Friday, June 17, 2022

Copyright Recapture: How to (Legally) Break Your Publishing Contract

How to Get Back Your Book Rights After 35-Years

Copyright Termination, Reclaim Your Copyright
1941 Superman "Breaking Chains" Trademark
The length of most author, screenwriter, and songwriter contracts corresponds to the duration of the work's copyright. Today, copyright lasts nearly one hundred years from initial publication. Fortunately, there's a powerful, but little-known, provision in the Copyright Act that makes life of copyright contracts unenforceable. 
Section 203 of the Copyright Act is a reset button allowing authors to reclaim their copyrights and regain their rights.  
To protect writers, artists, and musicians from bad deals signed after 1978 by their younger selves, the Copyright Act gives them (and their families) a mulligan - a second opportunity to negotiate better terms or exit from an undesirable deal.
I've filed termination notices for more titles than almost any other publishing attorney. Provided copyright termination notices are properly prepared and timely filed, termination can be accomplished "at any time during a period of five years beginning at the end of 35 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."

Section 203 applies to grants of copyrights made by authors on or after January 1, 1978, rather than grants made by their heirs. Interestingly, it applies to the transfer of pre-1978 works if the transfer was made after January 1, 1978. For example, a film option signed by Stephen King in 1994 for Carrie, a novel written in 1974, is eligible for termination between 2029 and 2034.

Works for hire are immune to statutory termination.
However, the concept of work for hire is complicated. Therefore, just because a contract says a work is a work for hire or created in the course of employment does not make it so. Additionally, the termination right does not apply to foreign grants. 
In the United Kingdom, however, under narrowly prescribed circumstances, 25 years after an author's death, rights revert to the author's estate. In Canada, 25 years after the death of an author, under a broader scope of circumstances, rights automatically revert to the author's estate. Here is a link to an excellent article by Professor Rebecca Giblin about reversion and allied rights outside the U.S.

They Don't Make It Easy

If you wish to terminate a rights agreement, a notice of termination must be signed, served, and recorded with the Copyright Office. In other words, t
he process of reclaiming copyrights is not automatic. 
The Copyright Act gives the termination rights holder the option, but not the obligation, to reclaim their copyrights. As a result, much to the joy of publishers, the vast majority of termination rights expire without being exercised.
It is your responsibility to calculate the termination date. It can be anytime during a five-year window beginning the earlier of (a) thirty-five years from the date of first publication or (b) forty years from the date of execution. A notice of termination may be served ten years before the effective termination date or as late as two years before. A missed deadline or improperly drafted notice is a fatal mistake.

Example: Andrea signed a contract for her first novel on September 26, 1989. The book was published on September 26, 1992. The termination window is from September 26, 2024, to September 26, 2029. The earliest Andrea (or her surviving family members) may serve the notice of termination is September 26, 2014, ten years before the earliest possible termination date. The latest Andrea (or her surviving family members) may serve notice is September 2027, two years before the latest possible termination date.

Andrea must serve the notice on her publisher or publisher's successor, fill out the appropriate paperwork and record the notice of termination with the Copyright Office. This public record becomes part of the work's chain of title, establishing legal ownership. Andrea's name and termination notice would appear in the title chain if anyone were to review the Copyright Office's database.

Derivative Works Exception

Under what's known as the "derivative works exception," a derivative work produced before termination may continue to be exploited under the terms of the license agreement. For example, a motion picture adaption of Andrea's novel can be streamed post-termination, subject to the studio's duty to account to Andrea. With the proviso, the studio may not create new derivative works covered by the terminated grant of rights.

Joint Works

In the case of joint works created after 1977, a majority of the coauthors must sign the termination notice.  
The 56-Year Termination Rule

For works published before January 1, 1978, the maximum term of protection for certain works was 56 years. Over time, Congress increased the term of copyright protection from 56 to 75 years. In 1998 Congress increased the term again by 20 years for a total of 95 years. Congress also created a new right of termination for pre-1978 grants, licenses, and assignments. 
For these older works, the Act provides a five-year termination window beginning 56 years after a work was first published or registered for copyright. To terminate, the author, or their surviving spouse and children, must serve and record the termination notice within the time limits specified by the Copyright Act. If not terminated, the agreement will continue for the duration of the agreement. Unlike post-1977 grants, licenses, and assignments, pre-1978 grants, licenses, and assignments made by an author's widow, children, and other statutory beneficiaries, are terminable.

Case & Comment. 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 a second chance to strike better financial deals. As a result, in 1999, using Section 302 of the Copyright Act, Siegel's heirs recaptured his rights to the Superman character. Unlike authors of joint works created after January 1, 1978, each author of a pre-1978 joint work may serve a notice of termination on their own behalf and recapture their share of the copyright.

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.

Estate Planning Considerations
As part of your estate planning, advise your statutory successors of your right to terminate. If you do not survive to exercise termination, that right is distributed to your family members as a statutory class. They may exercise this powerful right despite any agreement to the contrary. While copyright termination rights are kryptonite to copyright contracts, read on how this right can unintentionally be waived (given up).

Hoping they will catch family members off guard, publishers and motion picture studios may make offers to sweeten existing contract terms after an author dies.

Before signing an agreement that revokes and re-grants rights, family members should carefully review the document and consult with a termination rights attorney. If asked to sign during the period termination could be effected, they may be waiving their right to terminate.

If that later agreement revokes a publishing agreement, or film option, in exchange for a new contract, the new contract should be a significantly better deal than the previous grant. If not, they've lost the opportunity to renegotiate the terms of the agreement.

Bottom Line

Call us if you are thinking about exercising your termination rights or need assistance renegotiating your entertainment or publishing agreement. Fees will depend upon the complexity of the matter and the number of works being terminated. 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 the notice of termination; (iv) help you renegotiate your existing contract; or (v) work 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.

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.

LLOYD J. JASSIN is a New York 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). He is former adjunct professor at the NYU School of Professional Studies were he taught a course on digital rights. He has written extensively on negotiating contracts in the publishing and entertainment industries and has been quoted extensively in publications such as the New York Times, Publishers Weekly and Columbia Journalism Review. You may reach him at or at (212) 354-4442. His offices are located at 1501 Broadway, Floor 12, New York, NY 10036.

(c) 2011 - 2022. Lloyd J. Jassin 

Trademark Registration Superman Breaking Chains
1941 Superman Breaking Chains Trademark Registration
Friday, February 25, 2022

Tips for Negotiating a Book Publishing Contract

Book Publishing Contracts Checklist

Book Publishing Contract Attorney
I should probably have my lawyer look at this

In book publishing, unlike the film industry, the grant of rights is (or should be) narrow. In exchange for an advance against future royalties, publishers receive the basic right to print and publish a manuscript in book form for the entire term of copyright. Today, copyright lasts almost one hundred years from a book's initial publication. So, what could possibly go wrong? Lots. Just ask a publishing attorney. Common problems include:

  • unconscionable non-compete clauses
  • one-sided option (next book) clauses 
  • lack of approval over the settlement of claims
  • no objective criteria to determine"out of print" & rights reversion
  • no rights reversion for failure to account
  • no rights reversion for failure to publish
  • rights grabs and warehousing of valuable subsidiary rights

Publishers are most willing to accommodate requests for changes during the romance stage of the relationship. Later is too late. Unless a publishing contract allows an author to terminate for cause if the relationship goes awry, the author is caught between bad and worse options - asking a court to rescind the contract (rescission is seldom granted) or waiting 35 years to exercise their right of termination under the Copyright Act.

A Book Contract Should Not be Entered into Hastily

The goal of a contract is to define rights, royalties, and remedies.  For example, rather than relying on a lawsuit to get back rights, if a publisher fails to publish within a contractually agreed time limit, there should be a mechanism that permits an author to regain their rights. Similarly, if a publisher fails to exploit specific subsidiary rights (e.g., audiobook or foreign translation) within a reasonable time, it should trigger a reversion of those rights.  In addition to reclaiming or recapturing rights, an author should reserve, or hold for their own use, film, television, live stage, podcast and merchandise licensing rights. If a book publisher claims these rights, they are deviating from industry norms. 

What to Expect When Expecting a Book Contract

Preceding the actual book contract is the term sheet. The term sheet contains the main deal terms. To decode a term sheet some authors turn to literary agents, who receive 15% off the top for guiding them in the complicated journey from unbound to bound. Others retain flat or hourly fee book contract attorneys to help them negotiate royalty rates and the grant of rights and later, navigate the legal provisions and the publishing industry argot found the actual publishing contract.  

Initially, a publishing attorney will review the deal terms and make recommendations to their client. The initial task is to determine if the deal terms measure up to industry standards. We do this by comparing the terms to similar terms offered by similarly situated publishers for comparable books. After both parties agree to the deal terms, the publisher will prepare a contract incorporating those terms, plus the publisher's stock provisions. Like agents, attorneys are buffers that save you from having to deal with the minutia of contract negotiation. They will help the client think through the offer and its possible ramifications and advise them on what is negotiable and what is not. An author's attorney can argue for the exclusion of certain items or rights from the proposed contract and the inclusion of others, such as naming the author as an additional insured on the publisher's media perils policy. 

It should come as no surprise that publishing contracts are chock full of double dips and legal loopholes, and when it comes to royalties, a hall of mirrors where what it says and what it means are often two different things. The big '4' publishers offer royalties based on the suggested retail price. Royalties for trade paperback books range from 7 - 7.5% of the list price on average. Typically, established publishers offer 10% of the list price for the first 5,000 hardcover copies sold, 12.5% on the next 5,000 sold, and 15% thereafter. Many smaller publishers base their royalties on the "net" which is the amount the publisher receives from booksellers. The standard eBook royalty rate offered by established publishers, and many independents, is 25% of the net.

When presented with the contract, you will want to modify specific terms.  In the case of a subject matter expert, business owner, or series author, you want title approval. Yet most stock contracts state the publisher decides the book's title.  Contract clauses are malleable, not words set in stone. A good publishing attorney - or agent- knows the contract managers at the major publishing houses. Logical arguments supporting rational positions and knowledge of industry practice are the underpinnings of most book contract negotiations.

Whether one of the big four New York publishing houses or one outside of the insular world of New York publishing, a well-drafted publishing contract can anticipate potential issues, reduce disputes, improve financial return, and save thousands of dollars in legal fees later on. 

Benefits of Reviewing a Signed Agreement with a Publishing Lawyer

For those who have already signed a publishing agreement, a publishing attorney or literary lawyer can help you understand the deal's limitations and determine if those limitations are enforceable. For example, a publishing attorney can advise whether a next book option is enforceable or simply an unenforceable agreement to agree. For example, a common concern is whether a non-compete clause can prevent an author from writing a new book on a related topic. Similarly, a publishing attorney can advise on termination for cause options or termination as a matter of right under the Copyright Act.  

Tip. If chomping at the bit to sign a contract but cannot afford to hire a lawyer, visit Victoria Strauss' Writer Beware blog - a beacon of light in the "shadow-world of literary scams, schemes, and pitfalls." Writer Beware doesn't offer legal advice, but it does a stellar job exposing and raising awareness of questionable business practices in the world of books and authors.   

Book Publishing Contract Checklist

The following checklist highlights points covered in a typical book publishing contract. In addition, the questions and comments will help guide you through the process of book contract negotiation.

   I.   The Basics

1. In whose name is the contract? Author? A legal entity such as an LLC? 

2. If a legal entity, does the publisher require you to sign an inducement letter? 

 3. Description of work (synopsis)

-Tentative title, # of words, # of photos, intended audience, affix proposal?

II.   Grant of Rights and Territory

      1. Is it a license of certain rights or an assignment of all rights? 
      2. Term or duration (limited term or life of copyright?)
      3. Geographic scope
           a)     World?
           b)     Limited? (e.g., the U.S., its possessions & Canada) 

    4. Exclusive rights granted
    a) Primary rights
    -Trade paperback -Mass market -eBook (verbatim text of the work)

    b) Secondary (subsidiary rights)
    -Periodical rights
    1) First serial (serialization before publication)
    2) Second serial (serialization after initial publication) -Book club
    -Live stage or dramatic rights
    -Video Recordings / Audio Recordings

-Other digital versions (database rights, apps, enhanced eBooks)
-Podcast / Radio rights
-Merchandising / Commercial Tie-in)
-Emerging and future technologies (new ways to monetize)
-Foreign translations rights -British Commonwealth rights

c) Rights Reserved by Author (film, television, live stage podcast, merch)


III.   Manuscript Delivery

    1. Delivery requirements
          a) When due? Is the date realistic?
          b) What format? Spacing, margins, etc.
          c) What to deliver?
                 -Index (who pays?)
                 -Number of illustrations, charts, photos (who pays?)
          d) Copyright permissions and releases
                 -Permissions (do they parallel the rights granted to the publisher?)
                 -Who pays? (hint: it's usually not the publisher)
      2. Manuscript Acceptance
          a) Criteria: Satisfactory in "form and content" or at "sole discretion" of the  
            publisher? (Note: historically, this clause has been a litigation flashpoint)
          b) Termination for unsatisfactory manuscript
          c) Termination for changed market conditions (strike this clause)
          d) When must the publisher either accept or reject? 
          e) Good faith duty to edit
          f) Return of the author's advance
                 -First proceeds clause
                 -False first proceeds clause
  IV. Copyright Ownership / Who Owns the Title?

      1. Who is responsible for registering the work with the Copyright Office?
      2. Tip. Registration should be done within 3-months of initial publication.
      3. Reserved rights
            -The author usually retains film, television, and live stage. 
      4. Who owns the title? (an essential but often overlooked issue)  

V. Author's Representations & Warranties
      1. Author sole creator
      2. Not previously published; not in the public domain
      3. Does not infringe any copyrights
      4. Does not invade right of privacy or publicity
      5. Not libelous or obscene
      6. No errors or omissions in any recipe, formula, or instructions
      7. Tip. Limit reps and warranties to material delivered by the author 

VI. Indemnity & Insurance Provisions
      1. Author reimburses publisher for costs and expenses
      2. Does indemnity apply to claims or actual breaches?
      3. Can the publisher withhold legal expenses? If so, in an interest-bearing
 account? For how long?
      4. Is the author named as an additional insured on the publisher's liability insurance?
      5. Does the publisher have the ability to settle claims without the author's approval? 
      6. Tip. If a high-risk book, discuss author liability insurance with your attorney

VII. Publication
      1. Duty to publish is usually within 12 or 18 months of delivery & acceptance
          a) Force majeure (acts of G-d) delays that extend the time to perfeBook? 
VIII. Payments, Payout & Royalty Rates
      1.  Negotiate a cap on delays
      2. Advertising and promotion
      3. Right to use author's approved name and likeness
      4. Advance Readers Copies for long lead time media
      5. Style or manner of publication
          a) Title consultation or approval?
          b) Book jacket
                 - Right of consultation? Approval?
                 - Inclusion of URL on the back cover
          c) Changes in manuscript
      6. Initial publication in a specific format? Volume form? 
      1. Advance against accumulated royalties
      2. When payable? (in halves, thirds, etc.)
      3. Royalties and subsidiary rights:
          a) Primary rights
                 -Hardcover royalties
                 -Trade paperback royalties
                 -Mass market royalties
                 -eBook royalties
                 -Royalty escalation(s)
                 -Bestseller bonuses
                 -Sneaky royalty reductions
                  1) deep discount and special sales
                  2) mail-order sales
                  3) premium sales
                  4) small printing
                  5) slow-moving inventory
                  6) bundling with other works
          b) Secondary (subsidiary) rights royalty splits
                 -Book club (sales from publisher's inventory v. licensing rights)
                 -Serialization (first serial, second serial)
                 -Anthologies, selection rights
                 -Large print editions
                 -Trade paperback
                 -Mass market
                 -Foreign translation
                 -British Commonwealth
                 -Future technology rights
.                 -Audio rights
                  -Podcast rights (usually retained by the author)
                 -Motion picture/TV/live stage (always retained by the author)
     4. Reserve for returns
          a) What percentage is withheld?
          b) Is there a limitation on how long they can withhold reserves?
      5. What is royalty based on? (Retail price? Wholesale price? net price?)
          a) At an average discount of 50%, 20% of the net is the same as 10% of the list
          b) At an average discount of 40%, 16-2/3% of the net is the same as 10% of the list
          c) At an average discount of 20%, 12-1/2% of the net is the same as 10% of the list
$$ Bonus (Tied to earning out the advance? Tied to hitting a bestseller list?)

IX. Accounting Statements
      1. Annual, semiannual, or quarterly statements
      2. Payment dates
      3. Cross collateralize (suitable for the publisher, bad for the author)
      4. Audit rights
      5. Is there a time limit on your right to object to statements?
      6. Is there a limit on when you can bring legal action?
      7. Examination on a contingency basis (publishers don't like this)
      8. Pass through clause for subsidiary rights income
      9. Does the author have the right to terminate if the publisher defaults on payments?

X. Revised Editions
      1. If agreed to, how long is the revision cycle?
      2. Who revises if you are dead, disabled, or disinterested?)
      3. Royalty reductions if done by the third party (how much?)
      4. Sale of revised edition treated as a new book sale?
      5. Reviser/Author credit

XI. Next Book Option
      1. Definition of next work
      2. When does the option period start?
      3. Definiteness of terms (i.e., Is the option legally enforceable?)
      4. Different option flavors (e.g., First look, matching, topping)

XII. Competing Works      
      1. How is competing work defined?      
      2. How long does non-compete run?
      3. Any reasonable accommodations?
      4. Why novelist's should object to non-compete clauses
XIII. Out-of-Print = Reversion of Rights
      1. How defined? (by number of copies sold over x accounting periods)
      2. Notice requirements
      3. Author's right to purchase digital files, inventory

XIV. Termination
      1. What triggers the reversion of rights?
          a) Failure to publish within (usually between 12 - 18) months of manuscript             acceptance
          b) Failure to account to the author after due notice
          c) Failure to keep the book in print (see Section XIII)
      2. Survival of Author's representations and warranties
      3. Do licenses granted before termination survive?
      4. Does the duty to account and audit clause survive termination?
XV. Miscellaneous
      1. Choice of governing law
      2. Mediation / Arbitration?
      3. Literary agency clause
      4. Personal guarantee if the author is a business entity, not a human being.
      5. Reversion of unexploited rights after X years (e.g., audiobook rights)

Illustration: from Lawton Mackall's Bizarre 
Illustrator: Lauren Stout
Date: 1922

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