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Bar News - November 16, 2012

Give Me Back My Copyright! Provision allows authors to reaquire rights to their works


New writers and artists typically are not in a position to negotiate favorable licensing terms with publishers and/or recording companies early in their careers. There is a power differential that often causes emerging creative talents to take what they can get. At that stage in their careers, their goal is to get published, get recorded, and get the exposure they need to begin building a brand.

Often, when an artistic work is created, its true commercial value is unknown. Congress has attempted to protect authors who assign all of the rights in their works before knowing their true value. Most recently, Congress addressed this issue in the Copyright Act of 1976. So, why are we talking about this in 2012? Let me explain.

The Copyright Act of 1976 ("Copyright Act") governs copyright in the United States. There are several types of works of authorship protected under the Copyright Act, including literary, musical, dramatic, audiovisual, and pictorial, graphic or sculptural works. Many of these works increase in value over time.

Under US law, an "author" obtains a copyright for an original work when it is fixed in a tangible medium. The term "author" generally means the creator or originator of the particular work, and may include writers, photographers, software developers, composers, and the like. In some situations, though, the "author," as described above, may not have rights to their original works. This is true if the work is a "work made for hire," which is defined in the Copyright Act as (1) a work prepared by an employee within the scope of his or her employment; or (2) a work specially ordered or commissioned… if the parties expressly agree in a written instrument signed by them that the work shall be considered a "work made for hire." Thus, under the Copyright Act, in the case of a "work made for hire," the employer or other person for whom the work was prepared is considered the "author."

Because many works increase in value over time, the term of protection under the Copyright Act becomes an important factor. The term of protection for a copyrighted work is very long, by almost anyone’s standards. For an individual, the copyright of a work generally endures for the life of the author, plus 70 years after the author’s death. For "works made for hire," the copyright lasts 95 years from the year of its first publication, or 120 years from the year of its creation, whichever expires first.

In part due to the length of time that an "author" may have assigned their rights, and the potential for a work to increase in value over that period of time, Congress included a provision in the Copyright Act that protects authors from assigning away all of their rights before the true commercial value of the work is known. The provision provides a "termination right," which allows for the termination of transfers and licenses granted by the author, with those rights in the work reverting back to the author.

This termination right has some important limitations, but before we begin discussing the limitations on an author’s right to terminate any transfers or licenses they may have granted, it is important to first understand what rights an author has in their work. There are five exclusive rights in a copyrighted work: reproduction, modification, distribution, public performance, and public display. If the author did not have any rights in their work, i.e. it was a "work made for hire," then they could not have transferred or licensed their work, and thus the termination right would not apply.

There are also some rights that do not revert back to the author after a termination right has been exercised. These include some rights to already created derivative works (i.e. the right to modification), and any right to the work outside the US. But, the rights to any further derivative works generally do revert back to the author.

So, why are we discussing the Copyright Act of 1976 in 2012? Because the termination right only applies to copyrighted works created after Jan. 1, 1978 (the date the Copyright Act of 1976 went into effect), and generally speaking, the termination of the grant may only be effected during a period of five years beginning at the end of 35 years from the date of execution of the grant.

The termination of rights provision also requires that the author give notice of the termination not less than two years or more than 10 years before the effective date of termination. Once the notice of a termination right has been served, it must be recorded in the copyright office before it can take effect. This notice requirement helps to alert any co-authors, as the right to grant exclusive rights after the effective date of the termination right will require the authority and consent of all authors.

If a work was co-authored by two authors, one author can assert their termination right and their 50-percent right will revert back to them. This has the practical effect of converting the original exclusive right into a non-exclusive right held by the original licensee or assignee.

When there are more than two authors, the termination right must be signed by a majority of the authors. Under US copyright law, there also is a duty to account. In the previous example, any profits collected by an author as a result of asserting their termination right need to be distributed among any remaining authors, regardless of whether they joined in the assertion of the termination right.

In certain situations, exercising a termination right is an option worth pursuing. The termination right can be used to find a new business partner or as a negotiating tool. During the two years following notice, the original parties can come to a more balanced agreement, or the author can decide not to work with the original licensee or assignee. The decision of whether and/or when to assert a termination right to a copyrighted work requires legal analysis, and it is recommended that you seek qualified intellectual property counsel to assist you in making this decision.

Paul Remus is a shareholder of the Devine Millimet firm in Manchester. His practice focuses primarily on intellectual property and regulation of financial institutions. Paul began practicing with the premier public contracts law firm in Washington and, for a number of years, represented companies around the country in disputes with the federal government.

Kim Peaslee is a member of the Devine Millimet firm’s patent, trademark, and licensing practice group. She assists clients on a wide range of intellectual property matters, including, patents, trademarks, copyrights, trade secrets, and litigation matters.

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