Page:H.R. Rep. No. 94-1476 (1976) Page 125.djvu

, although affirmative action is needed to effect a termination, the right to take this action cannot be waived in advance or contracted away. Under section 203(a) the right of termination would apply only to transfers and licenses executed after the effective date of the new statute, and would have no retroactive effect.

The right of termination would be confined to inter vivos transfers or licenses executed by the author, and would not apply to transfers by the author’s successors in interest or to the author’s own bequests. The scope of the right would extend not only to any “transfer of copyright ownership,” as defined in section 101, but also to nonexclusive licenses. The right of termination would not apply to “works made for hire,” which is one of the principal reasons the definition of that term assumed importance in the development of the bill.

Who can terminate a grant

Two issues emerged from the disputes over section 203 as to the persons empowered to terminate a grant: (1) the specific classes of beneficiaries in the case of joint works; and (2) whether anything less than unanimous consent of all those entitled to terminate should be required to make a termination effective. The bill to some extent reflects a compromise on these points, including a recognition of the dangers of one or more beneficiaries being induced to “hold out” and of unknown children or grandchildren being discovered later. The provision can be summarized as follows:


 * 1. In the case of a work of joint authorship, where the grant was signed by two or more of the authors, majority action by those who signed the grant, or by their interests, would be required to terminate it.


 * 2. There are three different situations in which the shares of joint authors, or of a dead author’s widow or widower, children, and grandchildren, must be divided under the statute: (1) The right to effect a termination; (2) the ownership of the terminated rights; and (3) the right to make further grants of reverted rights. The respective shares of the authors, and of a dead author’s widow or widower, children, and grandchildren, would be divided in exactly the same way in each of these situations. The terms “widow,” “widower,” and “children” are defined in section 101 in an effort to avoid problems and uncertainties that have arisen under the present renewal section.


 * 3. The principle of per stirpes representation would also be applied in exactly the same way in all three situations. Take for example, a case where a dead author left a widow, two living children, and three grandchildren by a third child who is dead. The widow will own half of the reverted interests, the two children will each own 16⅔ percent, and the three grandchildren will each own a share of roughly 5½ percent. But who can exercise the right of termination? Obviously, since she owns 50 percent, the widow is an essential party, but suppose neither of the two surviving children is willing to join her in the termination; is it enough that she gets one of the children of the dead child to join, or can the dead child’s interest be exercised only by the action of a majority of his children? Consistent with the per stirpes principle, the interest of a dead child can be exercised only as a unit by majority action of his surviving children. Thus,