May 13 2012

Reclaiming Your Copyright After Thirty-Five Years

By Jane • Essays, Features • • Tags: ,

Introduction

This is a long article. Grab a cup of coffee and settle in.   I wrote this article and sent it to the RWR but it wasn’t suited for publication so I thought I would share it with you.   The right to sever a copyright grant after 35 years came to my attention when Evan Schnittman mentioned it briefly at the end of one of his articles.   I went off to research the issue because I found it fascinating.   This is what I learned.

A new author enters a publishing contract with very little negotiating power. She is presented with a contract with stock terms and an offer of an advance in exchange for an assignment of her intellectual property rights to the publisher. Often she is in the position of either taking the contract with little changes or not publishing. The Supreme Court noted that “authors are congenitally irresponsible, [and] that frequently they are so sorely pressed for funds that they are willing to sell their work for a mere pittance.” Fisher Music Co. v. Witmark, 318 U.S. 643, 656 (1943).

Congress, who is responsible for setting the parameters of the copyright law in the United States, recognizes the economic imbalance between authors and publishers and has tried to include provisions to correct the imbalance. One of those provisions under the current copyright law is the right of termination of a previously granted copyright.

Historical Background

Initially, the 1909 Copyright Law allowed for renewal terms. The 1909 Copyright Law was based, in part, on the Statute of Anne, the very first law that provided protection for the creative works of authors. The Statute of Anne granted authors 14 years of protection and the 1909 Copyright Law doubled it. The creator of a work registered for a copyright and was granted protection for 28 years. At the end of 28 years, the creator could renew the copyright for another 28 years. The need for renewal allowed the creator to renegotiate the original grant of copyright, usually for better terms. As the end of the two year renewal terms loomed near, Congress began debating extension of the copyright.

Congress passed the Copyright Act of 1976 and added 19 years to the copyrights which were created under the 1909 Act giving those works 75 years of protection. New works were granted protection for the life of the author plus fifty years (which was the international standard at the time). In the Copyright Renewal Act of 1992, Congress did away with renewals added an additional 47 years of protection. This essentially made copyright protection for all works published under the 1909 Act to have a copyright term of 75 years.

Sonny Bono Copyright Term Extension Act (known as CTEA) added an additional 20 years of protection to all copyrighted works. Works produced on and after January 1, 1978 were granted life of the author plus seventy years. Works created prior to January 1, 1978, and either in the first or second term of renewal, were granted an additional 20 years of protection.

The longer term both helps and hurts authors. It helps authors in that they and their heirs are entitled to more revenue from their creative works, but it hurts because there is no time in which an author can renegotiate her rights if that is not a provision in the original grant language.

Essentially the renewal period in the 1909 Act allowed for a natural reversion of rights. Renewal was complicated for an author. Many missed the renewal deadline, failed to follow the procedure accurately, and signed away their expectancy in the first time instead of waiting. Congress, when it eliminated renewals and extended the period of protection, included a reversion of rights through a termination procedure.

Section 203:

    In the case of any work other than a work made for hire, the exclusive or nonexclusive grant of a transfer or license of copyright or of any right under a copyright, executed by the author on or after January 1, 1978, otherwise than by will, is subject to termination…
    Upon the effective date of termination, all rights under this title that were covered by the terminated grants revert to the author, authors, and other persons owning termination interests…

17 U.S.C.A.  § 203 (a) (2009).

The purpose of Section 203 is to provide authors a natural reversion of rights so that they get a second bite at the bargaining apple. It allows any author, or a person assigned by the author, to terminate the original grant during a five year period beginning 35 years after the publication was made or 40 years after the grant of rights, whichever comes first.

The key difference between Section 203 and section 304 is who has the right to terminate the grant of copyright. Section 203 applies only to contracts signed by authors and only the author and the author’s assignee via a will or other document would have the right to exercise the termination provision.

Ostensibly, Section 203 limits the duration of a grant or a maximum period of time in which a grant can be effective. After that maximum period of time has expired, the author recaptures her rights and has the ability to put them on the marketplace once again. Contractually, an author and her publisher can grant a shorter period of time. For example, a standard author contract has an “out of print” provision which requires a publisher to keep the work in print for a period of time. If the publisher allows the work to go out of print for a period of six months or more, the author may request by written notice that the work be placed back into print. If the publisher fails to do so within a proscribed period of time, then the grant is terminated and the rights revert back to the author.

Each contract must be examined for reversion of rights language and how reversion of rights is to be effectuated. “In print” is defined by the contract and standard terms may include language such as “in print if it is in stock or available for sale in any edition of the Publisher or any of its licensees”. The timing or occurrence of reversion of rights can differ for print v. digital rights, or territorial rights. Digital rights will often revert if, during a period of time, royalties do not exceed a specified floor.

If the publisher is keeping the work in print, however, rights would never revert back and, therefore, an author is entitled to reclaim those rights through the exercise of Section 203 termination.

What Can You Terminate Under Section 203?

In the case of any work other than a work made for hire, the exclusive or nonexclusive grant of a transfer or license of copyright or of any right under a copyright, executed by the author on or after January 1, 1978, otherwise than by will, is subject to termination

An author can terminate almost any transfer of her copyright if the grant was executed on or after January 1, 1978. The grant must fulfill the following qualifications:

a) Not be a work for hire
b) Executed by the author and no one else
c) Not a grant made via a will

Problems arise if the original grant was open ended. The Rano v. Sipa, 987 F.2d 580 (9th Cir. 1992) case suggests that an open ended contractual grant cannot be terminated except for that 5 year period defined in Section 203. Walthal v. Rusk, 172 F.3d 481 (7th Cir. 1999), determined that a contract for an indefinite period of time can be terminated by the request of either party to the contract. Thus in some states, unless the original grant is for longer than 35 years, the contract will not be terminable until the conditions of Section 203 are satisfied.

Further, derivative works that were made pursuant to the grant cannot be terminated.

Who Can Terminate?

Basically, the author and the author’s heirs are the only ones entitled to terminate a grant made after January 1, 1978. In the case of an anthology, or joint work, a majority of the authors must execute the notice for termination.

This becomes more complicated if the author has died, in the case of either a solo or joint work. For example, for the heirs to terminate a grant, they must hold more than 50 percent interest in the work. If the author has a spouse, the spouse is entitled to the entire interest, but if the author has children, the spouse is entitled to only 50 percent and the remaining 50 percent is split between children and grandchildren (obviously this is an issue ripe for a book!). In Larry Spier, Inc. v. Bourne Co., 953 F.2d 774, 777 (2d. Cir. 1992), the author included his mistress as a beneficiary in his will, but the court found that the mistress was not entitled to a termination right because the statute applied only to spouses and children.

When Can You Terminate?

    Termination of the grant may be effected at any time during a period of five years beginning at the end of thirty-five years from the date of execution of the grant; or, if the grant covers the right of publication of the work, the period begins at the end of thirty-five years from the date of publication of the work under the grant or at the end of forty years from the date of execution of the grant, whichever term ends earlier.

17 U.S.C.A.  § 203(a)(3) (2009).

An author is entitled to terminate the grant 35 years after the execution or 40 years after the first date of publication, whichever comes first. In order for termination to occur and rights to revert, notice must be timely given. According to Section 203, notice must be within 10 years, but no less than two years before the effective date of termination provided in the notice.

Equation:

Date of Execution of Grant + 40 = X
Date of Publication + 35 = Y

Compare X and Y.   Which is the earliest date?
Earliest date – 10 = first date you can send in your termination notice

Earliest date   - 2 = last date you can send in your termination notice

Example 1:

Book rights are sold to a publisher in 1980 and the book  is published in 1982

1980 = date of execution of the grant
1982 = date of publication

1980 + 40 = 2020
1982+35 = 2017

2017 v. 2020 = 2017 being the earlier date
2017 -10 = 2007 is the first date upon which to terminate a grant
2017-2 = 2015 is the last date upon which to terminate a grant.

How Do I Terminate?

    The termination shall be effected by serving an advance notice in writing, signed by the number and proportion of owners of termination interests … or by their duly authorized agents, upon the grantee or the grantee’s successor in title.

17 U.S.C.A.  § 203(a)(3) (2009).

The Code of Federal Regulation  §210.10(b)(2) lays out in detail the contents of the termination notice. It does not provide a form. A termination notice should include the following for each work (other provisions apply if it is the heirs who are terminating the grant):

  • Name and address of the author or authors heirs
  • Date of the execution of the grant (often this will be the date of the signed contract) and the date of the first publication of the work.
  • Title of the work and the author. If it is a joint work such as anthology, the notice should list all the authors who are requesting the termination.
  • Original copyright number, if possible.
  • A statement describing the original grant.
  • The effective date of the termination.
  • Signature of the author or authors or duly authorized agent.

Each termination notice must be recorded with the Copyright Office with the correct information and during the correct time frame. Failure to properly record a termination may result in the termination being invalid. In other words, this is not something you should try at home, but rather contact an entertainment lawyer or your agent to effectuate the termination. Once those rights are reverted back, the content creator has another opportunity to sell their valuable works.

Only Terminate Once

While Congress wanted to protect authors, it is determined that the authors are only entitled to one chance at renegotiating their contracts. In Penguin Group (USA) v. Steinbeck, 537 F.3d 193, 204 (2nd Cir. 2008), the court noted that the termination provision could only be used once by authors and their heirs:

It should be noted that under our view, authors or their statutory heirs holding termination rights are still left with an opportunity to threaten (or to make good on a threat) to exercise termination rights and extract more favorable terms from early grants of an author’s copyright. But nothing in the statute suggests that an author or an author’s statutory heirs are entitled to more than one opportunity, between them, to use termination rights to enhance their bargaining power or to exercise them. See 17 U.S.C.  § 304(d) (permitting exercise of termination right only “where the author or owner of the termination right has not previously exercised such termination right”).

Conclusion

It is increasingly important to obtain one’s rights in this changing publishing period. The second chance to negotiate one’s work can result in a higher royalty rate, new advances, and other economic opportunities.

Disclaimer: A short article can never address all the legalities of termination and the following is only intended to provide an overview. Those that have questions about a specific grant should seek legal counsel as soon as possible. The works that are subject to a pre January 1, 1978, grant must follow the termination clause provision in Section 304. Those works that were subject to a grant post January 1, 1978, must follow the termination clause in Section 203. This article addresses only Section 203 provisions.

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