Have the Terminators Come Home to Roost?

David E. Wright is a J.D. candidate, 2020 at NYU School of Law.

If one were to read any among the spate of articles that were written in the wake of The Hollywood Reporter’s piece, “Real-Life ‘Terminator’: Major Studios Face Sweeping Loss of Iconic ’80s Film Franchise Rights,” it would be understandable to come away with the impression that major studios are facing a nigh apocalyptic copyright threat.  That fear is borne out of 17 U.S.C. 203, which governs the termination of transfers and licenses granted by an author.  This provision allows for an author to reclaim his/her rights in a given work after thirty-five years from the grant of said rights to another party, assuming it was not “a work for hire.” The Copyright Act of 1976 somewhat misleadingly went into effect in 1978, so now the first opportunities are emerging for screenwriters to reassert their ownership over properties covered by the provision, including the original Terminator, Predator, Beetlejuice and several others.  Studio hysteria surrounding the issuing of license termination notices, the vehicles through which screenwriters officially terminate the rights of the studio, is purportedly evident in the release of the recent Pet Sematary remake.  Under the two year deadline to comply with a termination notice, Paramount supposedly felt compelled to squeeze out every last cent from the property before it would be forced to renegotiate ownership rights. 

These fears were exacerbated in September, when the producers and production companies associated with the Friday the 13^th franchise, lost their case against the original screenwriter, Victor Miller.  The U.S. District Court Judge for the District of Connecticut, Stefan Underhill, ruled in favor of Miller’s claim of valid termination and dismissed the producers’ claim that Miller produced the screenplay as a work for hire, which would have preempted Miller’s claims, as per 17 U.S.C. 203.  Cue the panicked flurry of articles like this from Collider, “Studios May Lose ‘Die Hard,’ ‘Terminator,’ ‘Beetlejuice’ Rights as Authors Cite Copyright Law” or this from Los Angeles Magazine, “How an Old Copyright Law Might Kibosh a Generation of 1980s Movie Reboots.”  But wait – is this opinion ostensibly blessing frenzied efforts by lawyers to start sending out termination notices right and left truly as dire as it sounds? 

It would seem that much of the nuance of the statutory scheme and the relevant judicial opinion has been lost in the reporting.  The thrust of the producers’ argument in Horror Inc. v. Miller is that Miller’s screenplay was “a work for hire,” so he has no right to terminate its grant.  While that term colloquially suggests that it applies to work done by independent contractors, it is actually a term of art defined in 17 U.S.C. 101 as, “(1) a work prepared by an employee within the scope of his or her employment; or (2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture…if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.” Horror Inc. only pursued arguments under (1)’s definition, presumably because there was no language in the relevant contract that categorized the screenplay as a work for hire.  Regardless, this raises what is likely to be the first major roadblock to the widespread use of termination notices: many writers stipulated away their right to use them.  It is unclear what the factual circumstances were that led to such language being left out of Miller’s contract, but in the vast majority of cases, it is included and would kill any reassertion of rights before it even started.

Even if another screenwriter happened to have this kind of anomalous contract snafu, a number of hurdles still remain before a license would actually be terminated.  The most explicit of these hurdles is that the statutory scheme allows for the continued use of derivative works under the terms of the original grant. This means multiple works that are cited in these articles, such as Die Hard, Who Framed Roger Rabbit?, and even Pet Sematary would still potentially be viable intellectual property for the studio that owns the rights to these works because their screenplays are adaptations of novels.  Courts might make distinctions for adaptation based on the degree to which they vary from the source material, but the statutory language casts an intimidating shadow for anyone pursuing a termination claim.  Even beyond the situation of adaptations, if a screenplay underwent significant enough changes from what was originally produced by the author, it might fall under this exception for derivative works.

Furthermore, the articles in question fail to grapple with just how fact specific of an analysis Judge Underhill undergoes to demonstrate that Miller’s screenplay was not the work of an employee, and thus not a work for hire.  Of nearly sole primacy in Underhill’s analysis are factors stemming from the Supreme Court opinion in Community for Creative Non-Violence v. Reid, (hereinafter “CCNV”) that draw on the common law of agency to distinguish between an employee and independent contractor.  Throughout the analysis, hypothetical situations emerge in which these factors might weigh more in the direction of finding a screenwriter to be an employee, even in the attenuated work situation of the film industry.  For example, if the producer, Sean Cunningham, had supervised Miller’s daily activities, remained present while Miller worked, and played a distinctly active role in controlling details of the script, then he would have had a better case for the “hiring party’s right to control the manner and means by which the product was accomplished” factor weighing toward employment.  Several of the other CCNV factors could plausibly be spun to favor a determination of employment, such as, “tax treatment of the hired party,” source of instrumentalities, location of work, and hired party’s discretion over when and how long to work.  The opinion leaves open the opportunity for screenwriting work arrangements to be deliberately constructed so as to tilt the CCNV factors toward employment and nullify the screenwriter’s termination rights.

So, the imagined apocalypse this wave of termination notices has created is not quite as damning as it initially appeared.  Even if studios were to decide that litigating the termination notices was simply too expensive, two options remain: renegotiate ownership rights with the author or simply stop making movies based on these properties.  While the latter might sound far fetched in this era of recycled IP, it is worth noting that many of the film franchises targeted by these termination notices are long past their financial prime.  Terminator: Dark Fate, the most recent entry in the series, flopped at the box office. The same is true for the newest entry in The Predator franchise, and the newest Die Hard film had the lowest domestic gross in the series.  Perhaps it would be best for studios to treat these termination notices as an opportunity to abandon long-since drained cash cows to create something new.