Cases of Note -- Copyright -- Copyright: Termination Rights

Against the Grain Volume 20 | Issue 5 Article 26 November 2008 Cases of Note -- Copyright -- Copyright: Termination Rights Bruce Strauch The Citadel, Follow this and additional works at: https://docs.lib.purdue.edu/atg Part of the Library and Information Science Commons Recommended Citation Strauch, Bruce (2008) "Cases of Note -- Copyright -- Copyright: Termination Rights," Against the Grain: Vol. 20: Iss. 5, Article 26. DOI: https://doi.org/10.7771/2380-176X.5204 This document has been made available through Purdue e-Pubs, a service of the Purdue University Libraries. Please contact for additional information. LEGAL ISSUES Section Editors: Bruce Strauch (The Citadel) <> Bryan M. Carson, J.D., M.I.L.S. (Western Kentucky University) <> Jack Montgomery (Western Kentucky University) <> Cases of Note — Copyright Copyright: Termination Rights by Bruce Strauch (The Citadel) <> Penguin Group et al. v. Thomas Steinbeck et al., United States Court of Appeals For the Second Circuit, 2008 U.S. App. LEXIS 17152 (2008). The Steinbeck Estate In 1938, John Steinbeck contracted with The Viking Press to publish many of his famous works, including The Long Valley, Cup of Gold, The Pastures of Heaven, To A God Unknown, Tortilla Flat, In Dubious Battle, and Of Mice and Men. The following year, four other works including The Grapes of Wrath were added, and in that same year, Viking assigned its rights to Penguin Group (USA), Inc. Steinbeck married Elaine Steinbeck, a second marriage for each of them, and the catalyst for this suit. Each had children of a previous marriage. Dum-da-dum-dum. Steinbeck died in 1968, bequeathing everything to Elaine saving a $50,000 bequest to his sons Thomas and John IV. Which is not a whole heck of a lot of money even by 1968 standards while the wife gets Grapes of Wrath sold to every single high school kid in America forever. You will have to imagine the emotional maneuverings that led to this as we have no facts. Elaine was not idle. In 1994, she negotiated a new contract with Penguin which brought her more money than before. She died in 2003 leaving her interest to her children and specifically excluding John’s heirs. In 2004, John’s descendants (son Thomas and a son of the now deceased John IV) served notice on Penguin terminating the grant made by the 1938 agreement. Statutory History From the beginning, Congress was concerned with the weak bargaining power of a neophyte author who might sign away a timeless literary work for a mess of pottage. It has always attempted to redress that by giving the publisher the initial rewards, but allowing the author to revisit the terms if the work became successful. Stewart v. Abend, 495 U.S. 207, 218 (1990). In 1938, the Copyright Act of 1909 was in effect. Under the Act, authors held copyright 68 Against the Grain / November 2008 for twenty-eight years with a renewal period of a second twenty-eight. The author in theory held the power of the renewal over the publisher in seeking a better bargain. Stewart, 495 U.S. at 218-19. Of course this was easily thwarted by the publisher requiring the author to assign both initial and renewal copyrights at the same time, and the Supreme Court approved the practice in Fred Fisher Music Co. v. M. Witmark & Sons, 318 U.S. 643 (1943). In the 1976 amendments to the Copyright Act (taking effect in 1978), Congress attempted to revive the original scheme. The two twenty-eight year terms were replaced by one long term of seventy-five years from date of copyright. 17 U.S.C. § 304(b) (1997). And for post and pre-1978 works, an inalienable right of authors and heirs to terminate the grant. There is no discussion as to why for pre1978 works that is not an ex-post facto law prohibited by the Constitution. 17 U.S.C. § 304(c)gives the termination right to the author, or where dead, his children or children of a dead heir, exactly the case with Thomas and the son of John IV. If a widow exists, the ownership of copyright is divided between the two camps. Elaine would have held a one-half interest in the termination right, but she was now dead. The grant can’t be terminated at any time at the author’s whim. There is a limited five year window to terminate beginning at the end of fifty-six years from date of copyright or January 1, 1978, whichever is later. 17 U.S.C. § 304(c) (3). Which may be why the publishers lay down and took this. Or this was part of the Congressional log-rolling when the Act was amended. Which makes it not much different from before. Except for the inalienable right thing. Which does give the author leverage as you shall see. As to the 1938 agreement, the termination right expired for the first works in 1990 and in 2000 for the Grapes of Wrath group. But no termination was exercised. No, I don’t get why the second cluster was ten years later when it was added to the contract one year later. In the 1998 amendments to the Act, the term of years was extended to ninety-five years, and the time to terminate was also extended if it had not been exercised. Now it was five years to terminate beginning at the end of 75 years from date of copyright. Id. Section 304(d). The Steinbecks were trying to use this later period. The Litigation Well, Penguin did not care for this one bit and sought a declaratory judgment as to the validity of the termination. In 1994, Elaine had entered a new agreement with Penguin including all the works, some new Steinbeck works, and some works by Elaine. And with a much larger guaranteed annual advance. The language said it canceled and superseded the 1938 agreement. The district court held against Penguin. Going to the Next Level The language of the 1994 agreement makes clear that the parties intended it to supersede the 1938 one. They agreed to a rescission and entered a new contract. Jones v. Trice, 202 A.D.2d 394, 395 (2d Dep’t 1994). The 1994 contract obligated Penguin to pay more money to Elaine and to keep more Steinbeck books in print. Termination rights under the Copyright Act are statutory, however, and not dependent on the intent of Elaine and Penguin. Those statutory rights are determined by the date a grant of rights was executed. And the pre-1978 grant of rights no longer existed. No termination right was exercised before the 1994 contract, but the threat of termination was in the hands of Elaine Steinbeck when she negotiated. Thus the intent of the Act was observed. “Agreement to the Contrary” The Copyright Act says “[t]ermination continued on page 70 <http://www.against-the-grain.com> Cases of Note from page 68 of the grant may be effected notwithstanding any agreement to the contrary.” 17 U.S.C. § 304(c)(5). This is the inalienable right idea. The Second Circuit said don’t read this too broadly. Steinbeck heirs cited Marvel Characters, Inc. v. Simon, 310 F.3d 280 (2d Cir. 2002) in which the author was “coerced” into recharacterizing an existing work as one “made for hire.” The after-the-fact relabeling eliminated an (...truncated)