Opinion ID: 3035128
Heading Depth: 4
Heading Rank: 2

Heading: Legislative History of Section 304(c)

Text: The district court stated there was nothing wrong with the fact that “the 1983 [a]greement was created in order to protect SSI and Disney from a termination of the rights granted to them.” Relying on legislative history, the district court read the House Report for the 1976 Copyright Act as confirming the rule that “[n]othing in the Copyright Acts has altered the preempts any right Christopher had in contracting for the termination of the 1930 grant. Based on Rano, she argues that the 1983 agreement did not produce an effective termination because the Pooh Properties Trust did not utilize the statutory termination procedure in place under section 304(c) of the 1976 Copyright Act. This overlooks the fact that Rano did not address the effectiveness of a party’s purported exercise of a statutory termination right under section 304(c). The Rano court only held that the existence of such a statutory termination mechanism in section 203(a)(5) preempts a California common-law rule permitting the unilateral termination at will of an agreement that has a non-specified duration. 987 F.2d at 585-86. Whatever views one may have regarding the correctness of the narrow holding of Rano, it cannot be said that Rano suggests a ruling that would nullify a mutual decision to revoke a grant of rights. See Scholastic Entm’t, Inc. v. Fox Entm’t Group, Inc., 336 F.3d 982, 988 n.2 (9th Cir. 2003) (observing that “Rano has been called into serious question by courts as well as commentators”). Moreover, Rano’s narrow facts have no application here, where the 1930 grant expressly provided for its duration. See Rano, 987 F.2d at 583, 585 (emphasizing the fact that the subject agreement was one without a specified duration). 16022 MILNE v. STEPHEN SLESINGER, INC. power of private parties to contract.” H.R. REP. NO. 94-1476, 94th Cong., 2d Sess. (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5743. Clare criticizes the district court’s approach to statutory construction, arguing that section 304(c)’s meaning is clear on its face and that there was no need for the district court to consider legislative history. She maintains that the district court used legislative history to override the statute itself. [3] We disagree. Section 304(c)(5) states that “[t]ermination . . . may be effected notwithstanding any agreement to the contrary, including an agreement to make a will or to make any future grant.” 17 U.S.C. § 304(c)(5). As we have noted, the phrase “agreement to the contrary” is unclear. Even Clare agrees that the phrase is not defined by the statute, and the Second Circuit has expressly found the phrase ambiguous and that an analysis of legislative history is required to glean its meaning. Marvel, 310 F.3d at 290; accord Walthal v. Rusk, 172 F.3d 481, 484 (7th Cir. 1999) (reviewing legislative history upon concluding that section 304(c)(5)’s counterpart termination provision under section 203 “is not perfectly clear”). This court has recognized that when a statute’s terminology is not clear on its face, it is appropriate to seek guidance in the legislative history. In re BCE West, L.P., 319 F.3d 1166, 1171 (9th Cir. 2003); see also United States v. Buckland, 289 F.3d 558, 565 (9th Cir. 2002) (“Where the language is not dispositive, we look to the congressional intent revealed in the history and purposes of the statutory scheme.” (internal quotation marks omitted)). [4] As Clare concedes, a review of the legislative history turns up nothing to support her contention that she may terminate SSI’s rights in the Pooh works on the theory that the 1983 agreement is an “agreement to the contrary.” On the contrary, Congress specifically stated that it did not intend for the statute to “prevent the parties to a transfer or license from voluntarily agreeing at any time to terminate an existing grant MILNE v. STEPHEN SLESINGER, INC. 16023 and negotiating a new one[.]” H.R. REP. NO. 94-1476 at 127; 1976 U.S.C.C.A.N. at 5743.9 Congress further stated that “nothing in this section or legislation is intended to change the existing state of the law of contracts concerning the circumstances in which an author may terminate a license, transfer or assignment.” H.R. REP. NO. 94-1476 at 142; 1976 U.S.C.C.A.N. at 5758. Congress therefore anticipated that parties may contract, as an alternative to statutory termination, to revoke a prior grant by replacing it with a new one. Indeed, Congress explicitly endorsed the continued right of “parties to a transfer or license” to “voluntarily agree[ ] at any time to terminate an existing grant and negotiat[e] a new one.” H.R. REP. NO. 94-1476 at 127; 1976 U.S.C.C.A.N. at 5743. The rationale behind the legislation was to “safeguard[ ] authors against unremunerative transfers” and improve the “bargaining position of authors” by giving them a second chance to negotiate more advantageous grants in their works after the works had been sufficiently “exploited” to determine their “value.” H.R. REP. NO. 94-1476 at 124; 1976 U.S.C.C.A.N. at 5740. Congress sought to foster this purpose by permitting an author’s heirs to use the increased bargaining power conferred by the imminent threat of statutory termination to enter into new, more advantageous grants. This is exactly what Christopher and the other beneficiaries of the Pooh Properties Trust did in 1983. 9 To the extent that the legislative record references section 304(c)(5)’s counterpart provision under section 203(a)(5), we find that history instructive given Congress’s use of identical language in both provisions. See Gustafson v. Alloyd Co., 513 U.S. 561, 570 (1995) (recognizing that “ ‘identical words used in different parts of the same act are intended to have the same meaning’ ” under the “ ‘normal rule of statutory construction’ ” (quoting Dep’t of Revenue of Or. v. ACF Indus., Inc., 510 U.S. 332, 342 (1994))); see also Batjac Prods., Inc. v. Goodtimes Home Video Corp., 160 F.3d 1223, 1228 (9th Cir. 1998) (supporting the “ ‘basic canon of statutory construction that identical terms within an Act bear the same meaning’ ” (quoting Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 479 (1992))). 16024 MILNE v. STEPHEN SLESINGER, INC. [5] After more than 50 years of advancement of the Pooh works in the marketplace, their value was sufficiently demonstrated, and the 1976 Copyright Act provided Christopher a window for termination. The Pooh Properties Trust recognized the perceived right to terminate as a valuable bargaining chip, and used it to obtain an advantageous agreement that doubled its royalty share relative to SSI’s share. Thus, the 1983 agreement exemplifies the increased bargaining power that Congress intended to bestow on authors and their heirs by creating the termination right under the 1976 Copyright Act. As the 1983 agreement appears to be the type expressly contemplated and endorsed by Congress, we do not consider it to be a prohibited “agreement to the contrary” under section 304(c)(5). In addition, Clare attempts to conjure up a proverbial “parade of horrors” that she believes would result were we to uphold the parties’ exercise of free will to enter into the 1983 contract. She argues that judicial recognition of the 1983 agreement “ ‘would provide a blueprint by which publishers could effectively eliminate an author’s termination right’ ” (quoting Marvel, 310 F.3d at 291). The strength of a proposed parade of horrors, however, lies “in direct proportion to (1) the certitude that the provision in question was meant to exclude the very evil represented by the imagined parade, and (2) the probability that the parade will in fact materialize.” Harmelin v. Michigan, 501 U.S. 957, 986 n.11 (1991) (Scalia, J., concurring). The application of these factors here shows that Clare’s imagined parade will never march forward. Clare presents no authority suggesting that Congress designed the statutory termination provisions to prevent parties from agreeing to a simultaneous revocation and new grant of rights. Certainly with regard to the instant case, Clare’s concerns are unfounded. The 1983 agreement came about some seven years after the copyright owner felt empowered to exercise his right of termination under the 1976 Copyright Act, and after he was able to assess the works’ value over the course of more than five decades. Far from resulting in a termination of MILNE v. STEPHEN SLESINGER, INC. 16025 the grantee’s rights, the 1983 agreement resulted in an increased royalty stream to the author’s heirs — the very result envisioned by Congress when it enacted the termination provisions.