Sunday, March 28, 2010

Publishing Doomsday Clock & the Death of the Backlist

By Lloyd J. Jassin

Deadline for Terminating 1978 Book & Music Publishing Contract is Just Around the Corner

The copyright termination time bomb is ticking away.  Starting in 2011 the publishing and music industries will be looking at  the possibility thousands of negotiations with copyright owners seeking to recapture their rights.  Some call it "contract bumping."  This powerful "re-valuation mechanism" found in the Copyright Act allows authors (and their heirs) to terminate contracts 35-years after the contract date.  The termination right trumps written agreements -- even agreements which state they are in perpetuity.  Also known as “termination” or “recapture” rights, the deadline for sending termination notices for 1978 grants will begin to expire in 2011.

 The impending economic dislocation will manifest itself in the loss of  evergreen or backlist titles, as authors and composers, or their heirs, exercise their right to terminate publishing agreements and recapture their copyrights.  What is a threat to mainstream publishers, is otherwise an opportunity for a cheaper, more flexible kind of  publishing. With the ability to recapture rights, access to indie distributors and print on demand technology, authors (and their heirs) will have to decide how much faith they should place in their existing publisher relationships.  My guess is that "life of copyright" grants will soon become the exception, not the rule.  This article explains why.

Termination Rights Trump Life of Copyright Contracts 

To protect authors and songwriters of older works from having to live with a bad deal they entered into when they had little negotiating skill or leverage, the Copyright Act allows them (or their families) to recapture copyrights by sending notices of termination to their publisher partners. This often overlooked, but powerful right, serves as an “insurance policy” for authors who signed away their rights for less than adequate compensation. 

Section 203 of the “new” Copyright Act applies to grants of copyrights signed on or after January 1, 1978 by the author -- not grants signed by an author's heirs. As long as the work being terminated is not a “work made for hire,” the right of termination cannot be waived -- even if there are contractual provisions to the contrary.   In short, copyright law trumps contract law.  One of the idiosyncrasies of the termination right, is that it does not apply to foreign grants.  However, under UK law, heirs can recapture rights twenty-five years after the death of an author.  Known as British Reversionary Rights, these rights are analogous to our recapture and termination rights.   Despite the reversion of rights, the law contains an interesting exception, which allows licensees of derivative works (e.g., a movie based upon a novel) prepared during the license term, to continue to exploit the "based upon" work.   

Unlike general interest trade book publishers, technical reference and textbook publishers, who generally commission works on a "work for hire" basis, are largely immune from the effect of Section 203, which applies to contracts signed on or after January 1, 1978.  Of special concern to heirs is an unsavory practice known as revoke and re-grant.  If you are an heir, be very careful of what you are asked to sign by agents, coauthors, publishers, producers and other copyright licensees and partners.   If it is a revoke and regrant of rights agreement, you may be signing away valuable rights for less than market rate.    

This lucrative right of termination does not concern itself with when the work was published or registered; it only concerns itself with when the copyright grant or license was signed by the author. Succinctly stated, “Termination may be exercised at any time during a period of five years beginning 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 is earlier.”

Countdown to 2013 Copyright Termination (of 1978 Assignments)

The Copyright Act and the administrative rules that apply to termination and recapture of copyrights are dense and unforgiving.  Some might call them hellish.  For example, if you serve your Notice of Termination late, it is considered a fatal mistake under the law.  And, the process is not considered complete until the Notice of Termination has been recorded with the Copyright Office, which must be prior to the date of termination.  You can serve a Notice of Termination as early as ten years before the effective date of recapture, or as late as two years before the effective date of recapture.  The author (or his heirs) selects the date termination will take effect, and must send a Notice of Termination within the termination window outlined in the Copyright Act.
Example 1:  If a novel was published in 1978, rights could be recaptured as early 2013, i.e., 35-years after the date of initial publication.  In this instance, the earliest the author (or his heirs) could have served a Notice of Termination would have been 2003, i.e., ten years before the recapture date.

Example 2:  If a songwriter agreement was signed in 1978, the Notice of Termination could be served as late as two two years before the recapture date.   In this instance, 40-years from date of execution would be 2018, which means the notice of termination can be served as late as 2016.

Like the deed to a house, a Notice of Termination filed with the Copyright Act becomes – if not challenged -- part of the work's chain of title. If anyone were to review the Copyright Office’s database, the author or composer's name will show up in the "notice of termination” document.  

The right of termination should not be confused with the contractual right many authors have to recapture  book rights when their book goes out-of-print.  When a book goes out-of-print, most book contracts allow the author to request a reversion of rights in writing.  Regrettably, what constitutes "out of print" is not always clear, and responding to written requests for a reversion of rights is not a top priority with publishers.  Unlike out-of-print clauses, which requires the cooperation of the publisher, the statutory termination right automatically vests those rights in the author.      

Use It or Loose It

Calculating the notice and recapture dates are the author or composer's sole responsibility.  The Copyright Office cannot draft Notices of Termination, or calculate the notice and recapture dates for you.  Therefore, it is strongly advised that you consult with a knowledgeable copyright attorney (not a trusts & estates attorney or your book or music publisher) if you have questions pertaining to termination or recapture of copyrights.  Indeed, book and music publishers hope you never read this article.  If you have inherited either a literary work or catalog of music publishing rights, it is not in your book or music publisher's best interests for you to know about the  recapture of copyrights.  The important message is that when a writer dies, the writer's spouse, children or grandchildren, even parents or siblings,  may be entitled to exercise the recapture rights discussed in this article.   

Recapturing Ownership Rights to Pre-1978 Works

Keep in mind that the Copyright Act also gives families of deceased authors and composers an opportunity to recapture rights to pre-1978 works.  For example, when the author of an older work dies during the initial 28-year term of copyright, that author’s family has the right to reclaim the renewal copyright, which is a further term of 67 years of copyright protection.  This subset of the Copyright Act also provides for termination at any time during the five year period beginning at the end of 56 and 75 years from the date the copyright was originally secured.  These added opportunities to get back ownership of copyrights exists even if the author assigned his or her renewal term (or devised it by will) to someone other than his family.  What is extraordinary about these rights, is that copyright law also trumps a writer or composer's will.

Example 3.  Miles Davis, the jazz icon, died in 1991, before the end of the 28th year of copyright of his revolutionary 1970-album Bitches Brew.  Because he died before the 28th year of copyright, his renewal term rights in the song Bitches Brew vested automatically in his heirs -- cutting off a sister and brother mentioned in his will, and severing his ties to his music publisher.  Today, his sons (two of whom were not included in their father's will) and his daughter, jointly control the remaining 67-years of copyright in Bitches Brew and other songs.   Here, Section 203 trumped both Miles Davis' will and his songwriter agreements.   

Similarly, in 1938 Jerry Siegel and Joe Schuster, two young men from Cleveland, Ohio, signed over all of their rights to the Superman character to DC Comics for $130.00 and vague promises of future work. To address this, and similar economic injustices, Congress gave authors (and their heirs) a second chance to strike better financial deals. As a result, starting in 1999, using Section 302 of the Copyright Act, Siegel’s heirs recaptured his rights to the Superman character. Fortunately, you don’t have to be related to a man of steel to reclaim copyrights. The heirs of Jack Kirby, Hank Williams, William Saroyan, Truman Capote, Joe Young, Lorenz Hart, and many others have availed themselves of these valuable rights.

Copyright Estate Planning

The clock is ticking.  Don't miss this opportunity to get your book or song rights back.  Termination notices, which must adhere to complex formalities, must be sent within a narrow window. On January 1, 2013, provided timely Termination Notices are sent (and recorded with the Copyright Office) grants made on January 1, 1978 will terminate.  As a copyright owner, or copyright owner's heir, you must be vigilant. Failure to exercise these rights, or exercise them in a timely manner, can be fatal.  And, if you delay filing your claim, you can be time-barred by the statute of limitations.

If you are thinking about exercising your renewal or termination rights, or need help renegotiating your soon-to-terminate publishing agreement, call us.  We can help you: (i) identify which copyrights are eligible for termination; (ii) determine who is the proper party to exercise those termination rights; (iii) prepare, file and record your Notices of Termination; (iv) assist you recover rights to copyrighted works you thought were irrevocably assigned or bequeathed to others; (v) work cooperatively with your trusts and estates attorney on reopening an estate, or seek monetary damages that flow from a determination of ownership or co-ownership of a legacy copyright.      

The Best of 1978

Select Books

1.  The Stand - Stephen King
2.  Eye of the Needle - Ken Follett
3.  The House of God - Samuel Shem
4.  The Far Pavilions - M.M. Kaye
5.  Holcroft Covenant - Robert Ludlum
6.  Chesapeake - James Michener

Select Songs (artist , not composer shown)

1. Is This Love - Bob Marley & the Wailers
2. Le Freak - Chic
My Life - Billy Joel
4. Life's Been Good -- Joe Walsh
5. Night Fever - The Bee Gees
6. Miss You - The Rolling Stones
7. YMCA - Village People

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NOTICE: This article discusses general legal issues of interest and is not designed to give any specific legal advice pertaining to any specific circumstances. It is important that professional legal advice be obtained before acting upon any of the information contained in this article.  This article represents copyrighted material and may only be reproduced in whole for personal or classroom use. It may not be edited, altered, or otherwise modified, except with the express permission of the author. 

LLOYD J. JASSIN is a New York-based publishing and entertainment attorney with a special interest in copyright and trademark matters.  He is co-author of The Copyright Permission and Libel Handbook: A Step-by-Step Guide for Writers, Editors and Publishers (John Wiley & Sons, Inc.).  A former publishing executive, Mr. Jassin has written extensively on negotiating contracts in the publishing and entertainment industries, and lectures frequently on contract and copyright issues affecting creators. He may reached at Jassin@copylaw.com or at (212) 354-4442. His offices are located at 1560 Broadway, Suite 400, New York, NY 10036. Visit www.copylaw.org.

(c) 2010. Lloyd J. Jassin. All Rights Reserved.