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June 24, 2011 / screwvala

Mind the Gap

To my mind, one of the more fascinating aspects of Copyright Law is the statutory right of recapture. A recent rule adopted by the Copyright Office addresses a hypertechnical flaw in the statutory enactments of these rights by Congress. And, I suppose, it reveals me as a Copyright nerd.

First, let’s examine how the termination process works. Suppose you’re a new author trying to get a publishing deal. As an unproven author, you have little leverage in the negotiating process. You will more than likely have to agree to give away rights for the life of the copyright. Several years later, it turns out you’re John Updike — not literally, just literarily, and commercially. Now, in negotiations with publishers, you have substantially more leverage. But what about those early deals?

The Copyright Act permits authors, after a certain amount of time has passed and within a specific window of time, to terminate prior grants of rights so that they can be resold. So, that first book deal you did granting rights for the life of the copyright? You can cancel it and then resell those rights to the same publisher, or a different publisher, if you prefer.

As the Copyright Act has evolved and changed, so has the recapture right. Currently, the procedure exists in two separate statutes, §203 and 304 of the Copyright Act.  §203 applies to any grants on or after January 1, 1978, the effective date of the 1976 amendments to the Copyright Act.  §304 controls all grants for works that had an existing copyright as of January 1, 1978. Note that one statute is implicated by the date of the transfer, but the other is triggered by the date of the copyright.

Suppose that on December 31, 1977 you sign a contract with a publisher for an unfinished novel. On January 2, 1978, you complete and copyright the novel and deliver it to the publisher for publication. What statute governs your termination rights? §203 appears to be out, because the grant was made prior to January 1, 1978. Same too with §304, since the copyright did not exist prior to January 1, 1978. And herein lies the gap.

Although Congress certainly didn’t intend to create a class of works that would not enjoy termination rights, by establishing different criteria for the application of each provision, it did exactly that. To address this inequity, the Copyright Office has adopted a rule that transfers on the hypothetical would be accepted as terminations under §203. In support of the rule, the Copyright Office reasoned that a grant in a copyrighted work cannot be effective unless and until the work in question exists. So, our author who signed a contract on December 31, 1977 did not effectively make the transfer until January 2, 1978, the date that the work was completed.

This raises some important practical questions. First, the recordation of a termination notice is not a presumption of validity. Will Courts reach the same conclusion as the Copyright Office did and rule that §203 governs termination of the transfer described here? Can authors now provide an accurate date of creation to satisfy the requirement of §203, since under §304 it is the date of the transfer that is important? As the window for termination on these grants starts to open, Congress should provide clarity to rights-holders and grantees alike by clarifying the appropriate procedure.

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