Copyright

Two recently decided cases show the utmost importance of getting agreements regarding copyright ownership in writing – or else. What kind of "or else"? Spending years in Federal Court, and thousands of dollars litigating the issue. The problem is that copyright vests automatically upon fixation of the work,[ref]17 USC 102[/ref] and vests in the author or co-authors of the work.[ref]17 USC 201[/ref] However, this is not the case with certain kinds of "works made for hire," which must be in writing.[ref]17 USC 101[/ref] In addition, transfers of copyright ownership,[ref]17 USC204[/ref] including splitting a copyright unevenly,[ref]Papa's June Music v. McLean 921 F.Supp 1154 SDNY 1996[/ref] must be in writing. The first case is Yellowcake, Inc. v. Hyphy Music.[ref]2021 WL 3052535 ED Cal. 2021[/ref] There, a record company entered into a multi-album agreement with a recording artist, under an oral contract. The agreement lasted for four albums with each side performing its required duties. Then, an interloper, let's call them the "Acquiring Company," convinced the Artist (presumably since the agreement was not in writing), that he, not the Record Company owned the rights to the masters, and for a large sum of money "acquired" the copyright in the Masters, offering the Artist an indemnity if things went wrong.[ref]Id. at 2[/ref] Of course, it did go wrong. Demand letters and DMCA takedown notices flew back and forth for over a year between the Record Company and the Acquiring Company, before a copyright infringement suit was filed in 2020. Record Company had registered the copyrights in the sound recordings as "employer" in a work for hire arrangement.[ref]Id.[/ref] But this is not the case. Sound recordings are never mentioned in Section 101 as being capable of being a work made for hire in an independently created work. Even if they were covered by Section 101, these kinds of works require a writing, a fact not present here. So, absent a valid "work for hire," the only way that Artist transfers copyright to Record Company is by written agreement. Again, a fact not present here. Yet, this does not doom Record Company's case. The judge notes that the Record Company selected the songs on the albums, as well as producing the recordings in which Record Company gave Artist "artistic direction."[ref]Id.[/ref] This, in the eyes of the Court, is sufficient to make Record Company "at a minimum…a co-author, co-owner, or joint owner of the copyrights in the albums for the purposes of the Copyright Act."[ref]Id.[/ref] But, most importantly being a "co-owner" isn't the same as being the 100% owner. So at best, Acquiring Company only bought half the rights they needed. This decision makes for one unhappy shotgun marriage between Record Company and Acquiring Company, because, as the Court notes, co-owners cannot infringe the copyrights they co-own, and thus have no standing to sue for infringement.[ref]Id. at 7[/ref] Gee, a simple writing would have saved everybody a lot of time and money, not to mention not getting stuck in a shotgun marriage. Next up is the case of Brooks v. Dash,[ref]2021 WL 2816727 2^nd Circuit 2021[/ref] involving a dispute between a motion picture producer and the director of the film, and once again, no written agreement. (As a side note, the case was withheld from the official reporter and so has limited precedential value). Director is claiming joint authorship and joint ownership of the completed motion picture. At the outset we can note that motion pictures are one of those types of works that can be deemed a work made for hire, even if there is only an independent contractor relationship.[ref]17 USC 101[/ref] Yet, again there must be a writing to that effect, signed by the person giving up the rights.[ref]Id.[/ref] And yet again, no such writing exists. There were drafts, three to be precise, but they were never executed. Yet, all the drafts stated that the director was providing "work for hire" services and that Producer had sole discretion on all creative decisions on the film, including final cut. This proved to be very important. Just because one has contributed creative material to a copyrighted work does not necessarily create a co-authorship result. There are two parts to co-authorship, one a collaboration by two or more people, and two, that this collaboration must be intentional,[ref]Id.[/ref] that is everyone must agree and understand that a work of joint authorship is being created. This is what ultimately saves the case for the Producer. While there is no doubt Director added creative elements, the ultimate tipping point is that Producer retained 100% creative control, including final cut. Producer could accept, or reject, whatever Director brought to the table. As Producer stated in an email "I am not offering creative control. I am offering a chance for you to bring an edit to the table…I will maintain final approval."[ref]2021 WL 2816727 2^nd Circuit 2021 at 2[/ref] This made Producer in the eyes of the Circuit Court the "dominant author." And the dominant author decides whether to share the copyright. In this case, the weight of the evidence said there was no such agreement. Lastly, even if there is agreement to have co-authors, there still needs to be a written agreement if the copyright is going to be split up unequally. This was the result in Papa's June Music v. McLean,[ref]Papa's June Music v. McLean 921 F.Supp 1154 SDNY 1996[/ref] a dispute between Harry Connick, Jr. and his lyricist Ramsey McLean. The two had previously agreed in a written contract to an uneven split of the copyrights, owing to the much larger fame of Connick. Yet, when the contract expired, they continued to co-write more songs, but never executed a similar agreement. The record company started to pay the royalties 50-50 and Connick sued. But again we go back to section 204 of the Copyright Act. To agree to share the copyright unequally is in effect a mini-transfer of ownership from one co-author to the other. And therefore must be in writing. This proved useful in my conflict with the MLC over ownership splits in a certain song, as I detailed in a previous blog post.[ref]The Ins and Outs, the Good and the Bad, of the Mechanical Licensing Collective[/ref] My client was indeed listed on the copyright registration as a co-author, yet the music publishing house was claiming 100% control and an uneven royalty split. My pitch to the MLC was simple: make the music publisher produce the written agreement by which the uneven split was agreed to. Last week, I was notified by the MLC that the publisher had withdrawn their claim, and I should register my client's pro-rata share of the copyright. The bottom line is this: if it involves copyrights, and especially issues regarding ownership, shares and splits, get it in writing. Or else.

Following up on the Supreme Court's decision last year in Allen v. Cooper that States can commit copyright infringement with impunity (until Congress does something about it),[ref]Supreme Court Rules States Have Sovereign Immunity From Copyright Infringement Suits: Is Your State Government the Next "Pirate Bay"?[/ref] a novel legal theory proposed by Texas photographer Jim Olive to reign in States that infringe has met the same fate. The case, Olive v. University of Houston,[ref]Case No. 19-0605 Supreme Court of Texas; 2021 U.S.P.Q. 2d 661 (Tex. 2021)[/ref] was decided June 18, 2021 by the Supreme Court of Texas. Wait. A State Court deciding a copyright infringement case? Why isn't this in Federal Court? Because Olive did not allege copyright infringement. Instead, he argued that the infringement of his photograph by the University of Houston was an unlawful taking of his personal property by the government of Texas, in violation of the 5^th Amendment of the U.S. Constitution and Article 1, Section 17 of the Texas Constitution. The Texas Court of Appeals rejected the contention stating that "the government interference with property rights alleged here-does not state a viable takings claim, but is akin to a transitory common law trespass for which the state has not waived its immunity."[ref]580 S.W. 3^rd 360 at 376[/ref] More about this later. For its part, the Texas Supreme Court dithers around whether a copyright is a type of property that can invoke the constitutional protections of the takings clause. Ultimately it decides that it needs not settle this question because the copyright infringement didn't "take" anything. In sum:

• "Infringement by the government does not necessarily destroy any of the copyright owner's rights in the copyright. It does not deprive the copyright owner of the right to possess and use the copyrighted work."[ref]Case No. 19-0605 at 9[/ref]
• The infringer "does not assume physical control over the copyright; nor does he wholly deprive the owner of its use."[ref]Id.[/ref]
• "The government's infringement also does not deprive the copyright owner the right to dispose of the copyright. Because the copyright is nonrivalrous, the governments use of the work ‘does not prevent the copyright owner…from licensing others to use it." (citation omitted)[ref]Id.[/ref]

If this sounds familiar, it's because it's the same old tired excuses for piracy that we have been listening to for years: e.g. "if I take your book, you no longer have a book, but if I simply copy your book, you still have your book." Never mind that you now have a copy of my book, a valuable piece of property, that you paid nothing to acquire, in violation of my "copy-right." Not to mention the fact that all State universities are arms of the State government in which they reside. As of April 2021, there were 1,625 public universities in the United States.[ref]A Guide to the Changing Number of U.S. Universities[/ref] If all of them now have a "free pass" to infringe my work, then my copyrighted work may indeed become worthless, an event the Texas Supreme Court fairly scoffs at. Especially if a State university decides to take the bold step that since it cannot infringe my copyright by copying it, it can now sell "home-made" copies or freely license my work as well. But no worries, says the Texas Supreme Court, the copyright holder still has the right to sue for injunctive relief to prevent ongoing infringements by these State entities,[ref]Citing Seminole Trobe of Florida v. Florida 517 U.S. 44 (1996)[/ref] a remedy that is so time consuming and expensive, that in the absence of monetary damages, it becomes no "remedy" at all. But let's get back to the Court of Appeals "transitory common law trespass" theory. Way back when in 1976, it was discovered that a woman by the name of Elizabeth Ray was a paid staffer of a U.S. Congressman. Nothing about this would be unusual, except that her sole obligation as a paid staffer was to have sex with the Congressman.[ref]Closed Session Romance on the Hill[/ref] "‘I can't type, I can't file, I can't even answer the phone,' says Elizabeth Ray, 27, who began working for Hays in April 1974 as a clerk. Since then, Ray says she has not been asked to do any Congress-related work and appears at her Capitol Hill office once or twice a week for a few hours."[ref]Id.[/ref] So, let's transport this situation down to Texas, and to further cover his tracks, the Texas State representative ensconces his "staff mistress" at a friend's condominium, without permission, knowing that the condo is a vacation home, and the friend will not return for another eight months. When the friend finds out, he is incensed. He demands a fairly high-priced rent. He is refused. What is the remedy here for this "involuntary Airbnb"?[ref]Thanks to my colleague David Newhoff for coming up with this bon mot[/ref] According to the logic of this decision, none. The State actor did not take possession of the condo to the detriment of the owner. The owner wasn't using it. He got it back. In good condition. Sounds like "a transitory common law trespass for which the state has not waived its immunity." All he lost out on was a little rent. He still has his condo. Just like, all the copyright owner lost was the license fee, but still has his copyright. Is this fair? Are we going to let loose State actors to have free-reign to infringe copyrights, just because they can? Until Congress does something, the answer is "yes."