Forward to the Past: How the Statute of Limitations can Jeopardize the Copyright Termination Right
Mark J Writes on Rights: Termination Information Part 2
What if you’ve been given a future right that you can’t exercise when the future becomes present, because of what you didn’t do in the past, even though you couldn’t have done what you didn’t do in the past because it wasn’t the future?
That’s how the statute of limitations can thwart a statutory right to get your copyrights back.
If that didn’t make sense to you, you’re getting the point. So read on.
Background – The Copyright Termination Right and Works For Hire
The Copyright Act permits an author who assigned a copyright to get that copyright back from its owner, 35 years after the assignment, or 35 years from the publication of the work. We call that the termination right.
The termination right is meant to be non-waivable, or as the statute defines it, “notwithstanding any agreement to the contrary”.
Where it’s a work for hire. There’s no termination right. I’ve written a lot about the work for hire exception, so I won’t bog this article down in that discussion. But what’s important for this post is that a contract might state that copyright belongs to the assignee as work for hire, even if it doesn’t qualify as a work for hire under the Copyright Act. In other words, that contract says it’s a work for hire, but it’s not.
On top of that, when the assignee registers the copyright with the Copyright Office they designate the work as a “work for hire.” The original authorship disappears because under the Copyright Act the contracting or hiring party is the “author” of a work for hire.
We anticipated this dilemma, but until the termination right could be exercised, there was little that artists could do besides prepare to fight.
Copyright and the Statute of Limitations
And this is where the statute of limitations throws another hurdle in their way.
Under 17 U.S.C. § 507 of the Copyright Act, A civil action must be commenced within three years after the claim accrued.
Courts treat the statute of limitations for copyright infringement claim differently than a claim over ownership or authorship of the copyright.
If it’s an infringement claim, there’s essentially a new clock for a new infringement. So if the infringement is recurring, a plaintiff can sue over the infringement, but qualify for damages only as far back as three years before they brought the lawsuit. That’s why for instance, a songwriter’s estate was able to sue Led Zeppelin for copyright forty years after “Stairway to Heaven” was released.
But if the claim is merely regarding ownership or authorship of the copyright, the three-year clock starts ticking when there has been a clear repudiation of ownership. For instance, at the time someone tells you “I wrote this song. I am the sole author. You are not the author of the song”, then the statute of limitations period may have begun, and you must bring a lawsuit disputing authorship within three years. Even if you are the true author and that other person is not, you don’t get a new clock if they infringe the copyright.
For this reason, copyright plaintiffs often try to make an ownership/authorship claim into an infringement claim, and defendants often argue that an infringement claim is really an ownership/authorship claim in disguise.
The Dilemma and the Catch-22
So this is the statute of limitations problem with termination rights: the company specifies the copyright is a work for hire in the contract. It promptly registers the copyright with the Copyright Office and designates it is a work for hire. From the record company’s point of view, the three-year statute of limitations has begun.
That means that, if the record company refuses to accept the artist’s Notice of Termination 35 years later, and the artist sues for a declaration that the termination is valid, the company argues the artists can’t bring the lawsuit because it’s the owner and author of the copyright. It says you were on notice when we registered the copyright and repudiated your authorship, and because you didn’t challenge that within three years you can’t challenge it now
For example, let’s say an artist signs a contract in 1986, assigning the copyright in the sound recordings to the record company and designating it as a work for hire. The record is released later that same year, and the record company registers the sound recording copyright, designating it as a work for hire. In 2019 (two years before the earliest termination date), the artist serves a notice of termination to the record company. The artist takes the position, as I do, that the sound recording is ineligible to be a work for hire. The record company’s position is that the artist can’t make that argument because they should have it done it no later than 1989.
Do you see how whacked that is? How could the termination right, effective 35 years after the assignment or publication, and for which the earliest the artists can bring a Notice of Termination is ten years before the effective date, be nullified before the artist had the opportunity to invoke it? How can the artist change the past? It’s illogical. It’s unfair. And it couldn’t possibly be Congressional intent to ruin the termination right like that.
Let’s see how it plays out:
Example 1: Everly Brothers
Don and Phil Everly sang great songs together, but they couldn’t quite agree on who wrote what. They spent many years litigating against each other, with Phil’s estate taking up the fight on his behalf after he passed away.
The brothers fought over rights to “Cathy’s Clown” for decades. In 1980, they reached an agreement where Phil agreed to “release, and transfer” to Don “all of his rights and claims to said compositions, including rights to royalties and his claim as co-composer, effective June 1, 1980,” and to “transfer, release, assign, and set over… not only the said Phil Everly’s right to royalties and other income out of said compositions from and after the effective dates, but also every claim of every nature by him as the compositions of said songs.”
Later, Phil’s heirs sought to terminate his original assignment of rights to “Cathy’s Clown” from 1960 (that’s a right under 17 U.S.C. § 304 to retrieve copyrights from pre-1978 transfers, 56 years after the assignment). Don sued, claiming that Phil wasn’t an author of “Cathy’s Clown.”
Don argued the statute of limitations precluded Phil from asserting a copyright, because the 1980 agreement was a clear repudiation of authorship in 1980.
Here’s where it gets interesting. The Sixth Circuit Court of Appeals held that the 1980 release wasn’t necessarily a repudiation of authorship. It was ambiguous. It’s possible that his agreement to his transfer “his claim as co-composer” and to release claims to the “compositions” was not a transfer of authorship, but merely a transfer of the rights to receive the benefits of authorship.
That’s a very nuanced view, one that requires understanding of the distinction between copyright ownership and authorship – the latter, in theory, can’t be transferred. On remand, the District Court review all the evidence and ultimately held that Phil’s authorship was repudiated in 1980. Phil’s estate won a battle but ultimately lost that war.
Example 2: Ain’t Dismissing You at All
In John Waite’s lawsuit to terminate his contracts and get his sound recordings back, the record labels pushed back on statute of limitations grounds. The court allowed his lawsuit to proceed, but only because plaintiffs included an infringement claim. Because the company no longer owns the copyright after termination, the company was potentially infringing by manufacturing and distributing the records. There’s a new statute of limitations for this continuing infringement.
The company argued the only dispute was whether it’s a work for hire, and the artists were on notice because they signed agreements with “work for hire” provisions, that’s an “express assertion of sole authorship or ownership” and therefore a “repudiation” of any authorship or ownership claim by the artists.
The court held that “while authorship is certainly pertinent, plaintiffs’ infringement claim is a function of defendant’s failure to comply with the plaintiff’s termination notices.” Therefore, the court held that the lawsuit isn’t an ownership/authorship dispute masquerading as infringement claim.
It’s odd logic that led to an acceptable result here, but other times it won’t. It doesn’t really make sense. The infringement isn’t the heart of the claim. The claim is about the validity of the termination. That’s entirely dependent on whether the work can be terminated, and that depends on whether it’s a valid work for hire. That’s what being argued.
And the decision doesn’t grasp a big problem with its logic. Look at this part of the decision: The practice of inserting “work for hire” language into recording contracts “requires that many artists, often early in their careers, would confront a choice…they could refuse to sign the contract and jeopardize their chance for the record company to record or distribute the artist’s music. Or the artist could sign the contract and then bring a claim within three years to dispute the effect of the ‘work for hire’ provision in order to protect the copyright.”
But the court doesn’t explain the other reason an artist wouldn’t challenge ownership at that time: because they can’t. That same contract will also require the artist to assign the copyright to the record company. That’s valid. The copyright belongs to the record company for the life of the copyright, unless and until the artist invokes the termination right. At the three-year mark, the company owns the copyright, whether or not the work-for-hire clause is valid. So, there’s no basis to challenge the work for hire clause within three years, because there’s nothing the artist can obtain from that declaration. The artist either won’t have standing, or the lawsuit won’t be “ripe”. It will undoubtedly be dismissed on those grounds.
That’s acknowledged in an earlier paragraph: “it is impossible for there be a legally cognizable infringement claim until a termination right vests, a valid and timely termination notice is sent, is ignored, and the copyright’s grantee continues to distribute the work.” But it’s also impossible to bring the ownership lawsuit earlier, because aside from the work for hire clause, the copyright has been assigned to the company. Unless and until the termination right is invoked, the company is the rightful owner. There’s nothing to sue over.
To allow the litigation only when it’s styled as an infringement claim creates unnecessary problems. For one thing, it means there’s no litigation if the company that currently owns the copyright isn’t continuing to make it available. If it’s not, the original author doesn’t have a lawsuit to bring. Alternatively, the original artist can take the risk and make the record available as if the Notice of Termination is effective, baiting the company to bring its own infringement claim. But neither scenario gives the parties the clarity they’d have from resolving the work for hire issue. And to resolve the work for hire issue, the statute of limitations argument must be rejected.
To make it worse, the infringement workaround won’t always work. The company that owns the copyright will argue that the infringement isn’t in dispute and there’s only a copyright ownership issue.
That’s what happened in the Dimebag Darrell guitar copyright infringement case. The guitar, best associated with the late Pantera guitarist “Dimebag” Darrell Abbott, was designed by Buddy Webster in the 1980’s. In 2017, he sued Dean Guitars for unauthorized reproduction of the guitar.
Dean Guitars admitted to copying the guitar. They argued that since they essentially admitted infringement, only Webster’s ownership of the copyright was in dispute. They claimed that ten years earlier, they told Webster that Abbott’s estate owns the copyright. The court deemed that a repudiation of Webster’s copyright, triggering the 3-year statute of limitations. Problematically, the court accepted this argument.
So the way to make a copyright infringement claim go away, at least in the 11th Circuit Court of Appeals, is to say we admit to copying your work but we dispute your ownership, which you should have done something about long ago.
I think the Dimebag decision is highly flawed. Webster’s lawsuit was a copyright infringement claim, not an ownership claim disguised as one. But it’s a Court of Appeals decision, and a good example of how the statute of limitations jeopardizes artists’ rights.
I think one way to work around the Dimebag problem is to consider the standard for copyright infringement. The first factor is a “valid copyright”. Putting it this way, copyright ownership is an element of copyright infringement.
But what we really need is not a “workaround” the statute of limitations issue. Instead we should accept that the three year statute of limitations should never prohibit an otherwise valid termination, if that limitations period ends before the artist could exercise the termination right.
We have that in the Waite opinion, the better part: “To restrict the termination right based on the artist’s failure to bring a claim within three years of signing a recording agreement – a time during which the artist and recording company may still have disparate levels of bargaining power – would thwart Congress’s intent and eviscerate the right itself.”
The solution: invocation of termination rights under 203 (or 304) is a new claim of ownership, entitling the parties to a fresh run of the statute of limitations under 507(b).
Similarly, the counter-notification, where the current copyright owner insists the notification of termination is invalid because it’s a work for hire, also triggers a fresh run of the statute of limitations under 507(b).
This is fair. It’s logical. It’s consistent with the text of the Copyright Act, and the statute of limitations in particular. It creates some clarity for all parties. And it alleviates the necessity for a copyright infringement lawsuit substituting for what the parties are really fighting over.
The statute of limitations should never be a bar to a copyright termination, where that limitations period ended before the termination was even available. Let’s take some rational and logical steps to fix it, before it becomes a loophole that dooms Congressional intent to give artists the opportunity to reclaim their rights.
 It’s the not the same “new infringement” for determining whether there’s a new opportunity for statutory damages, though.
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