The Constitution of the United States, under Article 1, Section 8, grants Congress the power “to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” The U.S. Copyright Act was thus born, with the underlying purpose of balancing encouragement of innovation and promoting the progress of knowledge and learning. While the immediate effect of copyright law is to award authors for their labor, ultimately, the aim is to encourage creativity for the public good. Therefore, protection of authors’ creative works generates inventive to create new works, and the limitations to that protection avoid monopolies that would inhibit progress for the public good.
The termination right granted to authors under the U.S Copyright Act of 1976 is arguably one of many provisions that aim to maintain that balance. Section 203 gives authors who sold, transferred or licensed the copyright in their work after January 1, 1978, the right to terminate the transfer or license after thirty-five years. For transfers and licenses before 1978, authors or their heirs can terminate after fifty-six years (Section 304). Authors have a five-year window to reclaim their rights. In addition, the termination right cannot be contracted around and therefore does not allow grantees to take advantage of their bargaining power to coerce authors to waive this right. This gives authors the opportunity to either renegotiate bad deals to reflect the acquired success of their work, or to simply reclaim their copyrights and earn profits from their individual exploitation.
Section 203 and 304 are undoubtedly powerful and beneficial tools for artists. A great example is the comic book hero, “Superman.” When two teenagers, Jerome Siegel and Joseph Shuster, created this character in 1932, they sold their rights to Superman and in return, received $130 and a small rate that lasted five years. Regardless of how lucrative Superman became over time, Siegel and Shuster were only entitled to the small amount they had received. However, by exercising their copyright reclamation right, their heirs were able to terminate the transfer of rights and recapture the copyright to Superman in 2008. This gave them the second chance to negotiate new licenses that were fair, and therefore make up for what usually is a bad deal resulting from unequal bargaining power or a miscalculation of the work’s market value.
The advantages authors are entitled to through the right of reclamation have caused serious turmoil, especially in the music industry, and understandably so. Starting in 2013, artists will have the right to exercise their termination rights, putting record labels at risk of losing sound recording copyrights they bought in 1978. For music before 1952, grants can already be terminated. Music artists have already expressed their intention to send termination notices, including Bob Dylan, Tom Petty and Tom Walts. Losing copyrights to incredibly lucrative works can place record labels in financial detriment, especially considering the existing battles labels have been fighting with the innovation of digital media. Record labels are not at a complete loss, however, because there are exceptions to termination rights, including works made for hire and the right to reserve rights to derivative works (works record labels have created based on the original copyrighted work).
Where do reclamation rights fall within the balance of encouraging creation and promoting the public good? Certainly, between record label and artists, the balance is tipped in favor of the artist. Reclamation rights protect the artist in giving him/her a second chance to decide how to exploit their work after they know its profitability. Ultimately, however, this does “promote the progress or science and the useful arts.” Many times, record labels will by copyrights from artists, and based on recording contracts, have the right to shelf the masters at their discretion. For these artists, being able get their music to the public ear by having control over the distribution and exploitation, is not only incredibly beneficial to artists and their desire for further creativity, but also disseminates creative works to the public that otherwise could be shelved for decades. Promotion of progress is also exemplified in other works, such as books, screenplays, photographs, and the case of Superman. While the implications of the reclamation right remain to be seen, and the scope and purpose of section 203 continues to be discussed, one thing is clear, Congress intends to protect artists from unequal bargaining power.
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