Friday, December 21, 2012

Copyright Owners (and Heirs) Can Break Contracts & Recapture Copyrights



A Passing Opportunity to Break Bad Contracts


The copyright termination time bomb is ticking away.  In 2014 alone, copyrights to thousands of the publishing and entertainment industry's cash cows -- backlist books and song catalogs -- will revert to authors and their families.  Some call it "contract bumping."  This powerful "re-valuation mechanism" found in the Copyright Act allows members of the art, literary and music communities (and their heirs) to break contracts 35-years after the date of initial publication.  The termination right trumps written agreements -- even agreements which state they are in perpetuity.  Also known as “termination” or “recapture” rights, the time is ripe to send termination notices for works published between 1978 and 1989.

Invisible "Reset" Button Levels the Contractual Playing Field

Designed to protect authors of older works, who,
in hindsight, signed away their rights for less than adequate compensation, Congress devised a "reset" button that wipes out bad copyright contracts.  

Provided authors (or their heirs) satisfy the statutory notice requirements and maneuver properly, they can break any post-1977 copyright contract, provided it isn't a true work-for-hire agreement.

If served with a Notice of Termination, publishers and record labels must renegotiate their dusty contracts. If  those negotiations fail, creators or their successors  regain control of their copyrights.  What is a threat to old school entertainment and publishing companies, is otherwise an opportunity for a cheaper, more flexible kind of publishing. The ability recover copyrights, combined with access to a plethora of self-directed digital publishing and media solutions, gives the creative community a unique opportunity to reasses their business relationships


The Mechanics of Copyright Termination

The termination right applies to grants of copyrights signed on or after January 1, 1978 by the author --it does not apply to grants or licenses signed by, or on behalf, of an author's heirs.   So, family members must be careful what they sign. 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. 

For an author or songwriter agreement entered into on or after January 1, 1978, the agreement can be terminated, and copyright recaptured, during a five year period beginning the earlier of 35-years after publication; or 40- years after the contract was executed.  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.” 

The date termination takes effect is determined by the author or his heirs, not the Copyright Office.  The Notice of Termination must be sent within a specific time window, between two and 10 years prior to the effective date of termination.  The process is not considered complete until the properly drafted Notice of Termination has been recorded with the Copyright Office, which must be prior to the date of termination.   

Example 1: If a book contract was signed in 1978, and the book published that same year, rights could have been recaptured as early 2014, i.e., 35-years after initial publication .  In this instance, the author (or his heirs) would have had to serve a notice of notice of termination in 2004, i.e., ten years before the recapture date. 
And, the latest a notice of termination can be sent is 2016 -- two years before the last available termination date. 

Like the deed to a house, a Notice of Termination filed with the Copyright Act becomes part of the copyrighted work's chain of title. If anyone were to review the Copyright Office’s database, the artist, author or composer's name will show up in the "notice of termination” document.  

Use it or Lose it


As you have read, the rules governing termination are dense.  They can also  be unforgiving.   Calculating the notice and recapture dates is the author or composer's sole responsibility.  The Copyright Office does not provide forms, and they cannot calculate the notice and recapture dates for you.  Ergo, consult with a knowledgeable copyright attorney -- not your average wills or estate planning attorney. 


Often, trusts and estates attorneys know little about copyright law.  Do not consult your book or music publisher, as they hope you  never read this article.  All that is necessary for your publisher to win the copyright termination game is for you to do nothing.  

Clawing Back Rights to Pre '78 Works


While the current focus is on works published after 1977, the Copyright Act also gives creators and their families (if the creator is deceased) an opportunity to terminate pre '78 contracts and, dramatically, challenge (or rewrite)  an author's will.  This subset of the Copyright Act, provides for recapture of rights any time during a five year period beginning at the end of 56 and 75-years from the date the copyright was secured.  The reasons for this are explained below.


Omitted from a Will?  The Act Trumps a Copyright Creator's Will  

Sacrosanct as wills may appear, Congress wanted copyrights to go to an author's family according to federal rules -- not state law.   So, it may come as a big surprise that a will is not the final word on who gets a deceased creator's pre '78 copyrights.  It's worth repeating.  The Copyright Act, not an author's will dictates who receives the author's copyright interest in death.  And, unlike state law will contests, you don't have to prove suspicious circumstances surrounding the drafting of a will to challenge it.  Where a spouse or child has been intentionally or unintentionally omitted under a will, the spouse or child (including adopted children or those born out-of-wedlock) are entitled to claim recapture rights.  But you may ask, "What are they recapturing?"  Over time, Congress lengthened the original 56-year copyright term to 75-years, and again from 75-years to 95-years.  The recapture rules allow heirs to claim the bonus 39-years copyright (or, in the case of works published in the late 30's, the final 20-years) Congress tacked onto the original, shorter copyright term.

Another termination quirk, exemplified by example two below, allows family members to recapture a full 67-years of copyright if the creator died within 28-years of initially publishing the work.        

Example 2. 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 four children according to the Copyright Act -- cutting off  his brother, sister and a nephew mentioned in his will. 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, the Copyright Act rewrote both Miles Davis' will and 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.  Starting in 1999, using Section 304 of the Copyright Act, Siegel’s heirs recaptured his rights to the Superman character.  Similarly, the estates of James Baldwin, Truman Capote, William Saroyan, Lorenz Hart, as well as children born out-of-wedlock to 
creators and composers like Hank Williams, have availed themselves of these valuable rights.



"To Do" List for Authors & their Families

Review Old Files.  If ever there was a time to review old copyright files, it's now.  If you can, locate copies of old contracts and license agreements.  Make a list of titles and publication dates.  If the author or creator is deceased, compile a list of possible heirs.  


Don't Dawdle.  Doing nothing is not an option.  If you simply do nothing, the termination window will close.   

Copyrighted or Published Between 1936 & 1977? Contact us for a termination screening to determine if you are eligible to recapture your copyrights.

Contract Signed After 1977?  Contact us for a termination screening to determine if you are eligible to recapture your copyrights.   

Published After 1977?  Contact us for a termination screening to determine if you are eligible to recapture your copyrights.

Don't sign anything without consulting an attorney.  It's easy to inadvertently waive the termination right.  Regrettably, time-and-money crunches cause some people to basically just say “yes” to what is put in front of them.  Don't be one of those people. Congress provided only one do-over
This is it. 


Alert!  If you invoke your termination right, and re-grant rights, you may have to live with that second deal.  That is what happened to Christopher Robin who re-granted rights to Winnie-the-Pooh to Disney in 1983.  That agreement to re-grant rights cut off his daughter's right terminate the original 1930 agreement signed by her grandfather, A.A. Milne.  The lesson in all of this is don't sign anything without consulting a copyright attorney. 

Negotiate.  If authors wish to renegotiate the terms of an existing contract, they must wrestle with contract details that seem daunting.  Don't make the same mistake twice.  There is no such thing as a standard agreement.  Contract provisions such as advances, royalty rates, fees, the grant of rights and  territories, the duration of the agreement, the right to create new works based on the old, are all negotiable. If you retain us to represent you, we will negotiate with your original publisher on your behalf.

Terminate.  Original publisher not an option?  Consider taking control of these rights yourself, or entrusting them to another partner for better terms, including a new advance, higher royalties, catalog promotion, etc.  Again, if you retain us to represent you, or your family members, we will negotiate with your new publisher on your behalf, or help you to set up your own publishing company   

Don't Assume Your Estate Planning Attorney Understands Any of This.   

Suffice it to say, due to its complexity, and the dearth of case law interpreting the copyright termination statute, it's not surprising that agents, as well as many trusts and estates attorneys, are not conversant in the ins-and-outs of this esoteric topic.  We are happy to work cooperatively with your trusts and estates attorney.  

Maneuvering the Other Complexities

There is also a whole emotional side to copyright termination. These are not just business and financial decisions, but decisions that may involve family members, and the revisiting of past relationships. Fortunately, the invisible copyright "reset" button found in virtually every copyright grant or license, and certain wills, also has the potential to set right injured relationships -- provided the focus is on the future, not past injustices.  

It's Time to Break Bad Contracts and "Bump" Wills

With the exception of true "works for hire," it is not hypothetical speculation to say that every author contract entered into on or after January 1, 1978 is vulnerable to termination.  To that end, we can we can: (i) identify which copyrights are eligible for termination; (ii) determine who is the proper party to exercise those termination rights; (iii) prepare and record your Notices of Termination; (iv) assist you recover rights to copyrighted works you thought were irrevocably assigned or bequeathed to others; (v) help you negotiate new, better contracts; and, if requested (vi) work cooperatively with your trusts and estates attorney on reopening an estate. 


The opportunity to break or renegotiate a contract comes around just once every 35-years (if a pre '78 work, that's once every 56 or 75-years).  If what you sign is a revoke and re-grant of rights agreement, you (or your agent) may be signing away valuable rights for less than market rate.  Contact us to discuss business and legal strategies.

Contact us at jassin@copylaw.com 

The Best 1978*

Select Backlist 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

7. If Life Is a Bowl of Cherries . . . - E. Bombeck




 Select Songs (artist, not composer shown)

1. Is This Love - Bob Marley

2. Le Freak - Chic


3. 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 - The Village People


*For a work published on January 1, 1978 the latest the termination notice can go out is January 1, 2016


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.
 

Contact:  Jassin@copylaw.com or at (212) 354-4442. Law Offices of Lloyd J. Jassin, The Paramount Bldg., 1501 Broadway, Floor 12, New York, NY 10036.

(c) 2011 - 2014. Lloyd J. Jassin

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