Property, intangible

a blog about ownership of intellectual property rights and its licensing

“By Operation of Law” Addendum

I recently chided a court for not recognizing that one of the parties was claiming ownership of copyright “by operation of law,” specifically “under the operation of California law … governing partnerships, promoters, agents, fiduciaries and cofounders, not as a question of employment, work for hire … or joint work.”

The court never reached the partnership law theory in the Swipe and Bite case I was writing about, but I was pleased that my post prompted a North Carolina colleague to tell me about a case where copyright ownership by the operation of partnership law was the principal theory. It involved American Idol contestant Chris Daughtry and his former band, Absent Element, who sued Daughtry for their share of Daughtry’s proceeds from his post-Idol use of the band’s songs. Daughtry twice removed the case to federal court and twice* the former band members successfully won remand back to state court, with the federal court agreeing that the dispute over the copyright in the songs and their proceeds was a matter of state law, not federal law.

In my view, Coe Ramsey and Charles Coble of Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P. did a stellar job of explaining the partnership-based theories. They were kind enough to allow me to share the plaintiff’s opposition to Daughtry’s motion for summary judgment explaining them.

The court denied Daughtry’s motion but, alas for me (although undoubtedly good for the parties), the case settled before trial so we do not have a court’s opinion of the theory. I believe it is a valid one; copyright is an asset and should be subject to the same laws that allocate ownership of all other types of assets in partnerships. There is, though, a 9th Circuit opinion that, in the alternative, rejected a joint venture theory: “Given the ease with which joint ventures may be alleged and proved under the law of many states, acceptance of this argument would fatally undermine the Copyright Act’s written instrument requirement.” Konigsberg Int’l, Inc. v. Rice, 16 F.3d 355, 358 (9th Cir. Cal. 1994). But surely partnership law is not so indeterminate, nor are copyrights such an unusual type of asset, that they deserve exceptional treatment.

Memorandum of Law in Opposition to Defendant’s Motion for Summary Judgment, Andrews v. Daughtry, No. 12 CVS 5236 (N.C. Sup. Ct. Guilford Cty. Feb. 13, 2015).

*Andrews v. Daughtry, 2013 U.S. Dist. LEXIS 24355 (M.D.N.C. Feb. 22, 2013); Andrews v. Daughtry, 994 F. Supp. 2d 728 (M.D.N.C. 2014)

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