was a recording artist for Epic Records before attending Fordham Law School. www.wallacecollins.com


Monday, May 23, 2022


      Under the 1976 Copyright Act, the length of copyright protection was extended for the life of the author plus 70 years. However, it also established a right for authors or their heirs to terminate copyright transfers after a certain period of time. In other words, even if an artist or songwriter signed a contract that purports to transfer all rights in a work in perpetuity, even if the artist or songwriter is “unrecouped”, the Copyright Act provides that the author can terminate that grant and demand that the rights revert in a shorter period of time. Recording artists and songwriters have been terminating their contractual transfers and demanding back control of their copyrights. As anyone reading the headlines is aware, numerous superstar artists and songwriters (e.g., Bob Dylan, Bruce Springsteen, Sting, etc.) have sold their entire catalogs to third parties for enormous sums. However, it does not appear that the 1976 Copyright Act sets forth any limit on how many times an author is entitled to terminate the transfer of copyrights – which would seem to indicate that 35 years from now these superstars (or, more likely, their heirs) will be entitled to again terminate the contractual transfer and regain the copyrights under Section 203 of the Copyright Act.

     Generally speaking under the Copyright Act, 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 law. For grants by an author on or after 1978, termination must be exercised prior to the 5 year period beginning at the end of 35 years from the execution of the grant. Although there are certain formalities which must be complied with to effectuate termination of the transfer, this essentially means that recording artists and songwriters were entitled to exercise their rights of termination on post-1978 works as of the start of 2013. Current headlines announce that many superstars have done precisely that, and then turned around and sold their music catalogs for millions of dollars. Although under Section 203 heirs who execute such a grant post-1978 cannot reclaim those rights again (e.g., Prince's estate), grants executed by an author on or after January 1, 1978 (including recent catalog sales by Dylan, Springsteen, Sting, etc.) do appear that they can be recaptured again after 35 years. 

    As a matter of music business history, back when the 1976 Copyright Act was drafted, few practitioners would have envisioned a world where the artists might not need the record companies to finance, manufacture, warehouse and distribute their physical records. Back then the expectation was that, although any particular artist could exercise the termination right, what would effectively happen is that the label and artist would simply be forced to renegotiate a deal to continue working together (either with the artist or with the heirs of the deceased songwriter or artist). Now, in the current digital transmission age, this is no longer necessarily true. Any artist can demand back the copyright in the masters and then simply offer them directly to fans on the artist’s website or the artist can license the rights to an online aggregator or digital streaming service with little or no expense. This is particularly true in the case of the recordings of certain well-established artists because those artists would not need the record company’s ongoing support to finance the recording costs to create new recordings, store their product nor require the funds for promotion and marketing. High profile artists with established fan bases and large catalogs of music like Blondie, the Cars, Bruce Springsteen and others have no need for much in the way of advertising and marketing, and there is no longer a need for manufacturing, distributing or warehousing of their product. Simple ownership and possession of the digitized masters is sufficient to conduct business.

     It is noteworthy that, unlike song publishing contracts which generally provide for the assignment and transfer of a song copyright to the publisher, most record contracts have provided that the sound recording is created as a “work for hire” for the record label. Under the 1976 Copyright Act the termination provision is not applicable to certain types of copyrights, including a genuine “work for hire” grant. However, this does not preclude recording artists from exercising their right of termination. Sound recordings are not listed under section §101(2) which identifies various works that constitute a work for hire. Moreover, several years ago I litigated a case, Ballas v. Tedesco (41 F.Supp.2d 531 (D.C.N.J. 1999)), where a New Jersey Federal District Court addressed this issue and Judge Greenaway held that the sound recording in that case did not qualify as a work for hire. There is a great deal of case law addressing the applicable legal employer/employee issues involved including those established in the seminal Supreme Court case Community For Creative Non-Violence, 490 U.S. at 738, 109 S.Ct. 2166 which held that a statue did not satisfy the terms of §101(2) because it "does not fit within any of the nine categories of ‘specially ordered or commissioned' works enumerated in that subsection, and no written agreement between the parties establishes [the statue] as a work for hire.” Most case law that addresses the subject of “work for hire” holds that whether a work created by an employee is a work for hire or not depends on various factors as well as the circumstances of the relationship - and not just the language of the contract. This area of law has been ripe for dispute by any recording artist who tries to exercise termination rights against a record company that resists the claim where the facts suggest that no genuine “work for hire” relationship ever existed.

     Many superstar artists and songwriters have exercised their termination rights under the 1976 Copyright Act, regained their catalogs, and then made multi-million dollar deals to sell the catalogs. Current copyright law provides that the a copyright extends for the life of the author plus 70 years, so 35 years from now Section 203 of that same 1976 Copyright Act may allow the heirs of those superstars to terminate these current transfers, regain the catalogs, and start the whole process again resulting in more remuneration generated from the copyrights.

Wallace Collins is a New York lawyer practicing primarily in the area of entertainment law. He was a recording artist for Epic Records before attending Fordham Law School. www.wallacecollins.com


Tuesday, May 17, 2022

Understanding The Compulsory License and How It Applies To Digital Transmissions Under The MMA

Under the US Copyright Act, Section 115 provides for a compulsory license to make and distribute sound recordings subject to certain terms and conditions of use. Under the compulsory license procedures, an artist need not ask the songwriter or music publisher for permission to make a recording nor negotiate a license fee. Instead, an artist merely informs the publisher of the recording and agrees to pay royalties as music is sold at the rate set by statute. Once a song has been recorded and distributed to the public on recordings, any person or group is entitled to record and distribute their own recording of that song without obtaining the copyright owner’s consent, provided they pay the statutory royalty and abide by the copyright law requirements.

In order to take advantage of this compulsory license, a notice must be sent to the copyright owner and then monthly accountings made thereafter. In order to obtain a compulsory license, you must (1) serve a timely Notice of Intention to Obtain a Compulsory License (NOI) on the copyright owner; and (2) make monthly royalty payments to the copyright owner. The fee for physical recordings is currently 9.1 cents per song (or 1.75 cents per minute of playing time) while the digital streaming compulsory license fee is a small fraction of that amount. To verify the current rate, check the Copyright Office's guide to compulsory licenses (On the site, you can click “Mechanical Royalty Rate”).

The Music Modernization Act (“MMA”) changes the Section 115 compulsory licensing process for digital music providers from song-by-song licensing to blanket licensing.  Prior to the MMA, song-by-song licensing required digital music providers to identify and locate, serve a notice on, and make payments to the copyright owners for every song on the provider’s service.  This is a huge task, and many lawsuits were filed against digital music providers alleging noncompliance with the song-by-song licensing requirements.  The MMA changes this approach to a blanket license that is administered by a new organization, the Mechanical Licensing Collective (“MLC”).  The blanket license is essentially a one-stop-shop for digital music providers.  The MLC will establish and maintain a comprehensive public musical works database, match works used by digital music providers, collect royalties from digital music providers, and distribute royalties to copyright owners.  The new blanket license became effective on January 1, 2021. 

The compulsory license provisions for recording music apply only to the use of the song for non-dramatic musical compositions. You could not, under the compulsory license, use it for dramatic purposes, such as in an opera or an overture to a musical. The compulsory license applies only to audio-only sound recordings distributed to the public. Therefore, it cannot be used to record a song for use on a television show or movie soundtrack. In such a case, permission would need to be obtained directly from the copyright owner.

Wallace Collins is an entertainment lawyer specializing in entertainment, copyright, trademark and internet law. He was a recording artist for Epic Records before attending Fordham Law School. www.wallacecollins.com