NKU Chase Law + Informatics Institute will have a booth (No. 803) at the ABA TECHSHOW on April 4-6 in Chicago. As the Law + Informatics Institute continues to develop its national leadership in research and coursework integrating the regulation of information and use of technology into legal education, its participation in the expo will be an opportunity to showcase Chase and explore partnerships with cutting-edge legal technology vendors. When registering, mention EP1315 to receive discounted registration.
Much has been written regarding the complexity of copyright termination. As part of an ABA webinar – Termination of Copyright Grants Presented by the YLD Entertainment & Sports Industry Committee. I’ve agreed to comment on some of the hidden issues. There are very good examples and overviews of the general termination scheme, so this column focuses on the supplemental topics. Among the best overviews is: The Right to Terminate: a Musicians’ Guide to Copyright Reversion.
- Here is my list of concepts to remember:
- There are three distinct categories of copyright terminations:
- Those in their first or renewal term under the 1909 Act §304(c)
- Those in their 20-year Copyright Term Extension under §304(d)
- Those works transferred and created under the 1976 Act §203
- Each of the three has slightly different implications for the copyrighted work. Be sure to use the correct rules for the correct termination.
- Why §304(c): 17 U.S.C. § 304(c)(3) “allows an author or certain statutory successors to terminate a transfer in a pre-existing copyright after its 56th year, or at the beginning of its 19-year extended renewal term” provided by passage of the 1976 Copyright Act.
- Why §304(d): 17 U.S.C. § 304(c)(3) allows an author or certain statutory successors to terminate a transfer in a pre-existing copyright which did not take advantage of termination under §304(c) to do so at the beginning of its 20-year additional renewal term provided by passage of the Sonny Bono Copyright Term Extension Act. An author can use either provision in §304 but not both.
- The Gap. Congress inadvertently left out terminations for assignments entered prior to Jan. 1, 1978 for works created after Jan. 1, 1978. The Copyright Office held a rulemaking and decided: “[the Copyright] Office will accept for recordation under section 203 a notice of termination of a grant agreed to before January 1, 1978, as long as the work that is the subject of the grant was not created before 1978. Whether such notices of termination fall within the scope of section 203 will ultimately be a matter to be resolved by the courts.”
- Works in subsistence prior to Jan. 1, 1978 will be covered by §304(c)-(d).
- This covers copyright output contracts that may have been executed much earlier than 1976 but the works kept coming – such as series novels, composer output agreements and others.
- Work for hire excluded from termination. It is axiomatic both because the right vests in the employer as author (not assignee) and because the economic interests designed to protect authors from harsh bargaining are congressionally excluded from consideration.
- Work for hire has two entirely independent categories of works: “(1) a work prepared by an employee within the scope of his or her employment; or (2) a work specially ordered or commissioned for use [in any of nine categories] if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.”
- The comic book industry, in particular, is struggling to determine when independent comic creators were hired as employees and shifted the ownership of their creations. Similarly, some composer agreements are work for hire agreements. This determination is very fact specific.
- Specially commissioned works must meet the definitional test. Sound recordings are not within the nine enumerated categories, so they will only be made as works for hire only if the producer in whom the copyright vests is an employee making the recording within the scope of her employment. Although the labels continue to fight this, but the law is settled.
- Penalty provisions are agreements to the contrary. In his treatise, David Nimmer anticipated the controversy surrounding the Ray Charles estate. Ray Charles tried to get his 12 children to agree to take $500,000 each under the estate in exchange for not challenging the copyright dispositions. The court treated the agreement not to challenge as applying only to the probate, allowing a claim for copyright termination to proceed. (The court also found the claim to likely fail because of the work for hire nature of Ray Charles music composition agreements.) But Nimmer posits the contract that includes a $100 million liquidated damage award if termination occurs. Nimmer is undoubtedly correct that the court would strike down such a penalty provision.
- Other transfers not terminated. The termination rights do not terminate the right to continue exploiting a derivative work. Most copyright transfers include a number of other provisions, and these provisions would not be terminated. Among them:
- Use of the title of a work.
- Right to use name, likeness and biography to promote a work.
- Rights and obligations regarding credits for the work.
- Trademark licenses associated with the work, including band names, logos and similar indicia.
- These rights may not terminate even if the copyright grant is terminated and generally should not do so, absent express language, particularly where the original assignee continues to have the right to exploit derivative rights under the grant.
- Agreements for other assets are likely not agreements to the contrary. Consistent with the rights not terminated, if the licensee of the copyrighted work bargains for trademarks and publicity rights on an exclusive basis, some may seek to make those express provisions extend beyond the copyright. Unlike penalty provisions discussed by Mr. Nimmer, these provisions may well restrict what the author can do with rights other than the copyright even after the copyright has been terminated and restored to the author.
- Exclusive transfers of trademarks may give the publisher control over band names.
- Exclusivity agreements could limit the ability of an author to participate in the making of a new derivative work – such as a new film version of a novel.
- An agreement to transfer the copyright post termination will not be valid if negotiated before a valid termination notice is affected.
- Statute specifically allows renegotiation between author and original licensee which as the effect of resetting the 35-year clock for §203 transfers.
- If it is not the author, however, then the re-negotiation becomes quite complex.
- Testamentary transfers are not affected by any of the termination rights.
- Grants by will are not included in §203. But inter vivos trusts are not excluded!
- Nimmer explains that “the class of those who may claim as recipients of the terminated rights is determined as of the date the termination notice is served.” So taking advantage of the 10 year maximum notice may result in locking in the terminating class. Effective for senior authors; procedurally tricky for managing the per stirpes rights in a large family.
- Will provisions that use terms such as copyright or royalty may not be explicit enough to include termination rights.
- Courts are inconsistent regarding the tension between the statutory distribution of the termination right and the estate planning function. Estate planning is therefore increasingly complex. A trust, and even the estate, is a different legal entity.
- Termination rights are not themselves a testamentary asset. The statute sets out the control of the right. Like the renewal interest under the 1909 Act, it is merely an expectancy.
- Termination notices sent out prior to death remain effective. And the rights recaptured copyright should be identified in the will.
- Loan out companies might manage unruly families. For authors worried about the tension between the testamentary disposition and the statutory disposition, there may be one final trick. Through use of a loan-out company, an author may become a work for hire of her own business. The business assets can then be transferred in any legal manner and the work for hire nature of the relationship should extinguish termination rights in the unruly legatees. It isn’t much, but it may be better than nothing.
 See Bourne Co. v. MPL Communications, Inc., 675 F. Supp. 859, 861 (S.D.N.Y. 1987).
 See Bourne Co. v. MPL Communications, Inc., 675 F. Supp. 859, 861 (S.D.N.Y. 1987).
 See Ray Charles Found. v. Robinson, 2013 U.S. Dist. LEXIS 21273 (C.D. Cal. 2013); Penguin Group (USA) Inc. v. Steinbeck, 537 F.3d 193 (2d Cir. 2008); Milne v. Stephen Slesinger, Inc., 430 F.3d 1036, 1046 (9th Cir. 2005).
Many advocates have been calling for change in legal education this past year, focusing on the debt of students, the effect of Big Law on the practice, the declining legal job market, the value proposition for law school, the need for better experiential learning and a variety of other topics. Among the leaders worth following are Bill Henderson, Nancy Rapoport, Brian Tamanaha, and Richard Suskind.
As part of the Chase College of Law strategic planning process, I recently entered the fray, focusing on one aspect of the changes to the legal practice that I had not seen fully addressed in the academic literature – namely the increasing automation of legal services provided by solo and small to medium sized law firms.
The article is: Legal Education in Disruption: The Headwinds and Tailwinds of Technology.
By harnessing improvements on communications and computational systems, law firms are producing a revolution in the practice of law. Self-help legal manuals have transformed into sophisticated interactive software; predictive coding can empower clients to receive sophisticated legal advice from a machine; socially mediated portals select among potential lawyers and assess the quality of the advice given; and virtual law firms threaten to distintermediate the grand edifices of twentieth century Big Law. These changes may profoundly restructure the legal practice, undermining the business model for many solo and small firm practices.
This paper focuses on the implications of these profound disruptive changes. It looks at the expectations the market may place on future lawyers and by extension the training necessary for lawyers entering the practice of law. The final section reflects a suggested curriculum and programmatic redesign, highlighting one possible future legal educational model, complete with acquiescence to existing constraints found in American Bar Association and other accreditation regimes.
Part one of the article tracks the changes that automation is bringing to the legal profession from self-help online tools to predictive document drafting and other innovations. It analyzes the potential of the virtual law firm, unbundled (or specialized) legal services and the development of virtual law firm networks that will grow into the standard for small firm practice.
Part two translates these changes for legal education. While much of the core subjects taught in law school today will remain the same (i.e. Contracts, Torts, Property, Civil Procedure, Constitutional Law, Evidence, Corporation, Tax, etc.) much else needs to change.
- Like the other advocates for skills training, the article emphasizes clinical and field placement education for students.
- Like advocates for better instructional design, it calls for law school to each subject like logic and communication skills explicitly rather than hoping that students will glean these skills from the first year classroom discourse.
- It changes the focus on professionalism by recognizing that law is also a business, requiring law schools to prepare graduates with courses and training on the business of lawyering (including accounting, human resources, business development, legal business ethics, marketing, leadership and management training).
- It also emphasizes that 64% of law practice is done for business entities and an additional 10% of attorneys work in-house. So the emphasis of law schools should better reflect the kinds of lawyering that are actual taking place. While this does not suggest abandoning litigation or the teaching of how to serve individuals, it requires a more accurate balance so graduates are less surprised by the environment in which they practice law.
- Finally, it highlights that the nature of business has become global and technical so courses on international business, intellectual property and other fields relevant to the success of one’s clients should comprise the electives. Moreover, the proposal recognizes that many of these courses are better learned from the disciplines where the clients are trained, so interdisciplinary programs with certificates and even joint degrees should be encouraged.
- The trade-off means that fewer credits and course hours are expended on the core subject matter law school teaches. This will not be a problem since the measure of seat time is a poor approximation of a student’s learning or competency. Instead, competency testing for both skills and knowledge should be integrated throughout the curriculum, allowing students to move at their own pace and demonstrate readiness to leave law school using something more precise than a six-semester schedule.
The paper is a draft, and I truly look forward to the conversation it generates. I would appreciate feedback and hope to post additional blogs on the dialogue as advocates and critics law school incorporate the changes into small firm practice into the debate.