Paul B. Ungar, Esq.

Attorney At Law

 

 

 

Home       My Work       Clients        My Articles       Contact

 

 

“Check 1, 2 Check Check 

Music Biz Checklist 1, 2, 3, 4

 

(A Checklist of Stuff You Actually Need To Get Going)

 

By Paul B. Ungar, Esq. © 2013

 

 

Consider this: You’re a band ready to start recording a CD at a producer’s studio and you’re going to collaborate with outside songwriters on some of the songs on the CD.

 

Artists, producers and songwriters in this type of situation often ask me what – from a legal perspective – are the most important issues they should deal with, and in what order, particularly if they have a limited budget.  Some of them have heard that, before they get going, they first need to start an LLC or some other business entity, or perhaps “copyright” their songs, or “trademark” their band name and logo.  All of these are important matters that should definitely be included on Your Checklist (See below), but here’s the Real Deal:

 

If you’re working with other creative persons: The First Thing You Actually Need is (Dum-da-Dum-Dum):   Intellectual Property Rights.

 

Why? Now Consider This: You’ve all busted your collaborative You-Know-Whats and now a third-party actually wants to do something with you, Bizwise and makes you an offer. The very first thing their legal counsel is going to ask is: “Do You Have Zee Rights?” And that means:  “Show Me Zee Papers!”  Because, with but a few very limited exceptions, the general rule for Intellectual Property is that IP Rights must be clearly set forth in a properly worded and signed written document that allows the third-party to Use Your Stuff in the manner intended. And if you don’t have Zee Rights as set forth in Zee Papers, it can become an Absolute Nightmare – and sometimes it can even kill a deal, not to mention damage or even sever band member relationships.

 

Here’s a summary of perhaps the seminal case about what happens when there’s more than one person involved in the creation of a piece of Intellectual Property and There’s No Papers:

 

Ever heard of George Thorogood?  (Too tired to Google? How about, ever heard: “Bad To The Bone”, or “One Scotch, One Bourbon, One Beer”?  That guy...). Anyway, before Mr. Thorogood got famous, his first manager paid for a demo recording session (and apparently George hated the demos and never used them). Here’s the key fact: there were no contracts involved, either between George and the manager, or with the studio, or between the other members of the band. At some point later on, Mr. Thorogood and his manager parted company, and George – who had possession of the demos - gave them to the now ex-manager as a souvenir of their former relationship, but under the express condition that the tapes were a personal and private gift from Mr. Thorogood to him and could never be released. Well, Guess What: After George hit the Bigtime, the ex-manager arranged to release the tapes through a record label as the “Original Basement Tapes of....”, or Whatever...You get the drift, right?  Well, Mr. Thorogood, et. alia. sued the living You-Know-What out of the ex-manager - and everybody else involved, by the way – with George arguing essentially that the ex-manager violated the conditions of the gift. The ex-manager countered that he paid for – and also had possession of – the demos, and therefore the demos were his property, and not George’s - and thus George couldn’t “give” him a gift – whether conditional or not – because the tapes never belonged to George in the first place. And, under the ex-manager’s theory, since the ex-manager “owned” the tapes, he could do whatever he pleased with them.

 

(Time Out, you say and then you ask: What does any of this have to do with my band’s upcoming recording session? Remember, I mentioned that in the Thorogood case there were No Written Contracts, so Please Indulge Me:)

 

The legal issue that was addressed - and ultimately affirmed on appeal by a U.S. federal appellate court  (See: Forward v. Thorogood, et. al., 985 F.2nd 604 [1993] ) – was basically:  “What’s the Deal When There’s No Written Contract?” – and more specifically: “Who owns sound recordings when there’s no written contract?” If it was found that the ex-manager “owned” them, the ex-manager would win the case. On the other hand (which, parenthetically, reminds me of a bad lawyer joke: “How come there can’t be one-armed lawyers, because then they couldn’t say... Get It?)  Anyway, if Mr. Thorogood “owned” the tapes, then he would win.

 

The Court sided with George, reasoning that, under the U.S. Copyright Act (Title 17 U.S.C. §101 et. seq.), the “authors” -  e.g., the persons who contribute their “creativity” to the recordings -  are  the “owners” of the recordings – and the Court further decided that who pays for the recording – or who possesses it – has absolutely nothing to do with who “owns” it.

 

So back to Your Checklist:  

 

First and Foremost, you need to make absolutely sure you have proper IP Rights (as well as other necessary rights) in properly drafted and signed written contracts with everyone involved in the creative process specifically granting and transferring to you copyright ownership rights – otherwise, for example, without a contract granting you IP rights, that session keyboard player you hired on a one-shot basis who came in to the studio for a couple of hours, laid down a few tracks, and then went on her way, owns your CD as much as you do.  (By the way, the Thorogood Court gave some examples of who has enough creative input on a recording to be considered an “author” - and thus, absent a valid transfer document, an “owner” under the Copyright Act: basically they said that each performer, as well as any producers and certain other contributors - such as mixers or re-mixers - have enough creative input to be considered  “authors” –  but they excluded recording engineers, if the engineers only “twist the dials” under the directions of the band or the producer, etc.). But if you have a carefully worded contract that includes a proper transfer of IP ownership rights, then you can sleep well – and you can legally enter into deals with third parties - because you “own” your IP free and clear.

 

Also, there are other rights you may need which should be clearly spelled out in a properly worded contract. For instance, if you don’t have proper “name & likeness” usage rights in a written contract, and if you use a picture of that keyboard player - or even mention her name - on the CD artwork, she can sue you for violation of her rights of privacy and/or publicity. 

 

Another “quickie” Showbiz War Story: Remember Pink Floyd’s “Another Brick In The Wall” that featured the little English kids singing “We Don’t Need No Education”? Well, it turned out there was never any paperwork signed vis a vis the aforementioned little kids. In 2004, the former little kids (then in their middle ages) filed a major league class action lawsuit against the band, the record label, etc. for a whole lot of money – millions, in fact - claiming unpaid royalties, as well as copyright and right of publicity & privacy violations. Eventually, the case was settled and it was reported that each former member of the boys’ choir received a mid-five figure settlement payment.

 

So the moral of the story is: Without a contract, it can be a mess.

 

And so here’s your new Mantra:  Contracts, Contracts, Contracts.

 

Here’s some other Stuff You Should Do – and these apply whether or not you’re a solo or whether you’re working with others – and which you should definitely put on Your Checklist:

 

Think about setting up a Limited Liability Company (or “LLC”) or an S-Corporation to limit exposure of your personal assets in case an IP liability issue comes up. And if more than one person is involved in your company, you also really need an internal written agreement between the owners of the company to establish not only how the company is to operate, but also to address and clarify IP ownership issues. Again, the language in the contract is important, so my suggestion is: Don’t Try This Stuff On Your Own. You can certainly find template Operating Agreements for LLCs or Stockholder Agreements for corporations floating out there in The Ether, but most of these contracts don’t usually properly cover the IP rights issues that are particular to Our World.  But, also Consider This: in Our World using an LLC may be of limited use: Believe it or not, entertainment companies are not idiots, so even if you use a so-called “furnishing company” (such as your LLC) to sign a contract, often the company on “the other side” will almost surely make you sign a personal guarantee, which may defeat – at least in part - the very purpose in setting up the company in the first place – particularly if you’re a solo.  So, if you have limited start-up funds, setting up an LLC or a corporation doesn’t have to be at the top of Your Checklist. But it’s a good idea, particularly if you have “partners” (in the business sense) because under most U.S. state laws, if you don’t set up a formal business structure, you’re automatically considered to be an equal partnership (which may not be the case in your particular scenario) and, perhaps more significantly, you can be held personally liable for the debts of your business, as well as for the debts of your partners which are incurred by them, individually and/or collectively, in the course of conducting your business. So if you’re in a band, a “band agreement” is a must – even if you opt for a partnership structure - and I always recommend dealing with intra-band issues sooner - when everyone is usually in a collective good mood, “on the same page”, etc. – as opposed to later – when possible disagreements often come up (“Hey, I wrote 95% of our hit song....” “No, you wrote 35%....”, etc.). A written contract “up front” almost always solves the problem of selective recall or failed memory.

 

Note I keep repeating then phrase “written contract”.  While there are such things as “oral” agreements, most state laws require that an oral contract must be able to be totally completed in one (1) year or less – which is usually not the case in Our World. Also, when disputes arise over “oral” contracts, they usually dissolve into “He Said / She Said” scenarios. And, as I mentioned above, with limited exceptions, contracts dealing with IP must be in writing.

 

Back to Your Checklist: Also think about registering your songs and your recordings with the U.S Copyright Office – but remember, copyright registration of a work doesn’t necessarily prove that you “own” it (again – yet another reason to do contracts with creative collaborators specifying IP ownership) – instead, copyright registration is a requirement if you want to go after copyright infringers. So, I always suggest that you include copyright registration on Your Checklist. However, because under the U.S. Copyright Act you automatically own your work the instant you embody it in a tangible medium (e.g., you write it down, record it on a disc, etc.), you don’t have to register your work in order to “own” it. Therefore, copyright registration also doesn’t need to be first on Your Checklist. But, since normal copyright registration takes awhile, if an infringement situation suddenly arises and you haven’t registered your work yet - but you want to sue immediately - although you can get expedited copyright registration and then file your lawsuit, expedited registration is very expensive. Therefore, I always suggest that you register your works sooner, so you don’t have to scramble later if in the future you have to file a federal copyright infringement lawsuit against an infringer of your work.

 

If you have a trademark or servicemark (which might include your band’s or your production company’s name and logo) you can - and definitely should, at some point - register your mark with the United States Patent and Trademark Office. Similar to copyright registration, one of the main advantages of federal trademark registration is that it enables you to sue an infringer on a national basis - wherever the infringer is located throughout the U.S. – and take advantages of the special remedies provided under the U.S. federal trademark law, the Lanham Act (Title 15 U.S.C.). However, unlike U.S. federal copyright law – which is the only copyright law in the U.S. (since it expressly “pre-empts” all other U.S. laws that might otherwise apply to copyrights) - and thus requires federal copyright registration in order to be able to sue for copyright infringement - there are other state statutory and “common” (e.g., case) laws that apply to trademarks, so it is possible to sue an infringer under these other laws even without any federal registration under the Lanham Act. But the most important principle to remember here is that you obtain trademark rights by using your mark in commerce and interstate commerce.  So while it’s a good idea to register your mark with the USPTO – again, sooner as opposed to later – the most important thing is to use it in interstate commerce and establish your rights. If you have a limited budget, trademark registration also doesn’t have to be on the top of Your Checklist, but it should definitely be included thereupon.

 

Finally, I’m often asked about joining and/or registering your works with the performance rights collection societies (such as ASCAP, BMI and SESAC), or even about joining the entertainment industry unions or trade guilds (such as AFofM, AFTRA, SAG, Actor’s Equity, etc.).  All of these are good ideas, as well, and should be included in Your Checklist.  The performing rights societies collect monies from the public performance (such as airplay) of your songs – but remember that the societies will usually go back retroactively at least a calendar quarter – and sometimes even longer if you ask them – after you register with them in order  to find  and collect your public performance money, so there’s no real panic rush to join up before your CD comes out.  Again, my advice is to join a society “sooner” rather than “later” – particularly if you have a music publishing company, since publishing company name clearances can be a problem sometimes and you should have that settled before you print any artwork which includes publisher credits.  As for the unions – all I can say is: Hey, if you are a musician and if a union gig or a union recording session comes up and you need to join up, so be it. However, union membership can open certain doors for you – particularly if you’re an stage, TV or film actor:  getting your Actor’s Equity, SAG or AFTRA cards - even from playing a bit part in some local community theatre which is an Equity house, or perhaps doing a local commercial produced by a union-affiliated  production company –  will get you into certain auditions, allow you to be represented by union-affiliated agencies and otherwise give you entrée into other scenarios where union membership is a prerequisite.

 

But please remember your new Mantra and what should be Absolutely First on Your Checklist: 

 

Contracts, Contracts, Contracts!!  

 

-        Paul B. Ungar, Esq.

 


Home       My Work       Clients        My Articles       Contact

 


Page created and maintained by FemaleComputerNerd. Contact the Webmaster
Copyright (c) 2014 by Paul B. Ungar.  All Rights Reserved.
 

This website is Attorney Advertising. This website is designed for general informational purposes only. The information on this website is not formal legal advice and any use of such information does not create any lawyer-client relationship.