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When Wikileaks Works: Comparing the Leaked Draft of the IP Section of the TPP to the Official USTR Text and the Consequences to Termination Rights in “Phonograms”

With the recent official release by the U.S. Trade Representative of the long-awaited full text of the Trans-Pacific Partnership deal, the American public was finally able, if willing, to delve into its over 6,000 pages to see if the previously-Wiki-leaked draft language had made it into the final version. In a previous post, I cited and discussed a paragraph in the intellectual property section of one such leaked draft that would contravene U.S. copyright law to specifically include sound recordings in the limited list of works that could be created as works made for hire under the U.S. Copyright Act of 1976. The significance of such a provision involves its effect on recording artists’ rights to terminate a transfer of copyright in a sound recording, which I’ve discussed in another previous post.

As it turns out, the versions match up; well, almost. First, the heading, “Contractual Transfers” has been added to the section. This is interesting because ownership of a work arising out of a work-made-for-hire situation is not a transfer at all; rather, authorship vests in the employer or contract-hirer, and never in the creator.

Second, paragraphs in the leaked version had contained parenthetical notations which documented objections or supplemental language submitted by the representatives of individual nations. Section QQ.G.9 of the leaked draft had included one such proposal, with Chile as its sole sponsor. Interestingly, that modifying language ended up in the final draft as a footnote. The relevant provision, as released, is Article 18.67:

“Contractual Transfers: Each Party shall provide that for copyright and related rights, any person acquiring or holding any economic right in a work, performance or phonogram: (a) may freely and separately transfer that right by contract; and (b) by virtue of contract, including contracts of employment underlying the creation of works, performances or phonograms, shall be able to exercise that right in that person’s own name and enjoy fully the benefits derived from that right. [footnote 80].”

Footnote 80 then goes on to clarify that “[n]othing in this Article affects a Party’s ability to establish: (i) which specific contracts underlying the creation of works, performances or phonograms shall, in the absence of a written agreement, result in a transfer of economic rights by operation of law; and (ii) reasonable limits to protect the interests of the original right holders, taking into account the legitimate interests of the transferees.” Id.

Clause (ii) of the footnote above expressly allows for the preservation of transfer termination rights by a member country; why, then, is the footnote placed after Article 18.67(b) – which addresses “contracts of employment underlying the creation of works,” i.e., works-made-for-hire – instead of after Article 18.67(a), which specifically addresses transfers?

Sloppy drafting? Sure. Significant? Who knows, probably not.

What is notable, however, is the inclusion in this official draft of the term phonograms (sound recordings) as a specific additional item presumably not previously considered a “work” in the made-for-hire category.

But, while notable, the actual immediate legal effect of this inclusion, even if passed, would still be relatively benign for two reasons. First, it is unlikely that courts will readily abandon more than three decades of decisional precedent interpreting the broader work-made-for-hire doctrine under Section 203 of the US Copyright Act in favor of an obscure provision in a trade deal. And that’s not the end game of Article 4.7(b)’s ostensibly-conflicting terms anyway. Because international trade agreements like the TPP are negotiated in relative secret by the US Trade Representative with direct input from industry interest groups, the deals provide a vehicle by which those groups can essentially write the rules in their favor and in a manner that tries to answer often-complex legal questions under US law without having to deal directly with Congress. The immediate effect of any such provisions that are contrary to US law, therefore, may not be pronounced or even valid; but the long game is aimed at citing conformance with “international law” when the time comes to lobby Congress to amend the relevant conflicting domestic statute. This practice has been referred to in similar contexts as “policy laundering,” where (as with certain funds in money laundering) a certain rule’s origin or source is obfuscated over time to create the appearance of legitimacy later on. So the goal is not necessarily to change the rules outright now, but to develop a basis on which to change them definitively down the line.

Second, even if Article 18.67 were somehow authoritative in essentially rewriting the work-made-for-hire doctrine, there is nothing to suggest that it would apply retroactively (to the extent such application would even be constitutional). So regardless of Article 18.67’s legal effect on the work-made-for-hire doctrine under U.S. law, with respect to recording artists’ termination rights in sound recordings, it would seem to be at least 35 years before a case citing Article 18.67 is ripe (barring any definitive congressional action on the issue in the interim). If that case does get litigated someday – and I’m still around – maybe one of the parties will be generous enough wheel me up to the stand to testify on the obfuscated origins of these dang-blasted confusing rules and the good ol’ days when Congress wrote U.S. copyright law.

— M. Ryder Lee