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The Real World - Part 2
By Guy Betar - 03/22/2007 - 10:25 PM EDT

It seems to get longer between drinks in terms of my articles, so my apologies to readers for the delay in getting this article to press. I will ensure they happen much more regularly in the future.

In the last article, “The Real World Part 1” I was reviewing a real life situation a reader raised with me, and considered some of the important issues it raised. This article continues that review. As you will hopefully recall, the scenario I described involved Gary and a fellow composer allowing a church to incorporate a recording of their song onto a dvd to be used by the church for charitable purposes. I concluded the article by noting that whether the composers realized it or not, they granted a license to the church to use the song recording.

It is worth taking a brief detour here to understand what a license is, and how this relates to copyright ownership. In the context of copyright, a license is a grant of a right or parcel of rights to do something with or in relation to the copyright work. A license can be granted by the copyright owner to someone – for example a composer could grant a performer a right to make a sound recording of their composition and incorporate it onto a CD. A copyright owner might include as part of a license, a right for the licensee to in turn grant sub-licenses to third parties. An example is a composer licensing a publishing company to in turn sub-license other parties to use the work in some manner like using it in a movie or a television program. It is fundamental to the nature of a license that the copyright owner does NOT assign or transfer ownership in the copyright work. The copyright owner authorizes others to exercise some or all of the rights that attach to the copyright, but does not dispose of the ownership itself. An important distinctive aspect of a license is whether it is exclusive or non-exclusive. An exclusive license is one where a parcel of rights is granted to the licensee and cannot be granted to any other person. Exclusivity can be limited to defined geographical areas and in other ways. A non-exclusive license reserves to the licensor the right to grant identical rights to other people. There are a series of key terms and issues that should be incorporated into every license agreement, and this will be the subject of a separate article in the near future. For now, it is essential (yes, here it comes again!!!) to emphasize that license arrangements should ALWAYS be in writing.

Returning to the scenario involving Gary, how is it, you ask, that I concluded that Gary granted a license to the “church” to incorporate their song onto the dvd, especially as there was nothing in writing? To the uninitiated (and often to the initiated) the law can be an unpredictable beast. It will imply a legal understanding onto a set of facts even where the parties involved did not understand what they intended (from a legal perspective). In this particular situation, Gary and his co-author voluntarily delivered up a recording of their song to enable the church to incorporate it onto a dvd. The law will at the least imply a legal license having been granted by Gary and his co-author to do just that, and also to then distribute that dvd at least in terms of Gary’s understanding that it would be to some 400 churches in the “area”. The granting of this license is implied through Gary’s and his co-author’s conduct.

This is a good time to take up and consider a point I raised in the previous article where I alluded to the problem of precisely who did Gary and his co-author grant the license to, and apart from the bare license I referred to above, what were the terms of the license? 

There are some VERY important reasons why I ask these questions. Yes, Gary’s purpose was both generous and charitable. However, without a written agreement he may have problems controlling what happens with the recording of his song, AND it may impair what HE wants to do with the song and the recording of it. Let's look into this a little. Is there some point where Gary’s initial charitable purpose might be exceeded? What if the song is not just circulated to churches in the “area” but is distributed to thousands of churches around the country? What if it becomes so popular it starts getting air play? The song may become so popular that Gary and his co-author could benefit from it without in any way undermining his original charitable purpose. A related problem, as I mentioned in the previous article, is precisely who or what has Gary licensed to use the recording? A “church” has a variety of even common understandings. It might mean a particular building, it might mean a particular faith, either within a district or more generally. Religious bodies or groups have special status within almost all legal systems. They are often exempt from some or all tax requirements; they are often exempt or given latitude in terms of the law governing corporations and legal bodies. It is not always easy to identify what is the actual entity the law recognizes for the purposes of entering into contracts.

Let’s assume for our purposes here that two things happen. The first is that the song gets attention beyond the churches themselves. Some radio stations play it and there is some interest from a record company. I am making a BIG assumption here that Gary even knows about this. Because of the understandably casual nature of what happened, he is totally dependent upon the “church” to advise him of these things. They may not be interested in doing so, or in fact, it may happen in another part of the country where no one even knows who the composers and performers are. An issue I will also look into in a later article is what sort of information you, as a composer/performer, will want to be sure is published with your material if someone else has control over the making of records and distributing them, other than through a known record company or publishing house.

Back to the point, if Gary and his co-author now have an opportunity to commercially exploit their work and recording by merely signing up with a publishing group and/or record company, can they do so? The initial answer is no! The problem is that someone else already has a license to use the song and the recording, and the challenging part of the problem is that there is no certainty who the licensee is, or what the terms of the license are. Any decent publishing group and/or record company will require a written agreement to be entered into with composers/performers. An essential element of that agreement will be a written warranty (or promise) by the authors/performers that they own the copyright in the composition(s) covered by the agreement. (This is aside from a case where someone is making a record of covers i.e. other peoples’ compositions, but that is not the case here). Clearly this is essential for the record company or publisher because they can only get a valid license to exploit the song and/or recording where the composer/performer has the rights to grant licenses in the first place. Gary would have a major problem at this point, if it had not already come to light before being asked to put pen to paper. If he mis-represents this position by signing the agreement and not mentioning the church project (and I am not for a moment suggesting Gary would do this) he not only commits a breach of the agreement and makes a mis-representation, he exposes the publisher/record company to at best, having commercial agreements they need to enter into, undermined and breached (and thus suffering financial and reputation damage) and at worst, a major license/copyright breach suit.

It is not likely to be a revelation to readers to say that no publishing company or record company would enter into any agreement with a composer/performer unless they either have the appropriate rights to grant to the publisher/record company, or they can be sorted out reasonably easily. In the scenario I have described above, it will take quite a deal of effort to get the rights and licensing sorted out, and unless you have a VERY understanding and generous publisher, they are likely to tell you to come back when you have sorted it out.

This is a perfect time to yet again emphasize the golden rule – PUT IT IN WRITING! Even where the goals are altruistic or charitable, or both, it does not detract from those purposes to put down in writing what rights are being granted and to whom. It is also timely to repeat my second golden rule – you need to consider the implications of what you are doing or propose to do, even at a very simplistic level. As part of the written agreement, get down in writing even a simple understanding of issues to do with licensing, for how long, where and other key points. I will in fact look at these points in the specific context of licenses in my next article. One of the purposes of this column is to alert composers and performers to the very things they need to consider. There are also a variety of organizations which provide support to composers and performers to help them with such issues, and it may even be worth investing in talking to a lawyer who is experienced in the field. It may save a lot of heartache and cost in the future of having to undo mistakes made in the past.

In the next article I will look into licensing in detail, and issues related to license agreements. In the mean time please feel free to email me any questions you have about this or any past article.

Guy Betar

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