(Originally published in Franklin, Weinrib, Rudell & Vassallo’s Newsletter, The Report, Winter 2005-2006)
Now that 2006 has arrived, owners of many a derivative work (that is, a work based on a preexisting work, such as a film based on a novel) can breathe a sigh of relief. As of January 1, 2006, the time ran out to renew on a timely basis copyrighted works subject to two terms of protection. Accordingly, the days of waiting to see whether a deceased author’s successors will timely renew a copyright to an underlying work and thereby cut off the rights of the owner of a derivative work for the renewal term of copyright (as in the “Rear Window” case discussed below) are now over. While the owners of many works subject to two-term copyrights can still renew their copyrights, those renewals will no longer be timely and come without certain benefits, including the ability to cut off the rights of an owner of an existing derivative work.
By way of background, for works first registered for copyright or first published prior to January 1, 1978, the U.S. Copyright Act provides for two terms of copyright: an initial term of 28 years and, including a recent extension, a renewal term of 67 years. The two-term copyright system is a carryover from older copyright laws. Under the current Act, all copyrighted works created on or after January 1, 1978 are subject to a single term of copyright. December 31, 2005 (i.e., the end of the 28th calendar year of the initial term of copyright for works registered for copyright or first published in 1977, the last year of the old Copyright Act), was the last day for renewing copyrights during the last year of their initial terms.
The two-term copyright system was based in part on the presumption that authors would sell rights in their works before their true value could be assessed. The renewal term was intended to give authors and their families a second chance to exploit their works generally in accord with the following rule: with respect to a work that (a) is not a work made-for-hire, (b) was first registered for copyright or first published prior to January 1, 1978, and (c) has a renewal term that begins after the author’s death, Section 304 of the Copyright Act provides that several classes of statutory successors (such as the author’s widow and children) are entitled to the rights in the renewal term of copyright. Even if an author granted all rights in copyright, including the renewal term, to a third party, the grant in the renewal term would not be effective if the author died before the end of the 28th year of copyright. Instead, his or her statutory successors would be entitled to claim the rights in the renewal term and cut off the rights of the author’s intended recipient.
However beneficial to authors and their successors, the two-term copyright system could have a devastating impact on purchasers of rights in pre-1978 works, including those who acquired the right to use pre-1978 works to create derivative works.
The powerful effect is best exemplified by the 1990 U.S. Supreme Court decision in Stewart v. Abend (commonly known as the “Rear Window” case). There, the predecessors-in-interest of the producers of the classic Alfred Hitchcock film “Rear Window” had acquired from author Cornell Woolrich the right to base the film on Mr. Woolrich’s story “It Had to Be Murder.” The author had agreed to renew the copyright in the story at the appropriate time and to assign motion picture rights in the story for the renewal term. When the story was still in its initial term of copyright and the author was still alive, the film “Rear Window” was produced and distributed. However, Mr. Woolrich died while the story was still in its initial term of copyright and the plaintiff, who had purchased rights to the story’s renewal term of copyright from the executor of Mr. Woolrich’s estate, filed a renewal registration in the story on a timely basis. The Supreme Court held that the producers of the film infringed the rights of the plaintiff by continuing their exploitation of the film without his permission.
Until the end of 2005, it was still possible for someone to purchase rights from an author to a copyrighted work, only to lose those rights if the author died before the beginning of the renewal term. Because authors cannot waive the rights of their statutory successors to the renewal term, prospective grantees were faced with the prospect of gambling on an author’s longevity. Even if someone purchased rights in 2005 from an author of a work in its 28th year of copyright and the author subsequently died in 2005 before registering a renewal, the renewal term would have vested in the author’s statutory successors. (Some purchasers did attempt to obtain rights not only from the author, but also from the parties who might qualify as the author’s statutory successors. However, particularly in cases of authors with numerous children, this was often difficult to accomplish.) Now that we have entered 2006, purchasers no longer risk the loss of their rights based on the unknowable future date of an author’s death.
In addition to the consequences of an author’s death prior to the end of the 28th year of copyright, the timing of a renewal registration also has other consequences. What if a renewal claim for a pre-1978 work was not registered in the 28th year of copyright? For works first copyrighted in 1964-1977, renewal registrations are still accepted by the Copyright Office after 2005 throughout the entire renewal term of applicable works, but without some of the benefits of timely renewals. For example, in order to cut off the rights of the owner of an existing derivative work in the manner achieved in the “Rear Window” case, a renewal application must have been filed in the 28th year. This does not apply, however, to the situation where a derivative work has not yet been created as of the beginning of the renewal term, in which case an author’s statutory successors can prevent the creation of a derivative work even without having timely renewed the copyright.
Even in 2006, the effects of the two-term copyright system are not completely behind us. Renewal terms of pre-1978 works might last as long as 2072. Therefore, parties acquiring rights to pre-1978 works still need to ascertain whether the author of the work survived for the vesting of the renewal term and, for purposes of exploiting pre-existing derivative works, the date of renewal.
Addendum: Another Right of Termination
From the perspective of parties seeking to purchase rights in copyrighted works, the move in 1978 from a two-term copyright system to a single-term copyright system was a positive one, creating more certainty as to the duration of the rights being acquired. However, this is not to suggest that purchasers of rights now enjoy undisturbed serenity. The current Copyright Act contains a complex system by which authors of copyrighted works and certain family members can terminate certain decades-old grants during specified windows of opportunity for both pre-1978 works and post-1977 works. However, termination is optional, not automatic; it occurs, if at all, during predictable time periods with years of advance notice; and the timing mechanism, which is measured from the date of the copyright (for pre-1978 works) or the date of the contract (for post-1977 works), has nothing to do with the longevity of the author.