Daily Rules, Proposed Rules, and Notices of the Federal Government
The Copyright Act gives authors (and some heirs, beneficiaries and representatives who are specified by statute) the right to terminate certain grants of transfers or licenses within the time frames set forth in the statute and subject to the execution of certain conditions precedent. Termination rights (also referred to as “recapture rights”) are equitable accommodations under the law. They allow authors or their heirs a second opportunity to share in the economic success of their works. Codified in sections 304(c), 304(d) and 203 of Title 17, respectively, they encompass grants made before as well as after January 1, 1978 (the effective date of the 1976 Copyright Act). However, the provisions do not apply to copyrights in works made for hire or grants made by will. Sections 304(c) and 304(d) establish termination rights for works subject to grants of transfers or licenses of copyright (or of any right under a copyright) made before January 1, 1978, the effective date of the 1976 Copyright Act. Section 203, which is the subject of this proposed rulemaking, establishes termination rights for works subject to grants of transfers or licenses executed by the author on or after the effective date of the 1976 Copyright Act.
This proposed rulemaking is intended to address a narrow fact pattern that was the subject of a notice of inquiry after some authors and their representatives brought concerns to the attention of the Copyright Office and some Congressional Offices. In a
Several of those commenters took the position that the termination right provided in section 203 of the Copyright Act should be available under the circumstances in question. They based this position on a number of legal and policy arguments, prominent among which was the argument that a grant is not fully executed under the law until the relevant work has been created. Therefore, pre-1978 grants for works not created until January 1, 1978 or later should be subject to termination under section 203.
At least one comment, however, expressed skepticism that section 203 should apply to any fact patterns in which grants were made prior to January 1, 1978. It observed that there is some evidence that “Congress may have intended the term executed to mean signed” in other sections of the Copyright Act and that prior to the enactment of the Copyright Act of 1976, publications by the Copyright Office had expressed views consistent with the conclusion that a grant should be considered to be executed on the date the grant was signed. See Reply Comment of the Recording Industry Association of America, Inc. (“RIAA”), at pages 2-3.
Based on the comments received, the Copyright Office believes that there are legitimate grounds to assert that, in the case of a grant signed (or, in the case of an oral license, agreed to) before January 1, 1978 regarding rights in a work not created until January 1, 1978 or later, such a grant cannot be “executed” until the work exists. Therefore, the Office will record a notice of termination in such a case so long as the notice states that the grant was executed on a specified date that is on or after January 1, 1978. A person serving and submitting a notice of termination based on the rationale described above would be justified in including in the notice, as the date of execution of the grant, the date that the work was created. For purposes of clearly identifying the grant being terminated, it may be useful also to state the date the grant was signed. The Office's recordation of such notices of termination is without prejudice as to how a court might ultimately rule on whether the document is a notice of termination within the scope of section 203. See 37 CFR 201.10(f)(5).
Through the proposed regulatory amendments, the Office seeks to provide immediate practical guidance in light of the fact that the first deadlines for serving notices of section 203 terminations for grants executed in 1978 (if the terminating party wishes to terminate on the earliest possible date) will begin to expire next year. The amendments clarify that, consistent with existing recordation practices, the Office reserves the right to refuse a document for recordation as a section 203 notice of termination if the date of execution of the grant, as reflected in the document submitted as a notice of termination, falls before January 1, 1978. This practice is consistent with the law (17 U.S.C. 203(a)) and the existing regulations (37 CFR 201.10(b)(2)). The proposed amendments to the regulations underscore the consequences of failure on the part of an author or his heirs to comply with this aspect of section 203(a) of the Copyright Act, which can prevent recordation of the document as a notice of termination. Failure to record a notice of termination in a timely manner is a fatal error that will prevent termination from taking effect.
The Office also takes the opportunity in this proposed rulemaking to clarify certain circumstances under which the Office will refuse to index as notices of termination documents submitted under section 203, for reason of certain procedural failures drawn from the clear language of the Copyright Act. These circumstances include a date of execution of the grant that falls before January 1, 1978 (as discussed above), an effective date of termination that does not fall within the allowed statutory period (17 U.S.C. 203(a)(3)), improperly timed service of the notice of termination (17 U.S.C. 203(a)(4)(A)), or submission of documents for recordation as notice of termination on or after the effective date of termination (17 U.S.C. 203(a)(4)(A)). These circumstances are not intended to be an exhaustive list of procedural failures that may result in failure to record notices of termination.
In consideration of the foregoing, the Copyright Office proposes to amend part 201 of 37 CFR, as follows:
1. The authority citation for part 201 reads as follows:
17 U.S.C. 702; Section 201.10 also issued under 17 U.S.C. 203 and 304.
2. Amend § 201.10 by revising paragraph (f)(4) as follows:
(f) * * *
(4) Notwithstanding anything to the contrary in this section, the Copyright Office reserves the right to refuse recordation of a notice of termination as such if, in the judgment of the Copyright Office, such notice of termination is untimely. Conditions under which a notice of termination will be considered untimely include: the date of execution stated therein does not fall on or after January 1, 1978, as required by section 203(a) of title 17, United States Code; the effective date of termination does not fall within the five-year period described in section 203(a)(3) of title 17, United States Code; or the documents submitted indicate that the notice of termination was served less than two or more than ten years before the effective date of termination. If a notice of termination is untimely or if a document is submitted for recordation as a notice of termination on or after the effective date of termination, the Office will offer to record the document as a “document pertaining to copyright” pursuant to § 201.4(c)(3), but the Office will not index the document as a notice of termination. Any dispute as to whether a document so recorded is sufficient in any instance to effect termination as a matter of law shall be determined by a court of competent jurisdiction.