The New York Times recently published an article entitled Record Industry Braces for Artists’ Battles Over Song Rights, by Larry Rohter. The article describes how, “thanks to a little-noted provision in United State copyright law,” artists with 1978 hit albums “now have the right to reclaim ownership of their recordings, potentially leaving the labels out in the cold.”
That “little-noted” provision is 17 U.S.C. §203, Termination of transfers and licenses granted by the author. For grants made on or after January 1, 1978, §203 allows an author, or her surviving family or estate if the author is dead, to terminate a copyright grant after 35 years from the date the grant was made, if a certain procedure is followed. The word “author” is not defined in the Copyright Act of 1976. Merriam-Webster defines “author” as “one that originates or creates.” Thus, a broad range of creators is covered by the word “author,” including writers, composers, photographers and software developers.
The effect of the termination is that the rights granted go back to, and become the property of, the author, her surviving family or her estate. Authors’ termination rights are becoming an issue now, not in 2013, because the statute requires that the terminating author give the grantee at least a two year notice of the effective date of termination. §203(a)(4)(A). This termination right does not apply to works made for hire, for example, a work created by an employee within the scope of her employment.
Why does this provision exist? The Copyright Act of 1976 is a major reform of the Copyright Act of 1909. One of the 1976 Act reforms is the creation of a single term, ending the 1909 Act scheme of an initial term and a renewal term. According to Gorman and Ginsburg:
Under the 1909 Copyright Act and its predecessors, the principal purpose of the renewal format was to assure that a transferred copyright, when the transfer was made in the initial term, could be recaptured by the author (or his surviving family, or legatee, or next of kin) after a reasonable time. The economic rewards during the renewal term could thus be fully enjoyed by the author, unencumbered by any rights, interests, or licenses previously contracted away. The author, or her statutory successors, was to have a “new estate,” a second chance to license or assign for a new consideration.
Copyright Cases and Materials, Robert A. Gorman and Jane C. Ginsburg, 7th Edition, 2006, page 447.
The Gorman and Ginsburg discussion of this topic refers the reader to House Report No. 94-1476, 94thCong., 2d Sess. 124-28 (1976). Essentially, §203 is a recognition of the unequal bargaining power of authors. This inequality is partially caused by “the impossibility of determining a work’s value until it has been exploited.” (H.R. Rep. No 94-1476, 124.) Section 203 is a compromise that attempts to further the objectives of copyright law and address the interests of all stakeholders.
Getting back to the New York Times article, this transfer termination provision was enacted in 1976 and went into effect on January 1, 1978. Record labels and publishers in general have had 3 decades to make any necessary adjustments and preparations. Two different thoughts come to my mind. The first is how studios will respond to artists seeking to reclaim their copyrights. It seems to me that the grant terminations must be dealt with on a case by case basis and even a song by song basis. I think the recording labels’ approaches to this issue will have a direct impact on the second issue: Given the rise of viable alternatives to the traditional author/publisher model, what will recording labels and traditional publishers do to keep their businesses relevant? I think recording labels have an opportunity to further alienate recording artists with their approaches to this copyright termination issue. The copyright termination issue is relevant to all right grants made after January 1, 1978. This issue will not go away until the law is changed.
Many thanks to Gil Price for suggesting this blog topic. Gil is the Principal of Price Management Group. Gil’s firm provides lawyers with business development, marketing, finance and accounting, human resources, IT development, and facilities and operations services so that lawyers can spend more time practicing law and less time on law firm administration.