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A Hard Day’s Copyright

Paul McCartney
photo by May F.

For a young singer-songwriter, success on the level of Paul McCartney would be a dream. His recent lawsuit against Sony/ATV Music Publishing, however, casts light on an aspiring artist’s potential nightmare.

In January, McCartney went to court against the publisher in an attempt to regain his stake in the Beatles’ publishing catalog. This is the latest step in a long and winding legal battle for control of the songs. But to fully understand why McCartney filed his suit – recently settled on undisclosed terms – we need to consider some pertinent background information.

A recorded piece of music involves two separate copyrights. In simplified terms, the composition copyright is the one that usually interests publishers; the sound recording copyright is the business of record labels. Under United States copyright law as of Jan. 1, 1978, authors of copyrighted works of all types, including musical compositions and sound recordings, have a chance to reclaim their rights after 35 years. This right is called reversion, and Congress created it with the Copyright Act of 1976, when it eliminated the previous system of copyright renewals.

The reversion privilege is nonassignable, which means that authors cannot give up the right even if they wish to do so (or, more likely, if a publisher or label pressures them to do so). So while reversion is not automatic, authors can always pursue their rights if they want their copyrights back or if they choose to renegotiate ownership with a third party.

For American artists dealing with American rights, this process is straightforward if not quite simple. But when copyright disputes go international, they can get muddy.

This is what happened to the members of the pop group Duran Duran. The group, which formed in 1978 and rose to fame in the early ‘80s, sought to reclaim the U.S. copyrights to their first three albums under the American law. Gloucester Place Music Ltd, a British arm of Sony/ATV by way of EMI Music Publishing, fought back in court, arguing that English law would not require the publisher to revert the copyrights in question. At a hearing before the High Court in London, Gloucester Place’s lawyers asked the judge to rule that the band members were barred under English contract law from exercising their reversion rights in America. The judge ruled in the publisher’s favor.

Duran Duran’s members, including founding member Nick Rhodes, publicly expressed their disappointment with the ruling. “If left untested, this judgment sets a very bad precedent for all songwriters of our era,” Rhodes told the BBC.

Some legal experts contend that the result in Duran Duran’s case was flat-out wrong. Helene Freeman, an entertainment and publishing attorney writing for Law 360, explained that the band members could not have waived their right to reversion by contract under American law, regardless of their nationality. Band members have said they will appeal the decision.

Duran Duran’s initial loss in December 2016, however, was enough to motivate McCartney’s decision to file suit against Sony/ATV shortly thereafter. Though he reportedly did not receive pushback when he sent termination notices to the publisher, McCartney was wary after Sony/ATV’s legal victory against his fellow Brits. He sought to reclaim more than 260 copyrights in his filing, including some of his largest hits as part of the Beatles and from his career as a solo artist.

McCartney’s case, however, is unlikely to ever go before a court. McCartney’s lawyer asked the judge to drop the lawsuit because the parties “have resolved this matter by entering into a confidential settlement agreement.” Had the case moved forward, it could have resulted in wide-reaching consequences for the music industry, but for now it will stay out of the American legal record.

While McCartney’s case is settled, it did prompt me to engage in a little thought experiment. His songwriting partner John Lennon secured a green card in 1976. Had he lived, it is likely Lennon would be a U.S. resident, and possibly even a U.S. citizen, today. Say that in this alternate 2017, Lennon and McCartney joined forces to try to reclaim their copyrights to the songs they wrote together. Would a court recognize Lennon’s right to reversion as an American citizen or resident, but fail to recognize those of British citizen McCartney?

We will never know, especially since it is unlikely that McCartney’s claims will ever be adjudicated. We do, however, have one hint as to the former Beatle’s settlement terms, which is that those terms will be enforced by the U.S. District Court for the Southern District of New York. To me, the supervision of an American court suggests that McCartney will probably secure most, if not all, of the U.S. copyrights to his music. In exchange, McCartney probably dropped any counterclaims and let stand Sony’s rights in other jurisdictions. Alternatively, Sony might have retained the U.S. copyright in exchange for a significant payment or other benefit to Sir Paul, as he is now known in his home country.

What’s the moral of this story? The same one that has played out a million times in the entertainment business: Young artists should find good, independent advice when signing their first contracts with publishers and labels. They should also be wary about signing away publishing rights that could become enormously more valuable if, through years of hard work, they accomplish what Duran Duran achieved – not to mention the Beatles.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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