Are Songwriters Prepared to Recapture Ownership?

After recent discussions with successful songwriters and industry veterans, I realized that many songwriters are unaware of their termination rights (also referred to as “recapture rights”) under the Copyright Act. A termination right simply means that you get a second chance to take back your copyright after an original transfer. Termination provisions provide songwriters and other copyright authors with a long-term insurance policy on the value of their copyrights. Congress has stated that these types of rights are needed because of the unequal bargaining position of songwriters, resulting in part from the impossibility of determining a song’s value until it has been exploited.

Bart Herbison, executive director of the Nashville Songwriters Association International (NSAI), confirms that many songwriters remain unaware of this extraordinary right despite NSAI’s eight year long information campaign. And if you are talking about songs transferred after 1978, songwriters/composers only have one opportunity to exercise the right. Herbison says that even among songwriters who are aware of the recapture concept, many are putting off the process and may eventually find they waited too long. “If you have a song from 1978 and are interested in recapturing the copyright, you better begin the process immediately,” Herbison advised. “The same advice applies to songs from 1979-1985 for which the window to submit notices is open.”

The intricacies of the termination provisions – detailed in Sections 304(c), 304(d) and 203 of the Copyright Act – are fairly complicated. The primary analysis of recapture rights depends on whether or not the transfer occurred before or after 1978. This article focuses on rights transferred after 1978 because those rights are more germane to the problems songwriters will face in the next few years. For the majority of songs transferred after 1978, songwriters, or their heirs, have the opportunity to reclaim the songs 35 years from the date of transfer.

Although the procedure and qualifications for termination often turn on factual and legal distinctions, the concept of termination is fairly easy to explain. Consider the following: Suzie Songwriter independently writes and publishes a song called “Reagan’s Bacon” in 1979. The term of copyright in “Reagan’s Bacon” is the life of Suzie plus 70 years, although Suzie is free to transfer her rights. In 1980, Pablo Publishing Company offers Suzie a one-time payment of $5,000 to transfer all the rights to “Reagan’s Bacon” for a period of 50 years. Suzie agrees and executes a written transfer. Because the contract is for 50 years, Suzie believes that the copyright will revert back to her or her heirs in 2030.

Suzie, however, will be glad to know that she can terminate the transfer beginning in 2015 under the Copyright Act; it doesn’t matter that the contract says 50 years. As long as Suzie doesn’t enter into any subsequent contracts or renewal agreements and she follows the termination procedures, she will be able to reclaim “Reagan’s Bacon” in a few years.

This concept might be hard for some people to wrap their head around, but it’s the law. Again, it doesn’t matter that Suzie contracted for a period of 50 years. Normally, you can contract with someone for a period of 50 years. In our case, however, the 50-year term is in direct conflict with the Copyright Act’s 35-year termination right. Contracts are governed by state law, but state contract law cannot provide the basis of a decision when it conflicts with federal law, as it does when Suzie asserts her termination right.

Suzie’s termination right is not automatic, though. She will have to affirmatively assert this right and follow the procedure laid out in the Copyright Act. Termination rights are put into motion by serving notice on the grantee (the copyright owner). Suzie’s termination may be effected at any time during the period of 5 years beginning at the end of 35 years from date of execution of the grant, which is between 2015-2020. The advanced notice of the termination must state the effective date of the termination and must be served on the grantee not less than two, and not more than ten, years before that date. Therefore, Suzie’s earliest available advance notice period began in 2005 and ends in 2013. Her latest available advance notice period is between 2010 and 2018. That’s right around the corner Susie (take note that there is a certain time window that Suzie must serve notice to Pablo Publishing or she will lose her right). Also, the Copyright Act, through regulations, has set additional elements that must be included in the notice. A failure to follow the exact procedures could result in a loss of rights.

I should point out that oral agreements, agreements of unspecified duration, agreements made before 1978, agreements which specify terms for less than 35 years, and grants that cover “the right of publication” will be treated differently under the Copyright Act. Additionally, works created under an employment arrangement, which are called “works made for hire,” are not subject to termination. Also, the law gets tricky when there is more than one author or when an author is dead.

The immediacy of recapture rights for certain songwriters cannot be overstated and beginning in 2013, there is likely to be a slew of litigation in federal court regarding termination rights under the Copyright Act. While the topic of termination rights can put anyone to sleep, songwriters and other copyright authors should wake up. Uncle Sam has given you a gift to reclaim your copyright, no matter what your contract says. If you transferred your copyright, don’t hit the snooze button and sleep past your termination period.

Howell O’Rear is a lawyer at McInteer & O’Rear PLC, which is based in Nashville. His practice focuses on litigating business disputes, including copyright, trademark and Internet matters. Howell’s recent experience includes litigating copyright infringement claims and issues specific to digital music rights. Howell earned his law degree from the University of Virginia School of Law. He can be reached at [email protected] or at the company website, www.mcolawfirm.com.

Disclaimer: This article does not constitute legal advice – it is only background discussion about copyright issues. The author strongly recommends contacting a lawyer with questions or concerns.