Principles of Contracts: Everyone Knows Peggy Lee (Or Should)

This post, by JD Sawyer, originally appeared on his Literary Abominations site on 5/26/11.

Preface: I mentioned this in the first post in this series, but because I’m going to be talking about some specific points of law in this post, I need to reiterate: I am not a lawyer, am not qualified to dispense legal advice, and none of what follows should be considered as legal advice. All of what follows is opinion based on experience and on layperson’s research, and you should always consult a lawyer of an appropriate specialty when negotiating an IP-related contract (especially when dealing with a company that can afford bigger lawyers than you can).

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Previous chapter: Market Awareness
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If God had a lounge singer in the 40s, 50s, or 60s, I’d lay you even odds that it would have been Peggy Lee. Along with Etta James, Billie Holiday, and Rosemary Clooney, she had a glorious, smoky, rich alto that wrapped naturally around horns and clarinets to make sounds that were the aural equivalent of chocolate.

Peggy Lee had a good friend named Walter, and Walter need a singer/songwriter for his new project. Walter did good work, and he was a good friend, so Peggy gave him a good rate, and in 1955 the result of that project hit the country like Christmas. It was a little movie called Lady and the Tramp.

It was a great collaboration, and they had a good contract for the time (Peggy and her cowriter retained rights to “transcriptions” such as record albums and sheet music–a smart move). Everything might have been peachy for life, if Sony hadn’t screwed up the world with home video.

Videotapes have been around pretty much since the Big Bang (or at least since 1951) in broadcast, but nobody really expected that it would wind up being something people used at home any more than the early computer manufacturers thought that your phone would contain twice the computing power that sent men to the moon (which some of them now do). Even if it were technically possible, why would anyone want home video when they had, you know, lives? And television? A professional toy like video tape wouldn’t appeal to a mass market–or such was the thinking. Sony, by the 1970s the world leader in miniaturization, disagreed. In 1975 they introduced Betamax, the first home video format.

It took a few years for it to catch on, but (thanks largely to the porn industry) by the 1980s home video was THE thing (and in the years since, this trend has only deepened with more formats being released). Studios started making their bread-and-butter money from video rentals and sales, rather than from theatrical exhibition. The only people who had a problem with this were the artists who weren’t getting paid for the work they’d done for theatrical exhibition–but most of them just grumbled. Not Peggy Lee. Peggy Lee pulled out her lawyers and said “Sic ‘em.”

Disney argued that the original license left them with an implicit right to sell the movie in any format, and that “transcriptions” didn’t cover home video because it was just another video format, like film and television. Peggy Lee argued that it was a transcription, and that she couldn’t have sold home video rights, because home video didn’t exist at the time that Lady and the Tramp was produced.

It took a long time for the lawsuits, contrafilings, and court case to run its course. At the end of it, in 1992, Peggy Lee won two important victories. First, she got a few million dollars for her troubles, which helped with her retirement even after her lawyers got their cut. Second, she got a precedent, known in entertainment circles as “The Peggy Lee Decision.” According to this decision, rendered in the California Supreme Court, an artist can’t sign over rights that do not yet exist.

Let me say that again. An artist can NOT license rights that do not yet exist. All those old movie contracts suddenly got complicated, as studio lawyers had to scramble to make sure their creatives (such as composers, songwriters, etc.) signed addendum allowing the use of their work in home video. At the time, Internet streaming didn’t exist except in experimental theory, so very few studios listed that in their addendum–that came later (this is, btw, one of the reasons that certain episodes of TV shows, and certain films, are not available on DVD and/or for streaming–studios would not meet artist’s asking prices for their music and other creative contributions in the new formats).
 

Read the rest of the post, which goes on to address how the ‘rights that do not yet exist’ situation applies to—and can seriuosly injure—authors, on JD Sawyer’s Literary Abominations.

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