Thursday, April 29, 2021

How Do I Terminate My Publishing Contract?

Copyright Termination and Reversion Of Rights In A Publishing ContractMost agreements in the publishing and entertainment industries are for the life of the copyright - the writer's life plus another 70 years. However, thanks to the Copyright Act, there’s a five-year window that opens up the earlier of 35 years after publication, or 40 years from when rights were signed way, when an author, or their heirs can terminate a bad publishing, film or music publishing deal.

Similarly, authors (or their heirs) can terminate all grants, licenses or transfers of rights (made prior to 1978) beginning on the 56th year after that assignment was made.

The copyright termination right is an immensely powerful re-valuation mechanism that trumps written agreements—including valid and duly signed author contracts or licenses that erroneously state they are in perpetuity.

Often overlooked by authors (but not composers), it is a "reset button" that can undo most contracts entered into in the past 35 years. By definition and design, it is a panacea for any author who signed a bad deal when they were young and had little bargaining power.

Except for works for hire (discussed later), all copyright grants, including book contracts, film option agreements and music publishing agreements, entered into after December 31, 1977 are terminable.

As they say, the devil is in the details. There is a very specific process that must be followed to successfully reclaim rights. To successfully terminate grants and licenses, holders must provide legally sufficient termination notices. What is meant by legally sufficient? To give a precise summary, you have to know that grants can be terminated during a five-year window beginning the earlier of 35-years after the date of initial publication, or 40-years after the date of the grant. For example, provided the grant was not made by a will, a December 28, 1990 grant can be terminated as early a 2026, or late as 2031, provided notice is timely served.

Practice Pointer. A Notice of Termination must contain the effective date of termination - a date set by the copyright owner. The notice may be served up to 10-years before the effective date, but no later that 2-years before it. The notice must be recorded at the Copyright Office prior to the termination date selected. If your calculations are off, or you fail to timely record the notice, the notice is a nullity. Of great significance is the fact the termination right cannot be waived by contract.

If the author or other creator dies before serving a notice of termination, the termination right vests in their statutorily determined heirs - those identified in the Copyright Act. If deceased, the notice must be signed by a majority of the author's statutory heirs. Common pitfalls include missing the termination notice filing deadline, submitting notices on behalf of less than a majority of those needed to sign the notice, and failure to record the notice with the Copyright Office.

With the exception of true works for hire, every author contract entered into on or after January 1, 1978, is subject to termination. But authors cannot delay, because failure to send a timely (or properly drafted) notice can be the end of the road for those wishing to recapture control of their works.

Comment. Filing a Notice of Termination does not mean termination has taken place. It's a waiting game. Notices must be served upon grantees (or their successor in interest) between two and ten years prior to the actual termination date. If improperly done, the notice will be rejected by the Copyright Office. Finally, the recipient may challenge it.

To put the termination right in perspective, an author's copyright is protected for seventy years after their death. If not exercised, rights remain with the author's publisher or producer partner. It's worth noting that termination rights only apply to U.S. rights. Under the "derivative works exception," post termination a party, who was authorized to exploit a derivative work, such as a motion picture adaptation of a book, may continue to exploit and profit from that derivative work post-termination. What they cannot do is create a new derivative work (remake, novelization) after the effective date of termination.

The U.S. is not alone in giving authors and their heirs reversionary rights. Commonwealth Reversionary Rights, which exists in the United Kingdom, and in former commonwealth nations such as Australia, New Zealand, South Africa and Canada, allow authors and their heirs to reclaim their rights under related, but different, circumstances.

Pre-1978 Creative Works

Books and other creative works published 56 years ago are also subject to copyright recapture under a less publicized, but equally powerful, section of the 1976 Copyright Act. For example, in 2008, the U.S. Court of Appeals for the Ninth Circuit returned rights to the 1938 children’s story Lassie Come Home to the author’s family. Unlike the “35-year rule,” here the key date was the date of copyright, not the publication date or date the contract or license was signed. In this instance, Congress thought it was fair to award the additional term of copyright conferred by the controversial Copyright Term Extension Act to authors and their families, not the publisher. Like the 35-year rule, it is the author’s responsibility to understand whether they are eligible to terminate.

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