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 2013 alone, copyrights to thousands of the publishing and entertainment industry's cash cows -- backlist books and song catalogs -- reverted to authors and their families.   

Some call it "contract bumping."  This powerful "re-valuation mechanism" found in the Copyright Act allows members of the artistic community (and their heirs) to break 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 time is ripe to send termination notices for contracts signed between 1978 and 1989.  
Alert!  The time is ripe to send termination notices for contracts signed between 1978 & 1989 
The full impact of the loss of  evergreen or backlist titles is just beginning to be felt, as artists, authors, composers, musicians, and their heirs, begin to exercise their right to terminate publishing agreements and recapture their copyrights.  What is a threat to mainstream publishers, for example, is otherwise an opportunity for a cheaper, more flexible kind of book publishing. With the ability to recapture rights, access to indie distributors and digital on-demand technology, the beneficiaries of the copyright termination right 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, as authors go it alone, or re-grant their publisher partners limited term licenses.   This article explains why. 

Termination Rights Trump Life of Copyright Contracts 

To protect authors 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 authors (and their heirs) to recapture copyrights by sending notices of termination to their publisher and producer 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 (BRR), these rights are analogous to our recapture and termination rights.
Alert! Be very careful of what you are asked to sign by agents, publishers, producers and other copyright licensees.  If you sign a new agreement for the same rights, you may have nothing left to terminate.   Consult a copyright attorney.  The opportunity to break a contract comes around just once every 35 years.  If what you unwittingly signed is  a revoke and re-grant of rights agreement, likely, you did not enjoy the full benefit of your copyright termination right.
This lucrative right of termination does not concern itself with when a post-1977 work was registered with the Copyright Office.  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 Copyright Termination (for Books, Songwriter Agreement and Recording Contracts)

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 1979, rights could be recaptured as early 2014, i.e., 35-years after the date of initial publication.  In this instance, 2004 is the earliest the Notice of Termination could have been served, i.e., ten years before the recapture date.  The latest Notice of Termination could be sent is 2017 -- two years before the latest possible termination date.  
Similar to filing a release of a mortgage on real property, filing a Notice of Termination enables a copyright owner to own free and clear their domestic copyright rights.  If properly filed, the Notice of Termination becomes part of the work's chain of title. If anyone reviews the Copyright Office’s database, it would explain who the controls rights. 

Use It or Loose It 

Calculating the notice and recapture dates are the author'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.  Otherwise sophisticated rusts and estates attorneys, agents and business managers, are often, not very well informed.  And, book and music publishers hope you never read this article.  

Reclaiming Rights to Pre-1978 Works
Alert!  In 2014, termination notices for works copyrighted between 1936 - 1949 and 1955 - 1968 should go out
Keep in mind that the Copyright Act also provides an inalienable right to terminate pre-1978 works.  Over time, Congress increased the term of copyright protection from 56 years to 75 years.  In 1978 Congress amended the Copyright Acts again, extending the renewal term to a full 95 years.  This subset of the Copyright Act 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.  

A special circumstance exists if the author of a pre-1978 work dies during the initial 28-year term of copyright.  In such instances, the author's estate has the right to reclaim the renewal copyright.  In this instance, what is at stake is the balance of the remaining copyright term or 67-years. 

What is extraordinary about this right, is that it trumps an artist, writer or composer's will.

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 statutory successors -- two of whom were not actually mentioned in his will.   It also severed ties to his music publisher.  Today, his three sons (including the two not included in their father's will) and a daughter, jointly control the remaining 67-years of copyright in Bitches Brew and certain other songs.   Here, the Copyright Act rewrote 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 Hank Williams, William Saroyan, Truman Capote, Joe Young, Lorenz Hart, and many others have availed themselves of these valuable rights. 

Advice for Heirs 

While the Copyright Act was designed to provide for authors and their families, it is not in the interest of publishers or record labels to provide education about termination rights.  Further, be wary of what you are asked to sign.  It is easy to inadvertently waive this powerful right.  

If you are thinking about exercising your termination rights, or need assistance renegotiating an eligible entertainment or 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 and record your Notices of Termination; (iv) assist you recover rights to copyrighted works you thought were irrevocably assigned or bequeathed to others; (v) if you wish, use your increased bargaining power to renegotiate your existing contract; or (vi) work cooperatively with your trusts and estates attorney on reopening an estate, or seeking copyright damages that flow from a determination of ownership or co-ownership of a recaptured copyright. 

Conclusion

The termination card must be "played" properly before the termination  window closes.  If not played, the right conferred by Congress is lost. 
  
The Best of 1978*
 
Books Eligible for Recapture

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
Songs Eligible for Recapture (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


*For a work published on January 1, 1978 the latest the termination notice can go out is January 1, 2016
 
I Want You Back (1969)
Performed by The Jackson 5

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.) Mr. Jassin is an adjunct professor at NYU-SCPS, 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 1501 Broadway, Floor 12, New York, NY 10036. Visit www.copylaw.org.

(c) 2013 - 2014. Lloyd J. Jassin.