Breaking Up is Hard To Do – Chapter 3

Below are discussions of hypothetical situations involving band break-ups and other disputes among collaborators.

Your client is a bass player that has just been ousted by his group. Historically, the group has made business decisions collectively and split profits equally. However, after a secret meeting of the other members of the band, the decision was made to terminate the bass player.

The ouster comes at a time when the group is in negotiations with a major label. Initial interest from the label was spawned by several “demos” which were recorded in the bass player’s studio, and were in fact engineered and mixed by him. The advance under the record deal is purported to be $300,000, which would include purchase of the “demos.” The bass player comes to you for help. There is no written agreement.

Careful attention should be paid to the elements determining the existence of a partnership to determine if the band actually constituted such an entity. Important elements to consider are whether the percussionist participated in the control of the business, and whether there was any agreement to share profits and losses. The fact that the bandleader financed recordings may suggest no partnership existed. 

If the analysis indicates that the band did, in fact, constitute a partnership, then as with the preceding fact scenario, your client has no right to oust the percussionist. Likewise, one option would be to wind up the partnership and start anew. Given that this particular band is not on the verge of signing a big deal and may have insignificant assets, this may be more feasible than in the earlier example. 

However, it is certainly worth attempting to negotiate a buyout of the percussionist’s interests. In such a case, be sure to include language in the buy-out agreement settling any and all claims arising under the partnership, including claims to determine the terms of redemption,claims for breach of the partnership agreement and/or claims for breach of any duties under the partnership.

Again, copyright issues should be carefully considered. Given the percussionist’s limited role, it is doubtful that he would be considered a co-author of the musical compositions; however, you should carefully interview your client to gather facts related to that potential claim. A case that may be helpful to your client’s cause is BTE v. Bonnecaze (denying a drummer’s claims of authorship rights in a musical group’s musical compositions). Regarding the band’s sound recordings, although your client financed the recordings, this does not by itself make him the exclusive owner of the copyrights therein. 

Rather, ownership is vested in the “authors” of the recordings, which presumably would include the percussionist.  Absent assignment by the percussionist of his co-authorship rights, or a work- for-hire agreement, the percussionist likely will have a co-authorship interest in the recordings. That having been said, there is no reason your client could not attempt to buy the percussionist’s rights in the sound recordings as part of the buy-out of your client’s interests in the partnership. Alternatively, your client could offer to account to the percussionist for his share of profits. 

However, a clean break may be desired by both parties at this point. audit, and payment of his share of any proceeds. If that is ignored or refused, your client has the right to bring an action against the artist for breach of the partnership agreement, an accounting, and/or breach of the partner’s duties. 

As an alternative and/or fallback, you may wish to initiate negotiations for withdrawal and redemption of your client’s interests. If no agreement is reached, your client may wish to initiate an action to determine the terms of the redemption. Remember that you have only one year to bring such a claim after the artist has tendered his proposed redemption and supporting documentation.

A “friend” advances $20,000 to record an album for a talented artist with the hopes of securing a recording contract. Under the deal, the friend will spend a portion of these monies to “shop” the recordings. If that fails, the parties have agreed to start their own record label and sell the record themselves. The parties have agreed that the “angel” will be repaid his investment out of any initial advance (in the case of a record deal) or initial proceeds in the event they sell the record themselves. Thereafter, the parties will split proceeds 50/50. 

The relationship sours, and the artist moves to Los Angeles. Miraculously, he is “discovered” and signs a record deal. Under that deal, the artist sells the prior recordings to a record company under a deal that will entitle him to a continuing royalty interest in the recordings after recoupment by the record company of the purchase price. The artist refuses to share proceeds of the sale with the “angel.” 

The “angel” comes to you for advice. There is no written agreement.

This would appear to be a classic partnership scenario. Because the partnership was formed in Texas and operated in Texas, your client should be able to bring suit here if necessary—a decided advantage given the artist’s location.  

Initially, your client should tender demand for an accounting under the partnership and/or a right of audit, and payment of his share of any proceeds.  If that is ignored or refused, your client has the right to bring an action against the artist for breach of the partnership agreement, an accounting, and/or breach of the partner’s duties.

As an alternative and/or fallback, you may wish to initiate negotiations for withdrawal and redemption of your client’s interests.  If no agreement is reached, your client may wish to initiate an action to determine the terms of the redemption.  Remember that you have only one year to bring such a claim after the artist has tendered his proposed redemption and supporting documentation.

On the surface, your client would appear to have no claim under copyright law. As set forth above, ownership vests initially in the author(s) of a work. In the case of the musical compositions, there are no facts indicating that your client participated in the authorship thereof. 

With respect to the sound recordings, the result may be different. Again, the artist would presumptively have authorship rights in the recordings by virtue of his “recorded performance.”  However, you should query your client as to his relationship with any of the other participants in the recording process. For instance, assume that the angel is also a studio owner and engineer. 

If he participated in the creation of the masters (e.g. as producer or engineer), then he may have a claim of co-authorship. Even if he did not engineer or produce the recordings, if one of his studio employees did, the angel may have rights by virtue.of “work for hire.” Another theory under which he may have acquired rights by work for hire is if he personally contracted the producer, engineers, side musicians, etc., and secured written “work for hire” agreements with them.  In summary, a thorough interview of your client will be necessary in order to determine if he has any rights in the sound recordings.

If it turns out that your client does in fact have colorable claims as a co-author, then the artist has even bigger problems.  The artist has no right to assign the copyright in the sound recordings to the record company or to grant any exclusive licenses with respect to them without the permission of your client.  Moreover, as co-author, the angel would have the independent right to exploit the recordings, subject only to the duty to account to the artist for his share of proceeds.  

This may provide you with the means to negotiate directly with the record company – in the likely event the record company wants to ensure its exclusive rights in the recordings.  Finally, in addition to your client’s right to profits and accountings under Texas partnership law, your client will have a corresponding right as co-owner of the copyright for an equal share of profits and an accounting.

Suppose the artist successfully mounts a challenge to your client’s co-authorship rights, arguing, for instance, that the parties did not share the requisite mutual intent to be co-authors.  In such a case, provided your client’s contributions were nonetheless “independently copyrightable,” he may have a cause of action for copyright infringement, related to the unauthorized use of his contributions!  Considering the trouble the artist has put the angel to, that would certainly be “just desserts.”

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