Do American artists have a legitimate claim to terminate their copyright licensing agreements?

Music artists who made music after 1978 might soon increasingly be able to terminate copyright licenses they had granted to record companies with whom they had done business. How come? Section 203(a)(3) of the U.S. Copyright Act of 1976 states that any author who has granted or licensed a copyright after Jan. 1st, 1978, may terminate that grant or license and recover his rights thirty-five years from the date of execution of the grant or license. This section of the Act does not apply, however, to “works made for hire.”

In case the record companies can prove songs of artists are considered works for hire, the artists will not be able to end the agreement and recover their copyrights. A work is considered a work made for hire if the work is made by an employee or if it falls into one of the specific categories of works under Section 101. Music recordings do not fall under one of the specific categories, so the only way the songs of the artists could be works for hire, is if the artist is considered an employee.

Therefore, the question remains whether a contracted artist is an employee. In the American CCNV v. Reid case, there was a dispute between an artist and the organization that hired him about the ownership of a copyright protected sculpture. To resolve the dispute, the "work made for hire" provisions of the Copyright Act of 1976 were further construed. The Court used a multifactor test:  it considered things like the level of artist’s skill in creating his or her product, the source of the tools and where the artist worked, whether the contractor has the right to control the scope and duration of the artist’s work process and the method of payment. 

So what will happen if artists indeed have a legitimate claim? Will artists start lawsuits against record companies? We’ve noticed that already artists who licensed their music after 1978, such as The Village People, have started a lawsuit to recover the copyrights to their songs from record companies. If artists can successfully terminate these licenses, record companies might lose a lot of income. Therefore, these record companies will probably try to provide more and better services for artists in exchange to hold the copyright to the artists’ music.  We will have to wait and see how things will work out in the future.
 
Reference: IPBrief.net