Derivative Works Exception

Here is a corner of copyright law: the Derivative Works Exception. 17 U.S.C. §203(b)1), the Derivative Works Exception, presents a defense to a claim of infringement. It provides that a derivative work prepared under the terms of a license “may continue to be utilized under the terms of the [license] after its termination.”



The Supreme Court explained in Mills Music, Inc. v. Snyder, 469 U.S. 153 (1985), that “an entitlement to continue to distribute derivative works under the Derivative Works Exception depends on the terms of the license.” Who's Sorry Now? That is the song which is the subject of the Mills Music case. It's author sold the renewal rights in the song to Mills Music and received an advance and 50% of future revenues on reproductions and a fee on sheet music. The author died, and his estate cancelled the transfer, causing almost all the rights in the copyright to revert to the estate. The exception? Under §304(c)(6)(A), a "derivative work prepared under the authority of the grant before its termination may continue to be utilized under the terms of the grant after its termination." There were many sound recording of "Who's Sorry Now," so the dispute was about who received the continuing royalties from the recordings. The result? Since the recordings had been "prepared under authority of the grant" from the author to petitioner, the terms of the agreement that had been in effect prior to the termination governed the record companies' obligation to pay royalties, and that under those agreements petitioner and respondents were each entitled to a 50 percent share in the net royalty.

What about architectural drawings? In a new case, Architettura licensed its site plans for an apartment complex in Fort Worth to the developer. Ultimately, another architect was chosen. Architettura wanted to be paid for its work, but the developer refused. Architettura claimed infringement. It was undisputed that Architettura owned the work and could revoke any licenses, which it did; but, the Court found that if another firm had used their work while developing the site plan, the new work was a derivative work. And the Plaintiff has a "Who's Sorry Now" problem. They argued that the Derivative Works Exception did not apply to a revocable license of limited duration, as here, but should only be applied to a statutory termination, as in Mills. The Court disagreed.

The lesson? Beware of derivative works if you license a copyright.

Who Gets Attorneys' Fees in Copyright Case?

Failure to register a copyright keeps a copyright plaintiff from obtaining attorneys' fees and statutory damages. One has to register to proceed with litigation; but, registration of a copyright only allows statutory damages and attorneys' fees for infringements occurring after the registration. Section 412 of the Copyright Act provides that registration is a prerequisite for statutory damages and attorneys fees. Statutory damages and attorneys fees are governed by Sections 504 and 505 of the Copyright Act.

John Fogerty of Creedence Clearwater Revival helps us on this issue. He penned "Run Through the Jungle," and then sold its rights to Fantasy, Inc. Later, he penned "The Old Man Down the Road," and Fantasy sued, claiming "Old Man" was the same as "Jungle." A jury said Fantasy was wrong, and that they were different songs. Mr Fogerty, of course, requested attorneys' fees. His request was denied because Fantasy's infringement suit was not brought frivolously or in bad faith as required by the Ninth Circuit for an award of attorney's fees to a successful defendant. The Ninth Circuit standard for awarding attorney's fees treated successful plaintiffs and successful defendants differently. Under that standard, commonly termed the "dual" standard, prevailing plaintiffs were generally awarded attorney's fees as a matter of course, while prevailing defendants had to show that the original suit was frivolous or brought in bad faith.

In contrast, some other circuits followed the so called "evenhanded" approach in which no distinction was made between prevailing plaintiffs and prevailing defendants. The Court of Appeals for the Third Circuit, for example, had ruled that "we do not require bad faith, nor do we mandate an allowance of fees as a concomitant of prevailing in every case, but we do favor an evenhanded approach." Lieb v. Topstone Industries, Inc., 788 F. 2d 151, 156 (CA3 1986).

The Supreme Court took the Fogerty case (Fogerty v. Fantasy, Inc. (92-1750), 510 U.S. 517 (1994)), noting that: "The Copyright Act of 1976, 17 U.S.C. § 505 provides in relevant part that in any copyright infringement action 'the court may . . . award a reasonable attorney's fee to the prevailing party as part of the costs.' The question presented in this case is what standards should inform a court's decision to award attorney's fees to a prevailing defendant in a copyright infringement action--a question that has produced conflicting views in the Courts of Appeals."

It is the general rule in this country that unless Congress provides otherwise, parties are to bear their own attorney's fees. Alyeska Pipeline Co. v. Wilderness Society, 421 U.S. 240, 247-262 (1975). The British rule awards fees to the prevailing party. Looking at the statutory language, which uses the term "may," the Supreme Court ruled that the Copyright Statute adopted neither the American or British rule, or the dual approach rule. Instead, the Fogerty court instructs that "Prevailing plaintiffs and prevailing defendants are to be treated alike, but attorney's fees are to be awarded toprevailing parties only as a matter of the court's discretion. "There is no precise rule or formula for making these determinations," but instead equitable discretion should be exercised "in light of the considerations we have identified." Hensley v. Eckerhart, 461 U.S. 424,436-437 (1983)."

The best summary? The Supreme Court's footnote: "Some courts following the evenhanded standard have suggested several nonexclusive factors to guide courts' discretion. For example, the Third Circuit has listed several nonexclusive factors that courts should consider in making awards of attorney's fees to any prevailing party. These factors include "frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence." Lieb v. Topstone Industries, Inc., 788 F. 2d 151, 156 (CA3 1986). We agree that such factors may be used to guide courts' discretion, so long as such factors are faithful to the purposes of the Copyright Act and are applied to prevailing plaintiffs and defendants in an evenhanded manner."

Obama . . . Poster from Picture . . . . Fair Use?

It was a simple photojournalism picture, taken by an AP stringer, when a Los Angeles artist, Shephard Farley, found the image on the web and used it to produce his rendering as a poster:

. The poster has become ubiquitous, and the photo owners (there is a dispute there too about ownership) are now claiming infringement.

This is a great case to think about fair use. If you emphasize the copyright owner's property rights, then you can emphasize the first three factors of the four factor test and rule against fair use. If you emphasize creativity and development of art, then you can emphasize the last factor, through the Posner analysis, and find for fair use.

As you probably know, there are four factors which you look at when determining whether or not something qualifies as a "fair use":
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.

Justice Souter, in Campbell v. Acuff-Rose Music (the case dealing with 2 Live Crew's parody of Pretty Woman) weighs in on the purpose of copyright protection:

The first factor in a fair use enquiry is "the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes." § 107(1). This factor draws on Justice Story's formulation, "the nature and objects of the selections made." Folsom v. Marsh, 9 F. Cas., at 348. The enquiry here may be guided by the examples given in the preamble to § 107, looking to whether the use is for criticism, or comment, or news reporting, and the like, see § 107. The central purpose of this investigation is to see, in Justice Story's words, whether the new workmerely "supersede[s] the objects" of the original creation, Folsom v. Marsh, supra, at 348; accord, Harper & Row, supra, at 562 ("supplanting" the original), or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message; it asks, in other words, whether and to what extent the new work is "transformative." Leval 1111. Although such transformative use is not absolutely necessary for a finding of fair use, Sony, supra, at 455, n. 40, [n.11] the goal of copyright, to promote science and the arts, is generally furthered by the creation of transformative works. Such works thus lie at the heart of the fair use doctrine's guarantee of breathing space within the confines of copyright, see, e. g., Sony, supra, at 478-480 (Blackmun, J., dissenting), and the more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use.

In contrast, Judge Posner has viewed fair use from an economic perspective. Judge Posner suggests, in Ty v. Publications, 292 F.3d 512, that:

Generalizing from this example in economic terminology that has become orthodox in fair-use case law, we may say that copying that is complementary to the copyrighted work (in the sense that nails are complements of hammers) is fair use, but copying that is a substitute for the copyrighted work (in the sense that nails are substitutes for pegs or screws), or for derivative works from the copyrighted work, see 4 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 13.05[B][1], p. 13-193 (2002), is not fair use.

He then goes on to trash the statutory test (and the Campbell formulation) by saying:

We have thus far discussed the application of the fair-use doctrine in terms of the purpose of the doctrine rather than its statutory definition, which though extensive is not illuminating.

I find the Posner approach more convincing. Here, the photo's value was small but for the poster. These are complements, and allowing this transformation benefits both parties and society.

Failure to Register Copyright Before Infringment Cuts Damage Options

Statutory damages and attorneys’ fees under the Copyright Act are not not available for infringement that commenced before registration -- or after the registration. The rule: register or lose statutory damages if infringement occurs before a registration. Period.

In Shade v. Gorman, in the Northern District of California, the Plaintiff conceded that he could not recover statutory damages or fees for any pre-registration infringement. But, he argued that he was entitled to statutory damages and fees for post-registration infringement. Wrong.

Relying on the Ninth Circuit’s recent decision Derek Andrew, Inc. v. Poof Apparel Corp., 528 F.3d 696 (9th Cir. 2008), which held “in order to recover statutory damages, the copyrighted work must have been registered prior to commencement of the infringement, unless the registration is made within three months after first publication of the work,” the District Court rejected the claim for any statutory damages because the alleged infringement began more than three months before plaintiff obtained copyright registration.

Register.

Protect Software!!!!!!!!! Register Copyrights . . .

A prerequisite to bringing suit to enforce a copyright is that the copyrighted work is registered with the U.S. Copyright Office. 17 U.S.C. § 411(a). Let's repeat that: A prerequisite to bringing suit to enforce a copyright is that the copyrighted work is registered with the U.S. Copyright Office. 17 U.S.C. § 411(a).

Registering a copyright brings a horde of benefits to the copyright owner, including statutory damages, but the best benefit is attorneys' fees rights in enforcing the copyright. From a litigation perspective, the threat of an award of fees significantly shifts the balance of power to the copyright owner.

And the registration of copyrights must include registration of derivative works. "A 'derivative work' is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a 'derivative work'." 17 U.S.C. § 101. "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." 17 U.S.C. § 103(b).

When software revisions are issued, those revisions are derivative works. The original software should be copyrighted and registered, as should be the revisions.

In Dalton-Ross Homes, Inc. v. Williams, 2007 WL 2461892 (D. Ariz. Aug. 29, 2007), the plaintiff sued claiming defendant had infringed a copyright which plaintiff held on architectural floor plans. Plaintiff had registered a copyright for a floor plan known as the “VDM plan” and claimed that a newer floor plan, known as the “Conley plan” was a derivative which was entitled to protection as well. The defendant had admittedly copied the Conley plan in designing a home. The court concluded as follows:

The registration requirement in § 411(a) makes no distinction between derivative and original works. Whether a separate registration of a derivative work is a prerequisite to an action for infringement of that derivative work is a question of first impression in this circuit. However, we are persuaded that separate registration of the derivative work is required. See Well-Made Toy Mfg. Corp. v. Goffa Int’l Corp., 354 F.3d 112, 115 (2d Cir.2003) (“registration of a claim on an original work does not create subject matter jurisdiction with respect to a suit for infringement of the original’s unregistered derivative”); Murray Hill, 264 F.3d at 632 (6th Cir.)(“before an infringement suit can be sustained based on the derivative work,that derivative work must be registered”); Montgomery v. Noga, 168 F.3d 1282, 1292 (11th Cir. 1999); Creations Unlimited, Inc. v. McCain, 112 F.3d 814, 816 (5th Cir.1997); cf. Litchfield, 736 F.2d at 1357 (“[t]o constitute a violation of section 106(2) the infringing work must incorporate in some form a portion of the copyrighted work”). These multi-circuit authorities,coupled with a plain reading of section 501(b) in conjunction with section 411(a), indicate that in order to file an action for infringement of a derivative work, the plaintiff must first register the copyright of that derivative work.

Register, register, register. And that applies to originals and derivative works.

Distribution Required????

Hotaling v. Church of Jesus Christ of Latter-Day Saints, 118 F.3d 199 (4th Cir. 1997)holds that a library distributed a work by adding it to the collection and listing it in the catalog, making the work available to the public. And distribution is the key to infringement in the RIAA cases. Other courts are reluctant to follow Hotaling's simplistic formulation, upping the ante in proof that must be offered by the RIAA.

In the view of some courts, Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539 (1985), equates the term “distribute” with “publication”; and the Copyright Act in turn defines publication to include the “offering to distribute copies...to a group of persons for purposes of further distribution.”

Listing music files for downloading on a P2P network may not infringe the distribution right. London-Sire Records, Inc. v. Doe 1, 542 F. Supp. 2d 153 (D. Mass. 2008). And in Elektra Entertainment Group, Inc. v. Barker, 551 F. Supp. 2d 234 (S.D.N.Y. 2008), the Court held that “publication” has been given a broad interpretation, but all publications were not necessarily distributions. Merely “making [copyrighted works] available” did not violate the distribution right. Rather, plaintiffs would have to prove defendant “offer[ed] to distribute copies or phonorecords to a group of persons for purposes of further distribution.”

In Atlantic Recording Corp. v. Howell, 554 F. Supp. 2d 976 (D. Ariz. 2008), Judge Wake followed the approach of London-Sire and Perfect 10 v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007). It deemed that “the great weight of authority that § 106(3) is not violated unless the defendant has actually distributed an unauthorized copy of the work to a member of the public. … Merely making an unauthorized copy of a copyrighted work available to the public does not violate a copyright holder’s exclusive right of distribution.”

We're waiting for appellate review on this issue.

Cab Old Magazines Can be Digitized Without the Author's Consent?

Should magazine publishers be allowed to republish their old works, even in a compilation, in digital form? The 11th Circuit said no; then it said yes. The defendant is the esteemed National Geographic Society. The plaintiff a poor photographer. Who has the rights to reproduce the photographer's work originally published in the National Geographic magazine?

Section 201(c) of the Copyright Act (dealing with ownership of contributions to collective works), which provides as follows:

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."

Well, that sounds like the deck is stacked in favor of the photographer, does it not? Section 201(c) was a big change in 1976: Prior to 1976, whenever freelance authors contributed to a collective work, they risked losing their copyright in their individual works absent a printed copyright notice in the author’s name. The presumption now is that the author retains the rights to copyright when his or her work in included in a collective work.

But, in the absence of the author expressly allowing future use, the publisher can still claim that the future work was a "later collective work in the same series." And that is what National Geographic asserted about its digital collection. What is the same and what is "new?"

The Supreme Court in the NY Times Photographer case, Tasini, held that the New York Times went beyond the Section 201(c) privilege by compiling the text of all its articles in a searchable online database. That database allowed users to view the individual articles out of context from the other material originally compiled and published as part of the daily newspapers. It ruled that the database constituted a new use rather than a republication or revision of the collective work and, hence, infringed the copyrights of the authors of the individual contributions.

What about the National Geographic digital use. National Geographic reproduced all of the contents of all of its issues, from the very first to the then most recent, including all of the articles and photographs, and even including the original ads, just as they appeared to readers in print form. So, "new" did not apply here. Decision: magazine.

Here is the distinction, provided in a footnote: "In Judge Anderson’s dissent, he gives the example of placing the March 2000 monthly 18 edition of National Geographic devoted entirely to the geography and natural beauty of Africa
into a larger book entitled “The Complete Intellectual History of Africa from 1900 to 2008” as an impermissible reproduction. Under this opinion’s reasoning, that reproduction and/or distribution would not survive the contextual analysis either and I would reach the same result."

http://www.intellectualpropertylawblog.com/greenberg%20v%20national%20geographic%20society.pdf