MJ Bogatin (“Bo”) of Bogatin, Corman & Gold, is an Arts and Entertainment Attorney in San Francisco. He is also Co-President of California Lawyers for the Arts. www.calawyersforthearts.org Bo is available to answer some of your questions surrounding the business of Art Licensing. - THANKS BO!
Last month I wrote about the way I look to protect an Artist client’s rights in her image preemptively by making the license subject to mutually agreeable minimum annual earnings. That is a way to get back rights to images being used unproductively in the relatively short-term. (Last month's bLAWg)
However, the Copyright Act, Sections 203 and 304(c)(3), also addresses the return of copyright interests to Artist in the long-term. In short, for works originally published before January 1,1978, an Artist or their heirs can reclaim her copyright interest after 56 years. For works published since January 1, 1978, the right to claim a reversion of copyright is available after 35 years.
(See http://copyright.gov/title17/92chap2.pdf and http://copyright.gov/title17/92chap3.pdf
While most of my transactional work over the last 30 years involves works created and licensed after 1977, I have had occasion to advise certain composers and rock and roll poster artists on the way to recover the rights to their works that were exclusively in the hands of record labels and publishers for as long as 56 years beginning in the 1950s and 1960s.
For works published from 1978 on, the 35 year reversion right became operative as of 2013. This year, works licensed in 1980 became subject to reversion. Next year will open the door for recovery of works licensed in 1981, and on and on. Each calendar year, thousands of copyrights will be available to be reclaimed by their Artist authors or their heirs should they choose to avail themselves of this right.
It should be clear, however, this right only applies to copyrighted works that were licensed (exclusively or non-exclusively) or “assigned” (sold) in the first instance, not those that were created by an employee for her employer or as bona fide works-made-for-hire. (For more particulars on what is a work-made-for-hire, see my bLAWg from March 20, 2015 click here ). Nor does the statutory reversion right apply to copyright interests that were transferred by will.
However, it also applied to derivative works that were made from the original. So, if an illustration was issued for all kinds of paper products but mostly greeting cards, but was subsequently sub-licensed for a jigsaw puzzle that became a best-selling puzzle, termination of the original license terminates any sub-license as well.
So, why would you want to terminate the license of the sub-licensee who is still selling lots of puzzles? Because if the Artist is only getting a nominal royalty out of a successful illustration, she can look to renegotiate that royalty rate as an alternative to the termination, or look to obtain a much more lucrative license with another puzzle publisher upon termination!
There is a formal Notice process that applies to both statutory reversion rights. Rights under Section 203 may be effected at any time during a period of five years beginning at the end of 35 years from the date of original license. For instance, if an Artist granted an assignment of copyrights in a one or more of her illustrations on January 1, 1978, the earliest date upon which termination of such grant could be effected would be January 1, 2013; the latest date would be January 1, 2018. So, for those licenses commencing as of 1978, we are right in the window of time to recover those rights. If Notice has not been given in timely manner for this work, the reversion right will be lost for the duration of the copyright term, the life of the Author Artist plus 70 years.
Additionally, the written Notice must be served upon the grantee or the grantee's successor-in-interest not less than two years or more than 10 years before the effective termination date. And, of significant importance, the effective date of termination must be a date that falls within the applicable five-year termination window. So, in our example above, if the rights holders wait until January 2, 2016 to give the minimal two year notice, their window will have closed! For those who recognize that they are presently in the 10-year window, they can look to exercise their right now, to be effective as soon as the 5-year eligibility period commences. Make sense?
With copyright interests reverted, the Author Artist and her heirs will have the right to look for other publishing and/or licensing opportunities, presumably on much more attractive rates then were originally offered. And these recovered copyright interests will last for the remaining part of the copyright term, 70 years after the death of the Author Artist.