Clause & Effect: <b>Courts Rule on Audit Rights, Moral Clauses, And TV Talent Rights in Program Trademarks

Songwriting and recording agreements usually include a provision covering artist royalty audit rights. (See the article in this issue on the California law that takes effect Jan. 1, 2005 regarding audit rights in recording agreements.) But what happens when a songwriter or recording artist waits a lengthy time to conduct an audit of the music publisher's or record label's accounting books? In a case decided in December 2004 by the Court of Appeal of California, Second Appellate District, Division Eight, a music publisher argued that a songwriter's decade-long delay in conducting a royalty audit amounted to a lack of diligence that barred the songwriter from using the delayed-discovery doctrine in his royalty suit against the publisher. However, the court of appeal reversed the lower court's grant of summary judgment that had been issued in favor of the music publisher. Weatherly v. Universal Music Publishing Group (UMPG), B170395.

James Weatherly entered into an exclusive songwriter's agreement with KECA Music in 1974; UMPG subsequently acquired KECA's rights. Provisions in the songwriting agreement stated: