The Copyright Act of 1976 decrees that the author shall have a right exercisable only once for each separate literary work under exclusive license and for a brief window of time after 35 years from the date of a work’s publication to terminate a license. (There are some qualifications to this, but not necessary to explain the concept). There are two provisions concerning statutory termination, one [Section 304(c)] relates to literary works published prior to January 1, 1978; the other [Section 203] relates to literary works published after January 1, 1978. Both sections can be thought of as gifts from Congress to authors, or their estates, or spouses and children to renegotiate with the licensee of an economically valuable work or terminate licenses entered into at the beginning of an author’s career when he or she was in an unequal bargaining position with the licensee. We are going to confine our comments to Section 203, for post-1978 publications. The procedures for exercising the right are complicated.
If your literary work was published in 1978, 2013 is an important (in fact, the opening) year because if you acted properly in accordance with the time requirements for notice you are either in the process of renegotiating the license or taking steps to terminate an exclusive license for further exploitation with another licensee. If you started publishing in 1988, to take a random subsequent year, your important year is 2023, which means that this year, 2013 is the opening year for giving notice. Notice can be served at anytime between 2013 and 2021.
What was the purpose of the Act and how does it work? In its Report on the passage of the Copyright Act of 1976 the House of Representatives stated that “The purpose of the Act was to “safeguard[ ] authors against unremunerative transfers” [that is, transfers at the beginning of their careers] and address “the unequal bargaining position of authors, resulting in part from the impossibility of determining a work’s value until it has been exploited.” H.R. Rep. No. 94-1476, at 124 (1976). Section 203 reads in pertinent part:
In the case of any work other than a work made for hire, the exclusive or nonexclusive grant
of a transfer or license of copyright or of any right under a copyright, executed by the author
on or after January 1, 1978 … is subject to termination.
In other words, you have to own the copyright to be eligible to terminate the license. This issue has come up in some cases involving the superman character. There are no termination rights because the cartoonists created the superman stories and character as works made for hire.
You are familiar I know with the standard grant of rights provision in a publishing contract. It states that the grant is exclusive to the Publisher for “the term of copyright and all renewals thereof.” Well, this is not exactly accurate because 35 years from publication of a literary work is likely to be less than halfway through the current term of copyright which is life of the author plus 70 years. Nothing in the grant of rights language takes away the author’s statutory termination right which is non-waivable. In order to receive the benefit of the Act the author has to give notice to the licensee at least 2 years before the date of termination. The notice can be served anytime within a 10 year window preceding the anniversary date of the publication year. In other words, for a termination to be effective in 2013, notice had to have been given between 2003 and 2011. If notice was given in 2012, the earliest date for termination would be 2014.
The problem is that there is another window, a 5 year window. In other words, if the critical year is 2013 the window closes in 2018 so that if the notice is not served between 2008 and 2016 the right is irretrievably lost. Who benefits? The author if he or she is still living, the author’s estate if there is no living spouse and children, or living spouse and children if there are any. If there are only children and grandchildren, the termination interest can only be exercised by the action of a majority of them. Very, very complicated particularly if the family is at odds with each other.
A writer’s income generally comes from royalties and licensing revenues for works which are protected by copyright. Section 102(a) of the U.S. Copyright Act states that “original works of authorship fixed in any tangible medium of expression” are protected by copyright. By definition in Section 102(b) ideas and concepts do not have copyright protection. A writing known in the entertainment industry as a “series treatment” which embodies an idea developed for a television series is protected in part and unprotected in part. If there is no statutory copyright protection for “thought creations” the creator’s right to compensation must come from contract. Binding a party to whom an idea or concept has been disclosed does not necessarily require a written contract. An implied or quasi-contract may be sufficient.
Forest Park Pictures and others v. Universal Television Network, Inc. reached the Second Circuit Court of Appeals (which sits in New York) after a judgment dismissing the complaint. The case concerned the obligation of USA Network to pay for using a concept it received from the plaintiffs/creators for its television series. There was no written contract but plaintiffs alleged an implied promise to pay reasonable compensation if the concept was used (a quasi-contract). According to Forest Park Pictures, USA Network misappropriated its idea by producing its own television series based on the same concept.
After submitting the series treatment Forest Park met with USA Network’s representative. The complaint alleges defendant scheduled the meeting “for the express purpose of hearing Plaintiffs pitch their show.” Defendant knew “that writer-creat[o]rs pitch creative ideas to prospective purchasers with the object of selling those ideas for compensation” and “that it was standard in the entertainment industry for ideas to be pitched with the expectation of compensation in the event of use”…. And, at the meeting, “[i]t was understood that Plaintiffs were pitching those ideas with the object of persuading [defendant] to purchase those ideas for commercial development.” The parties exchanged further communications in the week following their meeting but then discussions ended and they had no further contact.
The threshold issue was whether dismissal of the complaint on the ground of preemption by the Copyright Act was premature. The District Court held in dismissing the complaint that the subject matter of plaintiffs’ breach of contract claim – the character biographies, plots, and story lines it pitched to defendant “fall within the subject matter of the copyright laws” and concluded
Plaintiffs’ breach-of-implied-contract claim based on his alleged right to be compensated for the use of his idea for a television series is equivalent to the exclusive rights protected by the copyright law and is therefore preempted by the Copyright Act.
The Court of Appeals viewed the preemption issue differently. It held in a decision in June 2012 that the complaint “adequately alleged the breach of a contract that included an implied promise to pay” and plaintiffs’ rights to compensation “are not equivalent to those protected by the Copyright Act.”
An enforceable implied-in-fact-contract is an alternative theory for compensation that does not rest on the Copyright Act. Misappropriation is not equivalent to copyright infringement. The question is “whether the Complaint actually pleads an enforceable implied-in-fact contract.” Defendant argued that the “Complaint falls short because there was no meeting of the minds over the price term.” But under California law where the contract was to be performed the absence of a specific price term is not fatal. “[A]n implied-in-fact contract can have an open price term to be filled in by industry standards.”
A disclosure expressly conditioned on a promise of payment is actionable against a party who knew or should have known that such a condition was implied. The Circuit Court pointed out that California has long recognized that an implied-in-fact contract may be created where the plaintiff submits an idea (the offer) that the defendant subsequently uses (the acceptance) without compensating the plaintiff (the breach). Of course, Forest Park will still have to prove at trial that such an industry standard price exists and that both parties implicitly agreed to it. That Forest Park may fail to prove its claim, however, does not render the contract unenforceable as a matter of law.
Literary agents are the filters to the publishing industry; the first readers; and mainly indispensable. Acquisition editors rely on their tastes and take their calls. In relation to authors they are like as adventurers to booty: they seek and sell. Their fee, a commission for placing an author’s work, is spread over the economic life of the publishing contracts their efforts bring into being. What exactly is promised and performed and the commission the literary agent is entitled to is set out in the parties’ agreement. A literary agent typically receives a commission of 15% of the publisher’s gross revenues from book sales or licenses of subsidiary and ancillary rights. Author/agent agreements are terminable, but an agent’s right to commissions for services performed survives.
Authors are not captive to their agents. We stress “not captive” and “services performed” because these issues arose in Lampack Agency v. Grimes, an unreported New York case decided in October 2010, and further reviewed in an appellate decision announced on March 1, 2012 (1st Dept.) The appellate division affirmed the trial court’s judgment dismissing the literary agent’s complaint that it was entitled to commissions from contracts negotiated after the author terminated the agency. The questions raised and the answers given in this case are significant markers as to an agent’s right to share in proceeds from subsequently created production after his connection with the author has ended.
Whether or not there is a written agent/author agreement, commissions are protected through a clause incorporated into the publishing agreement, an “Agency Clause.” The agent’s theory in Lampack rested on the inclusion in the publishing agreement negotiated by the Lampack agency of an option provision for the author’s next work of fiction. The publishing agreement for the “option” work was negotiated by the author’s new agent.
The Lampack Agency included the following “agency clause” in the publishing agreement:
The Author hereby appoints [PLA] irrevocably as the Agent in all matters pertaining to or arising from this Agreement. . . . Such Agent is hereby fully empowered to act on behalf of the Author in all matters in any way arising out of this Agreement. . . . All sums of money due the Author under this Agreement shall be paid to and in the name of said Agent. . . . The Author does also irrevocably assign and transfer to [PLA], as an agency coupled with an interest, and [PLA] shall retain a sum equal to fifteen percent (15%) of all gross monies due and payable to the account of the Author under this Agreement.
If a discharged agent has negotiated a publishing agreement that includes an option on the author’s next work, is he entitled to receive a commission on the publishing agreement for the option book? Both courts in the Lampack case made it clear that if such a right exists it would have to be expressly stated in the agreement between the author and the agent.
What does it mean for the author to have “irrevocably assign[ed] and transfer[ed] to [an agent] … an agency coupled with an interest”? What an author “irrevocably assign[s] and transfer[s]” is limited to commissions paid as a percentage of the author’s earnings. “An agency coupled with an interest” (the trial judge citing a case from 1896) “[means that] as a part of the arrangement with the principal, the agent received title to all or part of the subject matter of the agency.” The trial court stated:
In this case, the commission provision grants PLA a 15% commission in the proceeds from its sale of rights in Grimes’ literary works and not an interest in those literary works themselves…. (Emphasis added).
The appellate court went a step further:
It is not reasonable to interpret the phrase “this Agreement” to include either extensions of the 1999-2003 agreements or an agreement for the future work mentioned in the 2005 agreement …. If Grimes and Penguin had meant to give plaintiff commissions on such extensions and future agreement, they would have said so, especially since the 2005 agreement had a specific Option on Next Work clause.
Indeed, to interpret otherwise (in the Court’s words) would produce an “absurd result.” Rather,
Interpreting “this Agreement” to mean only the actual contract signed by the parties, not future agreements or extensions, is consistent with the doctrine that “[a]n at-will sales representative is entitled to post-discharge commissions only if the parties’ agreement expressly provided for such compensation.” (Emphasis added).
An agent engaged for an unfixed period is entitled to commissions on future contracts only for services performed during his agency. The appellate court in Lampack reached back to a 1900 case to explain why an agent is not entitled to commissions received for contracts entered into after discharge with customers he originally secured. In that earlier case the Court held:
He was to have his commission upon all such business, not merely because he had secured these original contracts, but because he was there to aid, if necessary, in securing renewals or additional contracts, and in keeping his customers in touch with the defendant …. contracts. He was consequently entitled to commissions upon renewals or additional contracts which came in during his period of employment…. The customers were … not his when they chose to contract directly with the defendant after his connection with the latter had ceased.
The legal principle is clear. An agent’s right to commissions is for services that result in one or more contracts. The “interest” agents have which survives termination of their agency accrues from their having completed services. The expectancy, if there is any, comes from fulfilling the purpose for which the agent is engaged. The phrase “an agency coupled with an interest”, which refers to ownership of a literary property, does not belong in an Agency Clause because that is not what the agent has. In Lampack the phrase served only to invigorate a dispute. And, who wants that?
Authors ask whether they can protect their ideas by which they mean the conception rather than the expression. The answer is that copyright law protects ideas only to the extent they are organized in a creative way and fleshed out in language. When the question is put in the context of television and movie properties there is another consideration. Something tangible has to be pitched to investors and studios that may be less than a fully developed work, although more than bullet points of ideas. Scripts and bibles can be protected by contract, but not fully or satisfactorily. Recipients of “ideas” even with some development are unlikely to bind themselves or acknowledge the “originality” of a script originating from anyone other than themselves. In any event, authors are likely to be asked to sign a Submission Agreement that limits their legal recourse in the event of any perceived infringement.
Not as an alternative, but supplementary to copyright are registration services. The WGA East website makes the following statement:
Script Registration is one of the most popular services offered by the Writers Guild East. We register the creative material of thousands of writers each year. Before you start sending your work to agents, producers and actors, make sure you protect your material with the Writers Guild Online Script Registration service. Script Registration fees ….
WGA West’s statement is a slight variation, but conceptually identical:
Since 1927, the Writers Guild of America, West Registry has been the industry standard in the creation of legal evidence for the protection of writers and their work. When you register your script prior to submitting it to agents, managers, or producers, you document your authorship on a given date should there be unauthorized usage.
Registries offer important protective tools against “unauthorized usage” by documenting both authorship and priority. It puts all parties on notice of creation and ownership. WGA East and West registers are similar to copyright registration, but private registries do not have the force of law. They are not substitutes for copyright protection.
There is not much law on this subject, but a decision was filed on January 31, 2012, Sims v. Viacom, Inc., 2:11-ev-o675 (W.D. Pa) that sheds some light on the problem. In brief, Sims “developed and created an idea for a reality television series called ‘Ghetto Fabulous,’ which would feature a competition between uncouth urban women.” He officially registered and recorded the “concept” with WGA, then worked with a collaborator to flesh it out. The original filing with WBA was then amended to add the collaborator and attach the formal treatment.
The collaborator submitted the treatment to “various television companies, cable companies, producers, directors and actors … including Viacom.” Viacom required the collaborator for herself and plaintiff to sign a “Submission Release.” Typically, a Submission Release asks the author to acknowledge that 1) the recipient (investor, studio, etc) is exposed to many stories, ideas, concepts and other literary materials, many of which are similar or identical to the submission; and 2) she will not be entitled to any compensation or other consideration because of the use of such similar or identical material, stories, ideas, and/or concepts that may have come to recipient. The Submission Release may also contain a provision noting that it is the author’s responsibility for registering her material with the Copyright Office and the WGA registry.
Sims commenced his lawsuit after comparing a Viacom produced reality television show with his submission and concluded it was the same. The reason the court dismissed the action is food for thought. “The Copyright Claim” (the court declared) “is barred because Sims failed to register his work.” An action for infringement of a copyright may not be brought until the copyright is registered. Sims’ “argument that his registration of the treatment with the Writers Guild of America is sufficient to meet the prerequisites of § 411(a) [of the Copyright Act] is without merit and requires little discussion.” The court cited an unreported decision from the Southern District of New York that deserves underlining and coloring with a yellow marker: “The Copyright Act requires registration be with the Register of Copyrights, not the Writers Guild of America.”
The principal legal mechanisms for protecting copyright of works recopied on the Internet without permission and in violation of an author’s copyright is laid out in the Digital Millennium Copyright Act (DMCA). The major aggregators of content have developed policies and take down forms in compliance with the DMCA. If a copyright owner finds unlawful copying of her material she can request the Googles of the world to take it down. Google and the other aggregators have developed copyright-infringement notification policies for both DRM free (digital rights management) and digitally accessible works with embedded copyright protection systems. This short note only deals with DRM free materials, § 512 of the Copyright Act. Materials embedded with copyright protection systems are covered in § 1201 et seq. of the Act.
The Google notification form asks a series of questions that match the statutory list in §512 (c)(3)(A) including whether the complained about material is a copyright infringement. The series ends with this notice:
IMPORTANT: If you knowingly misrepresent that material or activity is infringing, you may be subject to liability for damages. Accordingly, if you are not sure whether material available online infringes your copyright, we suggest that you first contact a lawyer. Please also note that your message to us may be forwarded to the party who filed the original copyright complaint.
This intimidating coda is based on § 512(f) of the Copyright Act. It provides:
Any person who knowingly materially misrepresents under this section —
(1) that material or activity is infringing, or
(2) that material or activity was removed or disabled by mistake or misidentification,
shall be liable for any damages, including costs and attorneys’ fees, incurred by the alleged infringer, by any copyright owner or copyright owner’s authorized licensee, or by a service provider, who is injured by such misrepresentation, as the result of the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing, or in replacing the removed material or ceasing to disable access to it.
There is not a great deal of case-law interpreting this provision of DMCA, but federal courts that have addressed the provision have offered additional gloss on the meaning of the terms “knowing” and “material misrepresentation.” “Knowingly” has been interpreted to mean ‘that a party actually knew, should have known if it acted with reasonable care or diligence, or would have had no substantial doubt had it been acting in good faith, that it was making misrepresentations.” Online Policy Grp. v. Diebold, Inc., 337 F.Supp.2d 1195, 1204 (N.D.Cal. 2004). And “[a] material misrepresentation is one that ‘affected [the infringer or service provider's] response to a DMCA letter’.” Capitol Records, Inc. v. MP3tunes, LLC, 611 F.Supp.2d 342, 346 (S.D.N.Y. 2009) (quoting Online Policy Grp.,337 F.Supp.2d at 1204).
Let us get our bearing. Copyright protects “original work[s] of authorship fixed in any tangible medium of expression,” regardless of whether the work has been registered. As a general rule, infringement is not actionable until the author has a certificate in hand (although this may not be true for all Circuits). That is, the author cannot commence or maintain an action in federal court until the work is registered. But the DMCA is a self-help procedure. Only if the service provider refuses to take down the infringing (or alleged infringing copy) is the author authorized to proceed further with injunctive and legal relief. There are questions that courts have not yet reached in commencing an action for infringement of unregistered material. The Copyright Office provides some information on its website.
Copyright is not limited to literary works. I tend to focus on expressive material in these Notes and will do here, but words in literary works are only one color on the palette of creativity. Literary works (compositions of word strings) are first on the list of 8 in §102 of the Copyright Act. The second on the list is “musical works, including any accompanying words.” All original works of authorship or composership all the way down to draftsmanship (architectural works) are covered by copyright protection. And, the protections and theories of liability that relate to one apply equally to the others. Expressive material, whether words in literary works or musical works are intellectual property. The protections are illustrated in a very recent case from the United States District Court from the Eastern District of Michigan, Southern Division that addresses infringement of “accompanying words” to a musical work. ABKCO Music, Inc. v. Johnnie Washington, 11-10763 (October 18, 2011) involved both words and sound recordings. The sound recordings “infringed” in ABKCO Music were created prior to February,15, 1972, thus not covered in the Copyright Act, so I will summarize the case only as it relates to the song words.
The case is instructive because it illustrates the reach of liability. Not only the infringer itself, but also any party who contributes to the infringement of a copyright has liability to the copyright owner. “Contributory infringement occurs” (quoting from ABKCO Music) “when a party with knowledge of the infringing activity, induces, causes or materially contributes to the infringement conduct of another,” citing a decision from the U.S. Court of Appeals from the 6th Circuit which in turn is citing a decision from the U.S. Court of Appeals from the 2nd Circuit, Gershwin Publi’g Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162 (2d Cir. 1971). (As in all these Notes I include the case citations for anyone interested in reading the entire cases.)
The ABKCO defendants are the producer and author of a play of the singer/songwriter Sam Cooke, the company that owns the venue at which the play was produced and a marketing company that produced a promotional video (AV Ad). Against the producer and author, plaintiffs claim that they included a medley of Cooke’s songs before the main scenes of the production. The defendants argued that they did not infringe any of the copyrights “because the Songs were performed as a medley prior to the beginning of the Production and not used during the course of the Production itself.”
Against the marketing company, plaintiffs claim that the AV Ad it created included copyrighted songs. The producer and author defendants sought to avoid contributory and vicarious liability by arguing that “they were unaware of the material [the marketing company] used in the [AV Ad] and [that the marketing company] had ‘complete authority to create an e-blast advertisement.” The gist here is that defendants did not “directly infringe on the copyrights … because they did not directly produce or publish the AV Ad.”
The court rejected both defenses. The medley of songs, the direct infringement (despite the claim that it was not part of the performance) was integral to the dramatic presentation. The indirect infringement is actionable against the producer and author under two theories, contributory infringement and vicarious liability. The court explained that
Defendants cannot shield themselves from liability by simply failing to watch their own promotional video. [They] should have known the contents of the AV Ad. Defendants’ relationship with [the marketing company] as we as Defendants’ financial interest in the successful promotion of the Production, renders defendants liable for the copyright infringement of the [marketing company].”
Vicarious liability rests on a principal/agent theory:
Even in the absence of an employer-employee relationship, a defendant can be vicariously liable for copyright infringement when: (1) a defendant has the right to and ability to supervise the infringing conduct and (2) the defendant has an obvious and direct financial interest in the infringement.”
Thus, exposure to liability for infringement of creative works can extend beyond the direct infringer who created the AV Ad to reach the initiator or contributor to the infringements however it may try to disguise its involvement.
The U.S. Supreme Court has described fair use as “a privilege in others than the owner of the copyright to use the copyrighted material in a reasonable manner without his consent.” The question often put is, How much can the taker use without violating an author’s copyright? The answer is, No more than is considered fair. The fair use defense “permits courts to avoid rigid application of the copyright statute when, on occasion, it would stifle the very creativity which that law is designed to foster,” Iowa State Univ. Research Found., Inc. v. American Broadcasting Cos., 621 F.2d 57, 60 (2d Cir. 1980). What is considered fair is measured in part by the taker’s status (a journalist, teacher, citizen) and his or her purpose in using another’s expressive content.
The Copyright Act identifies six examples of purpose for taking (the statute uses the phrase “such as”), namely “criticism, comment, news reporting, teaching, scholarship, or research.” If any such be the purpose, then the taking is assessed by considering
(1) the … 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 word as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
Takings for criticism and comment which may also raise First Amendment issues include creating “new ideas out of the old,” effectively transforming the old into something new. Parody would be an example that qualifies as fair use under a transformative use defense as may combinatory or reimagined works, although they would not be “presumptively fair.” In other words, the taking would still have to be judged on a “case by case” basis, Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 581 (1994), but parody “has an obvious claim to transformative value” and can therefore constitute fair use. The Court continued that it “would not be fair use if the purpose of the borrowing were to avoid the drudgery in working up something fresh.” In lay language we would call this plagiarism and when noted publicly has resulted in works being withdrawn from the market and pulped.
Other cases have established that copying verbatim from a copyrighted work weighs heavily against a finding of fair use. A recent case in New York pitted the publisher and author against a blogger who posted 21 pages of a book that it claimed were “leaked excerpts.” The U.S. Supreme Court held in Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 565 (1985) that reproducing portions of a copyrighted work verbatim is evidence of the qualitative value of the copied material and works against a finding of fair use. These cases generally involve significant takings of which a recent example is Salinger V. Colting, 641 F. Supp.2d 250, 256 (S.D.N.Y. 2009), affirmed 607 F.3d 68, 80 (2d Cir. 2010) .
The above cases, though, are in the magna category, sufficient to justify the cost of commencing an infringement of copyright action. They are large takings. Not surprisingly, there are few cases of small takings that hover on the boundary of fair use so there is no guidance on quantity of taking to be fair. There is no mathematical formula only a rule of thumb. For this reason, an author may expect that if her work is being considered for publication by a publisher and not self-published the editor will insist on her obtaining permission for lengthy quotations (“lengthy” in relation to the whole) that may cross the boundary of fair to unfair use.