impact of the Mills Music decision has been exaggerated by authors. After Mills, authors can terminate licenses and recapture the copyright. They can license new uses of their works including new derivative works that may compete with the one licensed by the publisher. 45/ Authors can receive all of the royalties from phonorecords of derivative sound recordings licensed post termination. They can share in the royalties under the terms of the original grant in the case of phonorecords licensed before termination (if that grant so provides), and the music publisher's right to royalties is limited to this last narrow situation. Nevertheless, given that the function of the termination right is to grant authors and their heirs a second chance at capturing a fair share of the revenue generated by the exploitation of their works, a bill designed to achieve the goal of S. 1384 seems an appropriate way of balancing the equities between authors and the publishers of their works. The function of the derivative works exception should not be to freeze authors into disadvantageous positions, but to prevent capricious rights owners from denying the public access to derivative works whose preparation and performance was initially authorized. As Justice White observed, the very purpose of the termination provisions is to provide more compensation to those authors whose works are very long-lived than their initial contracts would have provided. To leave the law as stated by the majority in Mills Music frustrates that purpose. C. Constitutional Issue It is clear that Congress had the authority to determine who got the royalties at the time the new right (extended term) was created in 45/ The author's right to license competing derivative works is particularly powerful outside of the music field. It is less significant in the music field because the public performance right is commonly licensed on a nonexclusive basis anyway, and the mechanical reproduction right is subject to a compulsory license. 1976. Now, however, the Supreme Court has interpreted the derivative works exception and held that publishers have a right to the royalties in accordance with the contract under which the derivative work is utilized. Should Congress now amend §304 to clarify that authors (and their statutory renewal successors) are to receive all of the royalties when derivative works continue to be utilized, the question arises whether retroactive application of the amended law interferes with or divests a vested right? 46/ The proposed amendment would be legislation passed to cure defects in prior legislation. Generally, curative acts are made necessary by curative legislation ... is concerned specifically In the instant case, if passed, the curative statute will follow a judicial pronouncement; consequently, if the curative statute interferes with vested rights, the statute itself may be declared unconstitutional. 48/ This brings us back to the question of whether the music publishers have a vested interest in royalties paid for derivative works that continue to be utilized after termination under the Mills decision. This is not an easy question since there is no clearcut definition of vested rights. One commentator has said that "settled expectations honestly arrived at with respect to substantial interests ought not to 46/ See Stancil v. United States, 200 F. Supp 36 (E.D. Va. 1961). 47/ (4th ed. 48/ Id. §41.20 and §41.06. be defeated." 49/ Another commentator and several courts have described the term as "conclusory," and indicated that the real question is one of reliance, "How the challenger's conduct or the conduct of others in his class, would have differed if the law in issue had applied from the start." 50/ Another court has said that the due process challenge to a retroactive statute is met by showing that the retroactive application of the legislation is itself "justified by a rational legislative purpose." If so, "[t]he fact that the statute's retroactive application imposes new duties and upsets otherwise settled expectations is not sufficient to invalidate it unless the changes it imposes are 'particularly harsh and oppressive.'" 51/ This case concerns imposing new duties on mine operators to make them responsible for compensating families of injured employees. The consideration may be different in matters of private not public interest. 52/ ... An arguably analogous case is the litigation involving a construction of the Fair Labor Standards Act (FLSA). Following an expansive Supreme Court interpretation of "work-week" Congress enacted a new rule, whose purpose was retroactively to minimize employers from all the suits pending or that could be brought under the Supreme Court definition. If the Supreme Court view had been allowed to stand, the effect would be to give large numbers of employees sizable "windfalls" and impose on employers vast liabilities for which the market economy had made no provision. Both federal and state courts were unanimous in 50/ Sea Hockman, "The Supreme Court and the Constitutionality of Retroactive Legislation," 13 HARV. L. REV. 692, 697 (1960); Adams Nursing Home of Williamstown, Inc. v. Mathews, 548 F2d 1077, 1081 (1st Cir. 1977). 51/ 1984) North American Coal Corp. v. Campbell, 748 F2d 1124, 1128 (6th Cir. citations omitted). 52/ See Sutherland supra note 47 at §41.05. But see, Hockman, supra note 50, at 722-3. upholding the new rule primarily on the reasoning that the Supreme Court decision "presupposed an opposite construction of the Act" and that, therefore, the new legislation validated agreements "fulfilling rather than defeating expectations which had attended formation of the employment relationships prior to the date of the unforeseen expansive Supreme Court interpretation," i.e., on the criterion which comprises the traditional justification for "curative" legislation "it fulfills rather than defeats reasonable expectations." ☐ 53/ In a similar situation where the Court interpreted a FLSA provision, Congress again enacted a subsequent act prescribing an interpretation which produced results "deemed by Congress to be compatible with what the expectations of the parties had been at the time when they negotiated the agreements." Again the retroactive application was upheld. 54/ As one commentator has noted, "a retroactive statute, by remedying an unexpected judicial decision, may actually effectuate the intentions of the parties." 55/ The same commentator has observed that the true test of constitutionality of a retroactive statute is whether a party has changed its position in reliance upon the existing law or whether the retroactive act gives effect to or defeats the reasonable expectations of the parties." 56/ In making this determination a court considers three major 54/ Id. see Addison v. Huron Stevedoring Corp., 204 F2d 88 (2d Cir. 1953), cert. denied, 346 U.S. 877. 55/ Hockman, "The Supreme Court and the Constitutionality of Retroactive Legislation," 73 HARV. L. REV 692, 693 (1960). 56/ Id. at 696. 3. The nature of the right which the statute In determining whether the proposed amendment to the derivative works provision is an unconstitutional interference with a vested right, we must first resolve whether Mills (or any other affected music publisher) has changed its position in reliance on the existing law. The answer to this may be "No" in Mills' case since the agreement under which Mills received rights to the underlying work was made before either the enactment of the derivative works exception or the Supreme Court's interpretation of that exception. In other words neither royalties nor an extended copyright term was foreseen by either party and were, therefore, not part of the original bargain. 58/ The question then becomes whether the proposed amendment gives effect to or defeats the reasonable expectation of the parties. Here the issue is much more complex. Following termination, some publishers apparently received royalties for the derivative works that continued to be utilized under the preexisting contracts. Also, the Mills decision reinforces the expectations that publishers were to be paid. Arguably, then the amendment does defeat a "reasonable" expectation. On the other hand, it can also be argued that this expectation is not reasonable. A public interest is served in permitting Congress to cure inadvertent defects in statutes or their administration. In such a case the individual who claims that a vested right has arisen is seeking a windfall since if the provision had had the effect Congress intended, no user right would have arisen. Moreover the relative strengths of the equities underlying competing claims are often relevant in determining the validity of a particular application of a retroactive statute. 57/ Id. 58/ It seems possible, however, that some publishers may have assigned their royalty expectations to third parties since 1978, either before or after the Mills Music decision. Did those third parties change position in reliance on existing law? |