April 3, 2019
If you listened to heavy metal in the early noughties, chances are you remember metal bands KoRn and Slipknot.
Both bands were hugely successful, releasing music and touring extensively for years. But the two bands now have something else in common – both are involved in acrimonious litigation between band members.
KoRn are locked in a legal battle with their former drummer David Silveria who quit the band back in 2005. A company had been set up before the first album was released, and the contract signed by all five band members stated that any income was to be shared equally between then.
In 2015, Mr Silveria sued the band, claiming that he was not given his fair share of royalties since he left the band. Korn issued a counter-claim against their former drummer, and this dispute was eventually settled between the parties without having to go to court. Instead, the band agreed to pay Silveria a lump sum to definitively buy him out of the KoRn company, so that they do not need to pay him any royalties going forward.
Unfortunately, this was not the end of it. In July 2018, Silveria approached SoundExchange, the band’s collecting society. Because SoundExchange pay royalties to musicians who appear on tracks even if they no longer own the copyright, Silveria asked them for his share. SoundExchange believed that they were already paying all the artist royalties due to the band, and did not have Silveria on their records. His request therefore caused SoundExchange to freeze all artist payments for the relevant recordings, which is the standard reaction of collecting societies when faced with this type of dispute.
As a result, KoRn sued Silveria for causing the loss of these frozen royalties. In response, Silveria has sued the band, claiming that when he signed the settlement agreement in 2016, he was not aware that he was entitled to these royalties, and as such these should not be included in the scope of the agreement.
Slipknot’s situation is similar, in that it also concerns the sharing of the band’s income. Longstanding band member and percussionist Chris Fehn is accusing singer Corey Taylor and fellow percussionist Shawn Crahan of setting up secret companies to syphon off income from the band’s touring and merchandising, therefore reducing the sums paid to Fehn.
The band had previously set up a company which would collect the band’s touring and merch income, before dividing it fairly between the band members. Of course, the existence of other companies which some band members are not aware of would affect the fairness of this system, which is what Fehn is suing for.
Both disputes are in the early stages, which means that although formal proceedings have been issued, there is still no trial date. Because of the cost and inconvenience of having to go to court, often such disputes are settled between the parties on mutually acceptable terms – watch this space.
In both cases, the unfortunate thing is that the bands had taken good precautions to avoid this type of dispute. Creating a separate legal entity (such as a company or partnership) to collect income from royalties, touring, merch etc. is often a good idea as it more transparent and easier to administer. There may also be some tax implications to be aware of.
Unfortunately for these two bands, commercial and financial success often leads to this type of dispute about money, and who is getting paid what.
Ensuring your contracts are air tight and drafted in a way that covers all eventualities is important, as it may allow you to prevent a Davild Silveria/KoRn type scenario, in which one of the parties tries to go back on a deal they have signed.
The truth is however that in some situations, disputes cannot be prevented entirely. Although we firmly believe that prevention is better than cure, sometimes litigation is the only way to unlock a situation, and it is crucial that your legal adviser talks you through your options in detail, including how the dispute is likely to play out, what the likely costs would be, and what your options are.
Whether you would like to discuss putting in place contracts and other preventive measures, or you find yourself in a situation where litigation seems unavoidable, feel free to get in touch and we would be happy to assist.
Written by Josh Schuermann, Solicitor
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