Intellectual Property Attorney

Termination Rights Under The Copyright Act: Part One

Copyright owners and their heirs should keep in mind certain little-known provisions in the Copyright Act that may enable them to capitalize on their (or their relatives’) intellectual property rights. Even though a copyright license agreement—for example, a book publishing agreement—may expressly state that the grant extends throughout the term of copyright in the work, such a grant may actually be terminable significantly earlier.

The Copyright Act provides three separate opportunities for an author or his/her heirs to terminate grants of rights in the author’s work long after those rights were first granted. However, in order to take advantage of these provisions, those seeking termination must strictly follow certain procedural requirements.

This blog will deal with termination rights under Section 304(c) of the Copyright Act. Termination rights under Section 304(d) of the Copyright Act and the so-called “right of recapture” under Section 203 of the Copyright Act will be discussed in separate blogs.

Section 304(c) of the Copyright Act provides a right to terminate grants executed by the author before January 1, 1978. A majority interest of the author’s statutory beneficiaries may exercise this right to the extent of the author’s share. In other words, if an individual illustrated but did not write a particular book, his/her beneficiaries may terminate a grant of rights in the illustrations, but they may not terminate a grant of rights in the text.

An author’s statutory beneficiaries include the author’s widow(er), any surviving children and the surviving grandchildren of any deceased child. The author’s widow(er) owns one half of the termination interest; the other one-half interest is divided among the author’s surviving children and the surviving grandchildren of any deceased child. Thus, a majority interest may be created by an author’s widow(er) plus any single surviving child or surviving grandchild of a deceased child.

Such grants may be terminated during a five-year period beginning at the end of fifty-six (56) years from the date of copyright; provided (a) advance written notice is served on the grantee at least 2 years and no more than 10 years prior to the date of termination, and (b) a copy of the notice is recorded in the Copyright Office before the effective date of termination.

Therefore, notices could be served on October 8, 2012, for example, for books published between October 8, 1953 and October 8, 1966. If one serves notice for a book published on October 8, 1953, the effective date of the termination would be October 8, 2014. If one serves notice for a book published on October 8, 1966, the effective date of the termination would be October 8, 2022. Notice for a book published on October 8, 2012 could be served as early as October 8, 2058 or as late as October 8, 2071.

Following termination, rights revert to the persons owning the termination interest, including those owners who did not sign the notice of termination. Termination affects all rights held by the grantee and any sublicensees, except rights based on foreign copyright law. The prior grantee, and any sublicensees of the grantee, may continue to utilize any derivative work already created (and the grantee may still receive royalties from its sublicensee’s utilization of its derivative work), but they may not create new derivative works. Owners of a majority interest in the reverted rights may grant the reverted rights, including the right to create new derivative works, after the date of termination. If the new grant is to the prior grantee, the grant may be made any time after the notice is served.

By availing themselves of these provisions, the owners of a termination right can liberate a work from a lackluster grantee in favor of one who can breathe new life into that work. Alternatively, the owners may simply wish to re-negotiate the terms of a license based on their improved bargaining power arising from the mere threat of termination. In either case, it pays to know your rights.

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