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Much ado has been made recently in the recording industry over a copyright law mechanism called the "termination" right, and for good reason. Section 203 of the Copyright Act gives authors a 5-year window to reclaim the rights to their works by terminating transfers or licenses they executed in or after 1978, starting 35 years after they granted the licenses. This allows recording artists to reclaim rights they previously sold, gave, or licensed away, and this year some of those artists (like Bob Dylan, Tom Petty, and Tom Waits, to name a few) began telling record labels that they intend to do so. The issue has even grabbed the attention of Representative John Conyers Jr., who has recently called for action to resolve ambiguities in the law. Copyright reclamation is undoubtedly a powerful tool that helps artists renegotiate bad deals and receive fair compensation for their work, and in that respect can only be described as an unequivocally good thing for artists. However, in ten years or so the reclamation system may have unintended consequences for the development of works licensed to the public under open-source or Creative Commons licenses. As the debate over copyright reclamation moves forward, it is important to ensure that the law continues to protect artists without hindering the development of open-source works.
In 1932, two teenagers named Jerome Siegel and Joseph Shuster collaborated to create a fanzine villain named "The Superman," which they re-worked into a comic book hero named "Superman." The two sold the rights to Superman to Detective Comics for $130 and a small per-page rate that lasted 5 years. For decades Superman became increasingly popular (and profitable), but the original authors were stuck with the relative pittance they had originally accepted. But, through copyright reclamation, Siegel's and Shuster's heirs were able to cancel the 1930s grants and regain the copyright in 2008, giving them the power to negotiate licenses that reflected the current value of the rights. Congress established the termination right for exactly this purpose: giving artists a chance to renegotiate bad deals, whether resulting from unequal bargaining power or an initial miscalculation of the work’s market value.
The issue of copyright reclamation is just now becoming a Big Deal in the music industry, because 2013 marks the first year that the earliest protected sound recording licenses and assignments can be terminated (recordings didn’t receive federal copyright protection until 1972, and the termination right only applies to grants executed after 1978). Many record labels, especially major labels, operate by taking the copyright for a recording artist’s copyright and paying a monetary advance in return (and royalties... after the advance has been paid back). Selling the ownership of your sound recording copyrights is also sometimes referred to as selling your masters, from back in the analog days when artists literally delivered one "master" recording to the label, which was used to make all subsequent copies. Labels then use their status as copyright owners to market the recordings. This is why sometimes you see stories of someone getting permission to use a song from the artist, but then getting a nasty cease-and-desist letter from the label: the artist may be the actual creator, but it's the label who has the right to sue.
Reclamation rights give the author a second bite at the apple: a chance to take her masters back, reevaluate how much they're really worth, and then decide whether to market them herself or negotiate again with a record label or other distributor. This is a great thing for artists in a lot of different positions. Commercially successful artists can escape the bad deals they struck before they made it big, when they had no leverage against a major record label. Some artists may simply want more control over the marketing and distribution of their works—for example, someone who wants to experiment with new online distribution strategies, but whose label won't take the risk. On the flip side, some artists may reclaim their works simply to get their music out into the public—sometimes record labels have been known to "shelf" masters if they didn’t like the music, didn't think it would prove profitable enough, or thought it would compete with another artist on the label. For these artists, simply letting the public hear their music that's been locked away for decades is reason enough to terminate the agreement.
Record labels, perhaps not surprisingly, are not happy about this. They have already attempted to change the law to exclude sound recordings from the termination provision, but were eventually defeated. Next, they will likely try to argue that sound recordings are ineligible for termination as works-made-for-hire [pdf], saying that the artist legally qualifies as an employee or similar enough to one that the company is the real "author." Whether a label could actually succeed on this claim requires a fairly detailed, fact-specific legal analysis, which I won't get into right now. The bottom line is: section 203 was meant to empower artists who have little negotiating leverage against big companies, and it is vital that the law operates to actually achieve that goal.
There could be, however, one wrinkle. Copyright reclamation may have some unintended consequences for works distributed under a Creative Commons license, or a free or open-source software license. In an open-content license, the author grants all members of the public a perpetual license to use their works, perhaps subject to certain conditions. Others can then enjoy, distribute, or build upon the work without needing to individually negotiate a license. For example, Wikipedia is the result of the contributions of many many contributors, who all allow future contributors to alter or adapt their words. The Mozilla Firefox browser and GNU/Linux operating system are both based on open-source software. If a contributor (or her heirs) to the open-source software in Linux decides to terminate her open-source license some time in the 2020s, all of her intermingled contributions would need to be extracted from what could be millions of lines of code before any future versions of the system could be developed. The popularity of open-source licenses took off in the 1990s, which means that many of theses works (especially computer programs) would not be eligible for reclamation until the 2020s at the earliest, but if we are to encourage the development of open-source works we should not ignore the effect copyright reclamation will have on them.
The termination of open-content licenses would be a sad event for a number of reasons. Open content brings a number of benefits to society: it minimizes transaction costs, facilitates uses that would not otherwise occur, creates a commons of raw materials that can be used by any member of the public, and, in the software context, allows programmers to work together outside of a large firm by letting them adapt and reuse one another’s code without fear of liability. What's more, open-content licenses don't pose the unequal bargaining power problems that Congress was trying to alleviate with section 203. In fact, they don’t involve bargaining at all: the license is granted to everyone because the author wants others to use the works without need to contact the author individually.
The reclamation right is an incredibly powerful tool, and it is important to consider its implications for all kinds of authors and users as we debate the scope and purpose of section 203. Most importantly, we should remember Congress's purpose—protecting artists who struck bad deals with little bargaining power—and aim to best effectuate that purpose.
Correction: Originally this post said sound recordings did not receive federal copyright protection until 1978, when in fact they received protection in 1972. Thanks to Casey Rae-Hunter for the catch!