The statutory termination right: One copyright act provision your publisher hopes you never hear about
In the fall of 1977, Ralph Little had just received his Ph.D. in Elfin Studies and was beginning his first faculty job as an assistant professor at Middle Earth College. Elfin Studies was in its infancy – many universities did not even recognize it as a legitimate discipline — and there was no introductory textbook on the market. Each week Ralph prepared lecture outlines on ditto masters for the dozen intrepid undergraduates in his Elfin Studies 101. When a representative of Colossal Publishers, Inc., came by his office, Ralph, sporting the sideburns and bell-bottoms of the day, told him about his idea of writing an introduction to Elfin Studies.
Soon afterward, Colossal offered Ralph a contract to write his Introduction to Elves, for a royalty of 5 percent of Colossal’s receipts on every copy sold. The royalty sounded almost as diminutive as the subject matter. But Ralph was thrilled to become a textbook author, and the editor promised him that when the book came out, he would be invited to Colossal’s Midwestern sales meeting in Minneapolis. He signed the contract early in 1978, and the first edition was published on January 10, 1980.
In the 1980’s and 1990’s, Elfin Studies steadily grew throughout the United States and, although
competing texts were launched, Introduction to Elves commanded a large portion of the market. By the time he got to the fifth or sixth edition, with cumulative sales well up in the six figures, Ralph began to ask Supercolossal Media, Ltd. (which had acquired Colossal in the mid-1980’s) whether they could improve his royalty to, say, 10 percent, with an escalation for high sales.
The editors always came back with sad faces and the grim report that “the lawyers say that the terms in the contract apply to all future editions.” “But there’s good news,” they would add. “We’re inviting you to our North American sales meeting in Kansas City and this time you can have your own room.”
Meanwhile, other publishers were constantly asking Ralph whether he could jump ship, saying that they could offer him a much better deal. But Ralph’s contract prevented him from switching publishers. The best he could do was to keep giving his pep talk on Introduction to Elves at Supercolossal sales meetings across the country.
That was then and this is now. Now a Distinguished Full Professor at Middle Earth, Ralph Little parted long ago with his sideburns and bell-bottoms. But in 2011 he can avail himself of something even better: the statutory termination right. Under Section 203 of the Copyright Act of 1976, an author who granted publishing rights to his or her work after January 1, 1978, can terminate the grant thirty-five years after the work’s publication.
Congress enacted the termination right precisely in order to provide authors like Ralph – and their heirs — a chance to renegotiate second-rate contracts that the authors had entered earlier in life. Take the case of high school friends Jerome Siegel and Joseph Shuster, who in 1938 conveyed the future rights to Superman to Detective Comics for the grand sum of $130. As the House Report put it, “A provision of this sort is needed because of the unequal bargaining position of authors, resulting in part from the impossibility of determining a work’s value until it has been exploited.” Especially as copyright terms were lengthened – they now last for the lifetime of the author plus 70 years — it became necessary to give authors and their heirs this second chance.
In Ralph’s case, he can serve a formal notice that will terminate his grant of rights to Totally Awesome Enterprises, LLC (which merged with Supercolossal at the turn of the century) as of January 10, 2015 (35 years after the first edition of Elves was published). The notice must be sent to Totally Awesome at least two years – and no more than ten years – before the specified termination date. He can serve the notice right now.
Once he has served his Notice of Termination and filed the notice with the Copyright Office, Ralph will be free to negotiate with Totally Awesome for a better deal. And if the termination date arrives without a new contract, Ralph will be a free agent. He will be able to negotiate with the other publishers who have been clamoring for the book and he can even decide to publish Introduction to Elves himself.
The termination right may be of great value to many textbook authors – not only made-up ones like Ralph Little but also real ones: veteran authors who entered into less-than-ideal contracts early in their careers and whose books have remained in print with the original publishers or their successors. Authors who entered into their contracts after January 1, 1978, and whose books were published in the late 1970’s and early 1980’s – or their heirs — can serve termination notices now for terminations that will take effect in 2013 and subsequent years. As time goes on, authors who entered into their contracts in the late 1980’s and the 1990’s, too, will be able to exercise the termination right.
If you decide to serve such a termination notice, don’t expect your publisher to be happy about it. In fact, this is one part of the Copyright Act that your publisher hopes you never hear about. There are many grounds on which publishers can try to combat efforts to exercise the termination right, and they sometimes will be successful. For example:
- The termination notice must precisely identify the grant being terminated, the date of the grant, and the date of publication. It must be served on the right grantee (whether the original publisher or its successor) and then recorded in the Copyright Office. A failure to get the details right can undermine the author’s effort to terminate the grant.
- If your original contract established that the book was commissioned by the publisher as a “work made for hire,” the termination right does not apply.
- If along the way – for example, at the time of a major revision – you agreed on a new contract or a substantial amendment, your publisher may argue that the new document superseded the original one, with the result that the original grant of rights is no longer terminable.
- The termination right applies only to United States rights, not foreign rights, so your publisher may take the position that, no matter what else happens, its overseas division will keep publishing your book on the existing contractual terms.
Not all textbook authors will be able to make effective use of the statutory termination right. If your book’s sales have been declining, a termination notice may simply spur your publisher to say “good riddance,” and you may not be able to find a better publishing option.
In many cases, however, the termination right will work as it is supposed to work, giving authors with long-lived but undercompensated books the chance to renegotiate with their publishers and, failing that, to seek greener pastures. The termination right will thus help to level the playing field between textbook authors and their publishers.
Zick Rubin is a publishing lawyer, psychology textbook author, and former member of the TAA Council. Further materials on the statutory termination right will be available on his website, www.zickrubin.com.