The Second Circuit just reversed a district court decision that had permitted the heirs of John Steinbeck to terminate a copyright grant to Penguin Group.
The issue arose from a termination right granted to authors and their heirs that corresponded to the extension of the copyright term. The logic was that if copyright terms were extended, publishers should not receive an unfair windfall without letting authors or their heirs renegotiate. An historic logic for letting authors terminate is that young authors would often enter into unfavorable agreements and giving them a chance to renegotiate later would compel publishers to reckon with the mature authors' better bargaining power.
Steinbeck's widow had renegotiated a 1938 rights grant in 1994. The Second Circuit found that the 1994 renegotiation was a complete termination of the 1938 rights grant. Steinbeck's widows heirs tried to exercise their termination rights in 2004.
But the Second Circuit found that, applying New York contract law, the 1938 grant had been terminated, giving the widows heirs no pre-1978 rights grants to terminate. Essentially, an author or heirs get one crack at renegotiating.
--- F.3d ----, 2008 WL 3376654 (2d Cir. 2008).