Despite the fact that the Electronic Signatures in Global and National Commerce Act has been around since 2000, the U.S. Copyright Office has refused to accept electronic signatures for copyright assignments and other documents. That all changed on December 18, 2017, when new rules (37 C.F.R. § 201.4) became effective allowing 21st century electronic signatures to be used for documents submitted for recordation at the Office. The new rules are first steps as the Office moves toward implementing its planned fully electronic online recordation system.
For many years, the Office felt that the undefined statutory term “actual signature” (17 U.S.C. § 205) required original documents to bear handwritten, wet signatures, and that “copies” of such documents had to reproduce those wet signatures. Under the new rules, the Office considers an “actual signature” to be any legally binding signature, expressly including an electronic signature as defined by the E-Sign Act. Even clicking a button on a website can now qualify as such a signature, so long as this act is supported by appropriate evidence (e.g., a confirmation email showing that a particular user agreed to contractual terms by clicking “yes” on a particular date). Where the Office’s recordation examiners cannot determine on a case-by-case basis that a document has been actually signed, the Office will presume that the signature requirement has been satisfied, and such presumption is to be without prejudice to any party who later claims that the document was not in fact signed.
A related improvement is that while the Office will continue to require that documents submitted for recordation be “complete,” there is a very different sense now as to what that means. It used to be the case that if a copyright transfer represented only a small portion of a much larger transaction document (such as might occur in connection with an overall corporate asset transfer or other M&A activity), the Office would require the complete document package, including voluminous schedules and exhibits unrelated to the copyright transfer. The new rule deems a document “complete” for recordation where all of the terms relating to the copyright issues are provided, and allows unrelated schedules and exhibits to be omitted. Likewise, they allow for redactions of portions of transaction documents that do not relate to copyright. The notice (82 FR at 52213) announcing the new rules cautions parties not to over-redact, however, as in some instances it may impact whether a document adequately provides the statutory constructive notice the remitter desires to achieve by recordation.
Another move toward modernization is a loosening of the requirement for English-language translations of documents originally in another language. The translation need no longer be “signed by the individual making the translation.” Instead, automated translations are now acceptable.
When reviewing submissions such as copyright assignments, the Office is clear that its examination is for only “facially obvious deficiencies,” and that more comprehensive review is done only at its discretion. The rules expressly warn that recordation of such a document is not to be construed as a determination by the Office that a document is valid or legally effective. Nonetheless, it is likely that these new rules will help further the general adoption of various types of electronic signatures.
Although the E-Sign Act covers many transactions, others are subject to state law. Not all states have adopted the Uniform Electronic Transactions Act (New York, Illinois and Washington are very notable exceptions) — so even within the United States there remains some uncertainty regarding the effectiveness of certain types of electronic signatures in certain situations. Some other countries recognize as binding only certain types of electronic signatures or recognize electronic signatures for only certain types of use. That said, with the new rules from the Copyright Office, we are one step closer to universal acceptance of electronic signatures.
In a related development, the day after the new rules became effective, the Ninth Circuit issued a ruling that seems to indicate a further loosening of the formalities needed for a transfer of copyright. Specifically, the court held that where a company owner signed an annual report containing a statement that “all assets” from a predecessor company were transferred to a new company upon its incorporation a year earlier, such a report by itself could be sufficient to satisfy the requirement (17 U.S.C. § 204(a)) that copyright transfers be in writing. The court quoted prior case law in observing that the writing requirement does not call for any “magic words” or “have to be the Magna Carta.” As the need for formality and ceremony appears to be diminishing, companies should be careful that they do not inadvertently take any action that might later be argued to constitute a transfer of copyright ownership under the Copyright Act.