Copyright Termination Right: A Powerful Right For Copyright Owners

Ever since I was a law student learning about copyright law, particularly, the provision that gives an author the right to terminate his or her transfer of copyright in a work (the “Copyright Termination Right”), I’ve wondered how the record and publishing companies were going to respond when an artist, songwriter, or composer actually attempted to recapture his or her copyright. Later in time, when I worked as an attorney in legal affairs for various labels, the Copyright Termination Right was always a topic of discussion when reviewing contracts that were entered into during the late 1970s and early 1980s since these contracting individuals would be the first ones eligible to assert the right. We’re talking about artists, songwriters, and composers that collaborated to create timeless music, such as Con Funk Shun’s “Ffun”, Parliament’s “Flash Light”, The Isley Brothers’ “Take Me To The Next Phase”, The O’Jays’ “Use Ta Be My Girl”, The Commodores’ “Three Times A Lady”, A Taste Of Honey’s “Boogie Oogie Oogie”, Earth Wind & Fire’s “Got To Get You Into My Life”, Chaka Khan’s “I’m Every Woman”, Chic’s “Le Freak”…should I go on?

This topic was also an ongoing discussion within the companies as it pertained to the competing philosophies for signing new talent: whether it was better to be a talent friendly company, and look for long-term success, or take what leverage we had over the talent at the time and limit any changes to our company friendly form agreement. At that time, the Copyright Termination Right seemed to be less important because the effective date was so far in the future, so guess which philosophy usually prevailed?

Fast forward to 2010, and the reality of the Copyright Termination Right is about to come to fruition.  The first termination notices have been written and served on record and publishing companies, and we are about to see a flurry of artists, songwriters, and composers test their rights. Whether or not this topic directly affects you, I believe that the issues that will be addressed with the first attempts to recapture ownership of works will affect many existing and future music contracts because it directly relates to the benefit that each side receives.

What Is The Copyright Termination Right?

The Copyright Termination Right sounds like a bunch of legal jargon that glazes the eyes of many, but what if I told you that it was possible for you, the artist, songwriter or composer, to take back ownership of your music from the record or publishing company that “encouraged” you to take an undesirable deal years ago. Is this something that would interest you?

I suspect that most people would have an answer similar to this, “Sure, but what about the contract that I signed where I transferred all of my rights to the Publisher?  How do you propose I get past that minor detail Mr. Attorney at Law?” My response to that question would be, “Well, my sarcastic friend, the short answer is that the U.S. Copyright Act includes a termination provision, the Copyright Termination Right, that actually trumps the contract that you signed, and, if certain criteria are met, allows the original author to regain ownership of his or her copyright in the work”.

What Is The Basis For This Law?

Particularly, there are two main reasons why a creative person may possess this right:

First, in the early 20th Century, the U.S. Congress initially created law to protect young authors from having to settle for bad deals that were made for the life of the copyright because at the time, struggling authors had no leverage to negotiate his or her original contracts. More recently, Congress, through the 1976 Copyright Act (which actually didn’t take effect until January 1, 1978) reiterated this concept by ensuring that an author would have a chance to re-evaluate the value of a copyright after 35 years, and either re-negotiate a deal with the original contracting party, who would likely be open to more fair negotiations, or go elsewhere and make a new deal with another party for the remainder of the copyright life.[1]

Second, federal law, such as the Copyright Act, takes precedent over any state laws, such as contract law, so if a conflict exists between the two then the federal law wins. This means that an author’s Copyright Termination Right cannot be waived, sold in advance, or otherwise forfeited by contract.

In short, taking advantage of a songwriter or composer is not only unconscionable, but literally unconstitutional. Even though an author signs a contract that says something like, “all rights are assigned for the life of the copyright”, which is common language in publishing deals, such a provision is void and ineffective when it comes to an author’s right to terminate the contract assignment and regain control of his or her work pursuant to the Copyright Act.

Why Is This Topic Important Now?

The reason that this subject has become a hot topic of late is because on January 1, 2013 a songwriter can assert his or her termination rights for the first time. To assert these rights, the author is required to send a notice to the holder of the copyright no later than January 1, 2011 (yes, just months away!).  This means that the author of content created in 1978 could regain ownership of their works if certain criteria are met, and authors of content created as late as 1985 are now eligible to serve their notices of termination. This will now be an ongoing right (i.e., authors of copyrights created in 1990 can regain their rights in 2025 by giving notice of such as early as 2015).

How Exactly Does This Right Work?

To qualify for the Copyright Termination Right, the transfer or license must have been executed by the author, not by a recipient of an author’s rights (i.e., heirs by will).  If the original author transferred or licensed the rights, then the discussion of the following issues will give authors some guidance as to whether the rights in their work may be eligible for revision:

When Did The Author Transfer or License The Rights?

The first fact to determine is when the grant of rights in question was executed. A longer analysis applies to works that were created prior to January 1, 1978 because Copyright Law prior to this date was more complex.  Section 304 of the Copyright Act governs these situations. As for the termination of transfers and licenses created after January 1, 1978, Section 203 of the Copyright Act governs. Since most of the works that I encounter were created after 1978,  and in the interest of writing a concise article, I am not going to address the issues pertaining to works created prior to January 1, 1978. That being said, it is important to note that  the analysis for works created prior to January 1, 1978 can be very different.

Was The Copyright Created As A “Work-Made-For-Hire”?

The next step in evaluating whether you are eligible to terminate a contracting party’s transfer or license is to determine whether the copyright was created as a work-made-for-hire for the contracting party. Reviewing your contract and comparing it to the definition of “work-made-for-hire”, defined in Section 101 of the Copyright Act, can sometimes answer this question. A work-made-for-hire is a work prepared by an employee within the scope of his or her employment for the employer. It is also a commissioned work, falling under one of the specially designated categories of such works, where the parties agreed in writing to treat it as a work-made-for-hire (“WFH”). Certain works are clearly defined in the WFH definition, but there are also several types of work that are excluded entirely, particularly music. This creates some ambiguity and when the work is not mentioned, a deeper analysis may be required, or possibly a law suit to clarify.

If there is work-made-for-hire language in your contract and it clearly falls under the definition found in the Copyright Act, then unfortunately you do not have the right to regain your copyright because a work-made-for-hire for a contracting party means that the contracting party is actually the owner. If your contract has “assign and transfer” type language in the contract then we are still in business and can move to step 3 of the analysis.

As a side note, what if your contract contains both “work-made-for-hire” language and “assign and transfer” language? For example, probably all recording artist contracts contain this dual language because the Copyright Act does not specify recorded music as a definite “work-made-for-hire” category and the record companies wanted to secure the best of both worlds. This has been a hot topic ever since the 1976 Copyright Act was enacted. The lobbyists who represent the sound recording industry are vigorously trying to make the case that no recording artists or producers should be deemed to have the right to terminate a sound recording copyright. With that position, the recording industry has to also walk the fine line of not calling recording artists or producers employees, which would trigger other legal obligations. Watch for this topic to heat up as we approach the first date (January 1, 2013) that an author can terminate his or her copyright.

Who Can Terminate The Copyright?

If the author is still alive then this answer is easy, the author can terminate the copyright. If the author is not alive then it can get complicated, but the short answer is the author’s heirs have the right to terminate assignments, (again, provided the deceased author made the assignment). The specific answer is determined in a way that is similar to what happens to a person’s property if that person dies without a will, which involves analyzing the rights of the spouse, children, and next of kin (this analysis can potentially be a legal nightmare in itself if the author was married multiple times, has multiple children from different marriages, has illegitimate children, etc.). You should consult your attorney to properly answer this question.

What Is The Effect of Termination?

Upon the effective date of termination, all of the author’s previously transferred or licensed copyright rights covered by the terminated grant revert to the author or proper person(s) if the author is deceased. Exercising the termination right does not extend or otherwise modify the original copyright term. A copyright for an individual author under the 1976 Copyright Act lasts for the life of the author plus 70 additional years. If, on the other hand, the work is a work of corporate authorship, the copyright duration is 95 years from the date of publication or 120 years from creation, whichever expires first. A proper termination of the rights to one can be transferred again for the remainder of the life of the copyright.

When Can I Terminate My Copyright?

Rights granted in works created after January 1, 1978 may be terminated during a five-year period beginning 35 years after the grant was made [date of execution of the grant] (This five-year period changes a bit if the author granted a right of publication of the work, whereby the clock may start on the date of publication), subject to the author giving proper notice (see below). For example, if the original copyright date is January 1, 1978, a notice of termination can be served as early as January 2003, but no later than January 1, 2011. If the original copyright date is January 1, 1985, a notice can be served as early as January 1, 2010, but no later than January1, 2018. As you can see, this is a timeframe that will shift daily.

How Do I Initiate Terminating My Copyright?

In order to terminate a copyright, the author, or proper person(s) if the author is deceased, must sign and serve a proper notice of termination on the grantee, not less than 2 years and no more than 10 years before the intended termination date, which must fall within the allowable termination date window.  For the notice to be effective, a copy must be recorded in the U.S. Copyright Office around the time of service to the grantee, and before the effective date of the termination.

Are There Any Exceptions?

It is worth noting that the Copyright Termination Right does not apply to derivative work prepared under authority of the grant before termination of the grant. A derivative work is a creation that is based on an original work, such as an updated version of original music. The derivative user may continue to use that work, but no new derivative works can be created.

Conclusion

Now, I admit that in theory the Copyright Termination Right sounds great, but the execution of asserting your rights against a major music company is not a task that you should attempt without first seeking competent legal counsel.  It must be done correctly and the company will likely attempt to discourage your efforts. But have no doubts about this subject, the groundwork for this powerful right is already being laid. Reportedly, seasoned talent like The Eagles, Journey and Barbara Streisand are planning to test the waters, and their efforts will likely set a precedent for other successful late 70’s talent to follow.


[1] The 1976 Copyright Act as amended (Title 17 of the United States Code) did not take effect until January 1, 1978.  Works created prior to this date were governed by the 1909 Copyright Act.

Richard B. Jefferson is a general partner of M.E.T.A.L.™ Law Group, LLP, a boutique law firm located in Los Angeles, California. The firm is comprised of highly skilled attorneys who have extensive practical experience in Business Law and Intellectual Property Law. It represents small to medium-sized businesses in the innovative industries of Media, Entertainment, Technology, Action Sports, and Lifestyle Brands.  Mr. Jefferson is also a member of the LawGuru Attorney Network.

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