How the Right to Terminate Transferred Copyrights Impacts Estate Planning
By: Barry E. Haimo, Esq.
April 12, 2018
For artists, writers, and other creators of work protected by copyright, estate planning requires some additional considerations. One issue that is often overlooked is the right to terminate copyright transfers. You may be able to regain the rights to work you previously gave away, and so may your statutory heirs after your death, whether you intended them to have that right or not.
This right has only been available since 2013, so many estate planning attorneys, particularly those without experience handling copyright issues, may not be aware of the potential dangers and the potential opportunities. In fact, it’s so new that the courts haven’t fully interpreted and applied the related provisions yet, and as such, there is still some uncertainty about it.
However, there are steps you can take to protect your estate plan. The first is understanding what the right to terminate transferred copyrights is.
What Is the Right to Terminate Transferred Copyright?
If you transferred the copyright to your work after January 1, 1978, and it was not considered “made for hire”, you can regain that copyright during a five-year period beginning 35 years after the date that rights were transferred or licensed. If the copyright also included the publication rights, then this window begins 35 years after publication or 40 years after execution of the grant, whichever is earlier.
In order to exercise this right, you or your statutory heirs are required to notify the copyright holder no earlier than 10 years before that five-year window opens and no later than two years before that window closes.
For example, if you transferred your copyright on January 1, 1978, then the five-year window would begin January 1, 2013. And you would have to notify the current copyright holder of your intent to terminate by January 1, 2003 at the earliest or January 1, 2016 at the latest.
This right was created to protect artists who may have made sales early in their career for a small amount, only to find greater fame or success later that makes the initial work much more valuable. After 35 years, they can gain it back and benefit financially from the works themselves.
Potential Complications for Estate Planning
Unfortunately, the 1976 Copyright Act that granted this right also created an automatic right of inheritance for your surviving spouse and/or descendants. That means, even if you do not intend to make them beneficiaries of your estate, your statutory heirs will automatically inherit the right to terminate if you die before the window is closed. You cannot choose which heir is given the copyright.
For example, you may have disinherited your children from your estate, giving everything to your spouse. But your children still retain the right to terminate your transferred copyrights, which means they could gain those rights during the five-year window and benefit financially.
If you die after giving notice but before the date where the copyright transfers back to you, the copyright will pass according to your estate plan. In the absence of an estate plan, it will pass according to intestate succession. Either way, this may come with a downside: your estate may remain open until the copyright has reverted to the estate. That can take up to 15 years, depending on the timing of your death.
You may want your copyright to stay in the hands of the person or organization who currently has it. For example, many artists give their copyright to their privately-run foundation, and that foundation often relies on income generated from that copyright in order to remain functioning and protecting the artist’s legacy after death. Another example is if you have given the rights as a charitable donation to support a cause you believe in or to a close loved one who is not related to you by blood.
So how do you prevent your statutory heirs from coming back later to terminate that transferred copyright and take it for themselves? You need to transfer the copyright in your last will and testament in order for it not to be subject to termination rights. This exception is not applicable to other testamentary substitutes, such as revocable trusts. We presume the drafters of this law in 1970s did not have the foresight to anticipate the brutal process in known as probate.
These types of details are why it is so important to seek the help of an estate planning lawyer with experience handling copyright matters. Otherwise, the copyright to your works might not end up where you intended after you pass.
Barry E. Haimo, Esq.
Strategic Planning With Purpose®
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