Statutory Heirs Apparent?: Reclaiming Copyright in the Age of Author-Controlled, Author-Benefiting Transfers, 119 W. Va. Law Rev. __ (2016).
This Article explores the intersection and disconnect between copyright law and estates law when a copyright owner dies before having the opportunity to exercise her termination right of an inter vivos copyright transfer. Specifically, I explore the impact of a statutory heir’s copyright transfer termination right on the original author’s testamentary freedom to the extent the decedent’s nonprobate disposition of assets is contrary to the “statutory will” disposition found in the Copyright Act.
Although copyright transfers made by will are not subject to a termination right, no such exception is made for an author’s lifetime transfers into vehicles controlled by the author. Examples of such transfers include those made into a performing artist’s loan-out company or a songwriter’s lifetime transfer of musical composition and sound recording copyrights into a self-settled irrevocable trust or charitable foundation.
The practical effect is that an heir (defined by the Act as a spouse, child or grandchild) who inherits the right to terminate any lifetime copyright transfer (including those just described), may exercise that right and successfully reclaim copyright ownership against the decedent’s intent to transfer copyright ownership at death to someone or some entity other than that statutorily prescribed heir.
I argue the termination right was intended to protect authors from being saddled for the full copyright term with bad deals made early in their careers when they had little, if any, bargaining power. The right was not intended to prevent authors from advantageous lifetime transfers into vehicles controlled by the author for prudent business, tax and estate planning reasons.
Many scholars, practitioners, and copyright transferees in the entertainment business surmised the likely impact of the first reclamation trigger date of January 1, 2013 under §203 of the 1976 Copyright Act on post-1977 transfer terminations. Some also expressed concern with the apparent distinction between, and treatment of, transfers by will and nonprobate transfers. This article focuses on what has actually transpired since that trigger date.
In addition, the article focuses on what might be done going forward to reconcile the probate and nonprobate disposition of copyrights in a way that best honors an author’s testamentary intent given what we now know from cases starting to make their way through the court system.