Legal Aspects Of Independent Recordings

The proliferation of independent recordings released makes this a set of legal issues highly relevant, particularly in view of the fact that most musicians who release independent recordings are not aware of the numerous legal issued involved. A number of the key legal aspects to independent recordings are outlined and discussed below.

 

1.            Copyright

 

a)         The Master

 

Copyright in the master recordings is owned by the maker of such recordings. This is typically the entity that pays for such recordings, such as the record company, unless there is an agreement to the contrary. 

 

In the case of independent recordings, it is often either a musician individually, or a musical partnership in the form of a musical group who would be the maker and therefore owner of the recording.

 

            b)         The Artwork

 

Other copyright aspects with respect to recordings include copyright ownership to the artwork and any and all materials which may be printed on the CD inserts.

For example, in many cases, the art work is often done by a friend or a graphic artist who is an independent contractor. In the absence of an acknowledgement in writing assigning or licensing the copyright to the artwork, the copyright will remain with the artist who created it. Therefore it is advisable to obtain an agreement in writing with respect to ownership of this copyright.  This is particularly important if the artwork is also used on T-shirts, for example, or if copyright to lyrics or other literary works is included on the CD materials, consent should be obtained from the copyright proprietors, such as in the case of a poem which is reproduced on a CD insert, consent should be obtained from the owner of such copyright.

 

            c)         Copyright Registration

 

One should also consider registering copyright to the sound recording and artwork, although copyright registration is not required under The Copyright Act.

 

            d)         Mechanical Licences

 

The issue of who pays mechanical royalties and who they are payable to are relevant to the songs that are on the record.  In particular, if a song is “covered,” a mechanical licence must be obtained from the copyright proprietor and the applicable mechanical royalty paid.

 

This can be done under a mechanical licence from the Canadian Music Musical Reproduction Rights Agency (CMRRA) for example and in some cases from SODRAC (Société du Droit de Reproduction des Auteurs, Compositeurs et Éditeurs du Canada) depending on who has the right to administer such musical copyrights.

 

2.            Contracts

 

a)         Generally

 

There are a number of contractual issues, including: (i) obtaining copyright clearances for samples; (ii) copyright clearances with respect to the artwork and other literary works that were used with respect to this independent recording; (iii) the contractual issue of who should be entitled to a share of record sales income.

 

            b)         Producer

 

A producer is often entitled record royalties in addition to producer fees.  Producer royalties are typically in the range of 1 to 3 percent of suggested retail list price for records sold and not returned. 

 

            c)         Performers’ Performances

 

Also, one should acquire the rights in writing to use the performers’ performances, such as background vocalists or background musicians’ performances on the recording since there is currently copyright in a performance under the Copyright Act.

 

            d)         Artwork / Photographs

 

In cases where artwork or a photograph is used, proper consent or a model release should be obtained from the appropriate party.

 

            e)         Management

 

A manager by custom and often by a written agreement, is legally entitled to a percentage of the artist’s record sales royalties and the artist’s mechanical royalties accruing from sales of such recordings. 

 

            f)          Loans

 

In some situations, a loan may need to be paid back either to a private investor, or government funding agency and this raises a contractual issue as well. A loan agreement stipulating pay back provisions and interest is often entered into.

 

3.            Labeling, Credit and Notice on Recordings

 

a)         Notices

 

            i)          Copyright

 

It is advisable to place copyright notices on recordings, which consists of the following:  the copyright notice, i.e. ©, the copyright proprietors’ name and date of publication.  This constitutes copyright notice for copyright in the lyrics, artwork and music. The symbol, the copyright proprietor’s name and the year of publication, constitutes notice of copyright in a sound recording. 

 

Neither of the above notices are required under the Copyright Act in Canada, however it is a useful practice. The effect of these notices is to give notice to the world that copyright is being claimed.

 

                        ii)         Trademark

 

A number of valuable trademarks may be credited and be identified as follows: “TM “ and “® “.  The ® stands for registration of a trademark in the United States.  The “TM” symbol gives the world notice that you intend to claim rights in a trademark. 

 

Neither of the above notices are required under the Trade-marks Act in Canada, however they are advisable for the reason offered above, concerning copyright. 

 

                        iii)        Business Name

 

Also, the business name under which the group is releasing a recording should be registered with the appropriate provincial Ministry of government office.

 

                        iv)        Labeling

 

Under the Consumer Packaging and Labeling Act, the principal place of business of the person for whom the product is manufactured should be identified on the label, for example on the CD insert material.

 

The minimum height for type size under this statute for upper case letters (whether these are used alone or with lower case letter; or where both upper and lower case letters are used on the principle display service of the container) is at least 1/16th of an inch, or 1.76 mm in height.  The type must be legible.  It also makes sense to have the telephone number and mailing address indicated for purpose of selling recordings by mail order. One should also consider the use of French language recordings distributed in Quebec. Contravention of this statute may result in fines. 

 

            v)         Credit

 

Also, false accreditation can result in legal action being taken.  Credit in this regard is recognized by contract or by statute, by case law or custom in the industry.  Credits can be extensive and usually include producer, musician, record company, etc. 

 

                        vi)        Other Notices

 

Other industry notices are given by custom and practice, for example the MAPL logo, which consists of the circle of letter “MAPL” in four sectors, including M = music composed by a Canadian. A = the musical lyrics were principally performed by a Canadian Artist. P = production consists of a live performance of music that is wholly recorded in Canada, or (2) performed wholly in Canada and broadcast live in Canada. L = the lyrics were written by a Canadian. The notice is particularly relevant to radio for purposes of complying with CANCON requirements.

 

Other industry credits and labeling could include digital coding and other designations such as whether or not the recording was originally recorded in mono or stereo and bar coding which is used in inventory and sales control.

 

The use of warning stickers may also be advisable, for example, as an explicit lyric advisory.

 

4.            The Library and Archives Canada

 

Independent recordings must be deposited with The Library and Archives Canada.  One copy of any sound recording which includes Canadian content which was published in Canada for public distribution or sale, must be deposited. Contact 1-866-578-7777 or legal deposit at lac.bac.gc.ca for more information.

 

5.            Tax:  Retail Sales, GST

 

The sales of independent recordings have tax implications not only with respect to income tax, but also retail tax statues.  The purchaser of any such recordings must pay retail sales tax on the fair value of such recordings at the time of purchase.  In most provinces, vendors must be licensed prior to making such a sales and if they are not, they may be liable to a fine.  However, distribution of promotional recordings are exempt from retail sales tax.  Books and records should be kept and returns made periodically in accordance with the applicable statues.  In applicable cases, as well, GST should be charged, collected and remitted.

The above is summary advice only and in specific situations, skilled legal advice should be obtained.

Paul Sanderson is an entertainment lawyer who entered private practice after having spent several years as a professional musician.  He has practical experience as a songwriter, guitarist, keyboard player, and is a publisher and writer member of SOCAN.  He is also the author of “Musicians and the Law In Canada”, now in it’s third revised edition.

 

© Paul Sanderson, 2009