After termination, derivative works prepared under a transfer or license executed prior to termination may continue to be utilized.  This is true of works that obtained federal copyright protection both before and after the effective date of the 1976 Act.  See here (Section 203(b)(1)) and here (Section 304(c)(6)(A)).  (There is no right to make a new derivative work after the license or transfer is terminated.)

One example is the grant of film rights in a novel.  This grant authorizes the preparation of a film based on the novel, which constitutes a derivative work.  If the license is statutorily terminated, the grantee of the terminated grant will continue to be able to utilize the film made per the grant under the exception listed above.

How might this have particular applicability in the recorded music business?  Well, in a number of different ways.  For example, a sound recording is a derivative of the underlying musical composition embodied on the recording.  This post will focus on remixes and/or remasters as derivative works.

Do remixes and/or remasters[1] constitute “derivative works?” 

The definition of a derivative work is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted.  A work consisting of editorial revisions, annotations, elaborations, or other modifications, which, as a whole, represent an original work of authorship, is a “derivative work”.  In order to be separately copyrightable, however, the contribution of original material to the pre-existing work must possess some minimal degree of creativity.

There is certainly a lot of creativity that goes into mixing a recording.  Among other things, one must determine the levels and effects of individual recordings of instruments relative to the recording as a whole.  Should there be a slight delay on the keys?  Does the guitar need to be in the left or right speaker?  More reverb on the backup singers?  This job is typically done by the audio engineer, whose principal role is to operate, or oversee the operation of, the equipment during the recording process and make creative and aesthetic choices in order to realize the sound and concepts the artist and producer envision.[2]

The Copyright Office will register a sound recording as a derivative if it contains a certain minimum amount of recast sounds or newly recorded material—where the changes are the result of mechanical rather than creative process, registration will be refused.[3]  Examples of elements that are acceptable as descriptions of material added: remixed, remixed for continuity and balance, resequencing, sweetening, new mix, remixed for stereo.  Examples of elements that are not acceptable: remastering, reprocessing, reissue, dolbyized.  The Copyright Office recognizes the following as “involving effort”, but will refuse to register alone: changing the treble, equalization, reverberation, balancing.

Are remixes/remasters prepared under a transfer or license? 

This depends on the grant at issue.  But consider this “grant of rights” language, not uncommon to many recording agreements:

Each Master produced hereunder as well as all recordings (audio and audiovisual) made by Artist during the Term hereof as well as all artwork and photographs shall, from the inception of their creation, be  considered a “work made for hire” for Record Label within the meaning of the United States Copyright Act.  If it is determined that a Master, recording, artwork or photograph does not so qualify, then, with respect to such Master, recording, artwork or photograph, together with all rights in it (including the sound recording copyright or other copyright, as applicable, but excluding the rights in the compositions embodied thereon), Artist hereby irrevocably transfers, conveys and assigns to Record Label throughout the universe and in perpetuity, to Record Label by this Agreement.

At the very least, Artist transfers to Record Label the Master—that is, until termination of such transfer.  During this time, Record Label has the right to prepare a remix/remaster.

So, what?

At least some remixes constitute copyrightable derivative works.  Such remixes are typically prepared under the transfer contained in the recording agreement.

If the record label prepares the remix prior to termination, the record label can continue to utilize the remix even after the transfer is terminated—the artist can terminate only its original mix.  This could give rise to a situation where there are two (2) mixes of the same recording in the marketplace, sold by competing parties, namely, the record label (selling the remix), and the artist (selling the original mix).  Both parties would be legitimate sellers of similar recordings.