Copyright Law - Ninth Circuit: Garden Variety Contract Dispute? Or Federal Copyright Action?

Assignments of Copyrights, Declaratory Judgments, Federal Question Jurisdiction, Dismissal of State Law Claims

Frost v. Frederick, 466 Fed.Appx. 604 (9th Cir. January 13, 2012). Plaintiff brings an action that the district court determines to be primarily a garden variety state law dispute over the formation of a contract. The district court declines jurisdiction. On appeal, and noting that even where jurisdiction exists a court may decline a declaratory judgment action, the 9th Circuit vacates and remands for consideration of four factors that the district court must record: 1. Whether retaining jurisdiction will involve the court in a needless decision of state law; 2. Whether the request is a means of forum shopping, 3. Whether dismissal of the claim for declaratory relief would avoid duplicative litigation. Since the district court did not consider all of the factors, including Plaintiff’s assertion that the controversy involved the transfer of copyright property subject to U.S.C. §204(a) and a potentially important question of federal law, the Ninth Circuit remanded for additional findings.

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Software Programs: Joint Authorship, Work for Hire and Declaratory Judgment Actions for Copyright Ownership

Woods v. Resnick, 2010 WL 2814414 (W.D. Wis. July 16, 2010) involved two men who were members of an LLC.   One was the "idea guy".  The other was a software programmer who worked from home.

The "idea guy" claimed that he owned the software.  He hired an expert to show that he'd made independently copyrightable contributions, which is one of the requirements of joint authorship.  The court disregarded the expert's findings in part because the expert was not an expert in copyright law and found that the "idea guy" had supplied only some non-copyrightable formulas.

The software programmer worked at home, was the only one with access to the source code, worked independently, and importantly, never signed a work for hire agreement.

The court considered cross-motions for summary judgment.   From the decision, it does not appear that either party registered any claims with the Copyright Office. The court found the software programmer to be the "sole author" of the software program and thus the owner.

Interestingly, the court considered an argument that the LLC's representations to third party that it was the sole owner were admissions that the software programmer had transferred the copyright to the LLC.  17 USC 204(a) provides

§ 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.

The court rejected the argument that the representations and warranties contained in service agreements to licensees that the LLC owned the copyright were sufficient to create an assignment satisfying 17 USC 204(a).

More on joint authorship here.

More on work for hire doctrine here.

More on assignments of copyright here.

More on declaratory judgments here.


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Licensing Litigation: "Hollywood Accounting" of Licensing Royalties Loses Bigtime: Jury Finds Disney Owes $269.2 Million

Who Wants to Be A Millionaire, per Wikipedia here.

Celadon licensed the show to Disney, seeking a 50-50 profits split.  Using "Hollywood Accounting" (link to great Wikipedia article on the practice). Disney managed to pocket $269.2 million that it owed to a licensor, according to a jury.

A percentage of the net profits is considered in Hollywood to be a percentage of nothing, since studios simply make up the math to always eliminate net profits by funnelling these monies to their friends.

Nice to see that a jury saw through it all...


Disney-Celador Lawsuit Verdict: Disney Ordered To Pay 'Millionaire' Makers $269.2 Million

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8th Cir: Famous Dave's Magic Words: Copyright Assignments and Settlement Agreements

In Thomsen v. Famous Dave's of America, 2010 WL 2219051 (8th Cir. May 12, 2010), the Eighth Circuit Court of Appeals found the following provision in a settlement agreement to be a valid copyright assignment:

"Al is releasing all copyright, proprietary design and sign work to [Famous Dave's] in all other restaurants that he has worked on with the exception of [signature restaurants]."

Quoting the Ninth Circuit, the Court noted:  "A transfer of ownership requires no "magic words" to satisfy copyright law: even a one-line pro forma statement will do."

The Court found the assignment to be a "clear conveyance".

Practice Tip:  An assignee is considered a "beneficial owner" of a copyright under the Copyright Act 17 U.S.C. 501(b) and is entitled to sue for infringement.   I cover Copyright Ownership and Licensing Litigation in more detail in Chapter 8 of Copyright Litigation Handbook.

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Knowledge Management: Third Party Infringers Have No Standing To Challenge Assigment

http://www.kmpro.org/

KMMentor, LLC v. Knowledge Management Professional Soc., Inc., 2010 WL 1946339, 1 (D.Kan.) (D.Kan. May 13, 2010)

“Knowledge is a process of piling up facts; wisdom lies in their simplification.” FN1 This case involves several parties engaged in the knowledge management field, a field that creates and uses data and information to manage knowledge. The proceedings so far have been highly contentious, and the parties have compiled numerous facts but have not simplified the process.

So opens a case involving a bitter struggle among knowledge managers.  Defendant alleges that plaintiff's evidence is insufficient to show copyright ownership, relying on 17 USC 204(a).   204(a) provides
§ 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.

Problem was, the copyright owner (exclusive licensee) listed in the Complaint was not the owner registered with the Copyright Office.  The record owner/author had apparently given an exclusive license that had not been written down or recorded with the Copright Office.

The court said that a third party infringer couldn't invoke 17 usc 204(a) and relied on the following cases:

Billy-Bob Teeth, Inc. v. Novelty, Inc., 329 F.3d 586, 592-93 (7th Cir.2003); Imperial Residential Design, Inc. v. Palms Dev. Group, Inc., 70 F.3d 96, 99 (11th Cir.1995). See also X-IT Products, 155 F.Supp.2d at 603-04.


Practice Tip:  We all get caught in certain situations and it's great to have some case law to pull us out.  But the better practice, and I'd say the far better practice is to marshal the evidence that your client owns a copyright, get it in writing, and record it before you start a lawsuit.  For a fuller discussion of these issues. Check out Chapter 3:  The Client Interview and Initial Investigation and Chapter 4:  The Copyright Office: Litigation Practice in my Copyright Litigation Handbook.

In Chapter 9: Motions Attacking the Complaint, I have a section called "Motions to Dismiss for Lack of Standing".  You will find there how to craft an assignment that deals with accrued litigations and what the assignment needs to say to give an assignee standing.

Two New Cases - Copyright Act: Infringement Plaintiff's Chain of Title Must Be Proven By Writings

Federico Fellini's La Dolce Vita From Wikipedia

Two recent cases underline the importance of being able to prove a written chain of title if you would like to bring a claim for copyright infringement.   If you wish to sue a gay pornographer for making a version of your film (Michael Lucas' La Dolce Vita).  In both International Media Films, Inc. v. Lucas Entertainment, Inc., 2010 WL 125358 (March 31, 2010) and  American Plastic Equipment, Inc. v. Toytrackerz, LLC, 2010 WL 1284471 (March 31, 2010), each copyright infringement plaintiff could not prove a chain of title showing ownership of the copyrighted work.

17 U.S.C. 204(a) says that transfers of exclusive rights need to be in writing.  There is an exception for non-exclusive writings and transfers "by operation of law".

The Fellini plaintiff had documents that looked liked they had been faked in Lichtenstein.

It looks like the American Plastic Equipment plaintiff did actually own the copyright, but didn't bother searching bankruptcy court records prior to judgment and waited until 60 days after judgment was entered against it to make a motion with "newly discovered evidence".

That is why it is so important to do research before bringing a lawsuit.   Document your chain of title and register your ownership with the Copyright Office.

 

New! Copyright Law for the General Practitioner Update - CLE on the Web Available on Lawlines

New copyright law update available through Lawlines here.

Raymond Dowd, Dunnington, Bartholow & Miller, LLP

Joseph Peterson, Kilpatrick Stockton LLP
David J. Wolfsohn, Woodcock Washburn

Program Chair:

Raymond Dowd, Dunnington, Bartholow & Miller, LLP

Description:

Learn from experienced litigators about the basics of copyright law and practice, including assignments, licensing, recording security interests, dealing with the Copyright Office, pre-litigation due diligence and litigation.

Lecturer Bios
David Wolfsohn, a trial lawyer, has tried numerous copyright, patent, trademark, unfair competition, and trade secret cases. On behalf of plaintiffs, he has obtained multimillion dollar verdicts and settlements, including a $19 million jury verdict in June 2006 in a copyright case (The Graham Company v. US! MidAtlantic) and a $5.8 million settlement of a trade secret case.


After graduating cum laude and order of the coif from the University of Chicago Law School in 1988, David served as a law clerk to the Honorable Walter K. Stapleton of the United States Court of Appeals for the Third Circuit. He then worked at a Philadelphia litigation firm for 16 years, handling commercial, governmental, and intellectual property disputes. David joined Woodcock Washburn in 2005, where he litigates intellectual property cases.

David was also lead counsel (pro bono) in the landmark case Nixon v. Commonwealth, in which the Pennsylvania Supreme Court struck down as unconstitutional a Pennsylvania statute barring persons convicted of minor crimes decades ago from all jobs in health care related fields. For this representation, David received the Equal Justice Award in 2004 from Community Legal Services.

David frequently lectures about trial tactics and intellectual property matters. A former concert pianist, David sits on the board of Astral Artistic Services, an organization dedicated to advancing the careers of young concert musicians. For four years, David was the solicitor for the Borough of Swarthmore, and now serves on the Swarthmore Borough Authority.

Joseph Petersen is a partner in the Intellectual Property group in the New York office of Kilpatrick Stockton LLP. Mr. Petersen has extensive experience in complex commercial litigation with particular expertise in intellectual property disputes such as copyright infringement, trademark infringement, trade secrets, litigation, patent infringement, and domain name disputes. He also regularly counsels clients on the protection, enforcement and licensing of their intellectual property assets.
Selected Experience
• Successfully represented the plaintiff in Yurman Design Inc. v. Diamonds and Time, 169 F. Supp. 2d 181 (S,D.NY. 2001) (granting plaintiff's motion for preliminary injunction in trademark infringement litigation).
• Represented leading manufacturer of ant-theft devices in successful motion for preliminary injunction in action pending before the United States District Court for the Southern District of Florida.
• Obtained temporary restraining order restraining defendant's enforcement of foreign injunction enjoining client from importing merchandise to defendant’s competitor during peak of holiday selling season.
• Represented client in successful motion to dismiss antitrust claims brought against a leading jewelry firm
• Represented leading cable television network in opposition proceedings before the Trademark Trial and Appeal Board.

Background
Admitted to practice before the U.S. Court of Appeals, Second Circuit; U.S. District Court for the Southern and Eastern Districts of New York; U.S. District Court, District or Connecticut; New York and Connecticut state courts.

Education
Law: Vanderbilt University, J.D. (1998)
Undergraduate: State University of New York, B.S., summa cum/aude (1991)
Bar Admission(s)

New York; Connecticut, U.S. Court of Appeals for the Second Circuit; Eastern District of New York; Southern District of New York

Raymond Dowd is a member of DBM's intellectual property, corporate, litigation and arbitration practice groups. He has broad commercial litigation experience in both federal and state courts, and has represented copyright, trademark and domain name owners, broadcasters, distributors and content providers in transactions and litigation, representing both plaintiffs and defendants. He has conducted numerous bench and jury trials and arbitrations. He has obtained, enforced, and collected judgments including conducting seizures. In addition, he has provided corporate and transactional representation entrepreneurial companies from the incorporation and startup phase through significant growth. Mr. Dowd represents collectors and dealers of fine art and has litigated disputes involving authenticity, forgery, ownership and provenance. Mr. Dowd regularly speaks to trade associations on copyright, fine art, trademark and litigation issues, and participates in organizing continuing legal education programs.

Memberships and Affiliations: Copyright Society of the U.S.A.; New York State Bar Association; Commercial and Federal Litigation Section; Intellectual Property law Section; President, Southern District of New York State Chapter of the Federal Bar Association (2006-2008); Federal Bar Association, Vice President for the Second Circuit (2008 - ); New York County Lawyers' Association; Board of Directors (2003 - 2006); Co-Chair, Entertainment Media, Intellectual Property and Sports Law Section (2000 - 2003); Continuing Legal Education (2003 - 2008); Committee on Committees ( 2003 - 2007).

Publications: Copyright Litigation Handbook, (West 3d Ed. 2008); former columnist, New York Law Journal; Copyright Litigation Blog. Member, Editorial Board, The Federal Lawyer (2007 - ).

Bar Admissions: New York (1993); U.S. District Court for the Southern and Eastern Districts of New York (1994); Northern U.S. Court of Appeals for the Second Circuit (1998);U.S. Supreme Court (2000); United States District Court for the Northern District of New York (2000); United States Tax Court (2007)

Education: Manhattan College (B.A. 1986); Fordham University School of Law (J.D. 1991)
Languages: French, Italian

Reviews for Copyright Litigation Handbook on Amazon

Thanks for the wonderful reviews of Copyright Litigation Handbook on Amazon here.

Most Helpful Customer Reviews

5.0 out of 5 stars A great resource, October 8, 2009

By Joseph Petersen - See all my reviews
Raymond J. Dowd, an experienced trial lawyer and partner with Dunnington, Bartholow & Miller LLP, has written a long-overdue work. His Copyright Litigation Handbook provides a straightforward overview and is chockablock with insightful and practical information. Mr. Dowd is liberal in his inclusion of excerpts from relevant statutes, including not only the Copyright Act, but also the Federal Rules of Civil Procedure and the Federal Rules of Evidence, and his book provides numerous sample forms. Mr. Dowd's Copyright Litigation Handbook will long be a valuable resource for copyright litigators; I am confident that it will be squeezed into trial bags for years to come. Joseph Petersen, Kilpatrick Stockton LLP

Help other customers find the most helpful reviews

5.0 out of 5 stars Copyright Litigation Handbook, August 26, 2009

By Corey Field (Los Angeles, CA) - See all my reviews
I have read this entire book. It is extraordinary for more reasons than I have space here to enumerate. It is a book about copyright law for litigators, and it is at the same time a book about litigation for copyright lawyers. It is written for a broad audience of attorneys whose practice may touch upon copyright law, but it is also a great practice overview for an experienced copyright lawyer. It is organized in a logical way proceeding from case evaluation through trial. Throughout, it offers nuggets of advice that are extremely valuable - the sort of experienced advice that makes a huge difference in the development of one's legal abilities.

Corey Field

Ballard Spahr Andrews & Ingersoll, LLP

Los Angeles, CA Help other customers find the most helpful reviews

5.0 out of 5 stars An indispensable and unique copyright guide for the litigator, August 26, 2009

By David J. Wolfsohn (Philadelphia, PA) - See all my reviews
Until Raymond Dowd wrote this book, there simply was no litigation-friendly guide to copyright litigation. Thank goodness Mr. Dowd chose to devote the equivalent of several years of time and effort to write this book, and to update it with this 2009 edition. This is the book that both occasional dabblers in copyright should go to first (which I wish I had when I started out), as well as now-experienced copyright litigators like me. It is the book I go to first when drafting a complaint (or even when deciding whether to sue), and consult when beginning to prepare for trial. Everything is litigation oriented, so one doesn't need to wade through abstract theorizing to get a sense for how you can use the current state of the case law to your client's advantage. The forms for a complaint and other litigation papers are particularly useful. And the ideas for motions in limine are priceless, and as far as I know, a unique feature of this book. --David Wolfsohn, Woodcock Washburn LLP.

Sixth Circuit - Confidentiality Agreements For the Development of Copyrighted Works - CAD and 3D

Dodge Avenger

Chrysler Sebring

In Multimatic Inc. v. Faurecia Interior Systems USA, 2009 WL 4927957 (6th Cir. Dec. 22, 2009), the Sixth Circuit Court of Appeals considered the question of whether a confidentiality agreement entered into by two parties protected intellectual property (trade secrets and copyright) developed during the course of the confidential relationship.

Multimatic agreed to develop cross-beam systems for the DaimlerChrysler Avenger and Sebring lines for Faurecia, a supplier to Chrysler.   There was no agreement on price, but the agreement implied that if Multimatic used Faurecia's 3D CAD designs, the parties would work together.

Instead, Faurecia gave Multimatic's designs to a third party.  Multimatic sued and won.   The Sixth Circuit opinion contains a good discussion of confidentiality agreements:  they are governed by state law under the state's contract law, but they deal with copyrightable subject matter, the source of Faurecia's rights under the Copyright Act in the 3D models. 17 U.S.C. Section 102(a)(5) ["pictorial, graphic, and sculptural works"].   Drafter's note: the Sixth Circuit found that the use of the PRESENT tense includes FUTURE rights.  Thus, neither the confidentiality agreement nor Multimatic's course of conduct in submitting the designs to Chrysler transferred the copyrights to Faurecia or anyone else, because Multimatic did not sign a writing transferring copyright ownership (as required by Section 204(a) of the Copyright Act) which provides:

§ 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.

Mergers and Acquisitions: Lack of Clarity in Copyright Assignments and Licenses Can Blow A Deal

In The SCO Group Inc. v. Novell Inc., --- F.3d ---, 2009 WL 2581735 (10th Cir. August 24, 2009) the Tenth Circuit Court of Appeals revisited a ten-year old transaction. In a transaction characterized as the sale of a "businesss", one party claimed that no copyrights were transferred. The other party claimed that copyrights were transferred. The $300 million 1995 involved the sale of a business.

This case ought to be made part of any curriculum for attorneys involved in mergers and acquisitions. A list of lessons to be derived from the case:

1. in corporate transactions, specify what copyrights are being transferred, if any - be as specific as possible;

2. if you don't understand what is being sold or transferred, no one else will;

3. where licenses are being transferred and one party retains certain powers, clearly define the powers in the transaction documents;

4. following the deal, amend any copyright notices and copyright registrations to conform to your understanding of the transaction;

5. if you are left in doubt (some quick deals necessitate this), insert a few hypotheticals to show how the contract is supposed to work ("for the elimination of doubt").

Much of the opinion deals with the court struggling with the meaning of the contract language, what rights are involved, what copyrights are involved, and how licenses work. The Copyright Act piece is a discussion of 17 U.S.C. Section 204(a) which requires a "note or memorandum" in writing and signed by the owner.

Where there is no question that a transfer of copyright was intended, but the scope of the transfer is ambiguous, the ambiguity will not invalidate the transfer, but opens the door for parol evidence.

The 10th Circuit reversed the lower court's grant of summary judgment and remanded on a number of issues. Where really smart lawyers and really smart federal judges can't figure out what a transaction means, it is a sure sign that the transactional lawyers dropped the ball.