Back To The Future, Part 2: Serving Proper Notice Under Section 203

By John Seay, Atlanta Entertainment Lawyer: The Seay Firm LLC (@TheSeayFirmLLC)

This is the second part of a two-part series discussing Section 203 Terminations of Transfers.  The first part summarizes Section 203, and the second part discusses proper Section 203 notice.  Although both parts of the article focus on transfers of music copyrights, note that Section 203 applies to any transfers of copyright, regardless of the underlying subject matter.

Proper Timing of a Section 203 Notice

There are other requirements relating to proper timing of the notice.  Transfers can be terminated any time during a 5-year period beginning at the end of 35 years from the date the transfer was made.  If the transfer included the right to publish the work, then the 5-year termination window begins at the end of 35 years from the date of publication, or 40 years from the date of the grant, whichever is sooner.  All record deals include the right to publish the work (i.e., to release the album).  In most cases, the album is released less than a year after the transfer, which means that 35 years from the date of publication will almost always be sooner than 40 years from the date of the transfer.  However, if you are one of the unlucky few who transferred all rights to your album to the record company and the record company never released your record, then you’ll have to wait the full 40 years.

Note that if you fail to terminate the transfer within that 5-year period then you lose the right entirely!  Note also that you have to provide notice to the grantee at least 2 years before the effective date of the termination, and no earlier than 10 years before the effective date of the termination.  So, let’s go back to our example from above:  The record company released The Terminations’ debut album in 1980.  Thirty-five years after that is 2015.  So the earliest The Terminations could have sent notice of termination would have been 2005.  The 5-year clock starts ticking at 2015.  The latest, therefore, that The Terminations could provide proper notice to the grantee of their intent to terminate the transfer would be 2018, which is two years before the expiration of the 5-year window.

If The Terminations had tendered notice in 2013, then by the time 2015 rolled around, which is the earliest date on which the termination of transfer could be perfected, then the termination would be complete.  Sound complicated?  Don’t worry, it’s not that bad.  Sit down with a pen and paper and list of dates, re-read the above, and go from there.

How To Perfect Proper Section 203 Notice

All of this sounds well and good, but exactly how do you terminate those transfers?  Do you run to the top of the nearest rooftop and yell your intentions to the heavens?  Not exactly, although an effective termination does require that notice be given to the person holding the rights to the songs.  In your case, the holder of the rights to the songs might be the original record label you transferred the rights to, or it could be that label’s “successor in title.”[1]  Because you must tender proper notice, take the time to get this right.  In our example from above, does Stink Bros. Records hold the rights to the songs, or did the rights to your songs get transferred to Bony Records when Bony purchased Stink Bros. in 1986?  At a minimum, check the records in the Copyright Office to see who claims rights to the songs.  Check with the original grantee, and check your royalty statements (if any).

Once you’ve conducted a reasonable investigation as to the true owner of the rights, you’re ready to send your official notice, in writing, signed by you,[2] with the full name and address of the person or persons claiming the termination right provided in full.  That notice must then be “served” either by personal service, i.e., handing it to the rightsholder, or by first class mail.  I recommend certified mail with return receipt to ensure proper delivery.  Remember: if notice is improper, then the termination is not effective, and if you waited until the last minute, the 5-year window may close before you realize your mistake.

As for the body of the notice itself, it must clearly state that the termination is being made pursuant to Section 203 of Title 17 U.S.C., and clearly state the effective date of the termination, which must fall within the 5-year period as described above.  The notice must also name the party or parties whose rights are being terminated, and provide their full addresses.  The notice also needs to clearly identify the transfer that is being terminated, the date of execution of the original transfer and—if the transfer included the right to publication of the work—then the date of publication of the work under the transfer, and for each work to which the notice applies, the title of the work, name of its author (or authors), who executed the transfer being terminated, and—if possible and if applicable—the original copyright registration number.[3]

Finally, your notice of termination of transfer must also be registered with the Copyright Office (which will cost you around $105).  Examples of proper notice abound online, or consult a professional to help you.  Feel free to contact me to discuss any questions or concerns you may have regarding this somewhat complicated process.

Wait, You Wanna Do What Now?

So let’s say The Terminations serve proper notice on Bony Records, the successor in title to Stink Bros. Records, in 2013, meaning that effective 2015, the transfer will be terminated (a full 5 years before the expiration of the right).  Do we all live happily every after?  Maybe not.  As alluded to above, rightsholders are likely to fight Section 203.  After all, with record sales down, record labels in particular are relying more and more on their extensive back catalogs.  Expect litigation in the coming years in which courts interpret “work for hire” in the context of a record deal.  Hopefully the results of that litigation will be available by 2015, but if not—and until it is—expect some pretty major dragging of feet.

Don’t be surprised if your rightsholder or holders make either unsatisfactory responses to your notice, or no response at all.  Some attorneys are advising their clients to, after tendering proper notice and recording the termination with the Copyright Office, proceed as the rightful owner of the track and—essentially—dare the record label to sue them to stop the use of the song.  This strategy means that artists won’t have to wait on litigation, or enter into expensive litigation themselves, in order to force the rightsholders into acknowledging the termination.  Whether or not this is the appropriate strategy for you is an important decision with serious consequences to be discussed with an attorney.

Purely Academic

Finally, I’ll note that Section 203 has other detractors in addition to the usual suspects.  Some theorists argue that the essential function of copyright law is to encourage the creation of works of art, and that Section 203 does not directly further that goal.  If anything, they say, it places a disincentive on companies who help artists exploit their works.  Why would a company invest in a song if it knows its rights in the song will terminate?  My response to that concern is simple: 35 years is enough time to make money off of a song that you had no hand in writing in the first place.  If a song has not fully recouped and then some in 35 years, then either the rightsholder wasn’t doing its job in properly exploiting the song; the song is probably never going to make money; or the rightsholder did properly exploit the song and made a bunch of money from it.  In any of those cases, the artist should be allowed a second bite at the apple.  In fact, knowing that the rights to a song expire in 35 years should incentivize exploitation, as time is limited.

I don’t view Section 203 as overly coddling artists, I see it as a way to better level the playing field, albeit 35 years down the road.  Still, the best defense for an artist is to not have to rely on Section 203 in the first place, and instead sign fair deals with reputable companies.  That way, everyone benefits from a hit song, and if the relationship proceeds as planned, then artists might not even exercise their rights to terminate the transfer, and instead let the rightsholder continue exploiting the song and making the artist money.

Conclusion

Section 203 provides artists with a great opportunity to reclaim rights in their works.  If you’re good at following directions, you can tender proper Section 203 notice yourself.  In addition to this article, this Copyright Office Circular has more information.  If you decide to proceed yourself, make sure you follow directions precisely, as your rights under Section 203 will eventually expire.  An attorney can make sure you tender proper notice, and their involvement can help demonstrate to the rightsholder your level of seriousness.  As always,  feel free to contact me with any questions you may have.  Happy terminating.