In The Curious Case of the James Brown Estate, Lee-ford Tritt explores how certain provisions of the Copyright Act of 1976 can upend an artist’s estate plan. Professor Tritt makes a persuasive case for legal reform and documents a messy disconnect between the fields of copyright law and estates law. This disconnect is particularly unfortunate because the havoc-wreaking provisions of the Copyright Act were enacted to help ensure that artists are fairly compensated for their creations. Congress could not have intended a loss of testamentary freedom—and in some cases, prolonged and expensive estate litigation—to be the price artists pay for this protection.
Professor Tritt writes that many copyright experts are unaware of relevant estate planning techniques, and that many estates experts are unaware of the termination rights provided in the Copyright Act. (P. 778.) Prior to reading Professor Tritt’s article, I fell into the second category. The same may be true of some of the readers of this review, so let’s start with the Copyright Act of 1976.
Artists can transfer the physical manifestation of their creations as tangible property and their intangible copyright interest as intellectual property. With respect to the copyright interest, the Copyright Act gives the artist a termination right that attaches to all assignments except for those that the artist makes by will. (P. 779.) For a transfer of a copyright interest executed after January 1, 1978, artists have a non-waivable five-year termination period that begins 35 years after the transfer. During this period, the artist has the right to terminate the transfer of their copyright and reclaim the intellectual property as their own. (P. 778) These termination rights are inalienable, so an artist’s attempt to transfer the rights will be ineffective. (P. 782.) Termination rights work a bit differently for transfers executed before 1978, but those are not the focus of Professor Tritt’s article.
Professor Tritt explains that by providing termination rights, Congress sought to give artists a second opportunity to benefit from their works. Congress recognized that the entrepreneurs and art patrons interested in acquiring copyrights usually have a bargaining position superior to the artist. Because artists have no way of knowing how successful their work will become, they often license their copyright interest for minimal compensation. Recognizing that this power imbalance would regularly cause artists to negotiate contracts that would prove to be unfavorable to them, “Congress conceptualized a recapture system that permits the author, originally in a poor bargaining position, to renegotiate the terms of the grant once the value of the work has been tested.” (P. 776.)
Now for the messy intersection of copyright law and estates law. If an artist dies before the termination period begins, or once the period has opened but before the artist has exercised termination, the termination rights descend to heirs identified in the Copyright Act. Those heirs include spouses, children, and grandchildren, who generally take in the order and proportion dictated by traditional rules of descent. The artist may not give or bequeath termination rights to anyone outside the statutorily defined class of heirs and cannot divest the heirs of the termination rights that descend under the Act.
Because the artist cannot prevent termination rights from descending to heirs, and because termination rights attach to all transfers of copyright except those made in the artist’s will, federal copyright law creates what Professor Tritt dubs “estate-bumping” (P. 787). If an artist doesn’t survive long enough to exercise their termination rights, any lifetime assignment of the copyright can be “bumped” by the statutorily defined class of heirs. As Professor Tritt explains, “[T]ermination rights curtail donative freedom and have the potential to undermine otherwise well-crafted estate plans…. Although estate-bumping does not apply to transfers by Wills per se, estate-bumping could nevertheless undermine other contemporary estate planning techniques. Moreover, for charitably inclined copyright creators…termination rights undermine lifetime gifts of their copyrights to charities.” (P. 787.)
And what about the Godfather of Soul? At the beginning of the article, Professor Tritt hooks readers with the story of James Brown’s estate plan. Brown devised $2 million for the education of his grandchildren, but he wanted to use most of his estate to provide opportunities for poor children—the kind of opportunities that Brown’s own childhood lacked. To this end, Brown left his adult children only personal property and directed that the bulk of his estate would fund a charitable trust for underprivileged children in South Carolina and Georgia. (P. 765.) Despite what Professor Tritt describes as a “fastidious” estate plan, chaos ensued after Brown’s death. There was the possibility of a pretermitted child; the question of whether an on-again, off-again love interest was Brown’s surviving spouse; allegations that Browns’ personal funds had been misappropriated; and settlements that were overturned by the South Carolina Supreme Court as a “dismemberment” of James Brown’s estate plan. I’m skipping over much of the drama—if you want to learn more, you’ll need to read Professor Tritt’s article—but after “fourteen and a half years and tens of millions in legal fees,” all litigation was finally settled. (P. 769.)
But, as Professor Tritt explains, the saga of the James Brown estate isn’t over yet. During his lifetime, Brown signed contracts that transferred ownership of his copyrights (more than 900!) to music companies in exchange for fees. Those fees are central to funding the charitable trust that was at the heart of James Brown’s estate plan. But because of federal copyright law, the termination rights in these copyrights have descended to his adult children, as well as to the love interest if she actually was his legal spouse. The heirs can eventually exercise those termination rights to strike deals that will benefit them instead of the underprivileged children that Brown intended to help.
To illustrate the extent to which inherited termination rights can interfere with donative intent, Professor Tritt discusses estate planning techniques that include revocable trusts, lifetime transfers designed to minimize tax exposure, family holding companies, and charitable giving. Through carefully crafted examples, Professor Tritt illustrates how estate-bumping can effectively undo each of these common estate planning strategies.
Professor Tritt’s article makes a compelling case that Congress should amend federal copyright law so that inherited termination rights do not interfere with donative intent and testamentary freedom. His article also illustrates the wealth of knowledge necessary to be a good estate planner. If James Brown is the client—or Paul McCartney, or Ray Charles, or any of the other big-name artists Professor Tritt mentions—the value of the copyright interests should be apparent to any lawyer. But Congress gave artists termination rights because it is impossible to know how successful a work will become. This means that lawyers who draft estate plans for all the artists whose work has not yet gained an audience—and maybe never will—also need to think about copyright law and termination rights. Hopefully Professor Tritt has sparked a conversation that will culminate in legal reform that protects artists without compromising their donative freedom.
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