1. Copyright Law: Spring 2002 Professor Susanna Fischer CLASS 14 February 27, 2002

2. GOALS FOR CLASS To learn about transfer of copyright ownership

3. WRAP UP POINTS: JOINT WORKS A joint work is defined in section 101 as a “work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole”

4. WRAP-UP: JOINT AUTHORS Joint authors have 2 rights and 1 obligation Each joint author has the right to use or license the work as he or she wishes Each has an equal and undivided interest in the work Each has the obligation to account to the other joint author for 1/2 profits that are made if the work is licensed

5. WRAP-UP: INTENTION TEST FOR JOINT WORKS If there is no written agreement between the authors, there is a 2 pronged test to determine whether there is joint ownership (Childress, Thompson) A P trying to establish co-ownership must establish: 1. Each putative co-author made independently copyrightable contributions to work 2. Each putative co-author fully intended to be a co-author

6. MORE ON INTENTION TEST The joint work intention test is not just SUBJECTIVE. You must look at the relationship -- e.g. how the collaborator regarded herself in terms of billing and credit, decisionmaking, and right to enter into contract

7. TRANSFER OF COPYRIGHT OWNERSHIP COPYRIGHT IS A BUNDLE OF RIGHTS - Under the 1976 Copyright Act, the copyright owner can transfer any of these rights separately This principle of divisibility is set out in s. 201(d)(2) (note - this was a change in the law; previous law required only one copyright owner at all times - anyone else was a licensee)

8. DIVISIBILITY: Section 201(d)(2) Any of the exclusive rights comprised in a copyright, including any subdivision of any of the rights specified in section 106, may be transferred as provided in clause (1) and owned separately. The owner of any particular exclusive right is entitled, to the extent of that right, all of the protection and remedies accorded to the copyright owner by this title.

9. HOW DO YOU TRANSFER COPYRIGHT INTERESTS? Section 201(d)(1): The ownership of a copyright may be transferred in whole or in part by any means of conveyance or by operation of law and may be bequeathed by will or pass as personal property by the applicable laws of intestate succession Jonathan Larson’s copyrights were inherited after his death. See also definition of “transfer of copyright ownership” in section 101

10. SECTION 101: TRANSFER A transfer of copyright ownership is an assignment, mortgage, exclusive license, or any other conveyance, alienation, or hypothecation of copyright or of any of the other exclusive rights comprised in a copyright whether or not it is limited in time or place of effect, but not including a nonexclusive license.

11. WRITING REQUIREMENTS FOR TRANSFERS OF COPYRIGHT OWNERSHIP? Does the Copyright Act of 1976 require transfers of copyright ownership to be in writing?

12. 204: Execution of Transfers of Copyright Ownership (a) A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent. Do you have to notarize such transfers? See section 204(b).

13. SUMMARY: WRITING REQUIREMENTS FOR EXCLUSIVE LICENSES Section 204 requires either : “note or memorandum of the transfer” or transfer by operation of law Why require a writing?

14. SUMMARY: WRITING REQUIREMENTS FOR EXCLUSIVE LICENSES Section 204 requires either : “note or memorandum of the transfer” or transfer by operation of law Why require a writing? See Effects v. Cohen - idea is to ensure that no one will inadvertently give away copyright; also require clarity about what rights are being given away and at what price. Enhance predictability and certainty.

15. TRANSFER BY OPERATION OF LAW COMPARE: CB p. 335 CA In re Marriage of Susan M. & Frederick L. Worth (1987) WITH LA Rodrigue v. Rodrigue (2000) [CAN state community property laws step in to enforce sharing of copyright?]

16. HYPOTHETICAL Novelist Neil wants to give Thea Translator the exclusive right to make a translation into Italian. Neil tells Thea he is giving her an exclusive license. Is that license valid? Why or why not? What are the benefits of an exclusive license as opposed to a nonexclusive license - see BMI v. CBS (S.D.N.Y. 1983) (p. 299), s. 501(b)

17. HYPOTHETICAL What are the benefits of an exclusive license as opposed to a nonexclusive license - see BMI v. CBS (S.D.N.Y. 1983) (p. 299), s. 501(b) An exclusive licensee has the right to bring an action for copyright infringement; a nonexclusive licensee does not. BMI had no standing to sue as it was a nonexclusive licensee. What problem does this create for BMI?

18. BMI v. CBS (S.D.N.Y. 1976) Court did recognize that its decision created a practical problem for BMI - it might be hard to join a large number of music publishers if lots of different songs were allegedly infringed. So court suggested that BMI might seek to have publishers declared a plaintiff class under Rule 23 of the FRCP.

19. EFFECTS V. COHEN (9th Cir. 1990) What is the Stuff and what food does it resemble? What was the copyrighted work created by Effects Associates and who commissioned it?

20. EFFECTS V. COHEN (9th Cir. 1990) Did Larry Cohen and Effects enter into a written contract? On what basis did Cohen claim copyright ownership? Could it be a work made for hire? An exclusive license? A nonexclusive license?

21. “Moviemakers do lunch, not contracts” Section 204’s writing requirement DOES apply to this situation (Hollywood executives are not exempted despite custom of the trade argument) Section 204 does not apply to nonexclusive licenses. Court implies a nonexclusive license on the basis that contribution was not of minimal value since Cohen paid almost $56,000 for it.

22. Did Effects have any recourse?

23. Effects could bring a suit for breach of contract in state court Effects could also assign or license its remaining rights in the special effects footage (though perhaps not worth much given the movie’s quality) All Effects gave up was one little twig of its bundle of copyright rights: the right to sue Cohen for copyright infringement

24. You Be the Judge Is Effects a good decision? Why or why not?

25. Recordation System What is recordation?

26. Recordation System What is recordation? It is a voluntary system permitting transfers of copyright ownership to be recorded with the Copyright Office. How do you record a transfer?

27. Recording a Transfer You file EITHER the original transfer OR (more often) a copy that is accompanied by a sworn certification that it is a true copy of the original transfer You PAY - fee is currently $50 for document containing no more than 1 title, $15 for additional titles (per group of 10 titles)

28. Recordation as constructive notice (section 205) Recordation operates as constructive notice (so long 2 conditions are met: work is specifically identified and there is a registration of copyright for the work) - 205(c) Recordation gives transferee priority over later transfers - 205(d)

29. Priority Between Conflicting Transfers First transfer prevails if recorded within one month after execution in US or within 2 months after execution after US OR at any time before recordation of second transfer OTHERWISE LATER TRANSFER PREVAILS

30. Priority between conflicting transfer and nonexclusive license Section 205(e) : Nonexclusive license, whether recorded or not, prevails over conflicting transfer of copyright ownership IF license evidenced by written instrument signed by copyright owner or authorized agent AND license taken before transfer executed OR license taken in good faith before recordation of transfer and without notice of it.

31. Peregrine case (C.D. Cal. 1990) What does this case hold?

32. Peregrine case (C.D. Cal. 1990) What does this case hold? Section 205, provision for recordation of transfers of copyright ownership in the Copyright Office, preempts state laws such as UCC providing for recording of security interests in various state offices Thus, if a bank takes a security interest in copyrights in many works (like the 145 films at issue in Peregrine), it will have to record these in the Copyright Office

33. Peregrine case (C.D. Cal. 1990) There is much criticism of this case, but subsequent bankruptcy courts have followed it Why has this case been criticized?

34. Peregrine case (C.D. Cal. 1990) There is much criticism of this case, but subsequent bankruptcy courts have followed it Why has this case been criticized? Because it complicates relatively simple business transactions and also creates uncertainty for past lenders who only made UCC filings Some legislative proposals to overturn this decision, but none enacted so far. Limited to registered copyrights in World Auxiliary

35. The Securitization of IP? Bowie bonds were a securitization of David Bowie’s royalties, the first securitization of IP assets Some commentators have argued that, despite media hype, there have not been many of these deals in practice and their proliferation is unlikely.

36. SCOPE OF GRANT You were asked to read a number of cases about the proper scope and interpretation of various license agreements (contracts!) This is an important issue in practice. The question, arising from the general principle of divisibility, is: what copyright has the licensor licensed (or the assignor assigned). We are going to compare the approaches of these cases broadly, but you should make sure you read them carefully.

37. Comparing Cohen and Boosey What was the difference in approach that the 9th Circuit in Cohen and the 2d Circuit in Boosey took to interpreting the scope of a license agreement? Was there a different policy rationale underlying these decisions? Note that both cases involved both licenses and assignments - in Cohen, Paramount acquired H & J’s rights by assignment and in Boosey, Boosey acquired Stravinsky’s rights by assignment.

38. COHEN V. PARAMOUNT PICTURES (9th Cir. 1988) Issue? Does a synchronization license conferring the right to exhibit a film using a copyrighted musical composition (distribution right) in motion picture theatres and “by means of television” include the right to distribute the videocassette of the film? Holding?

39. Comparing Cohen and Boosey Cohen takes the approach that the scope of a license only includes rights that lie “within the unambiguous core meaning of the term”. Effectively favors licensor/author due to policy of Copyright Act. Boosey takes the approach that the language of the license is controlling and that the law should not favor either party.

40. COHEN V. PARAMOUNT PICTURES: holding Ninth Circuit held that the scope of the license did not include the right to use the musical composition in a videocassette copy of the film. Reverses summary judgment in favor of Paramount.

41. COHEN V. PARAMOUNT PICTURES: reasoning The language of the license was not broad and contained an express reservation to the licensor of rights not granted by the terms of the license. Moreover, most importantly, home VCRs were not invented at the time the license was executed. The 9th Circuit was concerned about an inappropriate windfall gain to the licensee, which it felt would violate the purpose of the Copyright Act to encourage authors to produce new works.

42. COHEN V. PARAMOUNT PICTURES: reasoning So to get around this case, you should word licenses as broadly as possible, e.g. the right to exhibit, distribute, exploit, market and perform perpetually throughout the world by any means or methods now or hereafter known.

43. Boosey & Hawkes v. Disney: 2d Cir. 1998 Stravinsky composed “The Rite of Spring” Disney entered into 1939 license to use it in the 1940 film Fantasia (in a sequence on dinosaurs) and to distribute it (outside of U.S. because in public domain under U.S. law

44. Boosey & Hawkes v. Disney Exhibited it in movie theatres under 1939 license for years 1991 film released in video Issue: Did the 1939 Agreement authorize video distribution of the “Rite of Spring”?

45. Boosey & Hawkes v. Disney: Holding Second Circuit’s Holding: the scope of the license was theoretically broad enough to cover the video distribution of the “Rite of Spring” - remands for trial to determne whether it in fact violated the ASCAP condition (Case eventually settles).

46. Boosey & Hawkes v. Disney:Reasoning New use analysis should rest on “neutral principles of contract interpretation”, not “solicitude for either party” Should not, as in Cohen, favor author Language of license broad enough to include the new use and thus the burden of negotiating an exception should fall on the licensor (author)

47. Boosey & Hawkes v. Disney:Reasoning Of course author now deprived of profits from new use. Not totally clear from Second Circuit’s opinion if foreseeability of new use required. They held that this new use was foreseeable. Policy rationale: approach in new use cases that favors licensors actually “gives rise to antiprogressive incentives”

48. 1939 Agreement “In consideration of the sum of $6,000…S does hereby give and grant unto Disney... The nonexclusive, irrevocable right, license, privilege and authority to record in any manner, medium or form and to license the performance of, the musical composition hereinbelow set out.”

49. Paragraph 4 Disney’s license to the work “is limited to the use of the musical composition in synchronism or timed relation with the motion picture”

50. ASCAP CONDITION “The right to record the musical composition as covered by this agreement is conditioned upon the performance of the musical work in theatres having valid licenses from ASCAP or any other performing rights society having jurisdiction in the territory in which the said musical composition is performed.”

51. Paragraph 7 “the licensor reserves to himself all rights and uses in and to the said musical composition not herein specifically granted”

52. Random House v. Rosetta Books: Which approach does the S.D.N.Y take?

53. Random House v. Rosetta Books Contracts signed by Styron, Vonnegut and other authors published by Random House provided that RH had exclusive right to publish works “in book form”. Signed a clause promising not to use retained rights in a way that would compete with RH exercise of transferred rights Later conveyed Rosetta books exclusive right to publish electronic version of books Issue: does license to RH preclude Rosetta from publishing electronic versions of books?

54. Is an e-book a book? How did district court rule on RH claim for a preliminary injunction against Rosetta?

55. Is an e-book a book? How did district court rule on RH motion for a preliminary injunction against Rosetta? The district court denied RH’s motion

56. Is an e-book a book? How did district court distinguish Boosey?

57. Is an e-book a book? How did district court distinguish Boosey? 1. Language in Boosey was broader Was it? and 2. new use in Boosey within same medium as original grant -here new use was a separate medium from original use 3. Unlike movie cases, book publishers did not create a new derivative work 4. Policy rationale of fears that licensees would not encourage innovative technological developments did not apply

58. “Arising Under” Copyright or Contract Law Licenses are contracts so one might think that disputes over license agreements would be governed by state law, not federal copyright law. Yet clearly some issues involving licenses, such as whether the writing requirement of the Copyright Act are met, arise under federal law. Courts have had difficulty in determining when such claims “arise under” federal law.

59. New York Times v. Tasini Recent Supreme Court decision concerning clash between copyright owner of collective work and freelance author of a contribution to that collective work. What was the issue for the Supreme Court to decide?

60. New York Times v. Tasini Does s. 201(c ) protect publishers from infringing freelancers’ copyrights where publishers entered into agreements with database services (such as LEXIS/NEXIS to include freelancers’ articles in the databases without freelancers’ consent?

61. SECTION 201(c) Copyright in each separate contribution to a collective work is distinct from copyright in the collective work as a whole and vests initially in the author of the contribution. In the absence of an express transfer of the copyright or of any rights under it, the owner of copyright in the collective work is presumed to have acquired only the privilege of reproducing and distributing the contribution as part of that particular collective work, any revision of that collective work, and any later collective work in the same series.

62. A Revision? Was the reproduction/distribution of the articles in the databases a “revision of the collective work”? In the view of Justice Ginsburg, author of the majority opinion (and, perhaps notably for her decision, mother of Professor Jane Ginsburg, author of your casebook)? In the view of Justice Stevens, author of the dissent? What do you think?

63. Policy Justice Ginsburg noted that there might be policy concerns in finding for the freelancers, as the publishers argued. What were these concerns and how does Justice Ginsburg address them? What does Justice Stevens have to say about these policy concerns?

64. Did the Freelancers Win the Battle But Lose the War? In Tasini a pyrrhic victory? Will publishers just force the freelancers to enter into assignments or work for hire agreements?