Friday’s Endnotes – 08/19/11

By , August 19, 2011.

If the public desire a really free press, they must not look to it as a source of taxation; and if they are anxious for truth, for elevated and elevating sentiments, for ideas matured by study and reflection, and an honest exposition of grievances, they must recognise original articles as property, and secure them against a plundering appropriation by a copyright. 1“Impediments to Knowledge“, The Reasoner, vol 6, pg 264 (1844).

Free Ride — Robert Levine, author of Free Ride, has a companion blog where he discusses issues and themes covered in his book (UK edition out now, US edition coming October 25th).

Book Review: “Free Ride: How Digital Parasites Are Destroying the Culture Business and How the Culture Business Can Fight Back” by Robert Levine — Speaking of Free Ride, Chris Castle has posted an excellent review of the book. “Levine has written a book that is a must read for all policy makers and indeed all professional creators.”

The Wait For Kirtsaeng Is Over: The 2d Circuit Holds, Consistent With The 9th Circuit’s Opinion In Omega v. Costco, That The First Sale Doctrine Applies Only To Goods Manufactured In This Country — Last week, I highlighted Andrew Berger’s article on several post-Costco cases pending in the 2nd Circuit. This week, the Circuit ruled on one of them, holding that the Copyright Act prohibits the importation of so-called “grey market goods.” Berger again provides an excellent analysis of the decision and considers its implications on the remaining 2nd Circuit cases dealing with similar issues.

German Court: No bonus for dubbing actor if film becomes blockbuster Interesting case from Germany, with analysis from Future of Copyright’s Peter van der Veen. The country has a provision in its copyright law that allows an author to ask for modification of his original contract if a work becomes a “blockbuster” and the original compensation was strikingly disproportionate to what the work went on to earn. The “dubbing actor” who replaced Johnny Depp’s voice in the German language version of Pirate’s of the Caribbean sought such relief, but the court denied his claim, noting that “the dubbing actor’s actual contribution is of merely ancillary importance to the film.”

How intellectual must intellectual property be? The Language Log notes the irony of using the term “intellectual” to describe Kim Kardashian’s rights in her persona (currently the subject of a lawsuit against Old Navy, who used a “lookalike” of Kardashian in TV ads).

Taking Back Song Copyrights — A recent NY Times article has brought attention to the looming battle over termination rights in sound recordings. JETLaw takes a look at some of the issues involved.

Large ISPs Profit From BitTorrent Traffic, Study Finds — TorrentFreak reports on a recently released study that looked at 500,000 internet users in 169 countries over a 2 year period. “Aside from showing that BitTorrent users download more and more data, the report also finds that large ISPs including Comcast are actually making money off BitTorrent traffic.”

Netflix vs. Blockbuster: What’s the best service for streaming and DVDs? — CNet compares the streaming and DVD offerings of the two services. It also looks at several other services offering TV and movies, including Hulu Plus, Amazon Prime, Vudu, iTunes, and CinemaNow.

“Copywritten” — The grammar of copyright

Two weeks ago, I linked to Jonathan Bailey’s piece on The Grammar of Copyright. One of the most common errors is using “write” instead of “right.” How common is this mistake? Even federal judges get it wrong sometimes:

It is enough to make out infringement — assuming actual copying — if the alleged infringing work is “substantially similar” to the protectible expression in the copywritten work.

Matthews v. Freedman, 157 F. 3d 25, 27 (1st Cir. 1998).

This section states in pertinent part that a non-profit library (such as that operated by EPPI) is free to rent, lease, or lend copywritten material without authority of the copyright owner, so long as the library owns a lawfully made copy of such material.

Zuk v. Eppi of the Medical College of Pennsylvania, 103 F.3d 294, 300 n.5 (3rd Cir. 1996).

Under such logic, any use of copywritten work would be “fair” as long as that use did not result in the copywritten work’s unauthorized reproduction by anyone other than the putative infringer.

Software Freedom Conservancy v. Westinghouse Digital Electronics, Opinion and Order, No. 09 Civ. 10155 (SAS) (SDNY Aug 8, 2011).

Lastly, DT’s programming content is protected by copyright. DT produces some original content to which it has the sole copyright, but it also obtains the copyright to provide viewers access to shows copywritten by third parties such as cable networks, movie distributors, and sports leagues.

DirecTV v. Borow, Opinion and Order, No. 03 C 2581 (ND Ill. Jan 3, 2005).

I note, however, that under both the Federal Copyright Act, and under the doctrine of “common law copyright” (to the extent it has any continued bearing here, in view of the extensive preemption of the area accomplished by the 1976 amendments to the Copyright Act), ownership of a copyright is something distinct from ownership of a physical object in which the copywritten work is embodied, so that ownership of one can (and often will) be transferred without transferring ownership of the other.

Nika Corp. v. City of Kansas City, 582 F. Supp. 343, 367 (WD Miss 1983).

References

References
↑1 “Impediments to Knowledge“, The Reasoner, vol 6, pg 264 (1844).

Copyright and Web Fonts: Santorum Web Developer Sued for Typeface Infringement

By , August 18, 2011.

Professional web designers typically know a little about copyright law since infringement is a liability for their business. Most know enough to avoid using images without the proper licensing or copying large amounts of text from another website.

But not as many pay as much attention to making sure they have the proper licenses for the fonts they use.

The company that designed and created US presidential candidate Rick Santorum‘s website has found out the hard way that this is risky.

On Tuesday, Netherlands typeface design company Typotheque filed suit against media consultant RaiseDigital for copyright infringement. Typotheque alleges that RaiseDigital converted one of its typefaces into a webfont for use on Santorum’s site without permission. Neither Santorum, his campaign committee, or the America’s Foundation PAC (which commissioned RaiseDigital to design the site) has been named as a defendant in the suit.

Typotheque is also seeking claims of contributory copyright infringement, federal trademark infringement, trademark dilution, unfair competition, and breach of contract.

Can typefaces be protected by copyright? Like many legal questions, the answer is not a simple yes or no.

Typefaces and Copyright

First, a little background on typefaces themselves.

A typeface, or font, is a designed set of letters, numbers, and other characters — Times New Roman, Helvetica, and Courier, for example. 1While “typeface” and “font” began with distinct meanings, the two terms have largely become interchangeable. See, for example, Derek H. Kiernan-Johnson, Telling Through Type: Typography and Narrative in Legal Briefs, 7 Journal of the Association of Legal Writing Directors 87, 91 (2010). These are contained in digital files for use by computers. Fonts come bundled with operating systems and some software packages; they can also be purchased separately — some developers offer their typefaces for free as well.

For a long time, web designers were hampered in choosing typefaces for a web site. Web browsers render a site using fonts that are local to a user’s computer. So even though a designer could conceivably style a web page with any typeface, if she wanted the site to look consistent on most computers, she would need to choose a typeface common to most computers — a very short list.

That has changed in the last several years, and there are now a number of techniques web designers can use to get custom typefaces that look the same on most computers. One of those techniques, and perhaps the easiest to implement, is the @font-face method in CSS. There are a number of software and online applications that can convert most fonts into the formats the @font-face method needs.

Historically, US copyright protection has not been extended to “typeface as typeface.” 237 C.F.R. 202.1(e). That is, using a typeface in a document, book, or logo is not copyright infringement. The “sole intrinsic function” of a typeface is its utility, and its aesthetic features, though they may be “unique and attractively shaped”, are incapable of “existing independently as a work of art.” 3Eltra v. Ringer, 579 F.2d 294, 297 (4th Cir. 1978). Jacqueline D. Lipton discusses the copyrightability (or noncopyrightability) of typefaces in more detail in her paper To © or Not to ©? Copyright and Innovation in the Digital Typeface Industry — she also looks at whether other IP doctrines, like design patents or trademarks, could be used to protect typefaces.

The wrinkle is that font software — the “digital container” that houses a typeface for use in a computer — likely is protected by copyright. 4See, for example, Adobe Systems v. Southern Software, 45 USPQ 2d 1827 (ND Cali 1998). So while copying or distributing the actual font would not be copyright infringement, copying or distributing the font file would.

That is allegedly what occurred here. The complaint alleges that RaiseDigital, without permission, converted one of Typotheque’s fonts into a webfont format so it could be used through CSS @font-face. That unauthorized derivative work was subsequently reproduced by everyone visiting the site.

Typotheque’s trademark claims are not based on the typeface itself, but on its name. The company has a registered trademark in “FEDRA”, the font at issue here. RaiseDigital didn’t change the name of the file when it converted it — the unauthorized web font still bore the name Fedra. Typotheque alleges that this is a false designation of the source that is likely to cause confusion.

I wouldn’t be surprised to see this lawsuit settled quickly (though some of the remedies Typotheque is seeking might raise some eyebrows). 5It is seeking, among other things, destruction of “all catalogs, packages, boxes, labels, bags, film, goods, computer files, disks, hard drives, CD-Roms, data, DVD’s, videotapes, prints and all other recorded media” containing or using the FEDRA font software; an accounting of “every recipient of” the font software by “name, address, IP address, and telephone number”; actual damages of no less than $2 million or all profits derived from infringing use, plus $2 million statutory damages for trademark infringement under 15 USC § 1117(c), as well as punitive and exemplary damages. No statutory damages for copyright infringement — Typotheque registered its copyright too late to qualify for those. I’m curious how Typotheque came up with the $2 million actual damages estimate; it offers self-hosted webfont licenses for €1,500 (about $2,165). But whatever the outcome, it should serve as a cautionary tale for web developers to pay closer attention to license terms when they use custom fonts.

References

References
↑1 While “typeface” and “font” began with distinct meanings, the two terms have largely become interchangeable. See, for example, Derek H. Kiernan-Johnson, Telling Through Type: Typography and Narrative in Legal Briefs, 7 Journal of the Association of Legal Writing Directors 87, 91 (2010).
↑2 37 C.F.R. 202.1(e).
↑3 Eltra v. Ringer, 579 F.2d 294, 297 (4th Cir. 1978).
↑4 See, for example, Adobe Systems v. Southern Software, 45 USPQ 2d 1827 (ND Cali 1998).
↑5 It is seeking, among other things, destruction of “all catalogs, packages, boxes, labels, bags, film, goods, computer files, disks, hard drives, CD-Roms, data, DVD’s, videotapes, prints and all other recorded media” containing or using the FEDRA font software; an accounting of “every recipient of” the font software by “name, address, IP address, and telephone number”; actual damages of no less than $2 million or all profits derived from infringing use, plus $2 million statutory damages for trademark infringement under 15 USC § 1117(c), as well as punitive and exemplary damages. No statutory damages for copyright infringement — Typotheque registered its copyright too late to qualify for those. I’m curious how Typotheque came up with the $2 million actual damages estimate; it offers self-hosted webfont licenses for €1,500 (about $2,165).

Free Ride: How Digital Parasites are Destroying the Culture Business, and How the Culture Business can Fight Back

By , August 17, 2011.

A conventional narrative has emerged of  the media and creative industries’ response to the internet and digital technology. Beginning around the mid-1990s, this story has been one of old against new: stodgy, corporate executives holding on to the past versus hip digital natives embracing the future. These technologies have rendered copyright law broken according to this story; existing media industries have failed to take advantage of these innovations, relying instead on using the law to prop up their dying business models. They have failed to adapt and sued those who have.

Casting a journalist’s eye on the past decade and a half, Robert Levine debunks this narrative in his new book Free Ride: How Digital Parasites are Destroying the Culture Business, and How the Culture Business Can Fight Back.

For example, in his chapter on the music industry, he notes that contrary to the party line, record labels had privately been in negotiations with Napster prior to their lawsuit against it. Even if the two sides had reached an agreement, it’s unlikely the industry’s fortunes would have changed much: piracy would move to second-generation file-sharing services like Limewire and Kazaa and any revenues generated from a subscription Napster would have been a fraction of what labels were getting from traditional retail channels. As Levine points out, “The labels wasted time they should have spent setting up legal online services, and they made plenty of other mistakes. But why would any company rush to turn $15 transactions into 99-cent sales, let alone ones worth nothing at all?”

The reframing of the narrative goes deeper. In his book Moral Panics and the Copyright Wars, William Patry notes that the history of copyright law has been punctuated by “copyright wars”, one of which we are in the midst of today. Patry implies that the current “copyright war” is different — previous ones had been inter-industry struggles, this one pits the interests of traditional copyright holders with the public at large. 1Pp. xix, 1 (Oxford Univ. Press 2009).

Levine shows, however, that this is incorrect. The ideology of copyright critics masks nothing more than a simple economic struggle between existing content producers and emerging content distributors. As Levine points out in an interview at last June’s World Copyright Summit, despite all the high-minded academic arguments of the copyleft, no one has so far acted contrary to their economic self-interest. To be fair, even those who have argued against copyright have admitted as much. At this past April’s Rethink Music conference, Lawrence Lessig said, “Ideas have nothing to do with this fight. This is a fight between the people who make money under the old system and the people who might make money in the new system.”

Free Ride is currently available in the UK and hits the shelves in the US October 25th — the companion blog is found at freeridethebook.wordpress.com. The book is a must read for creators, copyright enthusiasts, and anyone else interested in these issues. Levine is a former executive editor for Billboard, former features editor for Wired, has written for Rolling Stone and Vanity Fair, and is an all around good guy. Disclaimer: I assisted Rob with some legal research for the book.

Along with the music industry, Levine devotes chapters to newspapers, books, television, and film. Although each of these industries rely on copyright and each have faced challenges in the digital age, the similarities end there. The business models of each sector have substantial differences, and the reasons for their struggles vary — newspapers, for example, lost significant ad revenues to web sites like Craigslist. The stories of these industries are breezily told but thoroughly researched, peppered with quotes from the many people who played a role in them that Levine interviewed for this book.

But it’s those parts of Free Ride that take a critical look at the role of tech companies in pushing the previously-mentioned narrative — shaping the law, policy, and public discourse at the same time — which seem to be getting the most attention. Google’s role in particular is scrutinized — Levine details the money and people that flows from the search giant to various academic think tanks and public interest groups which push for a version of copyright law more favorable to the googles of the world. As the book points out, there’s nothing wrong with this — every business looks out for its own interests. But this side of the debate often escapes attention.

Free Ride ends with some recommendations for how the culture business can address the challenges of commerce in the face of ubiquitous copying. Levine’s greatest contribution to these challenges, however, is the book itself. By bringing together all the pieces of the post-DMCA story of copyright and reframing the conventional narrative to one closer to reality, Free Ride lends an air of hope to the idea that creative industries can thrive online.

References

References
↑1 Pp. xix, 1 (Oxford Univ. Press 2009).

Sousa on Copyright, 1905

By , August 16, 2011.

The famed American composer colorfully mocks the idea of ascribing altruistic motives to the music pirate:

Sir, — With an avidity worthy the cause, I have read during my sojourn in these tight little islands everything that has come my way which has borne on the subject of music piracy.

Because of the laxity of your laws, and because of the perseverance of your music pirates, my royalties have gone a-glimmering. To use an anatomical expression current in my own country, I have been “getting it plump in the jugular.”

One or two of the arguments I have noted, which were in opposition to the publisher and composer, have not struck me as hilariously humorous, or even as faintly facetious.

To elucidate — I read in your journal some days ago, a communication in which the writer places the blame for the deplorable condition of the music trade here on the publisher, and points with argumentative finger to the fact that if the publisher had heeded the cry of the masses — whoever that nebulous body may be — and had sold his wares for less money, the music pirate would never have budded into existence. Inter alia, it would appear that the music pirate was called into the arena of activity to fill a long-felt want — to supply music at a cheaper price than the one at which the publisher cared to sell it — whether he could afford to or not.

It would appear under those conditions that the music pirate had a philanthropic mission. This mysterious and mercenary Messiah, noticing the’ dire distress of the tune-starved masses — whoever they may be — said, “I will save them. I will fill their melodic ‘little Marys’ with music at 2d. a meal. I will gorge them with gavottes, build them up with ballads, and make muscle with marches. They shall become comely with comedy conceits, and radiantly rosy with ragtime rondos — and all at 2d. a throw.”

And this beneficent pirate has waxed fat and saucy as he has hawked in the highways and byways spurious editions of him who is the favored of Melpomene and the boon companion of Orpheus. And I beg to ask, in words tinged with doubt and despair, where does the favored of Melpomene and the boon companion of Orpheus come in? The royalties of the “f. of M.,” and the “b.c. of O.” are like angels’ visits — few and far between.

Shall the sunlight depart from the soul of the sweet singer of melody? Shall the fount of the muse dry up, as it were? Is there no balm in Gilead? Is there no surcease from sorrow for royalties that never materialize? Behold, O star-eyed Britannia, a suppliant at the bar of public opinion asking for justice, for your own and for your friends’ own.

John Philip Sousa, letter to the editor of the “Daily Mail”, 1905.

Copyright Uncertainty

By , August 15, 2011.

Is copyright law too uncertain?

That certainly seems to be the prevailing view. Any number of copyright critics point to the uncertainty of the law — especially for online users, who are in closer contact with copyright issues than any previous generation has been — as one of its biggest flaws.

As attorney Steven Horowitz notes in a forthcoming article, the conventional argument is that this uncertainty “deters lawful uses of copyrighted works.” But, as you may guess from the title of the article, Copyright’s Asymmetric Uncertainty, copyright is only uncertain depending on the perspective. Those issues important to copyright holders, says Horowitz, are clear; issues important to copyright users are not so clear.

I was struck by how closely Horowitz’s distinction between what is clear and what is unclear in copyright law mirrors the distinction between creative and consumptive infringement that I had I previously wrote about — though, upon reflection, it might be more accurate to label these two categories “creative appropriation” and “consumptive appropriation”; use of a copyrighted work either creatively or consumptively is not necessarily infringement.

While there is plenty of overlap, in general, the line between creative appropriation and creative misappropriation (or infringement), relies largely on substantive doctrines of copyright law: the idea/expression distinction, substantial similarity, and fair use. Broadly speaking, the new work is compared to the original work. The line between consumptive appropriation and infringement, however, is governed by more regulatory provisions; a comparison between the two works is unnecessary since this type of appropriation typically consists of verbatim or near verbatim copies of the original work.

This isn’t just arbitrary line-drawing. As I said in my original post on the subject, recognizing this distinction is important to discussions of copyright law because each category has its own separate issues. “Uncertainty” is one of those issues: while there may be confusion over the rules that govern creative uses of copyrighted works, that is not the case when dealing with outright piracy of existing works.

Horowitz explains copyright’s asymmetric uncertainty by first discussing what issues are most important to copyright holders:

Although there are many who would produce expressive works irrespective of copyright protection, those whose production depends on copyright care most about three features of the law. They want (1) a reliable entitlement, (2) prohibiting at least pure or close copying of their work, which is (3) protected by remedies sufficient both to deter copying and to compensate for any losses that result from it. These are the core protections that ensure meaningful incentives to produce copyrightable expression, for without them a copyright holder might have to compete against others who sell identical copies of his own work. Such competition against perfect substitutes would drive down the price toward the near-zero marginal cost of the copy, leaving him without the ability to profit from the work or to recoup the costs of its production. Uncertainty in these three salient features of the law would spell trouble for copyright holders, but fortunately the features are predictable in practice.

In other words, copyright holders are most concerned with consumptive appropriation of their works. That shouldn’t come as a surprise.

That’s not to say copyright holders are not concerned with creative appropriation of their works — I think it goes without saying that the level of this concern varies widely from person to person. Some copyright holders strictly police against most creative appropriations, some may evaluate each use on a case-by-case basis — perhaps asserting their rights against commercial uses but not worrying about noncommercial uses — and some may welcome (or even encourage) such uses.

But most copyright holders’ primary concern is about control over how and where their complete works are copied and distributed.

Horowitz next looks at the issues of importance to copyright users:

Most affected by copyright’s uncertainty are the potential users of copyrighted works, those who want to use a work in ways not intended or expected by the copyright holder. For example, users may mix pieces of prior works together or write new stories using characters from old ones. The intent of the user is not to produce or sell verbatim copies of a preexisting work but to put some portion of a work to a new purpose. The potential user is most concerned with whether his expressive activity will constitute infringement and if so whether the remedies for infringement will be proportional to the harm caused—in other words whether his liability has a reasonable ceiling. Copyright makes answering both of these questions difficult. A potential user cannot predict with confidence whether a contemplated use will be deemed infringing or whether the damages will be manageable or devastating.

Most of copyright’s uncertainty falls within the scope of creative appropriation, not consumptive appropriation. One would think, then, that it wouldn’t be an issue when discussing piracy.

But what happens is that the uncertainty criticism is used as an across-the-board attack on copyright — as though piracy cannot be addressed until courts or Congress figure out, for example, a fair use rule that is both applicable to a wide variety of situations and easy enough for a fifth grader to understand. Any uncertainty that exists primarily in the area of creative appropriation shouldn’t be used as an argument against reasonable efforts to curb the harms of consumptive misappropriation.

The PROTECT IP Act applies to sites that have “no significant use other than engaging in, enabling, or facilitating the reproduction, distribution, or public performance of copyrighted works, in complete or substantially complete form, in a manner that constitutes copyright infringement.” Similarly, the Commercial Felony Streaming Act only applies to criminal infringement, where the willfulness requirement forecloses its application to most creative infringements. Doctrines like fair use, substantial similarity, and the idea/express distinction play little role in the application of proposed laws like these.

Friday’s Endnotes – 08/12/11

By , August 12, 2011.

“The law, like the marketplace, applauds innovators. It rewards the trend-setters, the market-makers, the path-finding non-conformists who march to the beat of their own drums. To foster such creativity, statutes and common law rules accord to inspired pioneers various means of recompense and incentives.” 1Louboutin v. Yves Saint Laurent, Decision and Order, No. 11 Civ. 2381 (SDNY Aug. 10, 2011).

Please help UK indie labels harmed in PIAS warehouse fire — One of the many casualties of this week’s riots in London was a warehouse containing inventory for a large number of independent record labels. Many lost large portions of their entire physical inventory. The Create Digital Music blog has additional information on official and third-party efforts to assist the labels and artists affected.

Creative America is seeking stories from those affected by content theft — The new grassroots organization writes: “Don’t forget to share your story about how content theft has affected you or a project you’ve worked on. Email us your story at stories@creativeamerica.org along with your name and studio and/or union affiliation for our upcoming new website and our Facebook and Twitter feeds!”

Authors and press publishers worry about making a living in the digital age — Future of Copyright takes a look at these worries, specifically as explored by Robert Levine in his new book Free Ride and German economist Torben Stühmeier.

New Website for the National IPR Coordination Center — ICE announces a redesigned website for the Center, which coordinates enforcement efforts, investigations, and training between 17 different federal agencies charged with protecting IP rights.

Zediva ‘suspending’ operations; many legal alternatives remain — The streaming site has officially shut down its operations following a federal court imposing a preliminary injunction against it. The MPAA notes the wealth of services where movie fans can watch films online, from iTunes to Netflix, Amazon, Vudu, and VOD offerings from cable and satellite providers.

The Numbers Behind a CreateSpace Bestseller — CreateSpace, a subsidiary of Amazon.com, provides Print On Demand services for authors. How much can writers sell through it? Author Lee Goldberg reports that he was #4 on the fiction bestseller chart at CreateSpace in July … and he had sold 204 copies.

Waiting for Kirtsaeng: the Still Unresolved Tension Between Sections 602 and 109 of the Copyright Act — Last year’s 4-4 split in Costco v. Omega did little to provide guidance for those involved with grey market goods and parallel imports. Andrew Berger looks at three separate cases pending in the 2nd Circuit that must resolve the issues the Supreme Court punted on.

The Greatest Anti-Plagiarism Video I’ve Seen — Entertaining video aimed at educating college students about the dangers of plagiarism. “A Plagiarism Carol” is in Norwegian, but includes English subtitles.

Why Free is so Misunderstood — Faza looks at the strange subset of pundits who champion the “economics of free” as though it were some sort of religious tenet. The reality is that the ideas of loss leaders, promotional giveaways, and giving away the razors and selling the blades have been around for centuries. Creators shouldn’t ignore these ideas, but they also shouldn’t rush into giving away their work because it’s the latest craze.

Hargreaves IP Review – the Response — The Copyright Alliance presents a guest blog from PPL’s Dominic McGonigal looks at the latest UK IP Review, the Hargreaves Report. He notes that the UK’s efforts to reform copyright law are beginning to seem like Groundhog Day: “Another review of IP. Another Report. Another set of Recommendations.”

References

References
↑1 Louboutin v. Yves Saint Laurent, Decision and Order, No. 11 Civ. 2381 (SDNY Aug. 10, 2011).

Rojadirecta: Barking up the Wrong Tree?

By , August 09, 2011.

Of the 100+ domain names seized by ICE since it began Operation in Our Sites last summer, only one has raised a challenge. Rojadirecta, which allegedly catalogs hundreds of links, primarily to live sporting events streaming online, has enlisted no less than six lawyers in its effort to prevent its domain names from being forfeited by the US government.

On Friday, Rojadirecta’s petition for release of seized property was denied by the court. 1The petition was actually filed by Puerto 80 Projects, the company that owns the Rojadirecta site. To keep things simple, I’ll refer to both the site and the site’s owners and operators as Rojadirecta for this article. On the same day, it filed its motion to dismiss in the Government’s forfeiture proceeding against its domain name. The Government’s response is due by August 26th, and Rojadirecta’s reply to the response is due September 2nd.

Was the court correct in refusing to release the domain name to Rojadirecta? Will Rojadirecta succeed in getting the Government’s forfeiture complaint dismissed?

The short answer to these questions are, in my opinion, yes and no. For the gory legal details, read on.

Petition to Release Seized Property

Civil forfeiture is based on the idea that property can be “guilty” — a strange idea, but not a new one. 2See Calero-Toledo v. Pearson Yacht Leasing Co., 416 US 663, 680-684 (1974) where the Supreme Court traces the history of forfeiture laws since Biblical times. But other than the defendant being property rather than a person, a civil forfeiture proceeding largely mirrors any other civil lawsuit. It begins with a complaint filed in court, proceeds through motions practice and discovery, and (if it makes it this far) ends in trial and judgment.

In a previous post, I wrote how the petition to release seized property largely mirrors the procedure of a criminal defendant being released on bail pending trial. Viewed this way, it’s easy to see why Rojadirecta didn’t succeed with its petition. Essentially, Rojadirecta’s lawyers made two arguments: “our client should be released on bail because he’s innocent” and “our client should be released on bail because he was wrongfully arrested.”

Those are certainly valid arguments, just not in this context.

As I detailed in my previous post, a petition like this is only granted if a claimant is suffering a substantial hardship due to the seizure. Most deprivations of property will cause some level of hardship, obviously; Congress added this procedure to reach those situations where the seizure would be devastating — situations like “preventing the functioning of a business, preventing an individual from working, or leaving an individual homeless.” 318 USC § 983(f)(1)(C).

Rojadirecta failed to argue any of these.

It did argue, in part, that its users were suffering a substantial hardship due to the seizure because their First Amendment rights had been infringed. The court rejected this argument, causing some to scratch their heads, since it sounds like the court is saying it doesn’t think a loss of First Amendment rights is a substantial hardship.

That’s not what the court is saying, however. Infringement of free speech certainly causes substantial, if not irreparable, hardship. But the definition of “substantial hardship” in this particular statute is far more limited than the general meaning of the phrase. In addition, Congress didn’t intend to include free speech violations under this statute because those rights are already protected.

Claimants can challenge the legality of a seizure during the forfeiture proceeding itself or through existing procedures — for example, a Bivens action or a motion to suppress. 4US v. PlayboyMonthly.com, United States’ Motion to Dismiss Claimant’s Counterclaims, No. 8:10-cv-1214-T-27TBM (MD Fla. 2010); US v. $80,633, 512 F.Supp.2d 1196 (MD Ala. 2007). The 983(f) petition is an additional layer of procedural protection on top of existing procedures, designed for a specific purpose. Rojadirecta simply raised this issue in the wrong place.

Judging by the brevity of the order, the denial of Rojadirecta’s petition was, as I had predicted, an easy call for the court to make.

Rojadirecta’s Motion to Dismiss

A motion to dismiss will be granted if the complaint is insufficient on its face.

Civil forfeiture complaints are governed by the Supplemental Rules in the Federal Rules of Civil Procedure, which state in part that the Government must “state sufficiently detailed facts to support a reasonable belief that the government will be able to meet its burden of proof at trial.” “However,” as one court explains, “the Government is not required to allege in the complaint all of the facts and evidence at its disposal.”

It is sufficient for the Government to simply plead enough facts for the claimant to understand the theory of forfeiture, to file a responsive pleading, and to undertake an adequate investigation. The issue is one of pleading, not proof at trial. And it is for this reason that “[n]o complaint may be dismissed on the ground that the Government did not have adequate evidence at the time the complaint was filed to establish the forfeitability of the property.” 5US v. $22,173.00 in US Currency, 716 F. Supp. 2d 245, 248-49 (SDNY 2010.

What does the Government have to show to establish the forfeitability of property?

Federal civil forfeiture statutes, including those applying to criminal copyright infringement, are subject to CAFRA, the Civil Asset Forfeiture Reform Act of 2000. Under CAFRA, the Government must show that the defendant property is subject to forfeiture by a preponderance of the evidence. When the defendant property is alleged to be an instrumentality of a crime, the Government must also show that there is a substantial connection between the property and the alleged crime.

If the Government can show both, the only way a claimant can win is by rebutting the showing of a substantial connection or raising an affirmative defense to the forfeiture — the claimant is an “innocent owner” of the property, for example. Under CAFRA, an innocent owner is one who “did not know of the conduct giving rise to forfeiture; or upon learning of the conduct giving rise to the forfeiture, did all that reasonably could be expected under the circumstances to terminate such use of the property.” 6Van Hofe v. US, 492 F.3d 175, 179-80 (2nd Cir. 2007).

18 USC § 2323(a)(1)(B) subjects the following to forfeiture: “Any property used, or intended to be used, in any manner or part to commit or facilitate the commission of an offense referred to in subparagraph (A).” Subparagraph (A) refers to criminal copyright infringement offenses, including those set out in 17 USC § 506, which states:

(1) In general.— Any person who willfully infringes a copyright shall be punished as provided under section 2319 of title 18, if the infringement was committed—

(A) for purposes of commercial advantage or private financial gain;

(B) by the reproduction or distribution, including by electronic means, during any 180–day period, of 1 or more copies or phonorecords of 1 or more copyrighted works, which have a total retail value of more than $1,000; or

(C) by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution.

Facilitation “occurs when the property makes the prohibited conduct less difficult or more or less free from obstruction or hindrance.” 7In re 650 Fifth Avenue and Related Properties, Memorandum Opinion and Order, No. 1:08-cv-10934-RJH (SDNY March 30, 2011). As one court noted, “It is ‘[i]rrelevant whether the property’s role in the crime is integral, essential or indispensable.’ A single incident of facilitating criminal activity is sufficient to trigger forfeiture.” 8US v. LAM, No. 3:07-CR-374, Memorandum Opinion (ED Va. March 28, 2011).

Notice what is not required in civil forfeiture proceedings.

First, the Government does not have to prosecute or convict anyone of the underlying crime to seek forfeiture of property that facilitates that crime. 9See, for example, Van Hofe at 179, US brought civil in rem forfeiture action against residence used to facilitate commission of drug crime without indicting and prosecuting owners personally; Austin v. US, 509 U.S. 602, 627 (1993) (Scalia, J. concurring in part and concurring in judgment), conviction irrelevant to forfeiture proceeding; The Palmyra, 25 US 1, 15 (1827), “no personal conviction of the offender is necessary to enforce a forfeiture in rem in cases of this nature”; US v. One Parcel of Real Estate Located at 7715 Betsy Bruce Lane Summerfield, 906 F. 2d 110,111-12 (4th Cir. 1990), “In civil forfeiture cases, property is subject to forfeiture ‘even if its owner is acquitted of — or never called to defend against — criminal charges.'”

Second, the forfeiture proceeding is not directed at the site operators of Rojadirecta, but at the domain name itself. 10See Calero-Toledo v. Pearson Yacht Leasing Co., 416 US 663 (1974). The culpability of the site’s owners is irrelevant. 11See US v. Cherry, 330 F.3d 658, n.16 (4th Cir. 2003). In fact, the civil forfeiture has been described as an “essential tool” when the government “can prove that the property was involved in a crime, but cannot prove who the wrongdoer was.” 12Stefan D. Cassella, Overview of Asset Forfeiture Law in the United States, United States Attorneys’ Bulletin, Vol. 55, vol. 6, pg. 17 (November 2007).

With this in mind, let’s turn to Rojadirecta’s general argument supporting its motion to dismiss. It states, “the Complaint, which focuses entirely on Puerto 80’s actions, fails to allege facts that, if proven, would suffice to show that Puerto 80’s operation of the Rojadirecta site constitutes criminal copyright infringement.”

As we’ve just seen, the Government’s forfeiture complaint doesn’t have to allege such facts. In other words, Rojadirecta is barking up the wrong tree with its entire argument. The question of whether or not the operators of Rojadirecta are directly or indirectly liable for criminal copyright infringement — as well as the question of whether or not criminal copyright infringement even allows for indirect liability — is completely unrelated to the question of whether the domain name can be forfeited for facilitating the commission of a criminal copyright offense.

I doubt, then, that Rojadirecta can succeed with its motion to dismiss. Its argument doesn’t apply to the Government’s claim that its property was used to facilitate the commission of criminal copyright infringement.

Limits on Forfeiture

Some have wondered what limits the Government from seizing just about any web site’s domain name, considering the seemingly broad reach of civil forfeiture law. I’ve previously discussed some of the legal limitations preventing a seizure free-for-all; I want to briefly mention one more.

The Eighth Amendment’s prohibition of excessive fines places limits on civil forfeiture. The 2nd Circuit analyzes property forfeiture for excessiveness by considering the following:

(1) the harshness, or gross disproportionality, of the forfeiture in comparison to the gravity of the offense, giving due regard to

(a) the offense committed and its relation to other criminal activity,

(b) whether the claimant falls within the class of persons for whom the statute was designed,

(c) the punishments available, and

(d) the harm caused by the claimant’s conduct;

(2) the nexus between the property and the criminal offenses, including the deliberate nature of the use and the temporal and spatial extent of the use; and

(3) the culpability of each claimant.

It adds, “Determining the excessiveness of a civil in rem forfeiture is necessarily fact-intensive and the ‘quantum, in particular, of pecuniary fines neither can, nor ought to be, ascertained by any invariable law.’ Given the impossibility of establishing a formula for an excessive fine with surgical precision, this framework provides a useful template for the fact-finding process and the ultimate excessiveness inquiry.” 13Van Hofe at 186.

A more detailed look at how this inquiry works in practice is beyond the scope of this article.

References

References
↑1 The petition was actually filed by Puerto 80 Projects, the company that owns the Rojadirecta site. To keep things simple, I’ll refer to both the site and the site’s owners and operators as Rojadirecta for this article.
↑2 See Calero-Toledo v. Pearson Yacht Leasing Co., 416 US 663, 680-684 (1974) where the Supreme Court traces the history of forfeiture laws since Biblical times.
↑3 18 USC § 983(f)(1)(C).
↑4 US v. PlayboyMonthly.com, United States’ Motion to Dismiss Claimant’s Counterclaims, No. 8:10-cv-1214-T-27TBM (MD Fla. 2010); US v. $80,633, 512 F.Supp.2d 1196 (MD Ala. 2007).
↑5 US v. $22,173.00 in US Currency, 716 F. Supp. 2d 245, 248-49 (SDNY 2010.
↑6 Van Hofe v. US, 492 F.3d 175, 179-80 (2nd Cir. 2007).
↑7 In re 650 Fifth Avenue and Related Properties, Memorandum Opinion and Order, No. 1:08-cv-10934-RJH (SDNY March 30, 2011).
↑8 US v. LAM, No. 3:07-CR-374, Memorandum Opinion (ED Va. March 28, 2011).
↑9 See, for example, Van Hofe at 179, US brought civil in rem forfeiture action against residence used to facilitate commission of drug crime without indicting and prosecuting owners personally; Austin v. US, 509 U.S. 602, 627 (1993) (Scalia, J. concurring in part and concurring in judgment), conviction irrelevant to forfeiture proceeding; The Palmyra, 25 US 1, 15 (1827), “no personal conviction of the offender is necessary to enforce a forfeiture in rem in cases of this nature”; US v. One Parcel of Real Estate Located at 7715 Betsy Bruce Lane Summerfield, 906 F. 2d 110,111-12 (4th Cir. 1990), “In civil forfeiture cases, property is subject to forfeiture ‘even if its owner is acquitted of — or never called to defend against — criminal charges.'”
↑10 See Calero-Toledo v. Pearson Yacht Leasing Co., 416 US 663 (1974).
↑11 See US v. Cherry, 330 F.3d 658, n.16 (4th Cir. 2003).
↑12 Stefan D. Cassella, Overview of Asset Forfeiture Law in the United States, United States Attorneys’ Bulletin, Vol. 55, vol. 6, pg. 17 (November 2007).
↑13 Van Hofe at 186.

Copyhype Turns One Year Old

By , August 08, 2011.

On August 8, 2010, I wrote the first post for Copyhype.

When I began this site exactly one year ago, I wasn’t sure what to expect from it. I find copyright law fascinating and enjoy writing about it. I also felt there was room in the blogosphere for thoughtful legal analysis of copyright issues, analysis that doesn’t necessarily require you to have a law degree to understand.

I don’t know if I’ve achieved that, but I have been genuinely surprised and encouraged by this blog’s reception. I want to thank all my readers, those who’ve commented here, and those who’ve linked here. I also want to thank everyone who has followed me on Twitter and Facebook.

Some stats: In the first year, Copyhype has had over 40,000 visits from 142 countries.

The most popular posts in the first year have been:

  1. Kind of Bamboozled: Why ‘Kind of Bloop’ is not a Fair Use
  2. Demonizing Copyright
  3. Is Copyright Infringement Theft
  4. Fears of Felony Streaming Bill Overblown
  5. The “Fallacy of Intellectual Property” Fallacy

Since August 8, 2010, I’ve written 104 posts with a total of 163,728 words. If this was a book, assuming an average of 250 words per page, then it would be 655 pages long.

New stuff: I’ve added a page for online copyright resources. They include many resources I use when writing for this site, as well as ones I’ve culled from previous articles. You may also notice a few cosmetic changes on the page. Nothing major, I just wanted to spruce things up a bit after a year.

What’s in store for the next year of this site? You tell me! Let me know if there are news items or issues you would like to see addressed, or subject matters you’d like to see more of. I love hearing from readers.

With that said, I’m excited to enter the second year of Copyhype, and I hope to continue to improve the quality of coverage and analysis that this site is becoming known for. Thanks for a great first year!

Friday’s Endnotes – 08/03/11

By , August 05, 2011.

“[I]t is virtually axiomatic that the public interest can only be served by upholding copyright protections…” 1Order granting preliminary injunction against Zediva, quoting Apple Computer v. Franklin Computer Corp, 714 F.2d 1240, 1255 (3rd Cir. 1983).

Federal Judge Grants Injunction Against Zediva — A major setback for the unlicensed streaming service this week as the motion picture studios were granted the preliminary injunction they sought. In A Rose By Any Other Name, the 1709 Blog notes that this was thoroughly unsurprising. Zediva’s “loophole” wasn’t a novel interpretation; others have tried and failed as far back as 1984.

With Final Filings, Parties in GSU E-Reserve Case Await Verdict — Higher ed has been closely watching the copyright infringement suit between academic publishers and Georgia State University regarding its e-reserve practices. Publishers Weekly reports on the post-trial developments before the upcoming verdict.

Myths About Fair Use — Patricia Aufderheide, writing at Inside Higher Ed, discusses seven myths about fair use and the academic world. Good read for anyone in education. Especially good: “Myth #5: Sure, fair use is on the books, but it’s too risky — even if I’m right, I could get sued.”

Copyright Infringement IS Theft, You Filthy Pirates — The Humble Indie Bundle is a group of independently developed video games. It’s sold under a “pay-what-you-want” model (minimum price: one cent), with proceeds going to various charities. Yet, the games are still pirated. This eloquent rant is aimed at those who attempt to justify this kind of theft.

Pirate Economics — The Cynical Musician gives us an economic analysis of online piracy.

The Grammar of Copyright — Jonathan Bailey talks about the proper use and spelling of the word “copyright”. It’s an interesting topic, as the word can be either a noun or a verb. Anyone who has spent time reading or writing about the subject knows the word is frequently misused; and no wonder, even I sometimes have to pause to figure out if I’m using it correctly.

UK Proposals to Modernize UK Copyright Act — Sookman also takes a look at the UK government’s adoption of a number of recommendations from the Hargreaves Report. He also notes that the fact that the blocking of infringing sites was not adopted is not as big a deal as it has been made out to be.

UK Copyright caselaw update: the Lucasfilm, BT, ITV and Meltwater cases — Barry Sookman summarizes the four major cases that came out of the UK last week. Great article for getting caught up in one sitting.

On Location: Picture Shop Frames a Hollywood Future (via MPAA Blog) — The LA Times profiles a California business that provides picture frames and other items for TV and film productions. The story highlights the role small businesses play in the entertainment industry.  “Catering to Hollywood has become an increasingly vital source of income to small business owners like Cruz, who have been buffeted by a deep recession and an anemic recovery that has kept may consumers from buying discretionary items like picture frames. ‘If it wasn’t for the film and TV business, we would be in hot water,’’ said Cruz, who generates 75% of her annual sales — more than $500,000 a year -– by supplying frames to set decorators on such TV shows as ‘CSI’ and HBO’s ‘True Blood’ and movies including ‘Spider-Man 3,’ ‘Funny People’ and the upcoming December release ‘The Girl with the Dragon Tattoo.'”

Facebook’s Complete Guide to Building a Band Page — The social networking site has released a 40 page guide designed to helping musicians get the most out of Facebook pages and Facebook integration with their websites. Though it’s geared specifically toward musicians, most of the information is helpful to other creative professionals and small businesses.

MTV’s standard Real World contract — The Village Voice got their hands on a copy of a contract used for participants in MTV’s The Real World. Read it in all its glory. Be sure to check out paragraph 41 on page 17: Real World cast members are responsible for clearing permissions on all copyrighted music, photos, and video that they perform or use when on camera.

References

Marvel v. Kirby: Work for Hire and Copyright Termination

By , August 03, 2011.

Last Thursday, a district court ruled against the estate of Jack Kirby in its attempt to reclaim the copyright on his creations. (Full opinion here).

If you’re a comic fan, you don’t need to be told who Jack Kirby (1917-1994) is. The artist was a key figure at Marvel during the Silver Age of Comic Books, helping create many iconic characters that are as popular today as they were over 40 years ago.

On September 16, 2009, Kirby’s heirs served Marvel Comics with termination notices for 45 Kirby comics published by Marvel between 1958 and 1963, including comics that introduced many iconic characters like Spider-man, the X-Men, Iron Man, the Mighty Thor, the Avengers, the Fantastic Four, and the Incredible Hulk. 1Marvel is no stranger to this type of litigation — in 2003, it settled a similar suit with creator Joe Simon over rights to Captain America, and has faced challenges to various other characters, including an ongoing dispute with Gary Friedrich, creator of Ghost Rider; see also In re Marvel Entertainment Group, 254 BR 817 (D. Dela. 2000) which covered a dispute over various characters. Marvel filed for declaratory relief on January 8, 2010, claiming that the comics were works made for hire, making the termination notices invalid. Kirby’s heirs counterclaimed. 2This litigation spawned an earlier decision, Marvel Worldwide v. Kirby, 756 F.Supp. 2d 461 (SDNY Nov. 22, 2010), where the court dismissed several of Kirby’s counterclaims.

On cross motions for summary judgment, the Southern District Court of New York sided with Marvel, ruling that the Kirby works were works for hire under the Copyright Act of 1909. Kirby’s estate has announced that it intends to appeal this ruling.

Litigation like this inevitably can lead to strong reactions among comic fans. The District Court commendably begins its opinion by making an effort to separate the emotional aspects of this case from the pragmatic:

At the outset, it is important to state what this motion is not about. Contrary to recent press accounts and editorials, this case is not about whether Jack Kirby or Stan Lee is the real “creator” or Marvel characters, or whether Kirby (and other freelance artists who created culturally iconic comic book characters for Marvel and other publishers) were treated “fairly” by companies that grew rich off the fruit of their labor. It is about whether Kirby’s work qualifies as work-for-hire under the Copyright Act of 1909, as interpreted by the courts, notably the United States Court of Appeals for the Second Circuit. If it does, then Marvel owns the copyright in the Kirby Works, whether that is “fair” or not. If it does not, then the Kirby Heirs have a statutory right to take back those copyrights, no matter the impact on a recent corporate acquisition or on earnings from blockbuster movies made and yet to be made.

Work for Hire

Copyright protection initially vests with the author or creator of the work. The exception to this rule is when the work is a “work made for hire” — in that case, the employer or entity commissioning the work is considered the author under the law.

Whether a particular work is a work made for hire depends on which copyright act applies to it. Works made before January 1, 1978 are governed by the Copyright Act of 1909, works made after are governed by the Copyright Act of 1976. Sometimes courts have to look at both Acts in one case. 3For example, in Playboy v. Dumas, 53 F.3d 549 (2nd Cir. 1995), the works at issue were made between 1974 and 1984.

This point is key since each Act has a different definition of what makes a work a work for hire.

The 1909 Act only mentions the doctrine once: “[i]n the interpretation and construction of this title … the word ‘author’ shall include an employer in the case of works made for hire.” 417 USC § 26 (1976) (repealed). The Act doesn’t define “employer” or “works made for hire” separately. Courts generally applied the work for hire doctrine only in cases involving a traditional employer/employee relationship until the mid-1960s. 5Playboy at 554.

However, courts also recognized that work for hire can apply when a work is commissioned — the creator is an independent contractor rather than a traditional employee. 6Yardley v. Houghton Mifflin Co, 108 F.2d 28 (2d Cir 1939); Grant v. Kellogg Co, 58 F.Supp. 48 (SDNY 1944); Dielman v. White, 102 F. 892 (CCD Mass 1900). In 1965, the 9th Circuit first expressed what became known as the “instance and expense” test for works made for hire:

[W]e believe that when one person engages another, whether as employee or as an independent contractor, to produce a work of an artistic nature, that in the absence of an express contractual reservation of the copyright in the artist, the presumption arises that the mutual intent of the parties is that the title to the copyright shall be in the person at whose instance and expense the work is done. 7Lin-Brook Builders Hardware v. Gertler, 352 F.2d 298, 300.

The “instance and expense” test was adopted by other Circuits, most notably the 2nd Circuit, where a majority of copyright cases are litigated. 8See  Brattleboro Publishing Co v. Winmill Publishing, 369 F.2d 565, 567-68 (2d Cir 1966); Murray v. Gelderman, 563 F.2d 773, 775 (5th Cir 1977). Under this test, courts find a work made for hire when “the motivating factor in producing the work was the employer who induced the creation” and the employer has the right to “direct and supervise the manner in which the writer performs his work”. 9Playboy at 554.

The work made for hire doctrine under the 1976 Act is more specific and limited. The Act defines a “work made for hire” as:

(1) a work prepared by an employee within the scope of his or her employment; or

(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire… 1017 USC § 101.

Based on this definition, the Supreme Court held that the “instance and expense” test doesn’t apply for works created under the 1976 Act, though it rejected the idea that the first definition only refers to “formal, salaried” employees. 11Community for Creative Non-Violence v. Reid, 490 US 730 (1989). Instead, courts must look at common law rules of agency to determine whether a work was made within the scope of employment — these rules place the actual nature of the relationship between two parties above whatever language is used in written agreements between them.

Factors that a court might consider include “the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party’s discretion over when and how long to work; the method of payment; the hired party’s role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party.”

Whether a particular work is a work made for hire or not has numerous implications, but the doctrine is especially significant when it comes to the question of a creator’s termination rights, which is the issue at play here.

Copyright Termination

The 1909 Copyright Act provided for an initial copyright term of 28 years with an optional renewal period of 28 more years of protection. The idea behind this set-up was to give authors, who may have been in a weak bargaining position when their work was first created, a chance to renegotiate licenses if a work became valuable. However, in 1943, the Supreme Court held that there was nothing in the 1909  Act that prevented authors from assigning the right to copyright renewal in their initial assignment. 12Fred Fisher Music v. M. Witmark & Sons, 318 US 643. The court noted, “We are asked to recognize that authors are congenitally irresponsible, that frequently they are so sorely pressed for funds that they are willing to sell their work for a mere pittance, and therefore assignments made by them should not be upheld … We do not have such assured knowledge about authorship, and particularly about song writing, or the psychology of gifted writers and composers, as to justify us as judges in importing into Congressional legislation a denial to authors of the freedom to dispose of their property possessed by others. While authors may have habits making for intermittent want, they may have no less a spirit of independence which would resent treatment of them as wards under guardianship of the law.” The result of this ruling was that it became common practice for publishers to insist upon an assignment of the renewal period when an author initially assigned his rights, effectively erasing the purpose of having two copyright terms. 13Marvel Characters v. Simon, 310 F.3d 280, 284 (2nd Cir. 2002).

When Congress set its sights on revising the Copyright Act, it took another look at this issue of new and emerging authors and creators signing away their rights because of their weak bargaining positions. This led to the creation of a termination right in the Copyright Act of 1976, gives an author the right to terminate any exclusive or nonexclusive license or transfer of copyright. 1417 USC § 203. Works that were already in existence when the 1976 Act was passed also received a termination right, 17 USC § 304(c). The termination right is inalienable — any agreement that takes it away is invalid.

The termination right does not, however, apply to works made for hire. Under the law, the “author” of a work for hire is the person or company doing the hiring. Since the actual creator never had a copyright to transfer, it follows that there is nothing to terminate. It should not be surprising then that most challenges to copyright terminations will hinge upon whether the original work was a work for hire or not.

The Court Decision

The court found the evidence that Kirby’s works were made at Marvel’s instance “overwhelming” — it pointed to only one conclusion: “Kirby did not create the artwork … until [Stan] Lee told him to.” Kirby’s heirs argued that there wasn’t a written agreement between Kirby and Marvel, meaning Marvel lacked the legal right and to control his work, but the court pointed out that a contract need not be in writing. When it looked at the actual relationship of the parties, it concluded that it was “undisputed” that “Marvel did control and supervise all work that it published between 1958 and 1963.”

The expense prong is in Marvel’s favor as well, since it was Marvel, not Kirby, who bore the risk of the comic books’ failure. The fact that Kirby was paid a flat sum for each page he submitted also favored Marvel, since the Second Circuit views a flat sum payment for work sufficient to meet the expense prong of the test. 15Playboy at 555. This made Marvel the presumptive author of Kirby’s creations unless Kirby’s heirs could rebut this presumption with evidence to the contrary.

Unfortunately for the heirs, the court found the evidence they presented thoroughly unconvincing. One piece, a 1972 agreement that was the first written contract between Kirby and Marvel, even contained a clause stating that Kirby agreed the works were made for hire.

The heirs pointed out, however, that the contract included a provision assigning “any and all right, title and interest [Kirby] may have or control” to Marvel. They argued that this provision made no sense if Marvel already owned the copyrights on Kirby’s creations as works made for hire.

The court disagreed, citing to several other cases where similar provisions were not sufficient to rebut the work made for hire presumption. In many situations, provisions like these operate like “quit-claim” deeds in real estate; that is, they aren’t warranties or admissions that a party has any rights to transfer.

In total, the facts and evidence presented convinced the court that Kirby’s creations were works made for hire. Marvel was the statutory author under the 1909 Act, making the termination notices filed by Kirby’s heirs invalid. This conclusion is, I think, on solid legal ground and consistent with previous cases.

References

References
↑1 Marvel is no stranger to this type of litigation — in 2003, it settled a similar suit with creator Joe Simon over rights to Captain America, and has faced challenges to various other characters, including an ongoing dispute with Gary Friedrich, creator of Ghost Rider; see also In re Marvel Entertainment Group, 254 BR 817 (D. Dela. 2000) which covered a dispute over various characters.
↑2 This litigation spawned an earlier decision, Marvel Worldwide v. Kirby, 756 F.Supp. 2d 461 (SDNY Nov. 22, 2010), where the court dismissed several of Kirby’s counterclaims.
↑3 For example, in Playboy v. Dumas, 53 F.3d 549 (2nd Cir. 1995), the works at issue were made between 1974 and 1984.
↑4 17 USC § 26 (1976) (repealed).
↑5 Playboy at 554.
↑6 Yardley v. Houghton Mifflin Co, 108 F.2d 28 (2d Cir 1939); Grant v. Kellogg Co, 58 F.Supp. 48 (SDNY 1944); Dielman v. White, 102 F. 892 (CCD Mass 1900).
↑7 Lin-Brook Builders Hardware v. Gertler, 352 F.2d 298, 300.
↑8 See  Brattleboro Publishing Co v. Winmill Publishing, 369 F.2d 565, 567-68 (2d Cir 1966); Murray v. Gelderman, 563 F.2d 773, 775 (5th Cir 1977).
↑9 Playboy at 554.
↑10 17 USC § 101.
↑11 Community for Creative Non-Violence v. Reid, 490 US 730 (1989).
↑12 Fred Fisher Music v. M. Witmark & Sons, 318 US 643. The court noted, “We are asked to recognize that authors are congenitally irresponsible, that frequently they are so sorely pressed for funds that they are willing to sell their work for a mere pittance, and therefore assignments made by them should not be upheld … We do not have such assured knowledge about authorship, and particularly about song writing, or the psychology of gifted writers and composers, as to justify us as judges in importing into Congressional legislation a denial to authors of the freedom to dispose of their property possessed by others. While authors may have habits making for intermittent want, they may have no less a spirit of independence which would resent treatment of them as wards under guardianship of the law.”
↑13 Marvel Characters v. Simon, 310 F.3d 280, 284 (2nd Cir. 2002).
↑14 17 USC § 203. Works that were already in existence when the 1976 Act was passed also received a termination right, 17 USC § 304(c).
↑15 Playboy at 555.
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