DIVORCE AND COPYRIGHT: Getting Back…Or Losing…Rights That You Thought You Lost…Or Had Ivan Hoffman, B.A., J.D.

        Songwriter, screen writer, director of film or television shows, recording artist, painter, writer or similar creative party (for simplicity in this article, all such creative parties are called “author”) owns rights in and to certain works.  These rights can be rights of copyright or rights in contracts whereby the author relinquished his or her copyright rights in exchange for contract payments such as royalties, fees, advances and the like.  The works can be musical compositions, sound recordings (provided they were first recorded after February 15, 1972), books, works of art, screen plays and similar works.

        As things would go in this “hypothetical,” the author and his or her spouse get divorced.  (Would that it were only a “hypothetical.”) As part of the divorce contest, the spouse claims rights in those said copyright or contract rights and, pursuant to a property settlement agreement approved by the court, the spouse is granted rights in and to the said copyrights or contract rights.

        However, depending upon the facts and circumstances of the given case, the transfer, in the form of the said agreement, by the author of rights in and to the said copyrights or contract rights may be subject to being “taken back” in whole or in part by either the author or the children or subsequent spouse of the author.   Whether this is so or not depends upon the operation of the federal copyright law on that transfer to the spouse.  In particular, the said law contains several instances in which those rights may be able to be taken away from the spouse who received those rights in the divorce settlement agreement.

        These situations are very fact-specific and complex in analysis.  Below are some, but certainly not all, of the examples.  See if any of these fit your or your client’s scenario.

        If the copyrights that were transferred were first registered in the United States before January 1, 1978, then those copyrights were subject to the “old” copyright law regarding renewal rights.  Before that date, copyrights existed for 2 separate terms: an initial term of 28 years and then a renewal term that previously was also 28 years but, effective January 1, 1978, was extended to 47 years and is now 67 years.  For the sake of simplicity in a very complex situation, I will leave out of this article issues related to the need to file renewal copyright applications for some of these copyrights.

        So the scenario plays out this way: the divorce settlement covered these “old” copyrights and after the divorce, the renewal terms arose.

        17 USC Section 304 of the copyright law provides which parties are entitled to renew the copyright into the renewal term.  For the sake of this article, the relevant section is below:

(C) In the case of any other copyrighted work, including a contribution by an individual author to a periodical or to a cyclopedic or other composite work —

(i) the author of such work, if the author is still living,
(ii) the widow, widower, or children of the author, if the author is not living,
(iii) the author's executors, if such author, widow, widower, or children are not living, or
(iv) the author's next of kin, in the absence of a will of the author, shall be entitled to a renewal and extension of the copyright in such work for a further term of 67 years.

        However, if the author died prior to the commencement of the renewal period, federal law pre-empts state law including, presumptively, the divorce settlement agreement approved by the state court.  That has been the ruling in cases dealing with a testator’s wishes conflicting with the federal law.  Broadcast Music, Inc. vs. Roger Miller Music, Inc., 396 F.3rd 762 (6th Cir, 2005); Larry Spier, Inc. vs. Bourne Co., 953 F2d 774 (2nd Cir. 1992).  If that same argument is extended to divorce agreements, that may mean that if the author died prior to the commencement of the renewal period, the transfer of renewal rights to the spouse in the divorce settlement agreement might be ineffective during the renewal period since federal law provides that the children of the author are the only parties entitled to the renewal rights. The spouse who received these copyrights in the settlement agreement is, by definition, not the widow or widower because of the divorce although there may be a new spouse who would thus be the widow if the author and this new spouse were married at the time the author died.

        As a practical matter, since renewal rights issues apply only to pre-January 1, 1978 copyrights as indicated above, any renewal terms will of necessity have started prior to December 31, 2005 (i.e. December 31, 1977 is the last date of copyright for “old” copyrights, to which you add 28 years to get the date of the onset of the renewal term).  However, cases indicate that a party is entitled to claim renewal rights without regard to any statute of limitations, meaning that the party or parties in whom the renewal rights vested at the onset of the 29th year retain the right to claim those renewal rights at any time.  There are certain equitable issues that may limit the right to claim back royalties, however.  In Stone vs. Williams (970 F. 2d. 1043), the Court held that a daughter of Hank Williams had the right to claim the renewal rights even though her claim was very late in being presented but she could not recover money for the exploitation of the compositions preceding the 3 year limitations period.

        For simplicity sake, I have not discussed the other potential parties who may be statutory successors since this article is about divorce.

        This scenario also deals with “old” copyrights, i.e. those registered before January 1, 1978.  Even if the author was alive at the time of the commencement of the renewal period, the transfer represented by the settlement agreement may still be terminable under a given set of circumstances.  The first of these circumstances is if the settlement agreement was executed before January 1, 1978.

        The same section of the copyright law further provides in part as follows:

(c) TERMINATION OF TRANSFERS AND LICENSES COVERING EXTENDED RENEWAL TERM. — In the case of any copyright subsisting in either its first or renewal term on January 1, 1978, other than a copyright in a work made for hire, the exclusive or nonexclusive grant of a transfer or license of the renewal copyright or any right under it, executed before January 1, 1978, by any of the persons designated by subsection (a)(1)(C) of this section, otherwise than by will, is subject to termination under the following conditions:

(1) In the case of a grant executed by a person or persons other than the author, termination of the grant may be effected by the surviving person or persons who executed it. In the case of a grant executed by one or more of the authors of the work, termination of the grant may be effected, to the extent of a particular author's share in the ownership of the renewal copyright, by the author who executed it or, if such author is dead, by the person or persons who, under clause (2) of this subsection, own and are entitled to exercise a total of more than one-half of that author's termination interest.

(2) Where an author is dead, his or her termination interest is owned, and may be exercised, as follows:

(A) The widow or widower owns the author's entire termination interest unless there are any surviving children or grandchildren of the author, in which case the widow or widower owns one-half of the author's interest.

(B) The author's surviving children, and the surviving children of any dead child of the author, own the author's entire termination interest unless there is a widow or widower, in which case the ownership of one-half of the author's interest is divided among them.

(C) The rights of the author's children and grandchildren are in all cases divided among them and exercised on a per stirpes basis according to the number of such author's children represented; the share of the children of a dead child in a termination interest can be exercised only by the action of a majority of them.

(D) In the event that the author's widow or widower, children, and grandchildren are not living, the author's executor, administrator, personal representative, or trustee shall own the author's entire termination interest.

(3) Termination of the grant may be effected at any time during a period of five years beginning at the end of fifty-six years from the date copyright was originally secured, or beginning on January 1, 1978, whichever is later.

        So let me give an example.  Copyrights in 1960 and, as part of the divorce agreement, the author’s copyrights are transferred to the spouse.  56 years from 1960 is 2016.  During a 5 year window commencing on the date of the respective copyrights in 2016, it is possible that the author, if the author is still alive or if not alive, the author’s children and widow, may be able to terminate the transfer to the original spouse.  Appropriate notice must be given no later than 2 years nor earlier than 10 years prior to the effective date of termination.

        Again, for simplicity sake, I have not discussed the other potential parties who may be statutory successors.

        Further, these rights are inalienable until they vest in the appropriate party.  This means that no agreement, including possibly a divorce settlement agreement, that purports to give up these rights, is likely to be held valid.  Section 304 goes on to state:

(5) Termination of the grant may be effected notwithstanding any agreement to the contrary, including an agreement to make a will or to make any future grant.

        In this scenario, the copyrights that are involved in the divorce settlement have first been copyrighted after January 1, 1978.   As to these copyrights, there were no longer any renewal rights involved and copyrights last for the life of the author plus originally 50 and now 70 years.

        That said, however, there are provisions that allow for the termination of a transfer made after January 1, 1978.  17 USC Section 203 provides in part:

(a) CONDITIONS FOR TERMINATION. — In the case of any work other than a work made for hire, the exclusive or nonexclusive grant of a transfer or license of copyright or of any right under a copyright, executed by the author on or after January 1, 1978, otherwise than by will, is subject to termination under the following conditions:

(1) In the case of a grant executed by one author, termination of the grant may be effected by that author or, if the author is dead, by the person or persons who, under clause (2) of this subsection, own and are entitled to exercise a total of more than one-half of that author's termination interest. In the case of a grant executed by two or more authors of a joint work, termination of the grant may be effected by a majority of the authors who executed it; if any of such authors is dead, the termination interest of any such author may be exercised as a unit by the person or persons who, under clause (2) of this subsection, own and are entitled to exercise a total of more than one-half of that author's interest.

(2) Where an author is dead, his or her termination interest is owned, and may be exercised, as follows:

(A) The widow or widower owns the author's entire termination interest unless there are any surviving children or grandchildren of the author, in which case the widow or widower owns one-half of the author's interest.

(B) The author's surviving children, and the surviving children of any dead child of the author, own the author's entire termination interest unless there is a widow or widower, in which case the ownership of one-half of the author's interest is divided among them.

(C) The rights of the author's children and grandchildren are in all cases divided among them and exercised on a per stirpes basis according to the number of such author's children represented; the share of the children of a dead child in a termination interest can be exercised only by the action of a majority of them.

(D) In the event that the author's widow or widower, children, and grandchildren are not living, the author's executor, administrator, personal representative, or trustee shall own the author's entire termination interest.

(3) Termination of the grant may be effected at any time during a period of five years beginning at the end of thirty-five years from the date of execution of the grant; or, if the grant covers the right of publication of the work, the period begins at the end of thirty-five years from the date of publication of the work under the grant or at the end of forty years from the date of execution of the grant, whichever term ends earlier.

                1. If the author is alive at the time of 35 years from the January 1, 1980 settlement agreement.

                        In this instance, the author may be able to terminate the transfer, subject to the notice and other requirements of the statute.

                2. If the author is not alive at the time of 35 years from January 1, 1980 settlement agreement.

                        In this instance, the children of the author (again, the transferee spouse is not the widow or widower but there may be a new spouse who is the widow or widower if the parties were married at the time the author died) may be able to terminate the transfer, subject to the notice and other requirements of the statute.

        As with the section 304 termination, these rights cannot be alienated or given away until they vest in the appropriate party.

        Assuming that copyrights and rights of copyright are community property, then overarching the above issues are issues related to the rights of the spouse in the community property that is the copyrights or the agreements related to the copyrights.  And in this regard, the question is whether the federal copyright law pre-empts state laws dealing with community property under the Supremacy Clause of the Constitution (Article VI, Clause 2).  And in the latter regard, the question is whether these community property issues are actually issues subsumed under the copyright law.  Section 301 of the copyright law provides in part:

§ 301. Preemption with respect to other laws

(a) On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103, whether created before or after that date and whether published or unpublished, are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.

        However, to date no court has decided whether community property survives the renewal or termination of transfer issues under federal law.  The issue, at least in terms of renewal rights, is whether the said renewal right is an expectancy, as the language of the federal cases states (see above), or is a contingent interest.  If it is merely an expectancy, then it may not be community property and in such an instance, if the author dies prior to the vesting of the renewal period, as indicated above, one could argue that the divorced spouse would not be entitled to renewal rights since the divorced spouse is not within the class of statutory successors.  On the other hand, if the right in the renewal period is not a mere expectancy but a contingent interest, then perhaps it is community property and thus the termination and renewal rights might exist as to the author's half.

        As to the said Supremacy Clause and the above pre-emption statute, the federal law specifically allocates a stated percentage of the copyright that passes to the indicated parties.  Since, by definition, a divorced spouse is not one of those statutory parties, if the said spouse has previously been given a one-half interest as a result of community property laws, the issue is whether that interest is valid under the copyright law since if there is no “widow” or “widower” all rights pass to the children of the author.

        There are other community property issues that would take us beyond the scope of this article.

        The above rights do not apply where the original creation was done as a work made for hire.  17 USC Section 304 (a) (i) (B). (Read “Work Made For Hire Agreements.”)  In such an instance, all rights including all renewal rights, belong solely to the party commissioning the work made for hire.  So, for example, if a film director did his or her work as a work made for hire, which is common in the film and television industries, the renewal rights and termination of transfer issues do not arise insofar as the relationship between the creator and the said commissioning party.  The commissioning party is deemed the “author” of the work and thus the above rights do not apply to the creative party.

        However, the transfer that is the subject of the within article, the transfer to a divorcing spouse via a settlement agreement, is not on a work made for hire basis.  If the creator retained certain rights despite the underlying film (in this example) agreement being a work made for hire, as is also quite common in the film and television industries (i.e. the creator may receive royalties or percentages of the gross etc.), those retained rights may be the rights transferred within the divorce settlement agreement.  Thus the legal question is whether the retention of certain rights under a work made for hire agreement, which retained rights are then transferred to the spouse in the divorce settlement agreement, represent the kind of rights that are subject to the termination of transfer provisions.  The argument of the spouse might be that because the creator spouse did not retain any rights of copyright but only rights of contract, there were no rights of copyright that were transferred to the spouse, only contract rights, and thus the transfer to the divorcing spouse is not subject to these provisions.

        The above argument could also be made if the transfer to the divorcing spouse was not a transfer of rights of copyright but only rights of contract under agreements not as works made for hire.  In other words, if the author had created something and transferred the copyright to a book publisher, as but an example, in exchange for rights to receive royalties or other contract rights, this may not be a contract covered by the termination of transfer provisions.

        Another alert: at least as to the termination of transfer provisions, the statutes refer to the termination of transfers of a grant or any right under it which was “executed,” which presumptively refers to a written agreement and thus the question is whether any transfer effected by a court decree in lieu of a settlement agreement would be terminable.  In Rano vs. Sipa Press, Inc., 987 F.2d 580, the Court held that the copyright law pre-empted the state termination-at-will law as to oral agreements and held that the termination of transfer provisions applied even as to an oral agreement that was executed by the conduct of the parties over several years.

        Another alert: the interests that passed to the spouse may be subject to co-author’s or co-authors’ rights.

        Another alert: often an author creates a copyrightable work using a “loan-out” entity, such as a corporation, and such an entity may or may not be the “author” of the work.  Since the statutes above refer to works created by the author or to agreements entered into by the author or the other parties set forth in the statute, this may be an issue.

        The above are just a few but certainly not all of the alerts in this area.  Keep in mind that all this is quite speculative since much of the copyright law in regard to these matters has not been tested in the courts.  But I believe there exists tenable arguments for the positions taken above.

        There may be some explanations for the reason the courts are not flooded with these matters.

        Many divorce attorneys may not be familiar with the arcane provisions of the copyright law.  As indicated, probate and estate planning attorneys have apparently drafted provisions in wills that ultimately turned out to be unenforceable.

        What is more likely, however, is that due to the long times involved in the termination of transfer provisions, the rights have not yet arisen or the parties that now possess those rights may not be aware of them since they were not parties to the original divorce transaction.  For example, as indicated above, the termination of transfer provisions for pre-January 1, 1978 copyrights do not arise for 56 years from the date of the original copyright.    For post-January 1, 1978 agreements, the rights do not arise until at least 2013.

        As you might expect, all this is extremely fact-specific and a detailed analysis is required in each instance to see whether any rights exist.

        Consult an experienced intellectual property attorney as well as a divorce attorney about these matters.

Copyright © 2009 Ivan Hoffman.  All Rights Reserved.