UK: Copyright Term Extension Update

Last Updated: 28 January 2014
Article by Michelle Brown

On 1 November 2013 changes were introduced into UK copyright law which have a material impact on the music industry.

The Copyright and Duration of Rights in Performances Regulations 2013 (the "Regulations") are being introduced to comply with a 2011 EU Directive.

The extension of the copyright term for sound recordings had been rejected by Gowers in his 2006 Review on Intellectual Property and also criticised in the Hargreaves Review in 2011 but, despite these criticisms the UK Government voted in favour of the Directive.

The key changes being introduced are:

  • An extension to the period of copyright and performers' rights in sound recordings from a 50 year to a 70 year period;
  • Windfall provisions which stand to benefit performers, including session musicians in some cases, during the extended term of rights; and
  • Changes to the way in which copyright for jointly written music and lyrics will be calculated, which will result in the copyright reviving in some "public domain" works.

Extension of copyright term & performers' rights in sound recordings

Provided a sound recording has been released in a physical format or played in public or "communicated to the public" (e.g. by way of broadcast or being made available as a download or stream) in the first 50 years after it was made it will potentially qualify for the new longer period of copyright protection. The 70 year period will run from the physical release or, if that didn't occur in the first 50 years, from the first act of playing in public or "communication to the public".

The term of performers' rights has also been extended to a 70 year period provided the performance was released in the form of a sound recording in the first 50 years from the performance being given. The term of performers' rights is calculated on a slightly different basis to the copyright term. The 70 year period runs from the first to occur of physical release, playing in public or "communication to the public", which could technically result in the performers' rights expiring before the copyright.

These changes follow years of lobbying by record companies and also artists such as Paul McCartney and Cliff Richard, who did not want to see lucrative sound recordings from the 1960s fall into the public domain. However, the changes won't revive any copyright or performers' rights in recordings if these rights have already expired. The extension only stands to benefit recordings first released on or after 1 January 1963. This excludes a number of The Beatles and Cliff Richard's earlier recordings. It remains to be seen if labels are able to argue successfully that re-mastered recordings give rise to a new copyright.

Windfalls for performers during extended copyright term

During the extended period of copyright there are a number of new windfalls for performers, some of which will stand to benefit session musicians as well as featured artists.

"Use it or Lose it"

In certain circumstances performers who have granted record labels the right to release their recordings will now be able to terminate the grant of rights as a result of non-exploitation. The Regulations make clear that record labels cannot get performers to contract out of these rights.

The right arises if the copyright owner has failed to meet "one or both" of the following criteria:

  • Offering copies of the recording for sale "in sufficient quantities"; and
  • Exercise of the so-called "making available" right (i.e. making the recording available to the public by electronic transmission in such a way that members of the public may access it from a place and at a time chosen by them) which would include making the recording available for online or mobile streaming or download.

"Sufficient quantities" was not defined in the Directive and the Regulations define it as meaning enough to "satisfy the reasonable requirement of the public for copies" of the recording.

The wording of the Regulations is not very clear but the reference to "one or both" could be understood to mean that the labels will have to ensure that both physical and digital distribution have occurred in order to prevent this right arising. Labels are given a period of one year from receiving notice from the artist in order to "cure" this failure and it is clear that to do so they must ensure that both these types of exploitation must occur.

There is also an ongoing right to terminate (again after a one year notice and cure period) if the recording subsequently ceases to be exploited by such means, so the record labels cannot rely on a one-off physical and digital release to preserve their rights.

If the right is successfully invoked "the agreement" is stated to terminate and the copyright in the recording is stated to expire.

These provisions do not sit very happily with the way in which the music industry operates for a number of reasons. Notably:

  • The Regulations refer to a right to terminate "the agreement" - presumably meaning the agreement under which the performer had assigned the applicable rights. This would clearly be problematic in the context of an exclusive recording agreement under which the artist has granted a label rights to multiple sound recordings. It is assumed that the intention is only to allow termination of the rights granted on a recording by recording basis, although this is not expressly stated.
  • There are generally multiple performers on a recording – both featured and session. There is nothing in the Regulations (or indeed the Directive) to suggest that the performers need to act together or that the copyright would only expire once all the relevant performers had terminated their agreements. The UK Intellectual Property Office ("IPO) was clearly concerned about this during the consultation period. It is arguable that once one performer has terminated his or her grant of rights the record company's copyright expires. However, the ongoing performers' rights would mean that nothing could be done with the recording unless all the other performers also terminate the grant of rights to the record label and work together to agree how the recording may be exploited. Unless this happens the recording could become un-exploitable. Also, once the copyright term has expired the 20% of revenue fund which is referred to below will cease to apply to that recording.

20% Fund for Performers with no ongoing royalties

Performers who transferred their performance rights in a recording in return for a one-off payment (i.e with no ongoing royalty entitlement) will now stand to benefit from a new fund during the extended copyright term.

This is a major windfall for session musicians and will sit alongside their existing right to share in equitable remuneration from the public performance of the recordings on which they performed. The current owner of copyright in the recording (or their exclusive licensee) will be responsible for paying 20% of the "revenues" earned during each remaining year during which copyright is protected and this will be collectively managed. We understand from the IPO that PPL, which already collects public performance income on behalf of both record labels and performers, is expected to take on this role.

The record companies will be obliged to pay 20% of the "revenues" earned during each year of the extended term (i.e. the final 20 years of the term) into a fund for these performers. They cannot ask performers to contract out of this entitlement. The relevant revenue for this purpose is that from the reproduction and issue to the public of copies of the sound recording and any "making available to the public", which will include revenues from streaming and downloads.

This 20% entitlement will be received as an annual payment and performers are given a right to request information from the copyright owner or exclusive licensee to establish their entitlement. In the event of disputes over the amount payable, performers can refer the matter to the Copyright Tribunal.

"Clean slate" Provision

For performers who do have a right to receive ongoing royalties, the Regulation provides that during this extended copyright period the payments must be "made in full, regardless of any provision in agreement which entitled the producer to withhold or deduct sums for the amounts payable". The Directive itself had referred to "advances" and "contractually defined deductions". It is assumed that these provisions are directed at wiping the slate clean in relation to un-recouped balances, whether of advances or recoupable costs, rather than the more general reductions and deductions which you would expect to find in customary royalty calculation provisions.

No right to modify existing contracts

The Directive also gave Member States the option of providing that contracts concluded before 1 November 2013, under which performers assigned rights in return for a recurring payment (such as a royalty) could be "modified" during the extended period.

UK record labels will be relieved to hear that the Regulations do not introduce provisions which allow performers to re-open the terms of their historic contracts. We are not aware of whether any EU Member States have introduced provisions of this kind and, if so, if they restrict this to contracts with some jurisdictional connection to their territory.

Harmonisation of term for co-written musical compositions

The new Directive also contains less well publicised provisions that are relevant to songwriters and publishers and affect the way in which duration of copyright is assessed in relation to musical compositions.

The provisions apply to musical compositions which were created by the collaboration of the composer(s) of the music and the writer(s) of the lyrics where these two elements were created to be used together.

These amendments have been introduced to ensure uniformity across the EU in the way in which duration of copyright in such music and lyrics is calculated.

Historically the UK assessed the duration of copyright in the musical work and lyrics separately by reference to the dates of death of their respective (last surviving) authors. The Regulations introduce the concept of works of "co-authorship" for such works. Although the music and lyrics continue to be protected as separate copyright works for all other purposes, for the purposes of calculating the term of copyright, the period will now run for 70 years from the end of the calendar year of death of the last surviving author of either element.

This change also applies to existing works of "co-authorship" (provided either words or music were still protected in an EEA State on 1 November 2013), with the result that it will actually revive rights in some musical works or lyrics which had previously expired.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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