Company A manufactures a toy that makes a variety of interesting and distinctive noises - it beeps, talks, shouts and sings.
Company B creates multimedia products; one of these products is a flashy video set to a catchy tune, consisting largely of samples of sounds made by the toy manufactured by company A, but arranged in a very clever and creative way.
Company A initiates legal action on the basis that their intellectual property has been abused. Their complaint is upheld and company B is forced to desist and pay compensation.
A little while later, an advertising exec from company A decides that, despite all the hassle, he did actually like company B’s tune, and he decides he wants to use it for a TV commercial.
Does company B still hold any intellectual property rights over the arrangement of the tune? Or were these forfeit as a result of the components being declared the protected property of company A?
OK, lets try a slightly less contorted example…
George Lucas watches the Phantom Edit. Instead of being annoyed, he declares “You know what? You’re right - Jar Jar is an annoying cock and Midichlorians are just a stupid, stupid, stupid idea”.
So he distributes a new box $et which includes The Phantom Edit.
Did the person who performed the edit have any rights protecting their version?
Lucas is a bad example, since he holds trademark rights.
However, ignoring that, since he owns the original copyright, he also holds derivative rights. The Phantom Edit is in violation of those.
Now, it gets complicated. However, if Lucas want to distribute the film, the best solution would be to find whoever did The Phantom Edit and sign an agreement: Lucas will drop any infringement suit, pay them some money, and, in return, be granted ownership of The Phantom Edit.
Can he just take The Phantom Edit and distribute it? I think a court would have to decide. I don’t know what the rule is about a copyright violation having copyright protection itself. Since it’s a violation, you wouldn’t think so, but since the law says there is copyright protection once a work is in its final form, there’s plenty of room for the lawyers to wrangle.
As for the OP, basically, Company A would get an agreement from Company B in order to use the song. It’s cheaper and easier than a potential infringement fight. If Company B asks too much, Company A will use something else.
The actual answer is, “It depends.” As with most legal answers, particularly those involving complex copyright answers, like in the OP.
Unlike what Reality Chuck continually propounds, simply making a use of the underlining copyright work work, without more, is not, in of itself, a copyright violation. Many fair use exceptions can be made, depending on the facts at hand. The fact that Nichols wasn’t sued for his work, lends to the idea that there was not a prima facie case of infringement against him.
So, if Lucas really wanted to distribute “The Phantom” edit, I can see things going very badly for him if he doesn’t get permission. However, that is my unreasoned, non-legal opinion (I’m not giving out legal advice). But, I will say that my reason is because he didn’t take the opportunity to enforce his copyright originally. Also, I don’t believe the Phantom Edit is a derivative work, but mainly transformative (i.e. Nichols’ own work) based on the wiki article. However, I didn’t see the work at hand (though, I would really, really like to), so I can’t officially give an opinion.