The Worst Part of Copyright: Termination of Transfers

Over at PrawfsBlawg, I’ve been holding a survey on the worst provision in the Copyright Act. This was my explanation of my own choice.

There were some great responses to my survey about the worst provision in the Copyright Act. Bruce Boyden nailed it when he guessed I was thinking about termination of transfers. This rule lets authors revoke any licensing contract between 35 and 40 years after they enter into it. (There was a similar but different system for renewals under the 1909 Act, which also survives in modified form in the 1976 Act, just to add to the confusion.)

This is an inalienability rule. But it’s not an inalienability rule that rests on a deep and shared moral intuition, like the rule prohibiting people from selling their organs as meat for the super-rich. Termination of transfers rests instead on a view that authors are “congenitally irresponsible” to the point that they can’t be trusted to make licensing decisions for themselves. They need to be given a second bite at the apple because they’re not smart enough to negotiate fair deals the first time around. As for the theory that it’s hard to value creative works up front, apparently percentage royalties and reversion clauses are too complex for authors to understand or insist on.

Trying to impose an inalienability rule on authors and publishers who don’t want it at the time they strike their original licensing deals leads to no end of practical trouble. Making the rule stick means overriding any number of contracts, including contracts specifically drafted to get around it. Litigation over decades-old agreements, frequently with intervening modifications and regrants, is virtually guaranteed to be a morass—and so it has been, with well-publicized disputes like the fight over the termination rights in Action Comics #1 dragging on for years at ridiculous expense. The courts have been fighting against this system for much of the century, but all they’ve really accomplished is to increase its complexity. And Congress has done its part to make the statute incomprehensible: I dare you to read Section 203(b) and explain what it’s supposed to mean.

But the demented logic of inalienability doesn’t stop there: it continues beyond the grave. The termination rights of a deceased author vest in the widow or widower, then the children, and then the grandchildren, on a per stirpes basis. That’s right: the Copyright Act displaces state probate law by creating future estates. And it does so in the form of byzantine set of fractional shares subject to an idiosyncratic voting rule requiring a majority of majorities to exercise the termination right. (Need I add that the drafters of the Uniform Probate Code concluded that a vast majority of Americans wouldn’t want per stirpes distribution if they understood how it worked? No. That would be overkill.)

The underlying assumptions behind this postmortem provision are creepy, too. The romantic author, it would appear, is both the family breadwinner and a bad provider. His family, having sacrificed for decades to support his creative efforts, will receive their reward after his passing, when his genius is belatedly recognized. Copyright law has a theory of the family: it’s nuclear and dominated by a single individual on whom the rest depend. The statutory text is gender-neutral, but its assumptions aren’t.

As an incentive for authorship, this a terrible one. If authors make bad up-front deals because they’re unmindful of future revenues, it follows that those same future revenues won’t operate as an ex ante incentive for creativity. As a welfare system to support deserving authors in their old age, it’s also terrible, since it bestows large windfalls on a very small number of them, at immense administrative cost. If this is a welfare system to support the families of authors, it’s beyond terrible, since it bestows windfalls on a small number of people with the good fortune to be related to a commercially successful author, while doing nothing for the families of those who toiled their whole lives in some other, equally worthy calling.

There is, I recognize, essentially zero chance that this system will be modified for the better any time soon. But that doesn’t mean we have to like it.