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Principles of Contracts: Everybody Knows Peggy Lee (or should)

28 December 2011

More details on the Peggy Lee case from J. Daniel Sawyer, who explains he’s not a lawyer, but does a good job of analyzing the legal issues:

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.

. . . .

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).

Link to the rest at The Worlds of J. Daniel Sawyer

Big Publishing, Contracts

5 Comments to “Principles of Contracts: Everybody Knows Peggy Lee (or should)”

  1. Wow. That’s such an important precedent. And it’s so great that she won. Thanks so much for posting these kinds of things. They help me stay informed about the industry.

  2. “An artist can NOT license rights that do not yet exist.”

    That’s a broad statement with broad implications. In 1988, Greg Bear, then president of Science Fiction Writers of America, gave a talk during the Nebula Awards weekend event, saying publishers were already beginning to reserve rights to electronic books, and agents were claiming they were “non-negotiable.”

    If the decision in Peggy Lee v. Walt Disney Productions actually means an artist can’t sign away rights “that do not yet exist,” what does that mean for book contracts signed years before ebooks existed?

    • It raises interesting issues. In part, it will depend upon how closely the description of ebooks in the contracts matches the reality today.

  3. Well, I could send you the language from my contract with a Penguin Group publisher, c. 1991, for your collection, if you’d like.

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