On June 12, 2006, in one of the first federal court decisions ever to address the issue of "recapturing" copyright ownership, U.S. District Judge Richard Owen of New York’s Southern District awarded John Steinbeck’s two surviving blood heirs the right to terminate agreements under which the deceased novelist granted the copyrights in ten of his early works to the predecessor of counterclaim plaintiff the Penguin Group. Judge Owen’s decision was based in part on certain provisions of the Sonny Bono Copyright Term Extension Act (CTEA), which Congress adopted in 1998 in memory of the '70s-singer-turned-Congressman, and which extended the term of copyright protection by 20 years.
Even in its original 1976 incarnation, the Copyright Act included a collection of complex provisions designed to afford authors of creative works a "second bite at the apple" by letting them terminate copyright agreements made early in their careers, before they became successful. With respect to agreements entered into before January 1, 1978, the 1976 Act gave authors (and their surviving spouses and heirs) the right to terminate a transfer at any time during a 5-year window beginning 56 years after a work’s initial copyright date or on January 1, 1978, whichever came later. After termination, statutory heirs are free to enter into new copyright agreements with whomever they choose. In addition to extending the term of copyright protection, the CTEA created an entirely new family property right in pre-1978 works that permits deceased authors’ surviving spouses and heirs who failed to exercise their termination rights within the 5-year window to serve notice of termination to end existing copyright agreements. In effect, the CTEA created a new 5-year termination window beginning 75 years after the initial copyright date.
John Steinbeck’s son Thomas Steinbeck and granddaughter Blake Smyle served five termination notices in 2004, having been unable to do so beforehand because of the Copyright Act’s provision granting a one-half interest in termination rights to an author’s spouse. The fact that Steinbeck’s will left his entire estate to his third wife Elaine (who left her estate to her children from a previous marriage) was immaterial; sons Thomas and John IV (Smyle’s father, who died in 1991) took no interest in the copyrights under their father’s will, but under the Act they were entitled to a fifty percent share that passes per stirpes to their own descendants. Following widow Elaine’s death in 2003, Smyle and Steinbeck together came into possession of the totality of the termination rights for the early works (i.e., those works as to which copyright renewals became due in the course of Steinbeck’s lifetime, and whose copyrights the author himself renewed), and for motion picture, radio, and limited publication rights in "The Long Valley" and "The Red Pony" (which Steinbeck had granted to Paramount Pictures in three agreements executed in 1946, 1947, and 1949 respectively). Because Steinbeck’s copyright agreements were executed over time, the Smyle-Steinbeck termination rights likewise will accrue gradually. Thus, the heirs will not gain control of the copyright to "Of Mice and Men" until 2012, and will not reap "The Grapes of Wrath" until 2014.
The case was not a complete victory for the heirs: Judge Owen rebuffed their attempt to terminate Steinbeck’s grants of film and theatrical rights for "The Wayward Bus" to Twentieth Century Fox, and for "Cannery Row" to Rogers & Hammerstein and MGM. This holding was based not on the fact that the film and theatrical agreements created only derivative rights in the works at issue but on the fact that Steinbeck died (in 1968) before any of these works entered its renewal period, and accordingly Elaine Steinbeck, being John Steinbeck’s statutory heir, automatically received the renewal copyrights in these works, leaving the blood heirs with no interest to terminate.
Steinbeck v. McIntosh & Otis, Inc. should serve as a heads-up to any company that uses works of authorship acquired from an author. These works can include music, photographs, other graphic works, written copy and computer programs. Companies should be cognizant of the very real possibility that those rights will be terminated in the future. The decision, accordingly, underscores the importance of taking inventory of copyright-protected works that are in use and whose continued use is expected to be important to the operation of the business. Having in place a program for such audits can help a company identify not only the assets it is using, but potential issues that may impact on future use, or exploitation, as by sale or license, of works the company has lawfully acquired.
It has been predicted that both the Penguin Group and Elaine Steinbeck’s estate will appeal the decision. Still pending in the Southern District is a separate suit in which Blake Smyle and Thomas Steinbeck allege fraud and breach of fiduciary duty against several defendants, including the Steinbeck Heritage Foundation and Elaine Steinbeck’s heirs.
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