The lawsuit between George Gallo, the writer of “Bulletproof Hearts” (which was later adapted into the 1995 hit “Bad Boys”), and Columbia Pictures has the potential to become a landmark case as it could have significant implications for copyright law and the entertainment industry. The crux of the dispute lies in the nature of Gallo’s relationship with his loan-out company, Sweet Revenge Productions, and the implications this has for his ability to terminate the copyright assignment for his work.
Columbia Pictures is challenging the termination of a copyright assignment made by Gallo’s loan-out company, Sweet Revenge Productions. The studio argues that the copyright termination notice served by Gallo and Israel in 2020 is invalid because works made for hire are not subject to termination under section 203(a) of the Copyright Act.
Loan-out companies are a common feature in the entertainment industry. They are essentially corporations owned by artists, who then “loan out” their services to studios and other hiring parties. This arrangement often provides artists with a range of benefits, including favorable tax treatment and access to qualified pension, profit-sharing, and employer medical reimbursement plans.
However, these benefits come with certain obligations. To ensure that the loan-out arrangement isn’t just a tax evasion scheme, the IRS and courts have insisted that the artist render services as an employee of the loan-out corporation. This means that the corporation needs to maintain the right to direct or control the artist in some meaningful sense.
In this case, Columbia Pictures is arguing that Gallo cannot terminate the copyright assignment for “Bulletproof Hearts” because he wrote the story as an employee-for-hire of his loan-out company, Sweet Revenge Productions. Under section 203(a) of the Copyright Act, works made for hire are not subject to termination. Gallo, however, disputes this work-for-hire characterization.
The case also involves a puzzling termination notice that purports to terminate a grant by George Gallo of his rights in the story to his loan-out company Sweet Revenge. Columbia Pictures requested a copy of this assignment but was ignored for over two years. The assignment is inconsistent with the work-for-hire representations that Gallo and Sweet Revenge made when they sold the story to Paramount.
The outcome of this case could have far-reaching implications. If Gallo is successful, it could potentially open the door for other artists to regain ownership of their works after a certain length of time, even if they were created under a loan-out company arrangement. However, if Columbia Pictures wins, it could reinforce the strength of the work-for-hire doctrine and the rights of studios over the works they commission.
As the case progresses, it will be closely watched by legal experts and industry professionals alike. Its outcome could potentially lead to significant changes in copyright law and the use of loan-out companies in the entertainment industry.
