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Loren on Renegotiating Copyright Deals

By Lawrence Solum

Lydia Pallas Loren (Lewis & Clark Law School) has posted Renegotiating the Copyright Deal in the Shadow of the ?Inalienable? Right to Terminate on SSRN. Here is the abstract:

Few people realize that many contracts that purport to transfer ?all right, title and interest? in a copyright can be terminated by the author of the copyrighted work after 35 years (in some cases), after 56 years (in other cases) and sometimes even after 75 years. Even if the agreement states that the rights granted are ?in perpetuity? or ?for the duration of the copyright and any renewals,? that agreement remains subject to the author?s right to terminate the agreement and take back the copyright. Agreements transferring or licensing copyright are even subject to a set of contingent termination rights granted to authors? widows, widowers, children, grandchildren, or authors? executors, administrators, personal representatives, or trustees.

Why does federal copyright policy dictate that freedom and sanctity of contract must give way to the rights of authors and their families to negate otherwise valid assignments and licenses? Many believe that Congress based the policy on a paternalistic desire to protect creative individuals lacking business acumen. This article demonstrates that Congress was much more concerned with the valuation problem inherent in creative works, a valuation problem that is particularly acute prior to the commercial exploitation of a work and that both assignors and assignees face.

With an accurate understanding of the termination rights and policy, this article then examines the most common strategy now used to attempt to avoid the termination rights: renegotiation of the original agreement. Only in three specific contexts should a renegotiated agreement be insulated from termination rights stemming from the original agreement. In all other contexts, the renegotiated agreement should be subject to those termination rights.

Full post as published by Legal Theory Blog on May 20, 2010 (boomark / email).