§ 203. — Termination of transfers and licenses granted by the author.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 17USC203]
TITLE 17--COPYRIGHTS
CHAPTER 2--COPYRIGHT OWNERSHIP AND TRANSFER
Sec. 203. Termination of transfers and licenses granted by the
author
(a) Conditions for Termination.--In the case of any work other than
a work made for hire, the exclusive or nonexclusive grant of a transfer
or license of copyright or of any right under a copyright, executed by
the author on or after January 1, 1978, otherwise than by will, is
subject to termination under the following conditions:
(1) In the case of a grant executed by one author, termination
of the grant may be effected by that author or, if the author is
dead, by the person or persons who, under clause (2) of this
subsection, own and are entitled to exercise a total of more than
one-half of that author's termination interest. In the case of a
grant executed by two or more authors of a joint work, termination
of the grant may be effected by a majority of the authors who
executed it; if any of such authors is dead, the termination
interest of any such author may be exercised as a unit by the person
or persons who, under clause (2) of this subsection, own and are
entitled to exercise a total of more than one-half of that author's
interest.
(2) Where an author is dead, his or her termination interest is
owned, and may be exercised, as follows:
(A) The widow or widower owns the author's entire
termination interest unless there are any surviving children or
grandchildren of the author, in which case the widow or widower
owns one-half of the author's interest.
(B) The author's surviving children, and the surviving
children of any dead child of the author, own the author's
entire termination interest unless there is a widow or widower,
in which case the ownership of one-half of the author's interest
is divided among them.
(C) The rights of the author's children and grandchildren
are in all cases divided among them and exercised on a per
stirpes basis according to the number of such author's children
represented; the share of the children of a dead child in a
termination interest can be exercised only by the action of a
majority of them.
(D) In the event that the author's widow or widower,
children, and grandchildren are not living, the author's
executor, administrator, personal representative, or trustee
shall own the author's entire termination interest.
(3) Termination of the grant may be effected at any time during
a period of five years beginning at the end of thirty-five years
from the date of execution of the grant; or, if the grant covers the
right of publication of the work, the period begins at the end of
thirty-five years from the date of publication of the work under the
grant or at the end of forty years from the date of execution of the
grant, whichever term ends earlier.
(4) The termination shall be effected by serving an advance
notice in writing, signed by the number and proportion of owners of
termination interests required under clauses (1) and (2) of this
subsection, or by their duly authorized agents, upon the grantee or
the grantee's successor in title.
(A) The notice shall state the effective date of the
termination, which shall fall within the five-year period
specified by clause (3) of this subsection, and the notice shall
be served not less than two or more than ten years before that
date. A copy of the notice shall be recorded in the Copyright
Office before the effective date of termination, as a condition
to its taking effect.
(B) The notice shall comply, in form, content, and manner of
service, with requirements that the Register of Copyrights shall
prescribe by regulation.
(5) Termination of the grant may be effected notwithstanding any
agreement to the contrary, including an agreement to make a will or
to make any future grant.
(b) Effect of Termination.--Upon the effective date of termination,
all rights under this title that were covered by the terminated grants
revert to the author, authors, and other persons owning termination
interests under clauses (1) and (2) of subsection (a), including those
owners who did not join in signing the notice of termination under
clause (4) of subsection (a), but with the following limitations:
(1) A derivative work prepared under authority of the grant
before its termination may continue to be utilized under the terms
of the grant after its termination, but this privilege does not
extend to the preparation after the termination of other derivative
works based upon the copyrighted work covered by the terminated
grant.
(2) The future rights that will revert upon termination of the
grant become vested on the date the notice of termination has been
served as provided by clause (4) of subsection (a). The rights vest
in the author, authors, and other persons named in, and in the
proportionate shares provided by, clauses (1) and (2) of subsection
(a).
(3) Subject to the provisions of clause (4) of this subsection,
a further grant, or agreement to make a further grant, of any right
covered by a terminated grant is valid only if it is signed by the
same number and proportion of the owners, in whom the right has
vested under clause (2) of this subsection, as are required to
terminate the grant under clauses (1) and (2) of subsection (a).
Such further grant or agreement is effective with respect to all of
the persons in whom the right it covers has vested under clause (2)
of this subsection, including those who did not join in signing it.
If any person dies after rights under a terminated grant have vested
in him or her, that person's legal representatives, legatees, or
heirs at law represent him or her for purposes of this clause.
(4) A further grant, or agreement to make a further grant, of
any right covered by a terminated grant is valid only if it is made
after the effective date of the termination. As an exception,
however, an agreement for such a further grant may be made between
the persons provided by clause (3) of this subsection and the
original grantee or such grantee's successor in title, after the
notice of termination has been served as provided by clause (4) of
subsection (a).
(5) Termination of a grant under this section affects only those
rights covered by the grants that arise under this title, and in no
way affects rights arising under any other Federal, State, or
foreign laws.
(6) Unless and until termination is effected under this section,
the grant, if it does not provide otherwise, continues in effect for
the term of copyright provided by this title.
(Pub. L. 94-553, title I, Sec. 101, Oct. 19, 1976, 90 Stat. 2569; Pub.
L. 105-298, title I, Sec. 103, Oct. 27, 1998, 112 Stat. 2829; Pub. L.
107-273, div. C, title III, Sec. 13210(9), Nov. 2, 2002, 116 Stat.
1909.)
Historical and Revision Notes
house report no. 94-1476
The Problem in General. The provisions of section 203 are based on
the premise that the reversionary provisions of the present section on
copyright renewal (17 U.S.C. sec. 24 [section 24 of former title 17])
should be eliminated, and that the proposed law should substitute for
them a provision safeguarding authors against unremunerative transfers.
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. Section 203
reflects a practical compromise that will further the objectives of the
copyright law while recognizing the problems and legitimate needs of all
interests involved.
Scope of the Provision. Instead of being automatic, as is
theoretically the case under the present renewal provision, the
termination of a transfer or license under section 203 would require the
serving of an advance notice within specified time limits and under
specified conditions. However, although affirmative action is needed to
effect a termination, the right to take this action cannot be waived in
advance or contracted away. Under section 203(a) the right of
termination would apply only to transfers and licenses executed after
the effective date of the new statute [Jan. 1, 1978], and would have no
retroactive effect.
The right of termination would be confined to inter vivos transfers
or licenses executed by the author, and would not apply to transfers by
the author's successors in interest or to the author's own bequests. The
scope of the right would extend not only to any ``transfer of copyright
ownership,'' as defined in section 101, but also to nonexclusive
licenses. The right of termination would not apply to ``works made for
hire,'' which is one of the principal reasons the definition of that
term assumed importance in the development of the bill.
Who Can Terminate a Grant. Two issues emerged from the disputes over
section 203 as to the persons empowered to terminate a grant: (1) the
specific classes of beneficiaries in the case of joint works; and (2)
whether anything less than unanimous consent of all those entitled to
terminate should be required to make a termination effective. The bill
to some extent reflects a compromise on these points, including a
recognition of the dangers of one or more beneficiaries being induced to
``hold out'' and of unknown children or grandchildren being discovered
later. The provision can be summarized as follows:
1. In the case of a work of joint authorship, where the grant
was signed by two or more of the authors, majority action by those
who signed the grant, or by their interests, would be required to
terminate it.
2. There are three different situations in which the shares of
joint authors, or of a dead author's widow or widower, children, and
grandchildren, must be divided under the statute: (1) The right to
effect a termination; (2) the ownership of the terminated rights;
and (3) the right to make further grants of reverted rights. The
respective shares of the authors, and of a dead author's widow or
widower, children, and grandchildren, would be divided in exactly
the same way in each of these situations. The terms ``widow,''
``widower,'' and ``children'' are defined in section 101 in an
effort to avoid problems and uncertainties that have arisen under
the present renewal section.
3. The principle of per stirpes representation would also be
applied in exactly the same way in all three situations. Take for
example, a case where a dead author left a widow, two living
children, and three grandchildren by a third child who is dead. The
widow will own half of the reverted interests, the two children will
each own 16\2/3\ percent, and the three grandchildren will each own
a share of roughly 5\1/2\ percent. But who can exercise the right of
termination? Obviously, since she owns 50 percent, the widow is an
essential party, but suppose neither of the two surviving children
is willing to join her in the termination; is it enough that she
gets one of the children of the dead child to join, or can the dead
child's interest be exercised only by the action of a majority of
his children? Consistent with the per stirpes principle, the
interest of a dead child can be exercised only as a unit by majority
action of his surviving children. Thus, even though the widow and
one grandchild would own 55\1/2\ percent of the reverted copyright,
they would have to be joined by another child or grandchild in order
to effect a termination or a further transfer of reverted rights.
This principle also applies where, for example, two joint authors
executed a grant and one of them is dead; in order to effect a
termination, the living author must be joined by a per stirpes
majority of the dead author's beneficiaries. The notice of
termination may be signed by the specified owners of termination
interests or by ``their duly authorized agents,'' which would
include the legally appointed guardians or committees of persons
incompetent to sign because of age or mental disability.
When a Grant Can be Terminated. Section 203 draws a distinction
between the date when a termination becomes effective and the earlier
date when the advance notice of termination is served. With respect to
the ultimate effective date, section 203(a)(3) provides, as a general
rule, that a grant may be terminated during the 5 years following the
expiration of a period of 35 years from the execution of the grant. As
an exception to this basic 35-year rule, the bill also provides that
``if the grant covers the right of publication of the work, the period
begins at the end of 35 years from the date of publication of the work
under the grant or at the end of 40 years from the date of execution of
the grant, whichever term ends earlier.'' This alternative method of
computation is intended to cover cases where years elapse between the
signing of a publication contract and the eventual publication of the
work.
The effective date of termination, which must be stated in the
advance notice, is required to fall within the 5 years following the end
of the applicable 35- or 40-year period, but the advance notice itself
must be served earlier. Under section 203(a)(4)(A), the notice must be
served ``not less than two or more than ten years'' before the effective
date stated in it.
As an example of how these time-limit requirements would operate in
practice, we suggest two typical contract situations:
Case 1: Contract for theatrical production signed on September 2,
1987. Termination of grant can be made to take effect between September
2, 2022 (35 years from execution) and September 1, 2027 (end of 5 year
termination period). Assuming that the author decides to terminate on
September 1, 2022 (the earliest possible date) the advance notice must
be filed between September 1, 2012, and September 1, 2020.
Case 2: Contract for book publication executed on April 10, 1980;
book finally published on August 23, 1987. Since contract covers the
right of publication, the 5-year termination period would begin on April
10, 2020 (40 years from execution) rather than April 10, 2015 (35 years
from execution) or August 23, 2022 (35 years from publication). Assuming
that the author decides to make the termination effective on January 1,
2024, the advance notice would have to be served between January 1,
2014, and January 1, 2022.
Effect of Termination. Section 203(b) makes clear that, unless
effectively terminated within the applicable 5-year period, all rights
covered by an existing grant will continue unchanged, and that rights
under other Federal, State, or foreign laws are unaffected. However,
assuming that a copyright transfer or license is terminated under
section 203, who are bound by the termination and how are they affected?
Under the bill, termination means that ownership of the rights
covered by the terminated grant reverts to everyone who owns termination
interests on the date the notice of termination was served, whether they
joined in signing the notice or not. In other words, if a person could
have signed the notice, that person is bound by the action of the
majority who did; the termination of the grant will be effective as to
that person, and a proportionate share of the reverted rights
automatically vests in that person. Ownership is divided proportionately
on the same per stirpes basis as that provided for the right to effect
termination under section 203(a) and, since the reverted rights vest on
the date notice is served, the heirs of a dead beneficiary would inherit
his or her share.
Under clause (3) of subsection (b), majority action is required to
make a further grant of reverted rights. A problem here, of course, is
that years may have passed between the time the reverted rights vested
and the time the new owners want to make a further transfer; people may
have died and children may have been born in the interim. To deal with
this problem, the bill looks back to the date of vesting; out of the
group in whom rights vested on that date, it requires the further
transfer or license to be signed by ``the same number and proportion of
the owners'' (though not necessarily the same individuals) as were then
required to terminate the grant under subsection (a). If some of those
in whom the rights originally vested have died, their ``legal
representatives, legatees, or heirs at law'' may represent them for this
purpose and, as in the case of the termination itself, any one of the
minority who does not join in the further grant is nevertheless bound by
it.
An important limitation on the rights of a copyright owner under a
terminated grant is specified in section 203(b)(1). This clause provides
that, notwithstanding a termination, a derivative work prepared earlier
may ``continue to be utilized'' under the conditions of the terminated
grant; the clause adds, however, that this privilege is not broad enough
to permit the preparation of other derivative works. In other words, a
film made from a play could continue to be licensed for performance
after the motion picture contract had been terminated but any remake
rights covered by the contract would be cut off. For this purpose, a
motion picture would be considered as a ``derivative work'' with respect
to every ``preexisting work'' incorporated in it, whether the
preexisting work was created independently or was prepared expressly for
the motion picture.
Section 203 would not prevent the parties to a transfer or license
from voluntarily agreeing at any time to terminate an existing grant and
negotiating a new one, thereby causing another 35-year period to start
running. However, the bill seeks to avoid the situation that has arisen
under the present renewal provision, in which third parties have bought
up contingent future interests as a form of speculation. Section
203(b)(4) would make a further grant of rights that revert under a
terminated grant valid ``only if it is made after the effective date of
the termination.'' An exception, in the nature of a right of ``first
refusal,'' would permit the original grantee or a successor of such
grantee to negotiate a new agreement with the persons effecting the
termination at any time after the notice of termination has been served.
Nothing contained in this section or elsewhere in this legislation
is intended to extend the duration of any license, transfer or
assignment made for a period of less than thirty-five years. If, for
example, an agreement provides an earlier termination date or lesser
duration, or if it allows the author the right of cancelling or
terminating the agreement under certain circumstances, the duration is
governed by the agreement. Likewise, nothing in this section or
legislation is intended to change the existing state of the law of
contracts concerning the circumstances in which an author may cancel or
terminate a license, transfer, or assignment.
Section 203(b)(6) provides that, unless and until termination is
effected under this section, the grant, ``if it does not provide
otherwise,'' continues for the term of copyright. This section means
that, if the agreement does not contain provisions specifying its term
or duration, and the author has not terminated the agreement under this
section, the agreement continues for the term of the copyright, subject
to any right of termination under circumstances which may be specified
therein. If, however, an agreement does contain provisions governing its
duration--for example, a term of fifty years--and the author has not
exercised his or her right of termination under the statute, the
agreement will continue according to its terms--in this example, for
only fifty years. The quoted language is not to be construed as
requiring agreements to reserve the right of termination.
Amendments
2002--Subsec. (a)(2)(A) to (C). Pub. L. 107-273, in subpars. (A) to
(C), substituted ``The'' for ``the'' and, in subpars. (A) and (B),
substituted period for semicolon at end.
1998--Subsec. (a)(2). Pub. L. 105-298, Sec. 103(1), struck out ``by
his widow or her widower and his or her children or grandchildren''
after ``exercised,'' in introductory provisions.
Subsec. (a)(2)(D). Pub. L. 105-298, Sec. 103(2), added subpar. (D).
Section Referred to in Other Sections
This section is referred to in title 36 section 2114.
