June 9, 2022
By: David Rabinowitz
When is a copyright grant executed by an author not a grant executed by an author?
This issue relating to this question arose and was recently decided by the Second Circuit Court of Appeals in Acuti v. Authentic Brands Group LLC. At issue was the extended renewal term for the iconic ballad, “Can't Help Falling in Love,” popularized by Elvis Presley in 1961.
Answer to the above question: When the author dies before the renewal term vests.
Extended renewal terms for pre-1978 copyrights suffer an unexpected consequence when the author of the work dies before the renewal term vests. This case highlights a worst-case scenario in attempting to maintain copyright protection and transfers, even when remaining compliant with Section 203 of the Copyright Act, and how a decades-old, nearly superseded law can still affect copyrighted works in 2022.
In the 1976 Copyright Act, Congress created an “extended renewal term” for copyrighted works. Under the previous Copyright Act, the 1909 Act, the initial term of copyright was 28 years, renewable for another 28 years by filing with the Copyright Office. The 1976 Copyright Act added 19 years to the term of protection, extending the total potential term to 75 years. The additional 19 years is called the “extended renewal term.” The newly extended renewal term was further extended in 1998 to a total of 39 years, giving a pre-1978 copyrighted work a total potential life of 95 years (different rules of duration apply to works in which copyright is obtained beginning in 1978, the year the 1976 Act became effective).
The idea and purpose of the extended renewal term was to enable the author or descendants or family specified in the Act to recover the right to exploit a copyright that had been previously transferred. That too was the purpose of the renewal term of 28 years under the 1909 Act, but that purpose had been somewhat frustrated by case law.
Under the 1909 Act, if an author transferred the renewal term of a copyright before the renewal term began, the transfer was effective – provided that the author survived into the renewal term. The reasoning supporting this rule was that the author did not actually own the renewal term before it began because the Copyright Act gave the renewal term to the author’s heirs if the author was dead when the renewal term began. It was said that the author only had an “expectancy” of obtaining the renewal term until the renewal term began. Miller Music Corp. v. Charles N. Daniels, Inc., 362 U.S. 373, 377 (1960). If the author did survive to the time that the renewal term began, title to the renewal term vested in the author, but the author’s previous transfer of the renewal term then took full effect and the renewal term passed to the transferee. If the author died before the renewal term, the author’s transfer did not take effect and the right to the renewal term passed to the author’s heirs.
The 1976 Act did not change the rule as to the first 28 years of the renewal term. However, the 1976 Act made it impossible for the author to give away the extended renewal term in advance. The Act invalidated such transfers, thereby assuring authors’ families of the chance to benefit from the author’s copyright in the extended renewal term.
The Acuti Copyright Transfer
In the Acuti case, the plaintiffs were the daughter of one of the authors and the estate of the author’s widow. The author and his family executed a transfer of rights of the copyright and the renewal term of the copyright. The transfer was executed in 1983, which was before the renewal term began. Because the agreement was made after 1978, the year when the 1976 Act became effective, the agreement was subject to Section 203 of that Act, which governs the termination of transfers made in or after 1978. Section 203 provides that transfers executed by authors can be terminated and the copyright recovered effective 35 years after the transfer.
The songwriter’s family duly complied with all of the procedural requirements to recover the copyright. However, despite the seeming compliance with Section 203 by the author’s survivors, the Second Circuit affirmed the holding of the district court that the author’s survivors did not recover the copyright for the extended renewal term. Why not?
Going back to the pre-1976 Act law concerning renewal terms, the court observed that the author, when he signed the 1983 transfer of the renewal term, did not actually own the renewal term because it was as yet a mere “expectancy,” which the author would never own unless he survived into the renewal term. (Indeed, no one would ever own the renewal term unless they survived into it.) Following the pre-1976 Act law, the court held that the author was, in 1983 when he signed the transfer agreement, without the power to convey the renewal term. The power to convey depended upon a condition subsequent, namely, the author’s surviving into the renewal term.
Because the author failed to survive into the renewal term, his transfer of his rights to the renewal term became a nullity. The court concluded that since the author’s transfer was a nullity – conveying nothing – the author's signature on the 1983 transfer did not constitute “execution of a transfer” by the author, a condition under Section 203 to the family’s recovery of the extended renewal term.
The Court’s Unique Reasoning
To arrive at this result, the Second Circuit drew an unprecedented distinction, citing no cases, between “signing” and “executing.” This distinction may be specific to the Copyright Act, which can be construed, with some imagination,1 to have a definition of “execute.” The Second Circuit said:
But what exactly is a grant “executed by the author?”… The Copyright Act uses the word “executed,” not the word “signed.” … [T]he term “execute” is explicitly defined in the 1976 Act. Section 204(a) of the 1976 Act, which is titled “Execution of transfers of copyright ownership,” …: A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent. 17 U.S.C. § 204(a).
Thus, the 1976 Act itself, in the statutory section immediately following the provision at issue, makes clear that the “execution” of a transfer of rights under the Act must be “signed by the owner of the rights conveyed.” Id.… Anyone can affix his signature to a document purporting to transfer a right or piece of property, but only the signature of the owner of the right or property in question (or that of the owner's authorized agent) can “execute” the transfer.
(emphasis added) The court thus concluded that the author’s signature, not constituting a transfer at all, meant that the 1983 transfer agreement was not a transfer executed by the author. Since, under the Second Circuit’s reasoning, the songwriter’s 1983 transfer did not qualify as a transfer of copyright executed by the author, it was not covered by Section 203 and thereby the author's family could not take advantage of Section 203 to recover the copyright.
It is ironic that a court-made doctrine, namely, the doctrine under the 1909 Act intended to benefit authors’ families by enabling them to obtain the renewal term if the author did not survive into the renewal term, was turned against the author’s family in this case. That pre-1976 Act rule received, zombie-like, a second life by this decision: Now, it deprives authors’ families of the right to recover the extended renewal term enacted by Congress precisely for the purpose of benefiting those families under these facts. Nevertheless, that is now the law in the Second Circuit.
The ruling in this case, whatever its merits, will eventually die out as we get further in time from the effective date of the 1976 Copyright Act. The renewal term of copyright was replaced in that Act by other duration rules for copyrights obtained in or after 1978, so only pre-1978 copyrights are affected by this ruling. Moreover, since this ruling applies only to authors who transfer rights and die before the 28th year of copyright, the rule applies only to authors who died before 2006.
What may be more intriguing in the future is whether the Second Circuit’s distinction between “signing” and “execution” has a life in the contracts world generally, not just under 17 U.S.C. 204. If it does, a lot of contract drafters are in for a big and possibly unpleasant surprise.
1 Despite the Second Circuit’s opinion, the word “execute” is not explicitly defined in Section 204. The word only appears in the caption of that section. The court might have tried to reach the same result by observing that the author was not the “owner” of the rights when he “executed” the transfer, but that would have run into the problem that Section 203(a) only requires execution by the “author,” not by the “owner.