[Federal Register: December 20, 2002 (Volume 67, Number 245)] [Proposed Rules] [Page 77951-77955] ----------------------------------------------------------------------- LIBRARY OF CONGRESS Copyright Office 37 CFR Part 201 [Docket No. 2002-5] Notice of Termination AGENCY: Copyright Office, Library of Congress. ACTION: Notice of proposed rulemaking. ----------------------------------------------------------------------- SUMMARY: Commencing January 1, 2003, copyright owners or their statutory successors will be entitled, under certain circumstances prescribed by section 203 of the Copyright Act, to terminate transfers or licenses of copyright that were granted on or after January 1, 1978. The Copyright Office is proposing to adopt a regulation governing the form, content, and manner of service of notices of termination. The proposed regulation is based on the existing Copyright Office regulation governing termination of transfers and licenses covering the extended renewal term, and is adapted to meet the requirements for termination of post-1977 transfers and licenses. DATES: Comments should be in writing and received on or before February 3, 2003. Reply comments should be received on or before March 5, 2003. ADDRESSES: If sent by mail, 10 copies of written comments should be addressed to: David O. Carson, General Counsel, Copyright GC/I&R, P.O. Box 70400, Southwest Station, Washington, DC 20540. If hand delivered, 10 copies should be brought to: Office of the General Counsel, Copyright Office, James Madison Memorial Building, Room LM-403, First and Independence Avenue, SE., Washington, DC. FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel. Telephone: (202) 707-8380. Telefax: (202) 707-8366. SUPPLEMENTARY INFORMATION: Prior to the effective date of the Copyright Act of 1976, the term of copyright was 28 years, subject to renewal by the author or certain other persons described in the statute for an additional 28 years. The second term was considered a new estate, meaning that with certain exceptions such as works made for hire, all rights reverted to the author at the commencement of the second term, and transfers or licenses of copyrights made during the initial 28-year term automatically terminated.\1\ The 1976 Copyright Act abandoned the two-term system of copyright duration in favor of a unitary term, but it provided for two circumstances under which authors or their statutory successors could terminate transfers or licenses of rights. --------------------------------------------------------------------------- \1\ In Fred Fisher Music Co. v. M. Witmark & Sons, 318 U.S. 643 (1943), the Supreme Court significantly limited this rule by holding that authors could, during the initial term of copyright, assign renewal term rights and that such assignments would be valid during the renewal term if the author was alive at the commencement of the renewal term. --------------------------------------------------------------------------- First, because the 1976 Act added 19 years to the terms of existing copyrights, extending the renewal term from 28 years to 47 years, section 304(c) provides that authors or certain statutory successors (such as the surviving spouse, children and [[Page 77952]] grandchildren or, if there are no such surviving relatives, the author's executor, administrator, personal representative, or trustee) may terminate pre 1978 \2\ exculsive or non-exclusive grants of transfers or licenses during the extended renewal term and secure for themselves the benefits of the additional 19 years added to the renewal term. Termination may be effectuated by serving the grantee or the grantee's successor in title with a notice of termination (which may be served only during a period prescribed by the statute) and recording the notice of termination with the Copyright Office prior to the effective date of termination. 17 U.S.C. 304(c). Section 304(c)(4)(B) provides, "The notice shall comply, in form, content, and manner of service, with requirements that the Register of Copyrights shall prescribe by regulation." In 1977, the Copyright Office adopted a regulation establishing the procedures for exercising the termination right. 37 CFR 201.10. Pursuant to section 304(c) and 37 CFR 201.10, authors and their statutory successors have been serving notices of termination of transfers and licences, and filing those notices for recordation with the Copyright Office, for almost 25 years.\3\ --------------------------------------------------------------------------- \2\ The effective date of the Copyright Act of 1976 was January 1, 1978. \3\ The Sonny Bono Copyright Term Extension Act, ("the Act"), Pub. L. 105-298, 112 Stat. 2827 (1998), extended the renewal term by an additional twenty years and gave authors or their statutory successors a second opportunity to terminate transfers or licenses during the extended renewal term. 17 U.S.C. 304(d). Earlier this year, the Copyright Office amended 37 CFR 201.10 to adopt requirements for notices of termination pursuant to section 304(d). 67 FR 69134 (Nov. 15, 2002). --------------------------------------------------------------------------- Second, the 1976 Act provides that authors may terminate grants of transfers or licenses entered into after January 1, 1978. 17 U.S.C. 203. Unlike termination pursuant to section 304(c) and (d), termination pursuant to section 203 is available only when the grant was made by the author, but as with termination pursuant to section 304, certain statutory successors may terminate if the author is no longer alive at the time termination may be made. 17 U.S.C. 203(a)(2). Termination may be made during a five-year period commencing 35 years after the execution of the grant or, if the grant included the right of publication, the earlier of 35 years after publication pursuant to the grant or 40 years after the execution of the grant. 17 U.S.C. 203(a)(3). As with section 304 terminations, termination under section 203 is accomplished by serving a notice of termination on the grantee or the grantee's successor in title and recording the notice with the Copyright Office prior to the effective date of termination. The notice must be served no more than 10 years and no later than two years before the effective date of termination. 17 U.S.C. 203(a)(4)(A). As with section 304 terminations, "The notice shall comply, in form, content, and manner of service, with requirements that the Register of Copyrights shall prescribe by regulation." 17 U.S.C. 203(a)(4)(B). The rationale for the section 203 termination right is similar to the rationale for the section 304 termination right. As the legislative history of section 203 states: 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. 24) 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. House Report on Copyright Act of 1976, H.R. Rep. No. 94-1476, at 124 (1976). Because section 203 terminations may be made only with respect to grants made on or after January 1, 1978, and because notice of termination may be served no earlier than 25 years from the date of execution of the grant (which, in the earliest case, would be 10 years before the effective date of termination, which may be no earlier than 35 years from the date of execution of the grant),\4\ no termination notices under section 203 have been possible between January 1, 1978, and the present. However, commencing January 1, 2003, certain authors and their statutory successors will be able to serve section 203 notices of termination, because on that date, 25 years will have passed since January 1, 1978. --------------------------------------------------------------------------- \4\ Or, if the grant covered publication of the work, notice may be served no earlier than 30 years from the date of execution of the grant or 25 years from the date of publication under the grant. See the discussion above. --------------------------------------------------------------------------- Because notices of termination must comply with requirements prescribed in a regulation by the Register of Copyrights, it is now necessary to adopt a regulation that will set forth the requirements as to form, content and manner of service of section 203 notices of termination. Fortunately, the regulation governing section 304 notices of termination provides a model for a regulation governing section 203 notices. Because the statutory requirements for termination under section 304 are very similar to the statutory requirements for termination under section 203, we propose to adopt a regulation modeled closely on the existing section 304 regulation. See 37 CFR 201.10. In this notice of proposed rulemaking, we seek comments on the rules that we propose to adopt, which would amend Sec. 201.10 to add requirements for section 203 notices of termination.\5\ --------------------------------------------------------------------------- \5\ Because of the time required to receive and consider comments from the public, it will not be possible to announce final regulations prior to January 1, 2003. However, because some authors or statutory successors may be able to and desire to serve notices of termination as early as January 1, 2003, we intend to publish an interim regulation shortly after publication of this notice of proposed rulemaking, and before January 1, 2003. The interim regulation will be virtually identical to the regulation proposed herein and will be in force pending the adoption of a final regulation. --------------------------------------------------------------------------- Existing Sec. 201.10 sets forth requirements governing the form and content of section 304 notices of termination, the signature on a notice of termination, the manner of service, the effect of harmless errors in the notice, and recordation of the notice. We propose to modify Sec. 201.10(b), which governs the contents of a section 304 notice of termination, by adding a new subparagraph to govern the contents of a section 203 notice of termination. The new subparagraph adapts the content requirements of the existing regulation to meet the needs of section 203. Somewhat different treatment is also required for signatures of section 203 notices of termination. Beyond those changes, only minor revisions in the wording of various provisions are necessary in order to reflect the fact that notices of termination may be served under section 203. Contents of the Notice The first modification that we propose is an amendment to Sec. 201.10(b)(1)(i). Currently, that subparagraph requires that if termination is being made under section 304(d)--the termination provision added by the Sonny Bono Copyright Term Extension Act--the notice must include a statement to that effect. The requirement that notices of termination under section 304(d) refer specifically to section 304(d) was added in the recent amendment of Sec. 201.10, in order to distinguish such notices from notices served under section 304(c). No corresponding requirement was imposed for notices of termination issued under section 304(c) because such a requirement would have added a new requirement for such notices, [[Page 77953]] which have been served since 1978, and might upset established legal practices in issuing notices under that section. Because a third category of notice of termination--pursuant to section 203--is now available, we believe that it would be prudent to require all notices of termination--whether under section 203, 304(c) or 304(d)--to state which statutory provision is being invoked. Requiring such specification should assist in eliminating confusion over the nature of any notice of termination. Accordingly, we propose to amend Sec. 201.10(b)(1)(i) to require that a notice of termination pursuant to section 304 must identify whether the termination is made under section 304(c) or section 304(d).\6\ --------------------------------------------------------------------------- \6\ The interim regulation to be announced shortly will not include this amendment because we do not believe it would be prudent to change the requirements for section 304 notices of termination on such short notice. The interim regulation will be effective January 1, 2003. --------------------------------------------------------------------------- We propose to add a new Sec. 201.10(b)(2) to state the required contents of a section 203 notice of termination. The proposed requirements are very similar to the requirements for section 304 notices, departing from that model only in instances where the requirements of section 203 are different from the requirements of section 304. Section 201.10(b)(2)(i) would require that a notice of termination made under section 203 identify itself as such. Section 201.10(b)(2)(ii) would be identical to current Sec. 201.10(b)(1)(ii), requiring identification of the name of each grantee (or successor in title) whose rights are being terminated, as well as the address at which service of the notice is being made. Section 201.10(b)(2)(iii) would impose a requirement not found in the regulation governing section 304 notices of termination: identification of the date of execution of the grant being terminated and, if the grant covered the right of publication of a work, identification of the date of publication of the work under the grant. In contrast, current Sec. 210.10(b)(ii) requires that a notice of termination under section 304 identify the date copyright was originally secured. When the original regulation was adopted, we explained that the latter requirement was being imposed because ``the period during which termination may be effected is measured from the date copyright was originally secured.'' Final Regulation, Termination of Transfers and Licenses Covering Extended Renewal Term, 42 FR 45916, 45917 (Sept. 13, 1977). Therefore, in order to determine whether a notice of