Opinion ID: 3035128
Heading Depth: 3
Heading Rank: 2

Heading: “Moment of Freedom”

Text: Clare also advances the theory that the 1983 agreement did not serve to revoke the 1930 grant to Slesinger because no “moment of freedom” was built in between the agreement’s simultaneous revocation and re-granting of rights in the Pooh works. She claims that section 304(c)(6)(D) requires such a “moment of freedom” before a re-grant of rights may take place, and that without such a moment of freedom, the 1983 agreement is nothing more than an amendment to the original 1930 agreement, one that is terminable under the CTEA. Section 304(c)(6)(D) reads as follows: A further grant, or agreement to make a further grant, of any right covered by a terminated grant is valid only if it is made after the effective date of the termination. As an exception, however, an agree- ment for such a further grant may be made between the author . . . and the original grantee or such grantee’s successor in title, after the notice of termination has been served. . . . 17 U.S.C. § 304(c)(6)(D) (emphasis added). This provision sets forth the proper timing mechanism for grants and agreements to make grants where the statutory termination under section 304(c)(5) has been exercised. Id. But Clare does not contend and cannot contend that in 1983 anyone exercised a statutory right of termination with respect to the Pooh works. Clare’s sole support for her position is found in a treatise authored by the late-Professor Melville Nimmer. In his treatise, Professor Nimmer expressed his assumption that this 16026 MILNE v. STEPHEN SLESINGER, INC. subsection — which on its face applies only to the statutory termination of a prior copyright grant — is intended to benefit authors and should therefore be extended to prohibit a simultaneous contractual termination and re-grant of copyright rights. See 3 M. NIMMER, NIMMER ON COPYRIGHT § 11.07 (6th ed. 1978). Clare’s counsel, however, conceded at oral argument that no source of primary authority has endorsed this assumption. We too decline to do so. [6] Congress included the general rule in section 304(c)(6)(D) — prohibiting a new grant of rights terminated by statute until after the effective date of termination — to avoid trafficking in future interests by third parties, which would deprive the original grantee of the opportunity to negotiate a further transfer. H.R. REP. NO. 94-1476 at 127; 1976 U.S.C.C.A.N. at 5743. The exception to this rule provides that once a notice of termination is served, the original grantee or his successor-in-title, here SSI, is the only party to whom the author (or author’s heir) may promise a future grant, and is therefore similarly intended to give the original grantee a competitive advantage over third parties (like co-plaintiff Disney) who wish to obtain the rights covered by the terminated grant. See id. (stating that the exception is “in the nature of a right of ‘first refusal’ ” in the original grantee’s favor). Thus, contrary to Clare’s view, section 304(c)(6)(D) was not intended to protect the author or his heirs, but was instead intended to protect licensees, such as SSI. [7] We note that the district court reasonably posited that if Congress intended to require a “moment of freedom,” it would have clearly said so. After all, such an implied condition is difficult to harmonize with the statute’s purpose of benefitting the original grantee or with other provisions of Title 17. For example, three other statutory provisions require advance notice of termination to be served at least two years before the effective date of the termination. 17 U.S.C. §§ 203(a)(4)(A), 304(c)(4)(A), 304(d)(1).10 During the two10 These provisions themselves intend to benefit the original grantee, as they ensure that the original grantee will have adequate notice of the impending loss of rights. MILNE v. STEPHEN SLESINGER, INC. 16027 year period between service of the notice and the termination’s effective date, the original grant remains in effect so that the holder of the termination right is no freer to walk away from the to-be-terminated grant than he was before he served the notice. Thus, contrary to the argument advanced by Clare and the Nimmer treatise, section 304(c)(6)(D) does not require a “moment of freedom” between termination of a grant and the creation of a new grant in its place because it allows the author or his heirs to enter into a binding agreement with the original grantee after service of the termination notice but before its effective date. Even assuming that Congress intended such a “moment of freedom” between a contractual revocation and re-grant of rights, we note that Christopher’s ability to exercise his perceived termination right gave him all the freedom he needed to refrain from entering into a new grant of copyright rights to SSI. He parlayed that right into a new agreement giving increased compensation to the Pooh Properties Trust, of which Clare is a prime beneficiary. In doing so, he fulfilled the very purposes for which Congress enacted the termination right. Thus, it defeats common sense to suggest that he needed to take a walk around the block between the time he revoked the old agreement and entered into the new one. Moreover, still assuming a preference for a moment of freedom, there is nothing to suggest that the parties would have come to any other decision than the one they reached. There is absolutely nothing in the record that would show that the beneficiaries of the Pooh Properties Trust were prejudiced in any way by the 1983 agreement. At bottom, Clare contends that the 1983 agreement did not give her as much money as she would like to receive. Such a position, however, does not amount to a viable termination right under the CTEA.