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  • May 13, 2019

    Copyrights in the Estate? Termination Right Planning a Must

    The copyright termination right can be little known among lawyers who don’t practice copyright law, yet it can alter the course of estate and marital property plans. Elizabeth Russell discusses the details of the copyright termination right in estate planning.

    Elizabeth T Russell

    “Transferring your copyrights to this living trust will activate the copyright termination right.”

    Estate planning professionals who have never uttered those words may inadvertently have thwarted their clients’ objectives.

    The copyright termination right (17 USC 203) can be little known among lawyers who don’t practice copyright law, yet it can alter the course of estate and marital property plans. Simply put, the termination right permits authors to terminate lifetime grants of any right under a copyright, and reclaim ownership of the rights so transferred.

    Elizabeth T Russell Elizabeth T Russell, Pace 1986, maintains a solo practice with Russell Law, Middleton, concentrating on copyright, trademark, arts, and digital business law.

    We’re talking about any lifetime grant. It could be a grant of copyright from the author to a publisher. It could be a grant from the author personally to the author’s corporation. (The term “author,” by the way, refers to anyone who creates copyrightable works.) It could be a nonexclusive license to use the work for a limited purpose.

    It could also be the transaction that happens every day, in estate planning offices everywhere: the transfer of a client’s assets to a living trust. The copyright termination right springs into existence, at the moment that lifetime grant is made. Later, if the termination right is properly exercised, all copyright rights under the grant revert back to the author or the author’s statutory heirs. The result: copyrights that transfer into trust during the author’s life might not stay there.

    Grants and Rights

    The author’s act of making the lifetime grant activates the termination right: automatically and irrevocably. Before the grant, there was no termination right. As soon as the author makes the grant, however, the termination right springs into existence and it cannot be reversed.

    The right will still have to be exercised, properly, for termination to occur. But the act of making the grant is the pivotal event that puts everything else in motion. If an estate planner merely lumps all of the client’s assets together and facilitates a lifetime transfer to trust, that professional causes the client to activate the termination right and, possibly, create a scenario whereby the copyright assets end up in the hands of unintended beneficiaries.

    If the author is not living, the author’s “statutory heirs” may exercise the termination right and reclaim the copyright rights for themselves. Copyright law (not state law) specifies who qualifies as a statutory heir for purposes of the termination right (17 USC 203[a][2]). Section 203 trumps state law and it trumps the client’s plainly expressed intent. For example: “beloved neighbors” are not section 203 statutory heirs. Even if the client’s trust document specifies that a beloved neighbor should ultimately receive the copyright rights, an actual section 203 statutory heir could reclaim those copyright rights by properly exercising the termination right.

    Copyright Knowledge is Key

    Termination right counseling requires the estate planner either to acquire fundamental copyright expertise or to affiliate with a copyright practitioner. The team must understand what copyright protects and what it does not; how copyrights may be owned and acquired during life; and how they may be transferred. Intake and inventory procedures must account thoroughly for every single work of authorship and for every lifetime grant the author may have made. (Even if there hasn’t been a lifetime transfer to trust, the client’s other lifetime transfers must be analyzed.)

    Practitioners must know how to calculate the permissible window of time during which each termination right may be exercised, and they must navigate a complicated process for effecting (or defending against) termination.

    The termination right is not an issue for other types of intellectual property. For every client whose estate contains (or might contain) copyright assets, however, the representation must include termination right planning.

    Elizabeth T Russell is the author of Copyright Conversations: What Estate Planners Need to Know (Ruly Press, 2019). The book is available in paper and e-book formats.

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