Copyright Law Blog: Exclusive Rights

Category Archives: Ownership

9th Cir. provides gloss on work-for-hire analysis in case involving data conversion claim

Shourin Sen - 14 April 2010 – 1:33 pm

JustMed, Inc. v. Byce, 07-35861 (9th Cir. 2010), on appeal from JustMed, Inc. v. Byce, 05-cv-00333-MHW (D. Idaho 2010) (judge magistrate decision finding, inter alia, conversion of data).

JustMed was a two man tech startup that was attempting to bring a hands-free digital voice larynx to market. The defendant-counterclaimant was hired to revise and complete the source code for the product. The defendant began working full time on the code, and was paid in stock and not wages. The parties never entered an employment or independent contractor agreement (the company generally did not keep formal records other than a series of notebooks). The defendant also never filled out an I-9 employment verification or W-4 tax withholding form for much of the relationship, which lasted for a number of years. The company never issued the defendant a W-2 wage statement, withheld taxes, paid workers’ compensation or unemployment insurance, provided benefits, or reported the employment to the state. The defendant lived in a different state than the company and worked from home setting his own hours, and the company did not tell him how to spend his days.

The defendant was included in JustMed’s company profile brochure and had a business card. The defendant also updated the company website and attended conferences, marketing meetings, and demonstrations on behalf of JustMed.

The relationship between the owner of the company and the defendant soured when the defendant discovered a spreadsheet showing that there was a large disparity in the shares owned by him and by the President of the company, and when his finances became tenuous due to the lack of monetary payment. The company then collected tax paperwork from the defendant and issued three checks, which were never cashed. At that point, the defendant changed the copyright notice on the source code so it reflected his name, and deleted all copies of the source code from JustMed’s computers.

JustMed filed in state court alleging a series of state law claims including, among other things, conversion of the source code and misappropriation under the Idaho trade Secrets Act. The defendant removed to federal court asserting that the case required determination of ownership of the software under the Copyright Act, and later filed a counterclaim seeking a declaratory judgment that he owned the copyright in the source code.

Jurisdiction

The Ninth Circuit raised the issue of whether it had jurisdiction sua sponte. It’s important to remember, when accessing the court’s analysis, that the defendant’s counter-claim regarding copyright ownership does not impact jurisdiction. Courts look to the factual allegations underlying the well-pleaded complaint, and only the complaint, to determine whether a case arises under the federal Copyright Act. Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., 535 U.S. 826 (2002).

The Circuit found that JustMed was required to “prove it owned the source code to prevail on its trade secret and conversion claims, and that the ownership rights under the Copyright Act overlap with those constituting common law ownership.” The Circuit thus found that the allegations “directly implicate” and arise under the federal Copyright Act. This is an interesting extension of the findings in Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989), which the Circuit relied upon as precedent. CCNV was a dispute over copyright ownership. JustMed v. Byce, in contrast, was a dispute involving trade secret and common law (do we have a name for these?) rights in the data that was influenced by the issue of copyright ownership.

Work made for hire inquiry

The Circuit’s analysis of whether the work was made for hire also contained a substantive gloss on existing case law. Copyright usually vests in the author or authors of the creative work. The Copyright Act contains an exception to this general provision where, under 17 U.S.C. 201(b) (“works made for hire”), “the employer or other person for whom the work was prepared is considered the author” and rightsholder. The Supreme Court found in CCNV that when “Congress uses the terms “employee,” “employer,” or “scope of employment,” it means to incorporate principles from the general common law of agency. Accordingly, “the hiring party’s right to control the manner and means by which the product is accomplished” is the central inquiry here. JustMed, Inc. v. Byce, 07-35861 (9th Cir. 2010) (citing CCNV, 490 U.S. at 740-4).

The Circuit found that the district court did not err in holding that the source code was a work made for hire. The Court noted that “as a small start-up company, JustMed conducted its business more informally than an established enterprise might. This fact can make it more difficult to decide whether a hired party is an employee or an independent contractor, but it should not make the company more susceptible to losing control over software integral to its product.” Among the Circuit’s more interesting findings:

JustMed’s treatment of Byce with regard to taxes, benefits, and employment forms is more likely attributable to the start-up nature of the business than to Byce’s alleged status as an independent contractor. The indications are that other employees . . . were treated similarly. Insofar as JustMed did not comply with federal and state employment or tax laws, we do not excuse its actions, but in this context the remedy for these failings lies not with denying the firm its intellectual property but with enforcing the relevant laws.

Religious translations are works of “imagination and creativity” for purposes of a fair use evaluation

Shourin Sen - 1 March 2010 – 4:03 pm

Filed under Assignment, Fair Use, Ownership, Settlement, Transfers

Society of the Holy Transfiguration Monastery, Inc. v. Archbishop Gregory, 2010 WL 548114 (D. Mass. 2010)

A Greek Orthodox Monastery brought a copyright suit alleging that an archbishop had infringed a series of its translations of religious texts and that the Archbishop had breached a Settlement Agreement reached in a prior lawsuit involving one of the disputed works.

Ownership

The Archbishop argued that the copyright to one of the works should as a matter of church law be transferred to the Rusian Orthodox Church Outside Russia. The argument was derived from an ongoing dispute that arose when the Greek Orthodox Monastery elected to leave the ROCOR. In 1994, the Massachusetts Supreme Judicial Court found that the Greek Orthodox Monastary was congregational in terms of property ownership and was the sole owner of all of its assets, not the ROCOR. See, e.g., Primate and Bishops’ Synod of the Russian Orthodox Church Outside Russia v. Russian Orthodox Church of the Holy Resurrection, Inc., 418 Mass. 1001, 636 N.E.2d 211 (1994). The Court found that it didn’t need to re-open the dispute because there was no written transfer:

The court need not, however, accept the Archbishop’s invitation to delve into the intricacies of the doctrine of neutral principles as it applies to ecclesiastical disputes. The Copyright Act provides a simpler statutory answer. After 1978, a transfer of copyright, other than by operation of law, “is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent.” 17 U.S.C. § 204(a).

As a side note, you can’t say for certain from the factual record, but this case may raise similar issues to those discussed in Schrock v. Learning Curve International, Inc., No. 08-1296 (7th Cir. 2009). The exclusive rights granted to a work employing preexisting material covered by copyright, such as many translations, do not extend to any part of the work in which the material was used without permission. 17 U.S.C. 103(a).

If the greek text of the disputed work contains copyrightable subject matter added by the ROCOR, such as annotations or editing choices made recent enough so that they are not in the public domain, the Monastary may, or may not, possess exclusive rights in its translation of the text. The outcome would depend on whether the Court adopted the Seventh Circuit’s finding from Schrock that when a rightsholder grants permission to a second author to make a derivative work, barring an agreement between the parties otherwise, the second author retains a copyright in the derivative work, even if the rightsholder later attempts to revoke permission.

Fair Use

The Archbishop’s copying of one of the works at issue omitted footnotes and three words, added some question marks, changed the spelling of six words, and added some headlines. The Court found that the work was substantially similar to the Monastery’s.

The Court then looked to whether the copying was a non-infringing fair use. The Court cited Campbell v. Acuff Rose for the proposition that not only is fair use an affirmative defense, but that a defendant has a “burden of proof” to show that the copying was non-infringing. The Court found that the use of the work was infringing.

Purpose and character

The Archbishop argued that his use was non-commercial (purely for devotional purposes), which was not disputed, and that his use was transformative because he placed a portion on the internet. The Court rejected the argument finding that a “simple repackaging” of a work in a new media context is “not transformative when the result is simply a mirror image reflected on a new mirror,” and found that the factor weighed in favor of the Monastery.

Nature of the copyrighted work

The Archbishop argued that the work at issue was factual as part of his religion, and as such, the factor weighed in favor of a finding of fair use. The Court found that the work was more closely akin to a creative work:

As a theological precept, this may ring true to a believer, but from an objective legal perspective, a religious contemplation in the form of a Homily (an admonitory sermon or discourse) falls more appropriately within the category of a work of imagination and creativity. While a translation is by definition derivative, some translations-the King James Version of the Bible comes to mind-are nonetheless thought to be “original in their own right.” This factor, on the whole, weighs in favor of the Monastery.

The amount and substantiality

The Court found that the Archbishop incorporated the entirety of one of the works on his website for “no apparent purpose other than avoiding the trouble and expense of creating a version of his own.”

Market harm

The Monastery did not allege any specific lost sales or profits as a result of the infringement. The Monastary instead noted that it has had to expend time and resources to enforce its rights in the work. The Court found that, “given Campbell’s emphasis on the deterrence of injurious conduct by others as a consideration separate and apart from a showing of actual market harm, this factor too weighs in favor of the Monastery.”

Australian court finds plaintiff is owner of “Kookaburra”; case to proceed to issue of infringement

Shourin Sen - 1 August 2009 – 1:00 am

Filed under Australia, Foreign, Music, Ownership

Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Limited [2009] FCA 799

It feels good to be blogging again, and I have a charming little decision to come back to. On Friday, the Honourable Justice Jacobson of the Federal Court of Australia, New South Whales District, issued a decision in Larrikin Music Publishing’s infringement suit against EMI and the author’s of the ’80s hit “Down Under.” This suit has garnered a fair bit of publicity on the intertubes. To briefly review, Larrikin, an Australian music publisher, alleged that “Down Under” infringed it’s copyright in the round “Kookaburra Sits in the Old Gum Tree.”

Men at Work’s performance of “Down Under”

Justice Jacobson had requested briefing on the preliminary issue of whether Larrikin was the copyright owner of the musical composition. “Kookaburra” was penned in 1932 as an entry in a competition/fundraiser conducted by the Girl Guides Association of Victoria. (The song won.) One of the rules that accompanied the advertisement for entry stated that “[a]ll matter entered to become the property of the Guide Association.” Neither party could locate the entry materials. EMI argued that an assignment could be presumed from the circumstances, that the author of “Kookaburra” was aware of the printed contest rules and accepted the terms through her entry, and that by including her name in the entry — ah, the age of hand-written correspondence – she wasn’t merely providing contact information, but executing a valid assignment.

A Performance of “Kookaburra sits in the Old Gum Tree” by KaiLi kids

In the question at bar, the Court addressed whether, under the Australian Copyright Act of 1912, which was in effect in 1932, the clause in the rules of entry assigned the copyright in “Kookaburra” to the Victorian Girl Guides. Section 5(2) of the1912 Australian Copyright Act (which is derived from the 1911 British Copyright Act) provides that no “assignment or grant shall be valid unless it is in writing signed by the owner of the right in respect of which the assignment or grant is made, or by his duly authorized agent.”

Justice Jacobson found that, at least for purposes of the suit, Larrikin was the copyright owner of “Kookaburra.” The Court found that it was equally probable that the composer learned of the competition by word of mouth and was not aware of the rules; that the communications between the Girl Guides and the author of “Kookaburra” show that there was no assignment; that the inclusion of the author’s name in the entry was likely for identification purposes and not an assignation; and that the operative language, “all matter entered [in the competition] to become the property” of the Victorian Girl Guides, was “more apt” to have referred to the physical property than the copyright in the work.

Assignments and burden:

The Court appeared to toy with the idea that there should be a burden on the defendants to prove that the author of “Kookaburra” executed an assignment. See, for example:

The test is that there must be shown to be more than “conflicting inferences of equal degrees of probability so that the choice between them is a mere matter of conjecture.” (117, citing Nominal Defendant v Owens (1978) 22 ALR 128 at 132.)

* * * * *

It is apparent that the admissibility of the evidence must be distinguished from its sufficiency to establish or support an affirmative conclusion in favour of the party who tenders it, when the burden of proof lies upon that party. (163, citing Lustre Hosiery Limited v York [1935] HCA 71; (1935) 54 CLR 134, 138–139 (Rich, Dixon, Evatt and McTiernan JJ) (emphasis added.)

If it was indeed the intent of the Court to assume a burden on behalf of the defendant, there are policy rationales for such a conclusion. William Patry argues that “the purpose of the writing requirement is not to effectuate the parties’ intent but principally to protect authors from those claiming, contrary to the author’s view of the facts, that he or she transferred rights in the work. The purpose of the writing requirement is thus to effectuate a congressional policy of protecting authors, even from themselves if need be.” Patry on Copyright at 5-218, citing Imperial Residential Design, Inc. v. Palms Development Group, Inc., 70 F.3d 96 (11th Cir. 1995) (“[T]he chief purpose of section 204(a), (like the Statute of Frauds), is to resolve disputes between copyright owners and transferees and to protect copyright holders from persons mistakenly or fraudulently claiming oral licenses or copyright ownership.”) (emphasis added); Effects Associates, Inc. v. Cohen, 908 F.2d 555 (9th Cir. 1990) (“Section 204 ensures that the creator of a work will not give away his copyright inadvertently and forces a party who wants to use the copyrighted work to negotiate with the creator to determine precisely what rights are being transferred and at what price.”)