It oftentimes comes like a bolt out of the sky to the great surprise and dismay of most mortals, but Copyright ownership agreements can be completely terminated by the author (or heirs) decades after that earlier irrevocable assignment of “all right, title and interest of copyright, now or hereafter held”! For example, to exercise the termination rights on an agreement made after 1977, whether license or assignment, the author (or heirs) need only serve a timely Notice of Termination within a five-year period beginning at the end of the 35th year from the original transfer grant date, and record it with the Copyright Office. KA-BOOM, the grant is goners. Talk about some serious kryptonite to kill that iron-clad absolute transfer of copyright you thought you owned in perpetuity; especially if you are DC Comics, with the franchise of the Man-of-Steel estimated at $1 billion in 2004.
In DC Comics v. Pacific Pictures Corp., (C.D. CA, CV 10-3633) the Federal Court held that the heirs of Joseph Shuster, the original illustrator of Superman (and co-creator with Jerome Siegel), had vitiated any termination right by virtue of a 1992 agreement between the heirs and DC. Siegel and Shuster had assigned to DC the “exclusive right” to Superman in 1938, then unsuccessfully sued to invalidate that assignment in 1948, and entered into another agreement with DC in 1975. The 1992 agreement with Shuster’s heirs, said it “fully settles all claims to any payments or other rights or remedies which [Shuster’s heirs] may have under any other agreement or otherwise, whether now or hereafter existing regarding any copyrights, and now grant to us any such rights.”
But like any comic-book character that will not stay dead, notwithstanding the 1992 agreement, Shuster’s heirs served a Notice of Termination in 2003 trying to reclaim all rights to the Superman copyrights. DC comics sued to establish that the 1992 agreement relinquished any termination rights held by Shuster’s heirs. In a just-issued decision, the Court held that the 1992 agreement superseded the original 1938 transfer by Shuster, and therefore the 1992 agreement revoked any prior agreements and regranted all copyright interest to DC.
DC Comics and its predecessors (for example, Milne v. Stephen Slesinger, Inc. over the “Winnie the Pooh” copyright; and Penguin Group (USA) Inc. v. Steinbeck, over the “Of Mice and Men” copyright) is a reminder that authors, or their heirs, have serious leverage to renegotiate agreements to copyrighted works that were previously assigned: or punch those prior transfers out of existence. The “inalienable” right to termination is even more invulnerable than Superman to efforts to transfer it in advance of when it would otherwise ripen, (complicated by termination provisions that might apply at 56 and even 75 years from the original date or copyright). Congress has repeatedly made clear that this reversionary provision to protect “authors against unremunerative transfers” (that is, selling for pennies what later turns out to be worth millions) is much more powerful than a locomotive, or any attempt to leap over or around it. It does not apply to works made for hire, but whether something really was a work made for hire (even if the parties said it was at the time) can be open to question. A very serious question with millions at stake.
Obviously, knowing that your copyright transfer may disappear after decades of investment, along with future profit, and that there is virtually nothing you can do to prevent it in advance is not the story arc that the transferee is looking for. Yet even X-ray vision has failed to find a really sure way to defeat the inalienable transfer right.
Renegotiation appears to be a viable option open to the original grantee to try and deal with the termination right, at least in some measure. Depending on the timing of the new deal, this may simply re-start the 35-year clock noted above (for post-1977 agreements). But that may be enough comfort for the grantee in the meantime. Authors and heirs should carefully approach renegotiating copyright ownership agreements when leveraging the termination rights. Indeed, the Court in DC Comics determined that the heirs had “exhausted the single opportunity provided” them to revisit the terms of the original grant, in the 1992 agreement. Grantees need to be cognizant of revocation of all prior agreements in the renegotiated transfer agreement, and address how the renegotiation involves termination rights the author or heirs may have. It may not always take a Brainiac, but the timing and analysis can be very complex.