## Facts

- In 1938, author John Steinbeck signed a publishing agreement with The Viking Press granting Viking the exclusive right to publish certain Steinbeck works in the United States and Canada in exchange for royalties; the agreement bound Steinbeck’s heirs and could end as to works not kept in print.
- Viking later assigned its rights under the 1938 agreement to Penguin Group (USA) Inc.
- Steinbeck renewed the copyrights in the covered works during his lifetime. He died in 1968 and left his copyright interests to his widow, Elaine Steinbeck.
- In 1994, Elaine Steinbeck and Penguin entered into a new agreement providing for continued publication of all works covered by the 1938 agreement, plus additional works, on improved financial terms for Elaine.
- The 1994 agreement expressly stated that once signed it would “cancel and supersede” prior agreements covering the works addressed.
- Elaine Steinbeck died in 2003 and left her interests to her children and grandchildren from a prior marriage.
- In 2004, Steinbeck’s surviving son, Thomas Steinbeck, and a grandchild served Penguin with a notice of termination under 17 U.S.C. § 304(c) and § 304(d), attempting to terminate the grants made in the 1938 agreement.
- Penguin sued in the Southern District of New York seeking a declaration that the 2004 termination notice was invalid because the operative rights came from the 1994 agreement, not the 1938 agreement.
- The district court granted summary judgment to the Steinbeck heirs, reasoning that the 1994 agreement did not eliminate the termination right because it was an invalid “agreement to the contrary” and did not displace the 1938 grant. Penguin appealed.

## Issues

1. Whether the 1994 agreement between Elaine Steinbeck and Penguin validly canceled and superseded the 1938 publishing agreement, leaving no subsisting pre-1978 grant for Steinbeck’s heirs to terminate under 17 U.S.C. § 304(c) or § 304(d).
2. Whether the 1994 agreement was an invalid “agreement to the contrary” under § 304(c)(5) such that it could not defeat the heirs’ statutory termination effort directed at the 1938 grant.
3. Whether a termination notice aimed at an earlier grant is effective when the parties’ current rights arise from a later agreement that replaced the earlier grant.

## Decision

- The Second Circuit reversed the district court’s summary judgment for the Steinbeck heirs and remanded.
- The court held that the 1994 agreement canceled and superseded the 1938 agreement and therefore replaced it with a later grant.
- Because the heirs’ 2004 notice sought to terminate the 1938 grant, and that grant no longer existed after the 1994 replacement agreement, the termination notice was ineffective.
- The court rejected the view that the 1994 agreement was an impermissible “agreement to the contrary” where it functioned as a new bargain that expressly ended the earlier grant.

## Legal Principles

- Termination under 17 U.S.C. § 304(c) and § 304(d) applies to pre-1978 “grants” of transfers or licenses of copyright; a notice cannot terminate a grant that has already been canceled and replaced.
- A later copyright agreement that expressly cancels and supersedes an earlier grant, and that is entered into by the author or by a statutory successor who holds the author’s interest, replaces the earlier grant for purposes of § 304 termination analysis.
- Section 304(c)(5)’s “notwithstanding any agreement to the contrary” language does not make every later renegotiated contract invalid; it prevents private agreements from waiving the statutory right to terminate an existing grant, but it does not preserve termination power over a grant that the parties have extinguished by entering a replacement agreement.
- When a replacement agreement governs the parties’ rights, the relevant question for termination is whether any qualifying pre-1978 grant remains in effect; if not, a termination notice directed at the earlier contract fails.

## Conclusion

The Second Circuit held that Elaine Steinbeck’s 1994 agreement with Penguin canceled and superseded John Steinbeck’s 1938 publishing agreement, so there was no longer a pre-1978 grant in force that Thomas Steinbeck and the other heir could terminate under § 304(c) or § 304(d); accordingly, the 2004 termination notice aimed at the 1938 grant was invalid and Penguin’s rights under the 1994 agreement remained in effect.


Penguin Group (USA), Inc. v. Steinbeck, 537 F.3d 193 (2d Cir. 2008)