Copyright Recapture: How to (Legally) Terminate Your Book Contract

How to Get Back Your Book or Film Rights

1941 Superman "Breaking Chains" Trademark

To terminate a book publishing contract, the first step is to carefully review the terms of the agreement to see if there is a valid contractual basis for termination. Valid reasons may include failure to meet agreed upon deadlines or failure to keep the book in print. If you cannot find a valid contractual basis for termination, do not despair. While termination is generally determined by the terms of the contract, there's a powerful, but little-known, provision in the Copyright Act that allows authors (or their heirs), to terminate life of copyright book publishing and film option agreements.

Section 203 of the Copyright Act is the reset button that permits authors and their heirs to recapture book and related rights. While this article focuses on book publishing contracts signed after 1978, there are similar provisions for older works, but with different rules. 

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.

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, the 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.

Terminating Jointly Authored Works

In the case of joint works created after 1977, a majority of the coauthors must sign the termination notice.  

 

Terminating Pre-1978 Works

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 book publishing attorney and former publishing executive with a special interest in defamation, copyright and trademark matters. He has successfully filed over one hundred copyright termination notices. 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, Time Magazine, Forbes, Fortune, Publishers Weekly and the Columbia Journalism Review. You may reach him at jassin@copylaw.com or at (212) 354-4442. His offices are located at 1501 Broadway, Floor 12, New York, NY 10036, and in Madison, NJ.

(c) 2011 - 2023. Lloyd J. Jassin 

 

 

1941 Superman Breaking Chains Trademark Registration

 

 

 

Tips for Negotiating a Book Publishing Contract

Asking an Attorney to Review a Book Contract

Book Publishing Contracts Checklist

In book publishing, unlike the film industry, the grant of rights are (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. What could possibly go wrong? Lots. Just ask a publishing attorney. Common problems include:

• no right to reclaim rights if the publisher fails to account
  
• no right to reclaim rights if the publisher fails to publish
• no right to reclaim rights for low or no sales
• no right to reclaim unexploited subsidiary rights (e.g., audiobook)
• no right to approve the settlement of legal claims
• overly broad non-compete clause
• restrictive option clause mistaken for a multi-book deal
  
• rights grabs (e.g., film, television, merchandise licensing rights)

Publishers are most willing to accommodate requests for changes to a book contract during the romance stage of the relationship. Later is too late. Unless a book 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 book 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 deviate 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 will receive a 15% commission on everything from books to audiobooks to film deals. Others retain flat or hourly fee book contract attorneys to help them negotiate royalty rates, the grant of rights, and, later, decipher the legal provisions found in 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 dealing 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 five New York 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 royalty on the "net amount received," which may be 40% to 50% less than the retail price.  The standard eBook royalty rate offered by established publishers, and many independents, is 25% of the net.

Is Your Book Contract Signable?

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 five 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

Below are matters to consider when you draft or negotiate your next publishing agreement. Each key point deserves greater attention than given here (and will be the subject of future blog posts). While not all clauses are equally important (or negotiable), a well-drafted contract will cover all or most of the points outlined below.

I.   General Provisions
      1. Name/address of parties
      2. Description of work (synopsis)
          -Tentative title, # of words, illos, intended audience, fiction, non-fiction, etc.

II.  Grant of Rights and Territory
      1. Is it an assignment of "all rights" or a license agreement?
      2. Term or time period (i.e., usually the life of the copyright)
      3. Geographic scope
           a)     The world?
           b)     Limited (e.g., the U.S., its possessions, and Canada)
      4. Exclusive rights granted
           a)     Primary rights
                  -Hardcover
                  -Trade paperback
                  -Mass market
                  -Direct mail
          b)     Secondary (subsidiary rights)
                  -Periodical rights
                  1) First serial (i.e., pre-publication excerpts)
                  2) Second serial
                  -Book club
                  -Dramatic rights
                  -Film/TV rights
                  -Videocassette/audiocassette
                  -Radio rights
                  -Merchandising (commercial tie-in) rights
                  -New technologies
                  -Foreign translations rights
                  -British Commonwealth rights

II.   Manuscript Delivery
      1. Delivery requirements
          a) When due? Is the date realistic? Time is of the essence?
          b) What format? 
          c) What to deliver?
                -Rights cleared photos, illos, charts?  Illos? Charts? 
                -Permission & release

      2. Manuscript Acceptance

          a) Satisfactory in "form and content" or at "sole discretion" of                      the publisher? 
          b) Termination for unsatisfactory manuscript
          c) Termination for changed market conditions
          d) How is the notice of acceptance or dissatisfaction given
          e) Good faith duty to edit
          f) Return of the author's advance
                 -First proceeds clause
                 -False first proceeds clause

III. Copyright Ownership
      1. In whose name will the work be registered?
      2. Who will register the work with the Copyright Office? 
      3. Is there a signed collaboration or ghostwriter agreement? 
      4. The scope of permissions should parallel rights granted publisher
      5. Reserved rights (i.e., rights retained by the author)

IV. 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 the right of privacy or publicity
      5. Not libelous or obscene
      6. No errors or omissions in any recipe, formula, or instructions
      7. Limited only to material delivered by the Author

V. Indemnity & Insurance Provisions
      1. Author indemnifies the publisher
      2. Does indemnity apply to claims and breaches?
      3. Can the publisher withhold legal expenses? If so, for how long?   
      4. Has the author been added as an additional insured to media perils policy?
      5. Does the author have approval over the settlement of claims?  

VI. Publication
      1. Duty to Publish within [insert number] months
          a) Force majeure (acts of god)
                 - Any cap on delays?
      2. Advertising and promotion
      3. Right to use author's approved name and likeness
      4. Advance Readers Copies - MUST be sent 3-4 months before pub date
      5. Style or manner of publication
          a) Book Title - Right of consultation or approval?
          b) Book jacket - Right of consultation? Approval?
          c) Changes in manuscript
      6. Initial publication by a specific imprint in a particular format? 

V. Money Issues
      1. Advance against future 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 bonus
                 -Royalty reductions
                  1) deep discount and special sales
                  2) mail order sales
                  3) premium sales
                  4) small printing
                  5) slow moving inventory

          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
                 -Hardcover
                 -Trade paperback
                 -Mass market
                 -Foreign translation
                 -British Commonwealth
                 -Future technology rights
.                -Database rights 
                 -Audio rights
                 -Motion picture/TV
                 -Merchandising

      4. Reasonable reserve for returns
          a) What percentage will be withheld?
          b) When liquidated?

      5. What is royalty based on? (retail price? wholesale price? net price?)
          a) At average discount of 50%, 20% of net is same as 10% of list
          b) At average discount of 40%, 16-2/3% of net is same as 10% of list
          c) At average discount of 20%, 12-1/2% of net is the same as 10% of list
      6. Recoupment of advances

VI. Accounting Statements
      1. Annual, semiannual, or quarterly statements
      2. Payment dates
      3. Can the publisher recoup an outstanding advance from the next book?
      4. Does the contract afford author audit rights? 
      5. Limit on time to object to statements
      6. Limit on time to bring legal action
      7. Can you hire a forensic accountant to review books on a contingency basis?
      8. Pass through clause for subsidiary rights income
      9. If the publisher fails to account, can you terminate the contract? 

VII. Revised Editions
      1. Frequency
      2. By whom?
      3. Can they reduce your royalty if you don't participate in a revision? 
      4. Sale of a revised edition treated as the sale of a new book?
      5. Reviser credit (May the original author remove their name?)

VIII. 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. What type of option? (e.g., first look, matching, topping?)

IX. Competing Works & Morality Clauses
      1. How is competing work defined?
      2. How long does the non-compete run?
      3. Are there adequate exclusions from what constitutes a competing work?

X. Out-of-Print
      1. How defined?
      2. Notice requirements
      3. Author's right to purchase plates, film, inventory

XI. Termination
      1. What triggers the reversion of rights?
          a) Failure to publish within 12 (or 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 X)
      2. Survival of Author's representations and warranties
      3. Licenses granted before termination survive?

       TIP. Pay attention to what triggers the duty to return the advance?  

XII. Miscellaneous
      1. Choice of governing law
      2. Mediation / Arbitration clauses
      3. Bankruptcy
      4. Modification
      5. Literary agent clause 

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Illustration: from Lawton Mackall's Bizarre 

Illustrator: Lauren Stout

Date: 1922

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Libel in Fiction

Fair Use in a Nutshell 

Twelve Copyright Permission Myths  

Estate Planning for Authors 

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