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Lawsuit shows what happens when royalty contracts go awry

On Behalf of | Feb 28, 2023 | Contract Disputes

The estate of the late music legend Rick James is facing a lawsuit regarding unpaid royalties. The lawsuit alleges copyright infringement and breach of contract. The defendants claim James’ estate is profiting off their work.

The lawsuit

The alleged problem began when the defendants recorded several demo tapes in the late 1970s, one of which was James’ hit song “Big Time.”

James wanted to include “Big Time” on his album Garden of Love. The defendants and Rick entered a licensing agreement in which James would receive 100% of the publishing royalties from “Big Time” for the first five years of its release. After that, the defendants would receive these royalties.

Since then, the defendants have been stuck in ongoing legal struggles to collect unpaid mechanical writers’ royalties, thus leading to the lawsuit.

What are licensing agreements?

Lawsuits like this highlight interesting legal issues, including the topic of royalties. While many of us are vaguely aware that songwriters receive royalties, what exactly does this mean?

There are numerous types of royalties. The lawsuit against James’ estate centers on mechanical royalties. These are payments made to songwriters when a copyrighted work they composed is distributed or reproduced.

The amount of royalties paid is generally stated in a type of contract called a licensing agreement. In a licensing agreement the artist, producer or other organization can use the songwriter’s work in exchange for payments called royalties. Royalties are often a percentage of the revenue generated by the work.

Licensing agreements are complex, but they are an essential part of the music industry. Intellectual property has value and should be protected.