Flaws in the "La Cienega Fix"?

How New Legislation Affects Pre-1972 Recorded Songs

by

Joseph D. Schleimer

     The music publishing industry breathed a collective sigh of relief when President Clinton recently signed H.R. 672 into law. Known as the "La Cienega Fix," the purpose of the new amendment to the Copyright Act was to overrule that part of  La Cienega Music Co. v. ZZ Top, 53 F.3d 950 (9th Cir. 1995), which held that the release of a phonorecord without a copyright notice on it constituted a "publication" under the 1909 Copyright Act, thereby injecting the musical composition embodied on the phonorecord into the public domain.

     Lobbyists for the music publishing industry told Congress that the  La Cienega decision jeopardized music copyrights with a market value between $3 billion and $4 billion. Thus, H.R. 672 was an urgent legislative priority for industry lobbyists during the past two years.

     Unfortunately, H.R. 672 is so ineptly drafted it may not fully achieve its purpose. Indeed, because of the overreaching manner in which the new amendment was drafted, the statute is likely to spawn a new wave of litigation between music publishers and composers over renewal and termination rights, thereby jeopardizing the very copyrights it was intended to restore.

     The language of the new legislation is actually quite simple. It amends 17 U.S.C.  '303 by designating the existing text as subsection "(a)" and adding a new subsection "(b)," stating as follows:

(b) The distribution before January 1, 1978, of a phonorecord shall not for any purpose constitute a publication of the musical work embodied therein.

     Prior to the Sound Recording Amendment of 1971, the predominant music industry practice was to not place a copyright notice on phonorecords. For example, original recordings released during the 1940s through the early 1970s by Glen Miller, Artie Shaw, Elvis Presley, Jerry Lee Lewis, Sonny & Cher, and the Beach Boys bore no copyright notices on them. Neither did thousands of other albums released during that time period. Thus, under the "divesting publication" holding in  La Cienega, entire catalogs of pre-1978 compositions were injected into the public domain as of the time of the original album release.

     Interestingly enough, this "copyright notice/forfeiture" aspect of the 2-1 majority in La Cienega was dictum, because neither the district court nor the Ninth Circuit ever had evidence before them as to whether La Cienega Music Co.'s phonorecords bore copyright notices. Moreover, a diametrically opposite rule to  La Cienega applied in the Second Circuit. See,  Rosette v. Rainbo Record Mfg. Corp., 354 F.Supp. 1183 (S.D.N.Y. 1973), aff'd per curiam 546 F.2d 461 (2d Cir. 1976). Hence, there was a split in the circuits, whereby thousands of copyrights were in the public domain in California--but still valid and enforceable in New York.

     Despite numerous amici curiae briefs asking it to do so, the U.S. Supreme Court declined to review the Ninth Circuit's decision in  La Cienega. By denying certiorari, the Supreme Court merely deferred until a later date the ultimate resolution of the split in the circuits. Nonetheless, the Supreme Court's refusal to review the  La Cienega decision sent a shock wave through the music publishing industry--and triggered the intensive, two-year lobbying effort which ultimately resulted in the passage of H.R. 672.

     If the new statute had merely stated that release of a phonorecord before January 1, 1978 (with or without a copyright notice on it) did not thrust musical works embodied thereon into the public domain for any reason, all of the forfeiture aspects of  La Cienega could have been remedied with minimal legal challenge.

     I believe, however, that the music publishing industry lobbyists for H.R. 672 had a hidden agenda: namely, the delayed vesting of composers' renewal and termination rights.

     To understand this complicated new legal problem, one must first analyze the primary holding in  La Cienega, which held that the release of a phonorecord under the 1909 Act constituted a "publication" of the musical composition  such as to commence the running of the initial, 28-year term of copyright.  Thus, the release of a phonorecord required registration of a  renewal of copyright 28 years thereafter, on pain of forfeiture, pursuant to both the 1909 and 1976 Copyright Acts. See, 17 U.S.C.  '24 (1909) and 17 U.S.C. '304 (1976).

      La Cienega Music Co., publisher of John Lee Hooker's 1948 hit, "Boogie Chillen," failed to register for the renewal term in 1976. This failure to renew in the 28th year resulted in a total forfeiture of the renewal term of copyright.

     Such inadvertent failure-to-renew forfeitures were eliminated by the Copyright Renewal Act of 1992. That statute still authorizes the composer or the composer's heirs to re-take the copyright by registering for renewal in the 28th year. If they fail to do so, however, the renewal term automatically vests in the copyright "proprietor," which is usually a music publisher. See, 17 U.S.C. '304(a)(1992).

     The issue H.R. 672 fails to address is, if release of a phonorecord is no longer deemed a vesting "publication," then when does the 28-year term begin (and end) for the purpose of calculating the composer's exercise of renewal and termination rights?

     Under La Cienega, the release of a phonorecord triggered the initial term, a "vesting publication" rule which can work to the advantage of the composer, by ripening the composer's renewal and "termination" rights at an early and easily definable date.

     To use the La Cienega case itself as an illustration, a derivative version of John Lee Hooker's "Boogie Chillen" was released on phonorecord in 1970, but the copyright was not registered by the publisher (La Cienega Music Co.) until 1992. If the 1970 release of the phonorecord commenced the running of the initial term, Mr. Hooker, as composer, may exercise his renewal rights as of January 1, 1998.

     Conversely, if H.R. 672 is taken literally, the 1970 "Boogie Chillen" phonorecord did  not constitute a "publication," and La Cienega can take the position that the initial term did not commence until the tardy registration in 1992. If that is legally correct, then Mr. Hooker cannot exercise his renewal rights until the year 2020--at which point he would be 103 years old. Likewise, Mr. Hooker's "termination" rights would not accrue until 2048--exactly a century after the release of the original phonorecord.

     The potential for litigation inherent in this aspect of H.R. 672 is self-evident. Proponents of the bill (primarily the music publishers) sought to surreptitiously "tilt" the legislation in favor of publishers, to the prejudice of composers and other "renewal parties." Congress, however, when enacting the 1909 and 1976 Copyright Acts, expressly granted the renewal right to the original composer or the composer's heirs. Moreover, under the 1976 Act, Congress granted a 19-year extension of the renewal term on pre-1978 works solely to the composer or the composer's heirs. See, 17 U.S.C.  '304(c)(1976).

     Recapture of renewal rights may occur even if the composer granted "all rights" to a publisher. Unless there is an express reference to the transfer of "renewal rights" in the written instrument of assignment, the agreement may be strictly construed against the assignee. See, e.g.,  Corcovado Music Corp. v. Hollis Music, Inc., 981 F.2d 679 (2d Cir. 1993).

     Moreover, if the composer dies before commencement of the renewal term, even an express assignment of "renewal rights" by the composer would not be effective. See,  Stewart v. Abend, 495 U.S. 257, 110 S.Ct. 1750 (1990); Marascalco v. Fantasy, Inc., 953 F.2d 469 (9th Cir. 1991), cert. den. 504 U.S. 931.

     Thus, substantial property rights will be at stake, involving many millions of dollars, when the courts interpret the "vesting publication" implications of H.R. 672.

     Despite the importance of this issue, the legislative history of H.R. 672 appears to lack any consideration of it. In fact, the lobbyist proponents of H.R. 672 presented the bill to Congress as a "non-controversial" bill, that merely made a "technical" amendment to the Copyright Act. No consideration at all appears to have been given to the rights of the renewal and termination parties.

     The courts may decline to interpret H.R. 672 as delaying the vesting of renewal and termination rights, and thereby reaffirm that aspect of the  La Cienega decision. Such a holding could be based on the time-honored legal doctrine that legislation should be interpreted as non-retroactive unless Congress specifically intended retroactivity.

     Indeed, any interpretation of H.R. 672 which delayed the vesting of a composer's renewal rights would raise the Fifth Amendment issue of an unconstitutional "taking" of private property without compensation. See, Ruckelshaus v. Monsanto Co., 467 U.S. 986, 104 S.Ct. 2862 (1984)("Taking" doctrine applies to state-imposed abrogation of intellectual property rights).

     That is where the overzealous lobbyists for H.R. 672 made their greatest blunder, because the "vesting publication" aspect of  La Cienega, if not modified, will still work an extensive forfeiture of music copyrights.

     The reasons for this are directly tied to pre-1978 practices in the music publishing industry. Under the 1909 Act, many music publishers  consciously  elected not to register musical works at the time of release on phonorecord, to avoid making the compositions available to third parties under the "compulsory license" provisions in the 1909 Act. Many of these publishers also foolishly believed that delaying registration would extend the initial copyright term.

     The publishers thus set themselves up for the negligent forfeiture of the renewal term, because most of them employed "tickler" systems for renewal registrations based on the date of copyright registration--not based on the date of release on phonorecord. In many cases, these dates were years, even decades, apart. Because of the "sudden death" procedure imposed by the old renewal statutes (which allowed only a one-year window in which to renew), many thousands of copyrights are subject to this problem.

     In the case of the original 1948 hit phonorecord of "Boogie Chillen," the copyright was not registered until 1967. La Cienega Music Co. calendared the renewal registration for 1995, based on the copyright registration, not the album release. That meant the copyright lapsed when La Cienega failed to register for renewal in 1976. As noted, the same defect applies to thousands (perhaps tens of thousands) of other music copyrights.

     Congress undoubtedly intended that H.R. 672 would avoid copyright forfeiture by deeming an album release without copyright notice to not constitute a divesting "publication." But by  not directly dealing with the "vesting publication" issue, the drafters of H.R. 672 made a mess of it. On the one hand, if the courts hold that H.R. 672 does not overrule the "vesting publication" aspect of  La Cienega, thousands of copyrights are at risk because of negligent calendaring by music publishers.

     Conversely, if H.R. 672 does overrule the "vesting publication" aspects of  La Cienega, it will unfairly abrogate property rights belonging to composers and other renewal parties, constituting a Fifth Amendment "taking" of property.

     Thus, H.R. 672 was not the complete "fix" it was intended to be, and further action may be expected in the courts and possibly in Congress.

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