Short and sweet: after seven years of litigation, partial summary judgment, and an award against the defendant for $100,000, the court vacated it all because, a year after the award, the defendant’s new lawyer noticed the plaintiff didn’t actually own the copyrights, its subsidiaries did.
In light of the recently unearthed determination that Plaintiff lacks of standing [sic], Rules 60(b)(1) and 60(b)(4) provide appropriate bases in this case to vacate the judgment. The “mistake” in this case was that all parties and the Court assumed jurisdiction over Plaintiff based on Plaintiff’s representations that it was the owner of the copyrights at issue. Although Defendant could have raised this issue at an earlier stage in the proceeding, and even admitted that Plaintiff controlled the copyrights at issue, (Pl. Opp. at 7–9, 12), standing cannot be waived by either party, and the Court has an obligation to raise the matter sua sponte. See Mancuso v. Consol. Edison Co. of N.Y., 130 F. Supp. 2d 584, 588–89 (S.D.N.Y. 2001). Because of this jurisdictional flaw, the judgment is void.
And it was too late to add the subsidiaries as parties:
Defendants state that they alerted Plaintiff to the jurisdictional defect in April 2012, only to be directed in circles to the original copyright notices and other sources over the course of several months. Plaintiff’s counsel, who has been representing Plaintiff throughout the entire course of this litigation beginning in 2005, did not seek to remedy the situation procedurally. Thus, the reasonable period of time for joinder of the subsidiaries has passed. Additionally, Plaintiff has not identified a reasonable basis for failing to name the subsidiaries as plaintiffs initially. The identities of the real parties in interest have been known to Plaintiff since the initiation of the lawsuit, as demonstrated in the copyright papers Plaintiff submitted to the court.
EMI Enter. World, Inc. v. Karen Records, Inc., No. 05 Civ. 390 (LAP) (S.D.N.Y. June 10, 2013).
By now you’ve probably heard that Gary Friedrich’s claim of ownership of the copyright in the “Ghost Rider” Marvel Comics character has been given a second life. While the district court held that his copyright was assigned to Marvel Comics, the Court of Appeals for the Second Circuit reversed. It’s a decision that keeps on giving for a blogger on ownership issues: the decision covers three different legal theories. I’ll talk about them in a different order than the court did though, because I’ll go through the events chronologically.
It’s a fairly simple set of facts. The case is about one work only, the original Ghost Rider comic first published in April, 1972. Gary Friedrich’s version of events is that in 1968 he created, at his own initiative and expense, a synopsis of the main characters and origin story. Friedrich was a freelancer, never employed by Marvel. Friedrich took the idea to Marvel, which ultimately published the story in Marvel Spotlight, a publication used to test new superheroes. At the time the character was created copyright was divided into two terms, the original term and a renewal term. There is no dispute that Friedrich assigned his copyright in the first term to Marvel Comics verbally, as was permitted by the Copyright Act of 1909.
The district court granted Marvel summary judgment that Friedrich had also assigned the second term in an agreement Friedrich signed in 1978, six years after the original comic was published. We’ll get to that in a minute, but first we’ll cover the status of the original work before the post-publication document was signed.
The first question is in whom the ownership of the original Ghost Rider work vested. Marvel said it was a work made for hire; Friedrich said he was the sole owner or at least a joint owner. If the work was a work made for hire at the time it was created, then Marvel Comics would be the owner of the copyright and the 1978 agreement of no moment.
There is a threshold question, though, of whether Friedrich’s claim of ownership is barred by the three-year statute of limitations. 17 U.S.C. § 507(b). A claim for ownership of a copyright accrues when there has been an express repudiation of the claim.
Recall that Friedrich did not dispute that he assigned the original term of copyright. This essentially meant that exploitation of the work during the original term were not acts that necessarily repudiated Friedrich’s ownership of the copyright.
The Copyright Act of 1976, effective January 1, 1978, controls the timing and vesting of the renewal term. In the case of the 1972 Marvel Spotlight work, the end of the first term of copyright would have been 28 years after 1972, 17 U.S.C. § 304(a)(2)(A)(1), that is, ending on December 31, 2000. After that date, the copyright would go into the 67 year renewal term, for purposes of discussion we’ll assuming vesting in Friedrich. 17 U.S.C. § 304(a)(2)(C)(i).
The court looked at public repudiation, private repudiation and implied repudiation. Publicly, Marvel repeatedly acknowledged Friedrich created the work, printing in 2005 the statement “Conceived & Written, Gary Friedrich” in its republication of the Ghost Rider issue of Marvel Spotlight. Marvel didn’t register the copyright in Marvel Spotlight until after the suit was filed, so no repudiation there. And, although the copyright notice on the comic didn’t mention Friedrich, the notice was consistent with Marvel’s ownership of the initial term of copyright, so there was no reason to believe that the notice indicated repudiation. As to private repudiation, the only undisputed evidence that Marvel did not consider Friedrich the copyright owner was in a letter to Friedrich dated April 16, 2004. The suit was filed April 4, 2007, so the claim was timely made after this repudiation.
As to implied repudiation, the Ghost Rider character wasn’t used much between 2000 and the letter in 2004 — six issues between August 2001 and January 2002; advertising a single toy in a toy catalog for two years, and a cameo appearance of Ghost Rider in a Spiderman video game. There wasn’t enough evidence to show that a reasonably diligent person would have been put on notice that there was exploitation of the copyright after the end of the renewal original term. Marvel claimed that there was a lot of publicity after 2000 about the upcoming Ghost Rider movie (filming in 2005 with a 2007 release), but the movie deal was made in 2000 when Marvel still had rights to the character. Since the practice in the industry is to pay royalties after release, the publicity alone was not enough to put Friedrich on notice that he wasn’t going to get any money. Further, in 2005 Marvel had paid Friedrich royalties on a Spotlight reprint, so a jury could find that a reasonably diligent person would not have known that Marvel claimed to be the copyright owner. The ownership claim was therefore not untimely as a matter of law.
Moving on to in whom the original ownership of the Ghost Rider character vested, under the Copyright Act of 1909 a work created at the “instance and expense” of the hiring party was a work made for hire owned by the hiring party. While Friedrich claimed to have created a synopsis with the major characters and origin story, there was contradictory evidence that all that he might have brought to Marvel Comics was an uncopyrightable idea for the character. There was evidence that others were substantially involved in the creation of the character, including a competing theory about who thought of the idea of a flaming skull for a head. So while Friedrich indeed was one of the contributors to the finished product, his contribution may have been after he started working with Marvel, performed at the instance and expense of Marvel, and therefore owned by Marvel. Thus since there is a question of fact about what Friedrich had before he started working with Marvel, the appeals court affirmed the district court’s denial of summary judgment on the ownership of the copyright in the character.
Finally we reach the major focus of the decision — assuming that Friedrich was the owner, whether Friedrich assigned the renewal term to Marvel. Marvel claimed that an agreement Friedrich signed in August, 1978 assigned the renewal term. The district court agreed, but the appeals court didn’t.
After the copyright law changed in 1978, for Marvel to continue to own the copyright in collaboratively-created comics it would need a written agreement with the contributors. It therefore had its freelancers execute an agreement for that purpose. It was this agreement that Marvel said also transferred the renewal term in Friedrich’s work to it.
SUPPLIER acknowledges, agrees and confirms that any and all work, writing, art work material or services (the “Work”) which have been or are in the future created, prepared or performed by SUPPLIER for the Marvel Comics Group have been and will be specially ordered or commissioned for use as a contribution to a collective work and that as such Work was and is expressly agreed to be considered a work made for hire.
There is a “strong presumption against the conveyance of renewal rights” which may be rebutted by express words stating a clear intention to convey the renewal. Construing the contract under New York law, there wasn’t any clear express statement here.
It is ambiguous whether the agreement covered a work published six years earlier. The document as a whole was forward-looking, and the reference to past works might have been a reference to works-in-progress. There was also no specific reference to renewal rights and instead the agreement language tracks only the 1976 Act’s definition of work made for hire.
Extrinsic evidence was of no help either; according to Friedrich he was told the agreement was for future work, not preexisting work. And here’s a lesson we’ve talked about in the past: calling a work a work-made-for-hire doesn’t make it so:
Even if the parties intended the definition of “Work” to extend to Ghost Rider, that alone would not mean that they intended the Agreement to convey Friedrich’s remaining renewal rights in that work. First, the Agreement appears to create an “employee for hire” relationship, but the Agreement could not render Ghost Rider a “work made for hire” ex post facto, even if the extrinsic evidence shows the parties had the intent to do so. The 1909 Act governs whether works created and published before January 1, 1978 are “works made for hire,” and that Act requires us to look to agency law and the actual relationship between the parties, rather than the language of their agreements, in determining the authorship of the work. Thus, regardless of the parties’ intent in 1978, the evidence must prove Ghost Rider was actually a “work made for hire” at the time of its creation. But the circumstances surrounding the creation of the work are genuinely in dispute.
I think it’s pretty clear that Marvel is using a document ill-suited to the purpose for claiming an assignment of the renewal right (and kudos for pulling it off in the district court). But Marvel has been pretty successful in the past winning the claim that the pre-1978 comics were works made for hire and I expect it will be equally successful here, despite the loss on summary judgment.
Gary Friedrich Enter., LLC v. Marvel Characters, Inc., No. 12-893-cv (2d Cir. June 11, 2013).
I recently wrote about a number of cases brought by photography agencies against Pearson Education, alleging that it exceeded the scope of copyright licenses. This led me to ponder the application of the licensee estoppel defense in copyright.
Licensee estoppel prohibits a licensee from challenging the validity of the rights licensed. Patents have a clear bias against the application of licensee estoppel, originating with Lear, Inc. v. Adkins, 395 U.S. 653, 89 S. Ct. 1902, 162 U.S.P.Q. 1 (1969). Lear invoked the public interest and held that a licensee, even a current licensee of a patent, may challenge the validity of the patent that it has licensed:
Surely the equities of the licensor do not weigh very heavily when they are balanced against the important public interest in permitting full and free competition in the use of ideas which are in reality a part of the public domain.
Trademarks are different, though. In general, where there is an express prohibition in the license agreement barring a challenge to the validity of the licensed mark, it is enforceable. After the license terminates, a licensee may be able to challenge the validity based on events occurring after the license terminated. But, in at least some cases a licensee is estopped, even after the license terminates, from challenging the validity of the marks. The reason trademarks are treated differently from patents is that the licensee can be the very agent of the trademark’s demise, for example by misuing the mark in a way that causes it to become a generic term, or by refusing to comply with the licensor’s quality control standards and then claiming that the licensor’s lack of control was a “naked license.” So barring a trademark licensee from challenging validity of a trademark makes eminent sense, at least in some situations.
Which brings us to copyright and the Pearson Education cases. In the various suits, the plaintiffs allege that Pearson Education had a license to use the photographs but exceeded the scope of the licenses temporally, in the number of copies printed, or in the geographic scope.
In response, Pearson Education is attacking the copyright ownership of the works to which it took a license. The industry model lends itself to the challenge; that is, photographers grant a license to an agency that allows the agency to sublicense the photographer’s works and enforce the copyrights. This model therefore invites a claim that the agreement between the photographer and the agency doesn’t grant enough ownership in the copyright for the agency to bring suit.
So where does licensee estoppel fit in, on the patent side or the trademark side? There is apparently no clear answer. In Saturday Evening Post Co. v. Rumbleseat Press, Inc.816 F.2d 1191 (7th Cir. 1987) (Posner, J.), the defendant alleged that the works to which it had taken a license were in the public domain. There was, though, a no-contest clause in its license. The 7th Circuit’s opinion on the value of the provision was this:
Such a clause serves a useful purpose in most cases. Without it the licensee always has a club over the licensor’s head: the threat that if there is a dispute the licensee will challenge the copyright’s validity. The threat would discourage copyright licensing and might therefore retard rather than promote the diffusion of copyrighted works. Also, a no-contest clause might actually accelerate rather than retard challenges to invalid copyrights, by making the would-be licensee think hard about validity before rather than after he signed the licensing agreement. Rumbleseat had, in fact, used its expressed doubts of the validity of the Post’s copyrights to obtain a lower royalty rate in the negotiations for the license.
Saturday Evening Post distinguished Lear because “Our case involves a negotiated clause rather than a doctrine that in effect reads a no-contest clause into every licensing agreement.” But the court distinguished on policy too:
The logic of Lear does not extend to copyright licenses. The opinion is narrowly written. It emphasizes
the important public interest in permitting full and free competition in the use of ideas which are in reality a part of the public domain. Licensees may often be the only individuals with enough economic incentive to challenge the patentability of an inventor’s discovery. If they are muzzled, the public may continually be required to pay tribute to would-be monopolists without need or justification.
Id. 395 U.S. at 670, 89 S.Ct. at 1911. A patent empowers its owner to prevent anyone else from making or using his invention; a copyright just empowers its owner to prevent others from copying the particular verbal or pictorial or aural pattern in which he chooses to express himself. The economic power conferred is much smaller. There is no need for a rule that would automatically invalidate every no-contest clause. If a particular clause is used to confer monopoly power beyond the small amount that the copyright laws authorize, the clause can be attacked under section 1 of the Sherman Act as a contract in restraint of trade. Rumbleseat does not argue that the clause here restrained trade in that sense.
The Saturday Evening Post court also noted that the challenge in this case wasn’t to the copyrightability of the licensed works, but rather to the validity of the copyright registrations, so the competitive underpinnings for the holding in Lear weren’t implicated. Summarizing: “So we have a narrow and a broad holding on no-contest clauses: they are valid in copyright licenses (broad); they are valid when no issue of copyrightability is presented (narrow).”
What if there isn’t a clause in the agreement? Twin Books Corp. v. Walt Disney Co., 877 F. Supp. 496 (N.D. Calif. 1995) sided with Lear and permitted a challenge that the licensed work entered the public domain because the copyright was not renewed. It distinguished Saturday Evening Post, noting that Saturday Evening Post limited its holding to the situation where there was a no-contest clause in the contract. In a case where the defendant acknowledged the plaintiff’s ownership of the copyright in the agreement but where there wasn’t an express no-contest clause, the court followed Twin Books. See FM Industries, Inc. v. Citicorp Credit Services, Inc. 2009 WL 162756 (N.D. Ill. Jan. 14, 2008). (Which makes me wonder what the court thought the purpose of the acknowledgement was, if not at least an admission against interest.) And in Melchizedek v. Holt, 792 F. Supp. 2d 1042 (D. Ariz. 2011), where there was apparently not a no-contest clause, the defendant licensee was allowed to challenge whether the copyright owner had abandoned the copyright in the licensed works prior to or during the license term.
So where does that leave us? Clearly, copyright owners need to put express no-challenge clause in their license agreements. But beyond that, I’m on the fence. In the past I’ve disagreed with courts that don’t allow defendants to challenge the ownership of the copyright, since proof of ownership is part of the plaintiff’s case-in-chief. And federal courts must have subject matter jurisdiction, one element of which is copyright ownership, which cannot be waived. But should there be no limit to a defendant saying, essentially, “The very rights I paid you for don’t exist?”
Ah, here’s an interesting one. The plaintiff claims to be an exclusive patent licensee, the defendant is the United States, the case properly filed in the Court of Federal Claims, and the defendant has challenged standing. But rather than the usual situation where the court is examining whether enough rights were transferred for the license to be considered “exclusive,” we have a bit of a different twist:
[T]he Government asserted that the WRF–NG Agreement only granted NG the right to bring infringement actions against a “Third Party.” The Agreement expressly provided a definition of “Third Party”: “any individual, corporation, partnership or other business entity other than WRF, Licensee, Affiliates and Sublicensees.”
What’s missing? The government is neither an individual, corporation, partnership nor other business entity.
The plaintiffs argued that the intent of the paragraph was clear, to simply exclude the patent owner and its licensees as potential defendants. But the court wasn’t having any part of it:
The Court is not persuaded by the Plaintiffs’ attempts to expand the scope of the contract beyond the plain meaning of its language. “The fundamental principle in contract construction is to interpret the contract to carry out the intent of the parties, as that intent is evidenced by the contractual language.” Restatement (Second) of Contracts § 8:12 (1981). The contractual language is quite clear: “Third Party” is limited to a set of entities, and plainly the Government does not fall within any of the classes of entity defined in the contract.
The court reviews other arguments made by the plaintiffs but finds none persuasive enough:
All told, the only pieces of evidence that even arguably support an intention of the parties to transfer to NG the right to sue the United States are the ambiguous Recital provision and this lawsuit–neither of which constitute clear evidence of intent. Nothing else indicates any intent to transfer the rights. Because nothing solidly evidences any intent either way, the Court is left to return to the plain language of the definition adopted by the parties.
Well, here’s a teaser of a case we might never know more about. The mark INTRAV has been registered since 1968 for travel agency services and is now owned by International Expeditions, Inc. A company called Christine E, LLC filed a petition to cancel the mark on the basis of abandonment:
After diligent inquiry, Petitioner is unable to locate any ongoing use of the Registered Mark by Registrant International Expeditions, Inc. or any other party associated with Registrant.
What piqued my interest is that registrant International Expeditions later said this about petitioner Christine E:
Petitioner was, on information and belief, formed by a founder of one of the Registrant’s predecessors. Moreover, Petitioner has hired at least one of Registrant’s employees.
Ah, looks like we have a former owner who thinks the mark was abandoned and is planning on taking it back. And it seems like Christine E might have a pretty good idea whether mark was abandoned, seeing as it hired a former International Expeditions employee.
But we’ll never know more of the story, at least not in the cancellation. It came to light because International Expeditions had already filed a motion to voluntarily abandoned the registration, tried to withdraw the motion once it realized who the challenger was, but was denied by the Board. So the registration is killed, removing the bar to the registration of Christine E’s application for its adoption of the mark.
But there’s always district court.
Here’s John Welch at TTABlog on why the motion was denied.
Christiane E, LLC v. International Expeditions, Inc., Can. No. 92055645 (TTAB May 24, 2013).
I don’t normally write about what some might characterize as “copyright trolls,” others cover it well enough. You know the story, though, a company is set up solely to do copyright enforcement and starts suing masses of people. The problem is that copyright law does not permit the assignment of a cause of action; the plaintiff must also own some of the exclusive rights of a copyright. The most infamous copyright troll was Righthaven, who tried three times to write an assignment that would give it standing, two were reviewed by courts, and neither withstood the challenge. As a result of the multiple Righthaven cases, we have a very high awareness of the potential for challenging a suit based on copyright ownership in the troll scenario and a significantly expanded body of law on copyright assignment too.
Which brings us to the short decision in Contra Piracy v. Does 1-2919. You probably know what the issue is just seeing that the plaintiff is “Contra Piracy,” and the first paragraph in the Background confirms it:
Plaintiff is a Swiss association that provides counter-piracy services for copyright owners that are members and part-owners of the association. (Compl.¶ 6.) These members provide Plaintiff with an “exclusive, limited assignment of the copyright or copyrights owned by the member” and direct Plaintiff to “engage in judicial and extrajudicial enforcement actions against infringements of the copyright or copyrights on an international basis.”
On an ex parte application for leave to take discovery so that Contra Piracy could identify the Does, the court sua sponte raises standing:
Plaintiff alleges little more than that it has been assigned “enforcement rights” in the work at issue, and these allegations, even if true, do not confer standing. Plaintiff alleges that it is the “exclusive assignee of all enforcement rights and interest worldwide, with the full authority to pursue and prosecute any causes of action with respect to the Work.” (Compl.¶ 5.) Plaintiff likewise alleges that it is “responsible for the enforcement of the copyright in the Work, by agreement and assignment of the enforcement rights in the Work from the copyright owner.” (Compl.¶ 16.) Plaintiff also argues in its application for discovery that “it holds the exclusive enforcement rights in the registered, copyrighted Work” and that this assignment is limited. (Dkt. 6 at 1, 8.) Plaintiff does not explain what it means by “enforcement rights,” but they appear to be nothing more than the “bare right to sue” that the Ninth Circuit held insufficient to confer standing in Silvers and Righthaven.
The remainder of Plaintiff’s ownership allegations are vague about what rights Plaintiff actually holds. Plaintiff’s allegation that it has been provided “written assignments of copyrights” does not specify what, if any, exclusive rights were transferred. (Compl.¶ 6.) Plaintiff does also allege conclusorily that it is the holder of “pertinent exclusive rights infringed by Defendants, as alleged hereunder,” but does not specify what, if any, exclusive rights it holds within the meaning of § 106. (Compl.¶ 17.)
Because there are serious questions about whether Plaintiff has standing to sue, the Court denies Plaintiff’s applications for early discovery of Doe Defendants and extension of time. Standing is a jurisdictional prerequisite, and this issue should be addressed at the outset, before any discovery or other proceedings. This Court is required to assess Plaintiff’s standing sua sponte, D’Lil v. Best W. Encina Lodge & Suites, 538 F.3d 1031, 1035 (9th Cir.2008), and may hear evidence when necessary. Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir.1987). Consequently, the Court orders Plaintiff to show cause why this case should not be dismissed for lack of subject matter jurisdiction.
Note that the Complaint did in fact allege that the plaintiff had some exclusive rights. I think under normal circumstances courts don’t look too hard as long as all the elements of the claim are there, but Righthaven has the courts on heightened alert. This court didn’t even wait for a defendant to challenge standing but nipped it in the bud. Tough going for copyright trolls out there.
Contra Piracy v. Does 1-2919, No. C-13-01133 EDL (N.D. Calif., May 31, 2013).
Ruh-roh, I think a court went off the rails. I don’t have a good feeling about this.
The case is, in part, about infringement of copyright. As you know, one cannot bring suit for infringement of a U.S. copyright unless the copyright is registered. 17 U.S.C. § 411. But it gets a little confusing with registration of derivative works.
The leading case is Streetwise Maps, Inc. v. VanDam, Inc., 159 F.3d 739 (2d Cir. 1998). All we know about Streetwise’s registration is that “The registration certificate relied upon by the plaintiff stated that the copyrighted work was derivative of a ‘Streetwise Manhattan map carrying a copyright notice date of 1984, 1985.’”
In Streetwise, the defendant argued that the registration for the derivative work covered only the new material added to already-existing maps. The court disagreed; in what later came to be called the “effective registration doctrine,” it held that a registration of a derivative work is sufficient for purposes of alleging infringement of the underlying original work also. Although the case has been distinguished by Oravec v. Sunny Isles Luxury Ventures, L.C., 527 F.3d 1218, 1229 (11th Cir. 2008) (holding that the certificate had to identify the preexisting works) and Morris v. Bus. Concepts, Inc., 283 F.3d 502, 505 (2d Cir. 2002) (holding that it only applies to situations where the copyright plaintiff owns both the preexisting and derivative work), it is well-settled law.
Which brings us to the present case. Plaintiff AFL Telecommunications LLC had a registration for version 1.32b of software that it alleged was infringed. This was a derivative work of a number of earlier versions of the work and the registration stated “Material excluded from this claim: Previous version.”
The court held that, unlike Streetwise, where the registration stated that the registered work was a derivative work, AFL Telecommunications specifically excluded the preexisting work and thus “AFL has failed to satisfy the registration requirement with regard to any previous version of the software.”
While this appears logical on its face, it is wrong. The difference in the wording used by AFL Telecommunications is forced by current copyright registration practice and does not mean that the AFL Telecommunications plaintiff intended any different scope of copyright than the Streetwise plaintiff did.
For an online copyright application for software, Circular 61 describes the “Limitation of Field Claim” — the part of the registration that the court was looking at — this way:
(click through to 2012 Circular 61)
If you can’t read the image, it says:
Limitation of Claim· Complete this part of the application if the computer program contains a substantial amount of previously published, registered, or public domain material such as subroutines or modules, or if the work was developed using an underlying computer program or authoring tool. “Material excluded” may state “previous version.” Typical examples of descriptions of “New material included” are “computer program” and “revised version.” Do not refer to debugging, error corrections, new functions of the revised program, or other elements that cannot be registered.
Note that this is not discretionary; if a copyright applicant fails to provide the information (because, for example, it wants to claim the underlying work also as part of the registration to satisfy a court like AFL Telecommuncations) the registration may be invalidated as fraudulent. See, e.g., One Treasure’s One Treasure Ltd., Inc. v. Richardson, 202 F. App’x 658, 661 (5th Cir. 2006) (challenging registration for failure to identify derivative sources).
This same exact information used to go in a block on the application called “Derivative Work or Compilation”:
(click through to 1999 Circular 61)
If you can’t read it, it says:
Space 6. Derivative Work or Compilation. Complete this space if the computer program contains a substantial amount of previously published, registered, or public domain material such as subroutines, modules, textual images, or if the work was developed using an underlying computer program or authoring tool. Space 6a may state “previous version.” Typical examples of descriptions of new material for space 6b include “revised computer program,” “editorial revisions,” “revisions and additional text of computer program,” “new programming text,” etc. Do not refer to debugging, error corrections, new functions of the revised program, or other unregistrable elements.*
You can see that the Copyright Office has merely changed the wording used for the derivative work claim also by comparing the current paper Form TX and the online application. The paper application still calls for a description of the “Derivative Work or Compilation”:
(click through for original application form)
But an online application puts exactly the same information in a block called “Limitation of Claim,” albeit with a surprising new word that was of such import to the court, “excluded”:
(click through for AFL copyright registration)
The copyright applicant has no control over the wording of the registration form. Further, the online application is a checkbox-based filing system where there is no place for an applicant to note that it intends for the application to cover both the preexisting work and the new work, nor to state that the application is for a “derivative work.”
So the Copyright Office, by modernizing its system and changing the wording of a block, has led at least one court astray and caused a substantive change to copyright law. But the Copyright Office cannot create substantive copyright law; it only administers it: “The Register of Copyrights is authorized to establish regulations not inconsistent with law.” 17 U.S.C. § 702. The Copyright Office did not have the authority to, and therefore could not have, changed the law merely by changing the words it chose for the content of the application. The court therefore erred in distinguishing this case from Streetwise on the basis of the uneditable form language of the copyright application.
The plaintiff’s infringement case failed for other reasons too — it didn’t prove that version 1.32 of the software indeed incorporated earlier versions, or what version of the software was being used on the accused hardware devices. But I have a sinking feeling that Streetwise will be mooted by a small change in a Copyright Office form as plaintiffs find they cannot bring a copyright infringement claim simply because they followed Copyright Office rules.
AFL Telecommunications LLC v. SurplusEQ.com Inc., No. CV11-1086 PHX DGC (D. Ariz. May 20, 2013).
*UPDATE: The language of the Circular is probably incomplete. The Compendium II of Copyright Office Practices § 308.01 is fairly clear that the intention is to identify the preexisting work owned by a different author:
306.01 Extent of claim.
The copyright in a derivative work extends only to the material contributed by the author of such work, as distinguished from the preexisting material employed in the work, and does not imply any exclusive right in the preexisting material. The copyright in such work is independent of, and does not affect or enlarge the scope, duration, ownership, or subsistence of, any copyright protection in the preexisting material. 17 U.S.C. 103(b). Where a work contains a substantial amount of previously registered, published, or public domain material, the application should contain a statement of the preexisting material as well as the new copyrightable material.
Nowhere does Circular 61, however, mention that the preexisting work to be identified is only that of a different author.
Here’s a a short and sweet one. Two guys, Mohammad Jarrah and Justin Truesdell, had some kind of business relationship—Jarrah claims Truesdell was an employee and Truesdell claimed he and Jarrah were partners. Whatever it was, the relationship ended.
Jarrah then opened an establishment in Houston called “Rebels Honky Tonk” in August, 2009.
Rebels Honky Tonk Houston logo
Then Truesdell opened a “Rebels Honky Tonk” in Austin in September, 2009 and a “Rebels Honky Tonk” in Oak Ridge North, Texas in March, 2012. He also registered the REBELS HONKY TONK trademark, the same logo the Jarrah was using:
Logo from USPTO website
The parties cross-claimed on likelihood of confusion, so the only question is—who owns the mark?
These are all the facts the court needed to decide the claims on a motion for judgment on the pleadings:
Ownership of a mark is established by use in the market, not by registration. As stated in a leading treatise,
Neither application for, nor registration of, a mark at the federal level wipes out the prior nonregistered, common law rights of others. The nonregistered rights of a senior user continue and are not trumped by the later federal registration of a junior user. The “senior user” who first uses the mark in the marketplace “is entitled to enjoin other ‘junior’ users from using the mark, or one that is deceptively similar to it.”
Defendants do not dispute that Plaintiffs opened Rebels Honky Tonk Houston in August 2009. Defendants’ own pleadings state that Truesdell did not open Rebels Honky Tonk Austin until November 2009. Rebels Honky Tonk Oak Ridge was then opened in March 2012. By Defendants’ own allegations, therefore, Plaintiffs have ownership of Plaintiffs’ Marks by virtue of their priority of use in the market. Truesdell’s registration of his Mark does not establish ownership.
Truesdell’s claim that he developed the name, logo and concept while in the business relationship with Jarrah doesn’t matter, at least for a trademark infringement claim.
Reservoir, Inc. v. Truesdell, No. 4:12-2756 (S.D. Tex. April 30, 2013).
It’s divorce week here at Property, Intangible. I just reported on a case before the Supreme Court of Hawai’i that decided the relative ownership interest of divorcing spouses in copyrights created during the marriage. Now we have a case about patents, this time a federal district court case deciding standing.
The statutory sections involved are not similar, but nevertheless the district court should take a lesson from the Hawai’i court on the distinction between the legal ownership of an intangible asset and an interest in the income stream from it. The Hawai’i Supreme Court compared a copyright to a paycheck:
A paycheck issued by the employer in the name of the employee-spouse alone can be cashed, deposited, or otherwise negotiated only by that spouse; yet, the proceeds of the paycheck, representing earnings of one spouse in community, belong to the community.
the Patent was obtained while the Plaintiff and Ms. Taylor were married, and the Divorce Settlement confirms Ms. Taylor’s ownership interest in the Patent. Since Ms. Taylor has legal title to the Patent under Florida law, and has not been made a party to the action at hand, the Plaintiff lacks standing to sue for infringement.
But hold on a second, what exactly did the divorce decree say?
click for larger version
If you can’t read the image, it says
The Court finds that the proceeds from the production of the patents shall be split 60% to the Wife and 40% to the Husband after the fees of the Special Master are paid should her services be necessary. If the parties cannot agree on the distribution of royalties by the Court, all disputes will be brought before the Special Master for resolution. The reason for the unequal distribution of the patent income is based upon the Husband’s current inability to pay alimony and taking into consideration of the lifestyle and standard of living of the parties during the marriage.
I don’t know how the divorce court could have stated more clearly that the former Mrs. Taylor has only an income interest, not legal ownership, of the patents: “proceeds from the production of the patents,” “distribution of the royalties,” “patent income.” It was error on the part of the district court to confuse an award of income from the patent with legal ownership of it.
The good news is that the case is closed so the decision is immediately appealable.
For a two-week period of time, from July 16, 2012 through August 8, 2012, Craigslist presented users with the following statement when submitting a post:
Clicking “Continue” confirms that craigslist is the exclusive licensee of this content, with the exclusive right to enforce copyrights against anyone copying, republishing, distributing or preparing derivative works without its consent.
Four days after the statement was added, Craigslist sued various companies that were harvesting and reproducing Craigslist postings on a variety of claims, including copyright infringement. The defendants challenged whether Craigslist had a sufficient ownership interest in the copyright of the users’ posts to bring suit, namely, whether it indeed had an exclusive license to the posts submitted when this language was displayed.
A grant of exclusive rights to copyright must be in writing, but the Electronic Signatures in Global and National Commerce Act (“E-Sign”), 15 U.S.C. §§ 7001 et seq., allows for the electronic signature of documents. An e-signature will be “an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.” 15 U.S.C. § 7006(5). In light of the E-Sign Act in part, The Court of Appeals for the 11th Circuit held that it was “neither objective nor reasonable” to claim that a sequence of emails did NOT create a valid assignment of a copyright.
I’ve expressed skepticism in the past about whether an action should be considered an e-signature where the action taken has a different primary purpose (in the case linked above, the uploading of a file) and the supposed grant is not clearly stated. But as much as I disagree with the concept of granting Craigslist an exclusive license to a post, Craigslist couldn’t have been clearer that clicking “Continue” would effect the grant of an exclusive license.
Which is what the court found. So while I still highly doubt whether the person submitting the content realizes the legal significance of granting an exclusive license, Craigslist was required to do no more than it did.
But, Craigslist did not have an exclusive license to content submitted without the displayed language. The Terms of Use standing alone did not grant an exclusive license, largely because the agreement didn’t use the word “exclusive.”
