English copyright assignments and US termination rights

Introduction

A couple of weeks ago I attended a lecture given by Sir Richard Arnold entitled ‘English copyright assignments and US termination rights’. So impressed was I with his lecture (I fear, with my having attended his swearing in ceremony at the RCJ, that my admiration for him rivals my veneration of a certain multiple Golden Globe and Oscar winning redhead actress), that I wanted to share his thoughts (as well as I can express them) …

Why I should care: The lex loci protectionis1 principle might just mean that, in an agreement governed by English law containing a worldwide assignment provision (provided it’s not in respect of a work made for hire2), the US portion of the assignment could be revoked using US legislative provisions (and the laws of all respective states in a worldwide assignment might similarly be applicable).

The very short summary: Every lawyer working across IP might need to be well versed in private international law.

The (MUCH) longer read: Using analysis from a forthcoming article co-authored with Jane C. Ginsburg3, Arnold LJ discussed three main areas: (i) termination of assignment of copyright under US law; (ii) private international law; and (iii) lex loci protectionis, which are all elucidated below (as this is a longer article, footnotes appear at the bottom of each relevant section rather than at the end).

1 Literally ‘law of the place of protection’. See below for more information.

2 Works made for hire are works where the first owner of copyright is the commissioner of the work. This is defined in s101 U.S. Code, Title 17 Copyrights, Chapter 2 Copyright Ownership and Transfer as “a work prepared by an employee within the scope of his or her employment” and “a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire”. The full definition and clarifications at s101 are available here.

3 Daughter of the indomitable RBG, with such article to appear in the Columbia Journal of Law and Art.

Termination of assignment of copyright under US law

The judgement of the US Second Circuit in Ennio Morricone v Bixio? posits that any US assignment of copyright is not for the full period of copyright, but instead is for the minimum 35 years with any further assignment period being contingent on the author not exercising their termination rights under 17 U.S.C. s203.? The relevant text of s203 is as follows….

In the case of any work other than a work made for hire,? the exclusive or nonexclusive grant of a transfer or license of copyright or of any right under a copyright, executed by the author on or after January 1, 1978, otherwise than by will, is subject to termination under the following conditions:

(a)….

1. Termination of the grant may be effected at any time during a period of five years beginning at the end of thirty-five years from the date of execution of the grant; or, if the grant covers the right of publication of the work, the period begins at the end of thirty-five years from the date of publication of the work under the grant or at the end of forty years from the date of execution of the grant, whichever term ends earlier.
2. The termination shall be effected by serving an advance notice in writing … stat[ing] the effective date of the termination,… [as per] clause (3) of this subsection…. Served not less than two or more than ten years before that date… [with a] copy of the notice shall be recorded in the Copyright Office before the effective date of termination, as a condition to its taking effect.
3. Termination of the grant may be effected notwithstanding any agreement to the contrary, including an agreement to make a will or to make any future grant.

(b) ...

1)     …[a] derivative work prepared under authority of the grant before its termination may continue to be utilized under the terms of the grant after its termination.

In Morricone the second circuit judges stated, when discussing “the maximum total duration” of assignment of copyright, that it is not (as one might expect) for the remaining maximum duration of the copyright. Instead, the judgement recounts as follows: “…As an initial matter, the transfer of “all the rights of economic use” was for “the maximum total duration permitted by the laws in force in each country in the world.” … This wording is evidently intended to be expansive. The maximum total duration permitted by the laws of the United States is thirty‐five years plus such additional period as the assignor allows until the exercise of the option to terminate...”

The most obvious criticism of the above interpretation is that any curtailment of assignment requires an active step within a five year period with indeterminate notice. While I didn’t get a chance to put this “active step” point to Arnold LJ, he did defend the interpretation by recourse to “the historical implementation of the law” (which links to “circumstances in which that law was adopted” as per the definition of a mandatory provision under Rome I (see below)). Such implementation being reference to the multiple amendments to the US Copyright Act in 1831, 1870, 1909 and 1976 and following the US’s ratification of the Berne Convention in 1988.

Adam Sutcliffe's rebuttal to the Morricone (with which this author agrees) is as follows:

• Serving notice of reversion with a 10 year notice period is clearly longer than serving it with 2 years’ notice (as per the notice limits set out in s203(a)(4)) ergo even if you accept the curtailment of term by an active step there is a maximum and a minimum notice period – and under the principles of Italian law (sic) applying to interpretation of the contract I cannot see how a 2 year notice period could count as “maximum”.
• It follows that the term “maximum” is linked to the discretion of the author. If you admit the applicability of discretion to this question then surely you must bring the discretion to serve the notice (or not) as linked to what is meant by “maximum”?.
• “Maximum” is not a complex term – it has a clear and well understood meaning that even a 4 year old can grasp. Convoluting it into an active voice from the normally passive meaning (i.e. status quo must always be the passive – natural interpretation) is to contradict the rule of applying the normal and natural meaning of words to the interpretation of contractual obligations.
• If God granted you “the maximum lifespan of a human” I think you would be quite pissed off if.. dying at 35 … he responded “Aha – but maximum can only mean until such time as Death exercises his discretion to come and fetch you from this mortal coil” adding: “I cite Morricone in my favour so go suck on that and see you in Court!”

? Ennio Morricone Music Inc. v Bixio Music Group Ltd (2019) 17-3595-cv – full opinion available here.

? U.S. Code, Title 17 Copyrights, Chapter 2 Copyright Ownership and Transfer, Section 203 Termination of transfers and licenses granted by the author – text available here.

Private international law

Arnold LJ proceeded to look at the three applicable sources of law which apply under English law to determine a contract's governing law:

• Common law (applies to contracts entered into pre 1 April 1991)? – Generally, the “proper law of a contract” as set out in Dicey? is “the system of law by which the parties intended the contract to be governed, or, where their intention is neither expressed nor to be inferred from the circumstances, the system of law with which the transaction has its closest and most real connection.”. However, this is subject to the Vita Food gap? - summarised as the parties avoiding the applicability of legal protections or obligations germane to a contract by a choice of law which does not contain such protections or obligations.
• The Rome Convention? (applies to contracts concluded from 1 April 1991 to 16 December 2009) – This convention continues the principle of party autonomy evident in Dicey and a contract will be governed by the law chosen by the parties (Article 3(1)) as express or demonstrable and if not the applicable law will be that of the country with which the contract has its closest connection (Article 4). Interestingly, in the Contracts (Applicable Law) Act 1990, the UK Government chose at Article 7(1) of Schedule 1 to preserve the Vita Food override “When applying under this Convention the law of a country, effect may be given to the mandatory rules of the law of another country with which the situation has a close connection, if and in so far as, under the law of the latter country, those rules must be applied whatever the law applicable to the contract. In considering whether to give effect to these mandatory rules, regard shall be had to their nature and purpose and to the consequences of their application or non–application.”
• Rome I (applies to contracts concluded on or after 17 December 2009) – As per the Rome Convention, party autonomy is respected with the governing law chosen being respected (Article 3(1)) and if not the applicable law is determined by specific rules that apply to different types of contracts, intended to produce greater certainty. In most cases, the applicable law is that of the country where the person with characteristic performance of the contract has his habitual residence. However, Rome I in the spirit of Vita Food maintains a commitment to ensuring the override of certain provisions if they are deemed to be “overriding mandatory provisions” which Article 9(1) defines as provisions that “respect for which is regarded as crucial by a country for safeguarding its public interests, such as its political, social or economic organisation, to such an extent that they are applicable to any situation falling within their scope, irrespective of the law otherwise applicable to the contract...”. In United Antwerp1? the CJEU held that while what constitutes a “mandatory provision” should be interpreted strictly, it is for national courts “in the course of its assessment of whether the national law which it proposes to substitute for that expressly chosen by the parties to the contract is a ‘mandatory rule’, to take account not only of the exact terms of that law, but also of its general structure and of all the circumstances in which that law was adopted in order to determine whether it is mandatory in nature in so far as it appears that the legislature adopted it in order to protect an interest judged to be essential by the Member State concerned”.

? And should have applied in Gloucester Place Music Ltd v Le Bon & Ors [2016] EWHC 3091 (Ch) (the “Duran Duran Case” – see IPKat article here). But both esteemed counsel in the case asserted the applicability of The Rome Convention (presumably because this is often noted as “applying to contracts entered into pre 17 December 2009”) and this was not challenged by the sitting judge* nor in any commentary I could find (including the IPKat).

* The trial Judge being a certain Justice Arnold (as he was then).

? Dicey & Morris, The Conflict of Laws – Rule 180 as recently affirmed in Merck KGaA v Merck Sharp & Dhome Corp & Others [2014] EWHC 3867 (Ch).

? Vita Food Products, Inc. v Unus Shipping Co (J.C.) [1939] AC 277.

? Arnold LJ reminds us that this is not technically part of the EU acquis (like the Universal Patent Convention), but is a convention entered into to EU states outside of the EU legal framework.

1? United Antwerp Maritime Agencies (Unamar) NV v Navigation Maritime Bulgare [2013] EUECJ C-184/12

Lex loci protectionis (and the key contention!)

This provision will be most recognizable to IP practitioners as it is expressed in Article 7(8) of the Berne Convention. Whereby works from long-copyright Country A have a short copyright term in short-copyright Country B, but works from Country B enjoy long copyright protection in Country A unless otherwise stated in a state’s legislation. The principle is also informs Article 1(2)(b) of the Satellite/Cable Directive (93/83/EC) where “the act of communication to the public occurs solely in the member state where… signals are introduced into an uninterrupted chain of communication” (lex loci protectionis preventing a rights holder from invoking copyrights in the other European states to prevent the satellite transmission).

The principle of lex loci protectionis was first clearly expressed by Wilberforce J in Campbell Connelly v Noble.11 Whereby, the Judge, in responding to the defendant’s contention that in their original contract assigning copyright in a song, only the initial period of copyright and not the renewal period would pass to the assignee, held: “ The composer might well under the law of some country have acquired some particular right (for example, the television rights) for a period extending beyond the original copyright period, and I would see no reason why it should not pass.”

KEY CONTENTION PRIMER Clearly, this principle permits a non-US author can still terminate a US assignment via s203, but can it permit an author who has entered into a contract governed by English law which contains a worldwide assignment for the maximum duration permitted under law to engage s203 to revoke the US assignment? KEY CONTENTION ALERT Yes! Arnold J posits that English law cannot override s203 on the basis that the Morricone understanding means the right to curtail the assignment applies via lex loci protectionis: (i) as an obvious effect of Vita Food for pre 1 April 1991 agreements; (ii) as a clear mandatory rules of the law of another country with which the situation has a close connection for Rome Convention contracts; and (iii) (with more difficulty) for Rome I contracts if one accepts s203 as being a law deemed “crucial by a country for safeguarding its public interests, such as its political, social or economic organization” to make it a ‘mandatory rule’ which is highly debatable.

11 Campbell Connelly & Co Ltd v Noble [1963] 1 WLR 252 – thank you to @Kemp, Hannah (NBCUniversal) for tracking this one down!

Ramifications and outstanding questions

• If s203 applies to a worldwide assignment: do all copyright related quirks in all states also apply? It seems likely for pre Rome I agreements, but unlikely for Rome I contracts unless such ‘quirks’ could be deemed a mandatory rule (so procedural or evidential requirements e.g. execution formalities, requirements for signature by the original author etc. are unlikely to apply).
• However, if the contention above is valid, there may well be copyright provisions in other states which could be enforceable by an author or assignor irrespective of our contractual wording and choice of law.

Thanks for reading!

Boring disclaimer - I've written/created the above in my personal capacity (as a legal nerd) for information purposes only and it is not intended to be legal advice. I make no warranty of any kind and will not be responsible for any actions (or inactions) if anyone is foolish enough to rely on my writing.