Understanding the derivative works exception to copyright’s termination right
The drafters of the Copyright Act thought ahead in ways authors might not. They included a termination right to free authors from the consequences of granting their copyright rights before they understood the true value of their works.
The termination right is subject to what’s called the derivative works exception, though. When one grantee recently tried to push the boundaries of that exception, the U.S. Court of Appeals for the Second Circuit closed the book on the claim.
The scene is set
The case involves two derivative theatrical works based on Harper Lee’s novel “To Kill a Mockingbird.” In 1969, Lee granted The Dramatic Publishing Company an exclusive license to stage “non-first-class” (that is, amateur) productions of adaptations of the book. She later terminated the grant and authorized the development of another stage adaptation. Atticus Limited Liability holds the rights to present and produce that adaptation.
Atticus sought a declaratory judgment that performances of the second adaptation don’t infringe any copyright interest Dramatic held under its grant. Dramatic countered that it held an exclusive license to stage amateur adaptations of the novel — even after the termination. The trial court granted declaratory judgment to Atticus, and Dramatic appealed.
The curtain falls
When a copyright grant is terminated, all of the covered rights generally revert to the author. Under the derivative works exception, though, a derivative work prepared under the grant pre-termination may continue to be “utilized under the terms of the grant” after its termination.
Dramatic contended that Lee’s grant of an exclusive license to produce amateur stage adaptations is a “term of the grant” protected from termination by the exception. Therefore, it argued, its adaptation continues to be the exclusive stage adaptation for amateur productions.
This interpretation, the court said, conflated Dramatic’s rights in its play with Lee’s rights in “To Kill a Mockingbird.” The termination caused all of her rights covered by the grant to revert, including the right to create derivative works and the right to authorize others to create derivative works. Dramatic could continue to “utilize” its play post-termination under the grant’s terms, but Lee’s promise of exclusive amateur rights wasn’t a term governing how Dramatic’s play was “utilized.”
The court described the upshot of Dramatic’s claimed exclusive license as the right to prevent further stage adaptations for amateur productions. That right, however, was part of the copyright in Lee’s work and reverted to her on termination of the grant.
The other show can go on
Dramatic will have to be satisfied with the ability to continue to perform and license its own derivative play. Because of the court’s ruling, it can’t block other derivative non-first-class plays based on Lee’s novel.
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