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>>“The sole right … shall return to the Authors”: Part III: Transitional Issues

“The sole right … shall return to the Authors”: Part III: Transitional Issues

Prof. Jane C. Ginsburg, Columbia University School of Law*
April 14, 2010

My two prior contributions to IP Issues (Feb. 26, 2010, and Dec. 8, 2009) have not exhausted the questions the 1976 Act termination right raises.  The Copyright Office recently issued a Notice of Inquiry seeking comments on a possible “gap” in the 1976 Act termination provisions:

The Copyright Office seeks comment on the question of whether and how Title 17 provides a termination right to authors (and other persons specified by statute) when the grant was made prior to 1978 and the work was created on or after January 1, 1978.1

As the NOI emphasizes, the need for an answer presses because the notice period for a termination to take effect 35 years after a grant made in 1978 will expire at the end of 2011.  (The termination period runs for five years; given the minimum two-year notice period, the last opportunity to serve notices of termination respecting grants made in 1978 will be 2016.)  But the impact of the NOI is not limited to grants made in 1978.  Because contracts to create multiple works in the future and transfer their copyrights are not uncommon, the Copyright Office’s inquiry raises issues not only concerning the existence of any termination right for authors whose works post-date the 1976 Act’s effective date but whose agreements pre-date 1978 (the subject of the NOI).  The inquiry also raises issues as to the timing of the vesting of termination rights when the creation of the works comes after (sometimes long after) the post-1978 entry into the transfer agreement.

Interpreting the statute

Sec. 203(a) provides (interpreted terms in bold):

In the case of any work other than a work made for hire, the exclusive or nonexclusive grant of a transfer or license of copyright or of any right under a copyright, executed by the author on or after January 1, 1978

At first blush, the trigger event is the conclusion of the contract on or after 1/1/78, and the “gap works” thus would be excluded.  But the contract must be a “grant of a transfer or license of copyright”; if the work does not exist at the time the agreement is entered into, there is no “grant of a transfer or license of copyright,” because there is as yet no copyright whose transfer or license can form the subject matter of the grant.  Under the 1976 Act, the federal copyright “subsists” with the creation and fixation of the work.2  The copyright does not pre-exist the creation of the work.  By the same token, the statutory text ties the grant of a license of a particular right to an extant work (“a copyright”): The contract does not grant an abstract reproduction right (the text would then read “any right under copyright”), but a right to make copies with respect to a work whose copyright (or parts of it) is being transferred or licensed.

Thus, under the terms of the statute, the “grant” cannot be “executed” before the works come into being.  There may be a signed agreement, but it is best conceptualized as an agreement to effect the grant when the works come into being; the contract grants a future interest, not a “transfer of copyright” itself.  Put another way, the “grant” is “executory,” not “executed.”  In U.S. contract law, an “executed” agreement is “one in which nothing remains to be done by either party, and where the transaction is completed at the moment that the agreement is made,” while “an executory contract is a contract to do some future act.”3  In this case, the future act is to create the works, to which the copyrights will attach.  Courts have recognized the distinction between “executed” and “executory” contracts in the context of grants of copyright interests.4

The text of Sec. 203(a) presents further reasons to conclude that “executed,” as employed in this part of the statute, must mean “concluded transaction,” and not merely “agreement signed or entered into.”  First, the Copyright Act is replete with references to “signed” writings or agreements.5  If Congress merely meant “signed,” it could have said so.  Second, and more importantly, “executed by the author” cannot mean “signed” rather than “carried into full effect,” because Sec. 203(a) provides for the termination of non-exclusive as well as exclusive licenses, but only an exclusive grant must have been made or evidenced through a signed writing.  Non-exclusive licenses may be oral or inferred from conduct.  If “executed” did not mean (or at least did not also mean) a transaction that the author has completed, then the author could not terminate a non-exclusive license.  Because the statute expressly states that non-exclusive grants are terminable, “executed” in Sec. 203(a) must mean something different, or at least more, than “signed agreement.”

Thus, as to works not created until the 1976 Act’s effective date, the statute is not in fact ambiguous, and there is in fact no “gap.”  The “grant” is not “executed” until the works are created and the future interest vests.  The termination time clock thus runs from the creation of each work covered by the agreement.6

Effect of this interpretation on the timing of termination of grants of rights in contracts to create works in the future

For works already in being at the time of the conclusion of a post-1977 agreement, the copyrights exist, and the grant of the transfer or license of copyright therefore is “executed” with the conclusion of the agreement: The time clock starts running from the date of the contract.  Thus, there is no gap between signature and “execution.”  But when the agreement provides for the future creation of works, the above analysis indicates that the termination time clock starts running not from the date of the agreement, but from the date of creation.  This start date may, however, pose practical problems.  The date the contract was signed provides a readily ascertainable starting point for calculating when to send a notice of termination.  The date of creation of the work may prove more elusive.  While the statute offers evidence of Congress’s expectation that the author should be able to identify the year date of creation,7 the Sec. 203 termination clock starts ticking on the actual date.  Authors’ abilities to recall or document the month and day on which they completed creating a work may be more uncertain.  But this objection could equally well apply to oral or inferred-from-conduct non-exclusive licenses: The date of their “execution” may be equally if not more unsusceptible to reliable documentation, yet the statute clearly provides for the termination of such licenses.

Policy considerations

Timing termination from the date of creation when the contract was entered into before the work was created seems consistent with the general structure and policy of statutory termination rights.  The text of the statute8 and its legislative history amply demonstrate Congress’s intent that authors should enjoy enforceable termination rights.  The statute should be interpreted to cover as many works as possible (other than works made for hire).  In the case of pre-1978 agreements to transfer rights in works not created until 1978 or later, no creative interpretation is even necessary: The plain words of the statute bring these works within the scope of the Sec. 203 termination right.

In the case of post-1978 agreements for works yet to be created at the time of the contract, timing termination rights from the date of creation, rather than the date the agreement was entered into, can make a significant practical difference.  Suppose, for example, a contract entered into in 1980 in which the author agrees to write and transfer publication and other copyright rights in four books.  The author writes the works over the next 20 years, delivering them in 1985, 1990, 1995 and 2000 respectively.  If the termination time clock runs from 1980, then the author may terminate the grant of all rights in all books in 2020; the publisher will have owned the rights not for the earlier of 35 years from publication or 40 years from “execution of the grant,” as provided in Sec. 203(a)(3), but for 35, 30, 25, and 20 years respectively.9  If the time clock runs from the creation of each work, then the publisher will have the rights for at least 35 years for each book.

If one interprets Sec. 203 as assuring publishers 35-40 years of quiet enjoyment of the transferred rights under copyright (the publisher may, of course, agree to grant the rights back much earlier, for example through an out-of-print clause), then designating an “execution” date for the grant that will shorten the interval before termination would seem inconsistent with the statutory scheme.  On the other hand, if the publisher offers a contract that commits the author to create and transfer rights in several works over the course of time, perhaps the publisher has assumed the risk that the later the author delivers the contracted-for works, the less time the publisher will have to enjoy the grant before the author’s termination rights vest.


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