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.

BASIC LEGAL TIPS FOR RECORD PRODUCERS

     Producers should be aware of their legal rights when it comes to working with recording artists in the studio. These days the music business, particularly the pop and urban markets, is producer-driven more so than ever before. Producers not only help capture the sound in the studio and use the available technology to mold it to be as commercially acceptable as possible, but more and more producers are finding and discovering new talent and developing the artist’s sound and even co-writing the songs with the artists.

     As a producer there are two copyrights that come into play in your business under the copyright law: one in the sound recording and one in the underlying musical composition or song. I usually suggest to my producer clients that they file a copyright registration with a Form SR covering both copyrights as soon as they begin to circulate a finished track (whether passing it around or posting it on a website or social media). The filing of a copyright registration in Washington D.C. gives you additional protection in so far as it establishes evidence of the existence of such copyright and gives you the presumption of validity in the event of a lawsuit. Registration also allows for lawsuits to be commenced in Federal court and, under Federal law, allows an award of attorneys’ fees to the prevailing party. Forms are available at www.loc.gov.

     Under copyright law, when a producer and an artist work together to create a sound recording in the studio they become co-authors in the work. The producer and the artist become joint owners of the copyright in the sound recording. In urban and hip-hop music, the producer who creates the musical bed or track becomes a collaborator with the artist who writes the lyric and performs the vocals in the recording studio so that the producer and artist become joint owners not only in the copyright in the sound recording but also, by current custom in the industry, in the underlying musical composition. Copyright vests in the creator as soon as the idea is “fixed in a tangible medium”, so as soon as you write it down or record it the copyright is created. Under the copyright law, although a non-exclusive license can be verbal, you can only transfer your right in the copyright by signing a written agreement to transfer them - so be careful what you sign.

    

     Although it is generally standard operating procedure when dealing with the major record labels to be asked to sign contracts to transfer your sound recording copyright to the label in exchange for an advance and royalties, you must be cautious with any agreement you are asked to sign whether by the artist or the record company. In addition, the underlying song copyright and the related “publishing rights” have an important value that the producer should know how to monetize whether through a publishing deal or acting as his own publisher. Producer contracts address numerous issues and the language can be a minefield - it is best to have an experienced entertainment lawyer navigate your way through that minefield.

      Producers earn revenues from advances and royalties paid for the sale of the sound recording, and may also earn mechanical royalties and performance monies (e.g., ASCAP, BMI, SESAC) if the producer is deemed a co-author of the musical composition. In addition, the producer should earn income from all use and exploitation of the record just as the artist does, whether from synchronization licenses for film and TV use, from social media, and from streaming services like YouTube and Spotify. Producer agreements should also provide for payment to the producer of SoundExchange revenues. Most of these issues are dealt with in the producer contact. In the absence of paperwork concerning the producer’s work in the studio and the producer’s share of income, then the producer and artist are joint owners of the sound recording copyright and the issue is then how to divide the revenues that may arise from the use and exploitation of the recording.

     Never sign anything - other than an autograph - without having your entertainment lawyer review it first. Do not rely on anyone else (or even their lawyer) to tell you what your contract says. And never 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 "translate" the deal and explain its terms to you, and then help negotiate more favorable terms for you.

     Keep in mind that it may, in fact, be in your best interest to "get it in writing" if you have an arrangement with someone. This is especially true in collaborative situations. Otherwise, you run the risk of a disagreement later over the actual terms of the oral agreement, and it becomes your word against that of the other party. That is not to say that an oral agreement is not a binding contract, but a contract is easier to prove if the terms of the arrangement are in writing. A simple contract may not necessarily require extensive involvement by lawyers. A contract can be as basic as a letter describing the details of your arrangement which is signed by both parties to the agreement. However, at the end of the day, if you believe in yourself and your talents, give yourself the benefit of the doubt, and invest in good legal representation - all the successful producers do.

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

What Is A Music Publishing Deal? - and Do I Really Need One?

    Sometimes I hear songwriters talk about wanting a "publishing deal" without even really understanding what that means. Depending on the circumstances of each writer and the terms of the particular contract, sometimes no publishing deal is better than the wrong publishing deal.

    The term "publishing", most simply, means the business of song copyrights.  Under US copyright law, a songwriter owns 100% of his song copyright and all the related publishing rights until the songwriter signs those rights away. Under the law, a copyright (literally, the right to make and sell copies) automatically vests in the author or creator of a work the moment the expression of an idea is "fixed in a tangible medium." (i.e., the moment it is written down or recorded on tape.)  With respect to recorded music, there are really two copyrights: the copyright in the musical composition owned by the songwriter and the copyright in the sound of the recording owned by the recording artist (but usually transferred to the record company when a record deal is signed).

     A writer owns the copyright in his or her work the moment he or she writes it down or records it, and by law can only transfer those rights by signing a written agreement to transfer them. Therefore, a songwriter must be wary of any agreement he or she is asked to sign. Although it is not necessary, it is advisable to place a notice of copyright on all copies of the work. This consists of the symbol "c" or the word "copyright", the author's name, and the year in which the work was created, for example: "(c) John Doe 2020."

     The filing of a copyright registration form in Washington D.C. provides additional protection in so far as it establishes a record of the existence of such copyright and gives the creator the presumption of validity in the event of a lawsuit. Registration also allows for lawsuits to be commenced in Federal court and, under Federal law, allows an award of attorneys fees to the prevailing party.  To order forms and for additional information on copyright registration go to www.loc.gov\copyrights. These days, a songwriter can register for a copyright on line.

     As defined by the copyright law, the word "publish" most simply means "distribution of copies of a work to the public by sale or other transfer of ownership, or by rental lease, or lending". As a practical matter, the music publishing business consists primarily of all administrative duties, exploitation of copyrights, and collection of monies generated from the exploitation of those copyrights. If a writer makes a publishing deal and a publisher takes on these responsibilities then that publisher "administers" the compositions. Administrative duties range from filing all the necessary registrations (i.e., copyright forms) to answering inquiries regarding the musical compositions.

     One important function of a music publisher is exploitation of a composition or "plugging" a song. Exploitation simply means seeking out different uses for musical compositions. Sometimes a music publisher will have professional quality demos prepared and send them to artists and producers to try to secure recordings of the songs. They may also use these tapes to secure usage in the television, film and advertising industries (known as a "synchronization" use).

     Equally important as exploitation is the collection of monies earned by these musical usages. Particularly in in the digital age, when transactions amount to billions and payments to fractions of pennies, the administration of song copyrights and the collection of revenues can be a complicated and massive undertaking. There are two primary sources of income for a music publisher: earnings that come from record sales (i.e., mechanical royalties from both physical and digital copies) and revenues that come from broadcast performances (i.e., performance royalties).  Mechanical royalties are collected directly from the record companies and paid to the publisher. Performance royalties are collected by performing rights organizations (e.g., ASCAP, BMI, and SESAC in the United States and different entities in each other country) and then distributed proportionately to the publisher and to the songwriter. In addition to plugging and administrative functions, it is also important to know that there is a creative side to music publishing. Since producing hit songs is in the best interest of both the writer and the publisher, good music publishers have whole departments devoted to helping writers grow and develop. The creative staff finds and signs new writers, works with them to improve their songs, pairs them up creatively with co-writers and hopes the outcome will be hit records.

     A publishing deal concerns rights and revenues. If a writer decides to do a publishing deal then the main issue for negotiation is going to be the language pertaining to the calculation and division of the rights in the copyright and division of the monies earned. In the old days, most deals were 100% copyright to the publisher and 50/50 share of the revenues because there was a concept that the "writer's share" was 50% and the "publisher's share" was 50%. This, of course, was an invention of the publishers. Legally, these terms have no such inherent meaning but their calculation is defined in each individual agreement. Most modern publishing deals, however, are referred to as "co-publishing" deals where the copyrights are co-owned 50/50 and the monies are usually calculated at around 75/25 meaning the writer gets 100% of the 50% writer's share and 50% of the publisher's 50% share for a total of 75%. It is best for the writer to insist that all calculations be made "at source" so that there are not too many charges and fees deducted off-the-top before the 75% calculation is made. Keep in mind, however, that the advance paid to the writer by the publisher is later recouped by the publisher out of the writer's share of income from the song. So, the net business effect is that the publisher pays the writer with the writer's own money to buy a share of the copyright (and the right to future income) from the writer.

     Although a writer can be his own publisher and retain 100% of the money, the larger publishers in the music business usually pay substantial advance payments to writers in order to induce them to sign a portion of their publishing rights to the publisher - and this can be a good thing for the writer. Although a deal for a single song may be done with little or no advance payment (provided there is a reversion of the song to the writer if no recording is released within a year or two), there should be a substantial advance paid ($5,000-$100,000+) to a writer for any publishing deal with a longer term (e.g., 3-5 years or more). Moreover, sometimes the length of an agreement is more than just a function of time, it might also be determined based on the number of songs delivered by the writer or, even more difficult to calculate, based on the number of songs that get recorded and released on a major label (something neither the writer nor the publisher may have any control over). 

     Publishing deals have to do with more than just the money though. Since every music publisher is different, it is important for the songwriter to assess both the business and the creative sides of a music publisher before signing any deal. Ultimately, the songwriter is trading a share of something the writer already owns 100% of (the song copyright) so it is important to be mindful of what it is exchanged for by way of services and money.

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 

PREDICTIONS FROM 1993 BILLBOARD ARTICLE: "WARNING SIGNS ON THE SUPERHIGHWAY"

Ramifications of New Technology  [*ORIGINALLY PUBLISHED IN BILLBOARD 1993 AS  "WARNING SIGNS ON THE SUPERHIGHWAY"]

The future in home entertainment technology is ever more rapidly approaching as headlines herald "mega-mergers" between and among cable, computer, electronics, telecommunications and entertainment conglomerates. The rapid development of interactive computer technology and the imminent availability of an infinite number of cable channels means that the electronic information superhighway is just over the horizon. The entertainment marketplace of the future could consist solely of a wall of interactive computer catalogues; consumers will go shopping with a compact disc and a credit card. With the addition of computer modems and/or fiber optic cable hook-ups, the consumer would not even have to leave home to choose music, video games, and movies stored in a central databank, and with the "virtual reality" apparatus, viewers may be able to experience the sensation of actually being in a film and partaking in a gunfight with Clint Eastwood or experience the sensation of sex with Marilyn Monroe. The ramifications of this global computerized information network, and other related technological developments, will be enormous for the entertainment industry, the legal community, and the world.

Telephone software already exists which will allow a consumer to listen to 90-second samples of a favorite recording artist's new album, and then, by touch-tone selection, order it shipped to him and have it charged to his telephone bill. Not only does this software facilitate sale of product, it compiles a consumer profile on the purchaser which can then be provided to record label marketing departments. This software has the capability, once appropriate fiber optic cable is in place, to transmit the product directly to the consumer at the push of a button.

For better or for worse, the arrival of computer driven consumption is eventually going to reshape the way business is conducted, from the way product is packaged, shipped and marketed to the way radio is programmed. Businessmen and lawyers in the entertainment industry will be confronted by new concepts in copyright and contract law not currently addressed in existing contracts. These delivery systems also raise new concerns regarding privacy and free speech.
Entertainment companies will soon be able to transmit their wares digitally instead of trucking them, dealing in the transfer of information rather than the shipment of product. Given the entertainment industry's investments in pressing plants, warehouse facilities, and distribution networks, this transition may not be an easy one. However, such a system will ultimately economize on packaging and transportation expenses. It will also eliminate the ecological issues surrounding the wasted plastic and paper used to package CDs and videocassettes.

With the advent of electronic distribution of music, the most basic concepts that govern contractual relationships will be effected. Fundamental movie and record contract issues could be completely eliminated from recording contracts.
With the coming of the one-world, global marketplace, transfer could be instantaneous and worldwide, and the issue of reduced "foreign" royalty rates payable to actors, artists and performers could be abolished. Sales figures for product could be compiled with absolute accuracy, and sales charts released on a daily rather than a weekly basis. Whether retail record stores and video outlets will disappear completely or continue to survive (the way radio continued to endure despite the advent of television, or people continue to go to the movies even after the arrival of home video) remains to be seen.

A particularly troublesome issue with respect to direct computer driven consumption is how to prevent the consumer from copying the transmission and circulating it (the way some computer software programs are currently copied from PC to PC in any given business office). An anti-copying code still needs to be developed and programmed into each album or movie transmission.

As we move into the future, barriers will continue to come down between telephone companies, cable TV, and video programming companies. The development of digital fiber optic networks will provide consumers with more choices and easier access to hundreds of channels as well as electronic home delivery of audio and video programs. Most troublesome is the fact that digital technology will make it possible for the consumer to make a virtually identical copy of any audio transmission royalty-free. Record companies and artists will increasingly find their products being transmitted and sold by way of cable networks or via computer modems and, yet, be precluded from collecting any revenue because such transmissions will arguably be deemed to be "broadcasts". As previously mentioned, even though these new broadcast and cable companies transmit record company product to consumers for their own commercial gain, they have no clear obligation either to secure record company permission or to compensate the label or the artist for the commercial use they make of the copyrighted works.

One apparent way to circumvent this problem would be for each major record label and movie company to develop its own cable TV channel which would allow viewers to order movies, albums and other related merchandise directly. Then, for example, the record label or movie company could charge the consumer a retail price equivalent for the transmission of a particular album.

Although such a solution has its obvious benefits, there is a downside. Operation of such a venture could prove to be costly and burdensome, specifically for a record label. In addition, there would still be nothing preventing a cable operator unaffiliated with a particular artist's label from establishing its own competing home-shopping music cable network, and then undercutting the prices offered by the artist's source label. In fact, it would be fairly easy for such an unaffiliated competitor to offer the transmission of a particular artist's album at a lower price because it does not have to bear the record company's financial investment in recording costs. Since the competitor would argue that it is merely broadcasting the product, not selling copies, the artist and its label could be without legal recourse. The competitor would only be liable for performance royalties which, at this point in time, are not payable on the sound recording.

Electronic distribution also has certain disturbing ramifications of the "Big Brother" variety. Popular culture has always thrived on decentralization - on garage bands, basement tapes, and independent film releases. If the larger entertainment conglomerates control the central databanks, what would the consequences be for independent releases and street music? Government intervention analogous to FCC regulation may be necessary to insure fair access to the databanks. New technology raises other questions: - What effect will credit card ordering directly through computer or cable hook-ups have on rights of privacy?; Would the databank also compile a wealth of personal information on each consumer?; If so, who will have access to this information?; Will centralized distribution make suppression of disturbing or "obscene" work much easier?; Will works be automatically transmitted in edited form? If so, who will decide what is suppressed and how a work is edited?

With respect to interactive technology, myriad intellectual property and related legal issues will be raised. If the consumer is enabled to manipulate the characters, the story line, and the action in a movie, movie companies need to consider how all of the alternative versions would be copyrighted. Since, in effect, the viewer would now be the creator of some essential portion of the work, the viewer might have an argument that certain derivative rights vest in him by virtue of his contribution to the work.

Interactive technology pundits predict that, with the advent of "virtual reality" apparatus, viewers will be able to truly experience a film by inserting themselves into the action and manipulating it such that the viewer could partake in a gunfight with Clint Eastwood, a prize fight with Sylvester Stallone, or experience the sensation of sex with Marilyn Monroe. As a preliminary matter, the manufacturers of the applicable interactive software would need to get appropriate clearance from the movie companies before altering the copyrighted works. However, with the proliferation of multi-national, vertically-integrated entertainment conglomerates, the company doing the altering might already be the owner of the copyright in the film (as was the case with "colorization" where Ted Turner had purchased certain films and later had them colorized). Nevertheless, supplemental legal issues would still be raised: If the viewer were to knockout Stallone, would this in some way subject the viewer to legal action by Stallone for disparagement of the actor? In the case of the Marilyn Monroe scenario, could intercourse with her image be said to violate certain privacy rights in some way, and who would assert those rights?

The ramifications of the new computer and communications technologies are simultaneously exciting and frightening. The next wave of technological developments is almost upon us and it is best that the entertainment industry and the legal profession confront the pertinent issues, review the relevant revenue streams, and resolve the outstanding legal issues now in order to capitalize on the coming changes as expeditiously as possible.

Wallace Collins is an entertainment lawyer. Tel: (212) 661-3656; www.wallacecollins.com. He was a recording artist for Epic Records before attending Fordham Law School. 

Judicial Approval of Contracts With Minors

As a recent Wall Street Journal cover story pointed out, technology start-ups and other computer software companies like Apple and Google often compete to employ young teenage whiz kids to write code or create new apps. With media giants like Disney and Viacom creating shows featuring younger and younger performers, and YouTube, Spotify and other online companies hosting content by eager young creators, content from minors is in ever-increasing demand by corporations. All of this raises the predicament of employing or dealing with contracts with minors (or contracts which involve a contracting party under the age of 18). I have handled many court proceedings concerning contracts with minors so the following might be of interest to my colleagues in legal departments of tech firms.

A minor may disaffirm a contract at any time during minority or upon reaching majority. Without a valid written agreement the employment is "at will" under the law of most states which means the minor can depart at any time. Copyright law, which is applicable to computer code, requires a signed writing to transfer copyrights and applies to authors of all ages, so without a valid written agreement the content created by the minor may not be validly transferred from its author to the employer. The dilemma created by a minor's ability to disaffirm a contract is that it may seriously jeopardize the employer's financial investment in the services of the minor.

The mere exercise of having the parent or guardian of the minor co-sign, approve or "guarantee" the contract does not resolve the problem. The minor may still repudiate the contract on the ground of infancy, asserting that the parent or guardian lacked authority to make the contract. In some jurisdictions, courts deem it against public policy to even enforce such guarantee language against the parent or guardian since it would subvert the purpose of the laws concerning the judicial approval of contracts with minors. So-called "working papers" under state law might work for purposes of a fast food chain or similar hourly wage employment but probably are insufficient for a tech company's purposes.

Although many tech companies may rely on the fact that they believe the minor is an employee creating intellectual property for the company, this may not be sufficient to transfer rights to the company in the computer code written by the teenage whiz kid as, for example, "work made for hire" under U.S. copyright law. It is beyond the scope of this article to address all of the factors courts consider when determining the issue of work for hire and the ramifications of the various outcomes of the cases concerning employers and computer programmers. Suffice to say that relying on the work for hire doctrine is an uncertain path for a tech company (all the more so when dealing with a minor).

State Laws

Several states, including New York and California, have laws specifically concerning judicial approval of contracts with minors. New York's Arts and Cultural Affairs Law §35.03 provides for judicial approval of certain contracts for services of "minors" under the age of 18. The procedure involved can be somewhat arduous to navigate, and may prove to be a difficult gauntlet to run for a lawyer inexperienced in this area. However, tech and media companies employing minors or contracting with minors should investigate the efficacy of pursuing court approval to protect their investment.

Once the court judicially approves the contract, the minor is held to a standard of adult responsibility for its contractual obligations assuring the employer company that it will get what it bargained for and that the contract is legally valid.

As a practical matter, a proceeding for judicial approval of a minor's contract in New York is commenced by the filing of a verified petition. It can be filed by a parent, the guardian, a relative of the minor or any interested person or entity such as the employer. The petition must contain a statement of the length of the employment term, compensation, and all other relevant, material terms of the agreement. A complete copy of the proposed contract must be annexed to the petition together with affidavits from the parents and/or guardians which consent to the petition and support the facts.

In addition to identifying the details of the nature of the minor's employment and the compensation to be paid, the petition must also contain a statement of who, other than the minor, is entitled to the minor's earnings and facts regarding the property and financial circumstances of the parent or parents so entitled. The petition may nominate a person to be appointed as limited guardian solely for purposes of establishing a trust account for the proceeding and should set forth the reasons why the person nominated would be proper and suitable.

Although a lawyer is usually appointed, a parent or other petitioner is not precluded from being appointed as limited guardian by reason of his or her interest in any part of the minor's earnings or in the contract provided such interest is disclosed. The court will designate how much is to be set aside and saved for the minor under guardianship until the minor becomes 18 years old. The court also has the option to appoint a special guardian to represent the interests of the minor at any time after the petition is filed.

As directed by the court, before the time at which the petition is noticed to be heard certain persons (other than the petitioner and anyone who has joined in the petition) must be served with an order to show cause why the petition should not be granted: (1) the minor; (2) the parents of the minor; (3) the minor's guardian(s); (4) each party to the contract; (5) any person having the care and custody of the minor; (6) the person with whom the minor resides; and, (7) the minor's spouse.

An order granting judicial approval of a contract for the services of a minor will rarely be granted on the papers alone. Usually a brief hearing is held at which the minor, the parent(s) and the various other interested parties may be questioned by the judge regarding the contract. Courts may require provisions in the court's order concerning how many hours the minor can work and may require that the employer provide tutors if regular schooling will be disrupted by the employment. Most terms and conditions of each arrangement will be affirmed as long as they are found by the court to be reasonable and not contrary to the best interests of the minor. Once the court does grant approval, an order will be issued which will, in effect, declare the minor an adult for purposes of fulfilling his or her contractual obligations.

California law concerning the judicial approval of minors' contract for artistic or creative services (Ca. Family Code §6750, et seq.), although similar, differs in certain respects. For instance, under California law there is no limitation on the length of the term of a minor's contract whereas in New York the limit is seven years. A hearing is usually required in California as in New York but under California law a maximum of only 50 percent of net earnings will be set aside until the minor becomes 18 years old whereas New York has no limit on what portion the court can direct to be set aside.

Once the court does grant approval, an order will be issued which will, in effect, declare the minor an adult for purposes of fulfilling his or her contractual obligations. Then all the results of the minor's services, including any copyrights in code or apps created by a minor during employment by the start-up or tech company, will be properly transferred as bargained for by the employer.

  

Wallace E.J. Collins III 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 

*reprinted with permission of The New York Law Journal 2014

http://www.newyorklawjournal.com/expert-analysis/id=1202667640206/Judicial-Approval-of-Contracts-With-Minors%3Fmcode=1380566174563&curindex=0

THE IMPORTANCE OF CREATING AN INTERNAL BAND CONTRACT

     Over the years there have been many lawsuits between and among the members of various musical bands. These lawsuits have concerned everything from disputes over the distribution of money to the right of departing members to use (or not to use) the band name in connection with ongoing endeavors. In most cases, it would have been better to be safe than sorry, and get the understandings of the band members in writing when everyone was in agreement just so all the parties remember what they agreed to at the start. Disputes over copyrights and trademarks as well as money could be avoided with a properly drafted "pre-nup" for the band.

     The internal group member contract between the members of a band is fundamentally important, but many musical groups ignore this crucial early step. When two or more people associate for the purpose doing business they create a partnership in the eyes of the law. General partnership law applies to the association unless a written agreement states otherwise. General partnership law provides, among other things, that all partners equally own partnership property and share in profits and losses, that any partner can contractually bind the partnership and that each partner is fully liable for the debts of the partnership. In the case of most musical groups, a written agreement setting forth the arrangement between and among the group members as partners is preferable to general partnership law.

     A band agreement can address issues such as who owns the group name (and whether and in what capacity a leaving member can use the group name), who owns what property (including not only sound equipment but intangible property such as recording agreements and intellectual property such as the songs and the recordings created by the group), and how profits and losses are divided. Since it almost goes without saying that members of a band inevitably leave and groups inevitably disband, it is important to structure an inter-band agreement in the early stages of a career. It will function in a sense like a prenuptial agreement when matters start to disintegrate, and it can make the break-up process less painful.

     Some bands may deal with this agreement among themselves and some bands may have a lawyer prepare a basic inter-band agreement. If it is a fairly equal partnership where all members are writing and performing and sharing equally, it is a fairly simple process. However, where some members are songwriters and others are not and/or where one member claims ownership in the name or another makes significantly larger financial contributions than the others, it can become a complicated process. If the band cannot work it out among themselves, they can either sign a conflict waiver permitting the one attorney to act solely as scribe (and not as advisor) on behalf of the group, or each member of the group may need to get his or her own lawyer to protect each respective member's interests. Like it or not, as artistic and creative as forming a band can be, this is a business and it is wise to recognize that and deal with it. These inter-band issues are better dealt with at the beginning when everyone is optimistic and excited rather than later when tempers flare and bitterness pervades as egos clash.

     A typical band contract will address certain fundamental group issues. One important issue is who owns the group name if one member leaves or if a group dissolves which group of members are entitled to use the name. Under partnership law the partners would be the joint owners of the name and any member would probably be permitted to use the name (or maybe no members would be allowed to use the name once the partnership is deemed dissolved). Trademark rights are determined based on the "use" of a mark (not on who thought of the name) so each of the members of the group would be an equal co-owner of the group name under trademark law. The end result under either partnership law or trademark law might be impractical.

     In most cases, the band agreement will state that if a particular founding member was the creator of the group name then only a group comprised of that member and at least one other member can use the name. This will apply whether one other member leaves or if the group disbands and only the founding member and one other reform the group. There are as many different ways this provision can be drafted as there are different group names. When a group member leaves, the remaining members are going to want to keep the group name and are not going to want the leaving member to dilute its value or confuse the public by using it in any way. The band agreement provision may say that a leaving member cannot use the name at all or that the leaving member can only mention that he was "formerly" a member of the group (provided that such credit is printed smaller than the member's name or his new group's name, etc.).

         

     Rights in the group name may also concern revenues generated in addition to rights, specifically as they concern the sale of merchandise (e.g., hats, t-shirts, calendars and other products and paraphernalia). The band agreement should have a "Buy-Out/Pay Out" provision which would deal with this financial aspect of the group name.

     The band agreement will need to contain provisions regarding the sharing of profits and losses. One provision may pertain to revenues earned during the term while each member is in the group and another may pertain after the departure of a member or the demise of the group. In most cases, a group just starting out will have a provision that all profits from the group are shared equally between all members with an exclusion for songwriting monies (which each of the respective songwriter members would keep for themselves). Where an established group adds a new member, the provision may provide that the new member gets a smaller percentage than the founding members.

     However, in most cases, during the term there is not a problem determining appropriate revenue shares. The more complicated problem of revenue division arises after a member departs. The agreement may provide that the leaving member is entitled to his full partnership share of profits earned during his tenure but a reduced percentage (or no percentage) of profits derived from activities after his departure - or the agreement may provide for a reduced percentage for a short period of time after departure (e.g., 90 days) and then nothing thereafter. This is an easier issue to remedy as it relates to live performances and sales of merchandise during those performances than it is as it relates to record royalties. The group needs to determine what happens, for example, when a group member performs on 3 albums but leaves before the fourth album is recorded. Although it might be acceptable to refuse to pay the leaving member any royalties on the fourth and future albums recorded by the group under the record contract the leaving member signed as part of the group, it might not be fair to refuse to pay that leaving member his share of royalties from the 3 albums that he did record with the band. Of course, this might vary in the agreement depending on whether the leaving member quit or was fired.  

     Another important financial issue is the question of the leaving member's share of partnership property such as band recording equipment or a group sound system. Again, the agreement might specify a monetary payout to the leaving member if he is terminated but forfeiture if the leaving member quits. If merchandise with the leaving members name and likeness still in inventory is sold after the member leaves, a decision will have to be made about whether and how much the departed member might receive for the use of his name and likeness.

     The issue of control is also very important to deal with in inter-band contract. In most cases, each member will have an equal vote and a majority will rule. However, there are as many variations as there are bands. For example, some acts might require unanimous agreement or an important member may have two (2) votes and/or the band’s manager may have a tie-breaking vote. The agreement may also provide that certain matters such as requiring financial contributions from group members or incurring debts on behalf of the band require a unanimous vote. Again, there are endless variations including situations where a particular member makes all of the decisions or where new members do not have a vote on band business. One interesting inter-band arrangement was that of The Beatles.  In answer to that age-old question, "no", Ringo did not get less. In fact, my understanding of their arrangement was that it was what might be called a reverse democracy: each member had one vote but if any member voted against doing something then the band would not do it. In other words, their arrangement required unanimous consent to proceed with an activity.

     Another issue of control that must be decided for the band agreement concerns the hiring and firing of band members: how votes are calculated (e.g., will each member get one vote or will a particular member's vote count double) and how many votes are needed (e.g., a majority or a unanimous vote) to fire a group member and/or hire a new member. In most cases, a new member voted into the group will then be required to sign on to the internal group contract. It must also be decided how to vote on any amendments to the band agreement since this may materially effect the relationship between the members after the group has started. In most cases, a majority vote will be deemed determinative but some members may prefer a unanimous vote on such things as amending the agreement (as well as hiring or firing). This will have to be decided between and among the members of the group.

     Finally, the group’s internal agreement should contain a comprehensive Buy-out/Pay-out provision that deals with departing members. In most cases, whether the leaving member quits or is fired the agreement will provide that the leaving member waives all rights in the intangible assets of the partnership (e.g., the group name, the group contracts, etc.). If the member quits, he might waive any right to and benefit derived from the hard assets such as band sound equipment. If the leaving member is fired, the agreement might provide that he or she is entitled to the pro rata percentage of the current value of the hard assets. With respect to this payout, the band agreement may provide that if the valuation exceeds a certain amount (e.g., $25,000.00) or would put the band partnership in financial distress, the payout would be in a certain number of equal monthly installments (e.g., over 12 months).

     Again, this Buy-out/Pay-out provision can be as simple or as complicated as the band members deem necessary. There are as many variations in this as there are differences in personalities between the members of a group. Each member and each group must find its own balance.

     Inter-band issues and disputes are many and varied. Recently, a member of the Eagles sued the remaining members saying he was forced out of the Eagles’ corporation by the other shareholders (and invoked provisions of the California corporate law pertaining to minority shareholders in close corporations). Years ago an ex-member of The Black Crowes sued his former band mates claiming that he was entitled to an equal share of all the money they made after they threw him out of the band. His contract claim was based on nothing more than a pie chart drawn on a napkin. Legend has it that, years before while eating at a diner after a band rehearsal, each member had signed his name on his slice of the "pie" drawn on the napkin allegedly agreeing that they would stay together and share all of the money equally come what may. Of course, when circumstances changed the fired member used that napkin to assert his rights.

     It is difficult to form a good band and to achieve a successful career in the music business. Any group of two or more musicians working together would be well-advised to create and sign a good Internal Band Contract so that the band does not later self-destruct over money and ego issues and forfeit its hard-earned career success. In a perfect world, each member could afford its own lawyer to quickly and inexpensively prepare and sign such an agreement. In the real world, that may not be the case. In any event, some kind of basic band agreement is a good starting point for any new band.

Wallace Collins is a New York lawyer specializing in entertainment, copyright, trademark and internet law. He was a songwriter and recording artist for Epic Records before attending Fordham Law School. Tel:(212) 661-3656 / wallacecollins@gmail.com / www.wallacecollins.com