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Warner Music sued in latest case testing the US termination right and sound recordings

By | Published on Thursday 11 February 2021

Warner Music

Warner Music is the latest record company to be sued over the termination right under US copyright law. Country artist Dwight Yoakam says that the major has refused to recognise the termination notices he has submitted to reclaim the US rights in his old recordings. And, to make matters worse, it has removed some of those tracks from the streaming services, meaning he can’t earn from the recordings, or take them to another label for distribution.

The termination right allows music-makers who assign their copyrights to another party to terminate that assignment after 35 years, reclaiming their rights, albeit only within the US. Introduced into law in the 1970s, this particular termination right only really came into effect a decade ago. But on the songs side of the music business plenty of songwriters who signed publishing deals 35 years ago are now reclaiming their rights.

However, on the recordings side, some labels argue that the termination right does not apply. That argument is principally based on the idea that a record contract is a so called ‘work-for-hire’ agreement. That would make the label, not the artist, the default owner of any recording copyrights created under that deal. So no assignment of copyright occurs, which means there is no assignment to terminate.

Of course, most artists – and their managers and lawyers – disagree, insisting that record contracts – even those record contracts that specifically claim to be work-for-hire agreements – are not, in fact, work-for-hire agreements. Like, not at all. Not in any way. Not even close.

Yoakam’s 1985 record contract with Warner “uses ‘work-for-hire’ language only to create an artificial work-for-hire relationship, despite not meeting any statutory requirement of such status”, says the country musician’s new lawsuit.

A work-for-hire arrangement would basically make Yoakam an employee of the label. But “Warner itself acknowledges that Mr Yoakam was not an employee”, the lawsuit goes on, “and as such any refusal of Mr Yoakam’s termination notices on the basis of a ‘work-for-hire’ relationship would be in direct indifference to the definition of ‘work-made-for-hire’ under [US law] and [an] outright rejection of the rights granted to authors”.

Elsewhere, Yoakam explains that he filed termination notices with Warner and its Rhino division in 2019. But “instead of acknowledging the validity the termination notices, Rhino instead proposed new deal terms”. Following a bit of back and forth between the major and the musician, “defendants failed to acknowledge Mr Yoakam’s termination rights effected through the termination notices, thus leaving him in a state of perpetual limbo”.

Then he found out that Warner had removed his earliest tracks – ie the ones approaching 35 years – from the streaming services. This was because the major didn’t want to be sued for distributing recordings it doesn’t actually own, Yoakam’s lawsuit claims. But by refusing to officially recognise it no longer has those rights, it adds, Warner is preventing him from partnering with another label or distributor on those tracks. Making the “perpetual limbo” costly.

“Every hour that Mr Yoakam’s works are absent from the marketplace”, the lawsuit continues, “through Mr Yoakam’s inability to exploit the works due to defendants’ false ownership claim and defendants’ refusal to exploit Mr Yoakam’s works, Mr Yoakam is financially damaged. Mr Yoakam is unable to earn royalties on these works, his fans are unable to listen to these works, and his streaming count, a quantifier that directly impacts the known value of a song, is detrimentally impacted”.

To that end, Yoakam wants the courts to confirm that his contracts with Warner were not work-for-hire agreements, and therefore his termination notices are valid, and that the US rights to his 35 year old tracks have therefore reverted to him.

The whole work-for-hire debate – and some other technicalities around the termination right and record contracts – are already being tested in the US courts through two other cases involving Universal Music and Sony Music.