Enacting the AUTHOR (Authors’ Universal Termination and Hassle-free Ownership Reclamation) Act

This April Fools’ Day post is coauthored by UC Berkeley student Kalani Jai Gaviola and Authors Alliance staff. 

We need a dream-world in order to discover the features of the real world we think we inhabit. — Feyerabend

There are no answers, only choices. ― Lem

I. A long-overdue revision of Section 203

Today, Congress enacted an unprecedented yet long-overdue law granting authors automatic termination of copyright transfers five years after they are granted, with a six-month notice period during which the original grantee may notify the author that the transfer is about to end and indicate whether they wish to renegotiate the agreement. This law supersedes the previous Section 203 of the 1976 Copyright Act. The new law is aptly titled the AUTHOR (Authors’ Universal Termination and Hassle-free Ownership Reclamation) Act, reflecting its Damascene conversion for an unprecedented empowerment of authors.

In the same vein of allocating to authors a greater share of the economic surplus of their own creations, the AUTHOR Act also includes a provision mirroring Section 32a of the German Copyright Act, which grants authors a right to renegotiate compensation when a work proves unexpectedly successful—a contingency that, however remote it remains for most creatives, deserves protection. Though derivative works are exempt from automatic termination under the AUTHOR Act, they are subject to authors’ renegotiation rights under the new Section 203(b).

II. Why the previous Section 203 was not working 

Public Knowledge has summarized the problems with the previous Section 203:

[M]any artists and creators appear unable to exercise something which is supposed to be an inalienable right. Court records, academic studies, and press reports all point to dysfunction within the termination right regime. The right is complex to execute, and that has allowed problems to take root as artists struggle to fulfill obscure eligibility, timing, and filing formalities which together create significant hurdles that are difficult (if not impossible) to overcome without expensive legal representation. And even when an artist meets her statutory obligations, she can find herself entangled in lengthy and expensive litigation to resolve ambiguities in the law and its application, ranging from judicial “work for hire” determinations to disputes over the statute of limitations. 

Criticism for the previous Section 203 was largely due to its onerous and costly requirements for authors seeking to terminate transfers. Noting that “requirements [for termination] can present a daunting challenge to an author or successor looking to terminate,” Prof. Anthony Reese listed the following formalities that burdened authors—but quite predictably, not publishers and distributors—under the 1976 Act. Authors must:

• identify who holds the right to terminate, and, if the right is held by multiple parties, identify and correctly compute their proportionate shares, and get the holders of more than one-half of the shares to agree to terminate;

• calculate the time period during which termination can occur and choose an effective termination date in that period;

• calculate the time period during which advance notice must be served on the party whose rights are being terminated; 

• identify and locate the party on whom the advance notice must be served; and 

• draft a proper termination notice, serve it properly, and record a copy of it in the U.S. Copyright Office before the effective date.

Such onerous requirements naturally “create[d] unexpected pitfalls that thwart or blunt the effort of [termination].” Prof. Kevin Greene noted that the 1976 Act termination provisions “virtually ensure most authors could never recapture their rights,” and as one workable alternative, Congress could “place the burden on rightsholders to keep track of termination dates and send notices to artists regarding the existence of termination rights and termination procedures such as notice.” Similarly, Prof. Jessica Litman observed that termination was “sufficiently difficult to be largely illusory for most creators,” and suggested that a pro-author termination provision could “allow[] authors to terminate any transfer at any time after 10 years had elapsed from the date of the grant. …[I]t would go a part of the way toward shifting the copyright balance from distributors to creators and it would be fine under Berne and TRIPS.” 

A key problem with the previous termination provisions is exactly that it harmed “most creators.” As Prof. Lydia Pallas Loren plainly laid out: 

termination rights will be exercised only for very successful works with commercial staying power. However, all copyright transfers are subject to termination rights. If the bargained for price for the transfers includes a discount for the possibility of termination, then unsuccessful authors may be suffering at the cost of extremely successful ones. The successful authors will be able to capture the value that was discounted, but the unsuccessful ones will not.

Prof. Ann Bartow explained that many authors are tricked into believing that they do not have the right to terminate:

Any commercial publisher with access to legal advice likely knows about termination rights and understands that they are unwaivable. Yet typical copyright licenses are very likely to contain a provision that claims the agreement is in effect for the entire duration of the copyright. This is to trick authors out of asserting their termination rights.

Similarly, Prof Bartow lamented how Sony and UMG (subtly nicknamed “Ur Money, Gimme” by the Act’s drafters) put “work made for hire” language in their contracts with musicians. “[T]he musicians (and sadly, their representatives who negotiated licenses for them) probably did not understand the ultimate end to which this language was going to be deployed.” When distributors make termination difficult for authors, Prof. Bartow explains, “Authors who feel badly treated by licensees who attempt to deprive them of their termination rights may even sour on the music industry and stop creating new works altogether.” Instead: 

If authors can predictably and efficiently reclaim their copyrights using Section 203 termination rights, this almost certainly would lead to the broader dissemination of existing works. After termination, authors can choose different intermediaries to partner with, move from exclusive to nonexclusive licenses, or engage in distributive acts themselves. Authors can leverage their control of the copyrights in commercially successful works to obtain support for less economically flourishing works.

III. Safeguarding authors from unremunerative transfers

The fundamental rationale for granting authors copyright reversion rights is to protect authors from “unremunerative transfers,” and in doing so provide all authors greater incentive to create works that lead to the progress of science—a constitutional mandate that, one imagines, has been applied rather generously when accounting for the rise of memes, OOTD, and bodice-rippers. 

The rationale has largely been the same for more than a century. As the former Register of Copyrights noted: “author-publisher contracts must frequently be made at a time when the value of the work is unknown or conjectural and the author (regardless of his business ability) is necessarily in a poor bargaining position.” During the revision process leading up to the enactment of the 1909 Act, a member of Congress explained that it was essential for a renewal term to vest exclusively in authors. This was illustrated with the example of Mark Twain who “sold the copyright for Innocents Abroad for a very small sum, and he got very little out of the Innocents Abroad until the twenty-eight-year period expired, and then his contract did not cover the renewal period, and in the fourteen years of the renewal period he was able to get out of it all of the profits.” 

Similar—but newer and more compelling—examples were presented during the House and Senate hearings leading up to the enactment of the new AUTHOR Act. These examples are even more compelling than the example with Mark Twain, as even more economic surplus went to the distributors.

Deborah Gregory, the original creator of The Cheetah Girls, was a particularly intriguing case brought forth by one of the Act’s advocates, marking the first time the franchise had been invoked on the Senate floor: Gregory sold Disney the dramatic rights to her debut novels in 2001 for an 125k advance and a 4% cut of net profits. However, industry-standard ‘Hollywood accounting’ cut Gregory off from both her profit and her creative freedoms—leaving her struggling in a cramped Manhattan apartment while the characters she created headlined multiple hit films, concert tours, and millions in merchandise sales. 

Other, older examples served to illustrate the impossibility of appropriately valuing art before it hits market, proving the necessity of the AUTHOR Act: Bob Dylan’s first music publishing deal with Leeds Music Publishing in 1962 provided him a mere $100—a stark difference to the estimated $300 million he later sold his songwriting catalog to Universal Music for. In 2020 Similarly, the hardcover advance for Stephen King’s 1974 debut novel, Carrie, was notably “small” while, mere months later, the paperback advance was valued at around $400k, a sum large enough to retire King’s mother. 

By providing a predictable and enforceable path to termination and renegotiation, the law finally aligns statutory design with its original constitutional purpose: safeguarding authors from unremunerative transfers, in doing so, promoting creation that benefits the public. 

We encourage you to savor this great new law, appreciating how today Congress chose authors over big businesses.