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December 2010 Archives

December 1, 2010

A Bad Bet - Suit Alleges That Head of IMG Gambled on College Sports

By Joseph M. Hanna

In a suit recently filed in Los Angles County Superior Court, sports and entertainment superpower IMG Worldwide's chairman Ted Forstmann is accused of betting more than $600,000 (in amounts ranging from $2,000 to $23,000) on the men's NCAA basketball tournament from 2004 to 2007-- all while IMG was representing top college coaches.

Forstmann's alleged gambling habits came to light in a lawsuit filed by Agate Printing. Agate alleges fraud, interference with contract and breach of contract related to lost business that it alleges Forstmann had promised to it. Forstmann stated that the allegations set forth in the lawsuit are inaccurate and IMG stated that Forstmann was not involved in the firm's representation of college coaches.

IMG plays a significant role in the multibillion-dollar business of college sports. According to the lawsuit, after Forstmann made bets worth nearly $100,000 on the 2007 NCAA men's basketball tournament, IMG significantly increased its investment in collegiate athletics. Today, IMG is the licensing agency for nearly 200 collegiate properties, including the NCAA, the BCS and several universities including Ohio State University, University of Florida, and the University of Oregon. It should be noted that IMG was not representing the NCAA from 2004 to 2007. However, as an NCAA Vice President stated, "as almost everyone knows, the NCAA doesn't like anyone betting on college sports."

As the case progresses, it will be noteworthy if any athletes, coaches or colleges get dragged into Forstmann's mess or if the NCAA chooses to open an investigation into the issue on its own. For example, Jay Wright, Villanova's head men's basketball coach, is listed as a client of IMG on its webpage. According to the lawsuit, one of Forstmann's many bets on the 2006 NCAA was a $7,000 wager on Villanova made on March 25, 2006.

For more information about the claims, see http://www.nytimes.com/2010/12/01/sports/01gambling.html?_r=1


HarperCollins Publishers v. Gawker Media

By Barry Werbin

The HarperCollins case settled on Nov. 30 according to the latest news reports, after the court ordered Gawker last Saturday to remove 21 pages. "'In settling the case, Gawker has agreed to keep the posted material off its website and not to post the material again in the future,' HarperCollins spokeswoman Erin Crum said in a statement."

Please see the following link for more information: http://www.stuff.co.nz/entertainment/books/4405549/Gawker-com-settles-Sarah-Palin-book-dispute

Work for Hire: The Copyright Office's Online Registration Problem

By Elizabeth Russell

When it comes to copyright’s “work made for hire” doctrine, misunderstandings abound. And as it turns out, the Copyright Office itself may be contributing to the confusion.

Bottom line: it’s impossible using the Copyright Office online registration system (eCO) to register work that one company has engaged another to create, without incorrectly identifying the work as work made for hire.

With apologies to those for whom this is rudimentary, let’s start at the very beginning.

• General rule: The person who creates copyrightable material is the “author.”
• Ownership of copyright vests initially in the “author” of the work (17 USC §201[a]).
• As its owner, the author can keep the copyright; license all or parts of it to others; or assign ownership of the entire copyright to another party.

The “work made for hire” (WMFH) doctrine creates exceptions to these general rules. If WMFH applies, the creator of the work is not considered the author, and never owns the copyright -- even for a moment.

If we suspect that WMFH might apply, the threshold question is whether the work itself qualifies as WMFH. There are only two ways work can qualify as WMFH:

1. If the work is prepared by an employee within the scope of his or her employment; or
2. If the work is specially ordered or commissioned for use as:
a. A contribution to a collective work;
b. Part of a motion picture or other audiovisual work;
c. A translation;
d. A supplementary work;
e. A compilation;
f. An instructional text;
g. A test;
h. Answer material for a test; or
i. An atlas

Many people think if they paid someone else to create copyrightable work, it’s automatically WMFH. They also think that if in a contract they call the work WMFH, it is. Neither is true. If the person who created the work is an actual employee and created the work in the scope of his or her employment – OK. It’s WMFH. Otherwise, no matter who paid and no matter what a contract might say, the work is not WMFH unless a.) the work itself falls into one of those nine categories listed above; and b.) a written agreement is in place specifying that the work is WMFH.

Given these requirements, a lot of work that people assume to be WMFH – really isn’t. And as a result, many people who think they own the copyright to such work, really do not.

Assuming the work actually is WMFH, the employer or other person for whom the work was prepared is considered the “author” and thus owns the copyright from the very beginning.

Our problem, however, involves registering work that was created by an organization (as opposed to an individual) and is not WMFH.

Here’s the situation.

Client A engages Company X to develop a computer software application (or any other type of copyrightable material). Is the work WMFH? No. Company X is not an employee of Client A, and the software application does not fall into any of the nine categories of work that could, possibly, be WMFH. Knowing this, Client A obtained from Company X a written assignment of copyright to the software application. Had Client A not done this, Client A would not own the copyright. But Client A was well advised, and now (because of the assignment) does own the copyright.

Great. Now Client A goes to eCO to register its copyright in the software application.
Q: Who is the author?
A: Company X (because Company X created the work.)
Q: Who is the claimant?
A: Client A (because of the assignment.)

But here’s the problem: eCO’s online form doesn’t allow us to enter an organization as the author. It would allow us to enter an individual as the author and then indicate that copyright was acquired by written assignment. But if we enter an organization (Company X) as the author and then (correctly) indicate that the work is not WMFH, the following error message pops up: “If an organization is named as author, the ‘work made for hire’ question must be answered ‘Yes.’”

I pointed this out to the Copyright Office and our exchange went something like this:

Me: An organization was engaged to create the work, but it’s not WMFH and copyright was transferred by written assignment.
CO: You have to indicate that it was WMFH.
Me: But it isn’t.
CO: You have to indicate that it was WMFH.
Me: But it isn’t.
CO: Say it anyway.

See the problem?


December 3, 2010

Application for Masters Program

The Association for Research into Crimes against Art (ARCA) warmly invites applications to its third Masters program in the study of art crime and cultural heritage protection. This program provides in-depth, Masters level instruction in a wide variety of theoretical and practical elements of art and heritage crime: its history, its nature, its impact, and what can be done to curb it. Courses are taught by international experts, in the beautiful setting of Umbria, Italy. This interdisciplinary program offers substantive study for art police and security professionals, lawyers, insurers, curators, conservators, members of the art trade, and post-graduate students of criminology, law, security studies, sociology, art history, archaeology, and history.

For additional information (including a link for the 2011 Masters program application), visit http://artcrime.info/education.htm.



December 15, 2010

The Zenith of the Omega Case on the Future of the "First Sale Doctrine"

By Lisa Fantino

When is a "supreme" decision not a decision? When the court is split down the middle and the deciding judge recuses herself. Just what we need - more grey area over gray market goods and the First Sale Doctrine but that's exactly what happened this week in Omega S.A. v. Costco Wholsesale Corp., 541 F.3d 982 (9th Cir. 2008).

The Court ruled 4-4, with Justice Kagan sitting back because of her stint as U.S. Solicitor General, thereby upholding the 9th Circuit's decision allowing Omega to control the price of its watches in the aftermarket. The essence of the argument is whether U.S. Copyright protections extend to goods made outside the United States and then sold overseas for U.S. distribution and this "non-decision" states that it does.

In a nutshell, Omega manufactures watches in Switzerland and sells them both overseas and in the United States to authorized distributors and retailers. In the instant action, Omega made and sold the watches overseas to an authorized distributor. An unidentified third-party bought them overseas and sold them to ENE Ltd., a New York company, which in turn sold them to Costco for distribution in California. Although Omega authorized the foreign sale, it claimed it did not authorize the importation of those same watches into the U.S. and claimed copyright infringement of its logo under 17 U.S.C. §§106(3) and §602(a). Costco, on the other hand, cross-moved under 17 U.S.C. §109(a) arguing that it was protected under the first sale doctrine, which allows a purchaser to transfer a lawfully made copy of a copyrighted work without permission from the copyright holder.

This hits home for consumers who don't want to pay nearly $2,000 for an Omega watch when they can purchase it for nearly 35% cheaper at a big box chain like Costco. That is the advantage for buying anything at a store like Costco, because it buys in bulk and passes the savings onto consumers who don't need all the frills and luxury of shopping in high-end stores for the same merchandise.

Since the Court was divided down the middle with no opinion issued, it leaves many questions on the extra-territorial nature of the First Sale Doctrine, especially with this practitioner. The decision seems to fly in the face of the High Court's long-standing precedent in Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908), where a publisher sold a novel with a statement on the first page indicating that no dealer could sell the book lower than $1.00. R.H. Macy & Co., ignored that and sold the book at a discount after buying it wholesale from an authorized distributor. The High Court sided with Macy's stating that the Copyright statute protected the rights holder's "right to vend" and multiply the work but it did not afford it greater protection than set forth in the statute by allowing the holder to limit future resales. This case of first impression set forth what was subsequently codified in 17 U.S.C. §109 as the First Sale Doctrine.

17 U.S.C. §109 states that "notwithstanding the provisions of §106(3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord." It is pretty much a bright-line rule except in a gray market, where goods are sold legally but not necessarily in the manner or to the parties intended by the original manufacturer.

Again, nearly 100 years after Bobbs-Merrill, in Quality King Distributors, Inc. v. L'anza Res International, Inc., 523 U.S. 135 (1998) SCOTUS specifically noted an eagerness to preserve goodwill for the United States in the global marketplace and hesitated at the idea that the intent of the statute was limiting. Further, the Quality King decision made it clear that the Court did not appreciate the fact that the manufacturer was using backdoor allegations of copyright infringement to justify its discounted marketing and pricing outside of the United States rather than to look to the statute as a tool to prevent the making of unauthorized copies.

Distribution channels and territories are no longer clearly delineated. More and more licensing and distribution agreements are drafted to encompass the world. More and more cyberpreneurs are purchasing goods in one country and selling them within the United States and vice versa, not to mention U.S.-based dealers who sell to domestic customers but have the orders drop-shipped directly from foreign distributors.

Today's "gray market" has become THE market. This decision does nothing to clarify the vague area between practice and statute. In fact, in my opinion it leaves a gaping hole for manufacturers to dance through and control pricing. They can make good overseas at a considerably reduced cost; slap a U.S.-copyrighted logo onto them; and then and limit their resale anywhere in the world without their permission. This first major decision of the October term did nothing to advance clarity in a growing global grey marketplace.

Lisa Fantino is an award-winning journalist and solo practitioner. She has a general practice firm in Mamaroneck, New York, where she focuses on entertainment as well as general transactional and litigation matters. She can be found at http://www.LisaFantino.com or blogging as http://ladylitigator.wordpress.com.

December 20, 2010

Golan v. Holder: The Long Road to Restoration

By Joan McGivern and Christine Pepe

In 1994, Congress amended our copyright laws to allow for the restoration of foreign copyrights, which had lapsed into the public domain, thereby, placing the U.S. in compliance with our foreign treaty obligations under the "Uruguay Round Agreement". (Section 514 of the Uruguay Round Agreements Act (URAA), Pub. L. No. 103-465, 108 Stat. 4809, 4976-80 (1994), codified as 17 U.S.C. §104A, 109. As stated in Golan v. Holder, the Uruguay Round General Agreement on Tariffs and Trade included the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs). The TRIPs agreement required, in part, that its signatories, which included the U.S., comply with Article 18 of the Berne Convention, and thus, extend copyright protection to all works of foreign origin whose term of protection had not expired. See Golan v. Holder, 2010 WL 2473217 at *1-3 (10th Cir. 2010), citing Berne Convention for the Protection of Literary and Artistic Works, Art. 18, Sept. 9, 1886, revised at Paris July 24, 1971.) Foreign copyright owners rejoiced; many had lost valuable rights due to their inability or lack of knowledge of the arcane formality requirements imposed under the U.S.'s pre-1976 Copyright Act. U.S. copyright owners also stood to benefit because their copyrights, due to the U.S.'s failure to comply, were not being similarly protected through restoration abroad.

However, people in the U.S., who had built livelihoods in reliance on these works being in the public domain, were not happy. They alleged that once a work was in the public domain, the work had become part of the common culture and could never be "restored." Some alleged that their First Amendment rights were encroached and that no action by Congress, even to comply with an international treaty obligation, can justify the "unconstitutional" action of trammeling their First Amendment rights. Congress had also enacted detailed provisions to address and balance the concerns of such users of public domain works with the rights of foreign copyright holders of restored works. Nonetheless, the users of these public domain works were not satisfied.

And with these allegations, so began a long challenge, which seemingly came to an end this past summer, with the Tenth Circuit, on its second review of Golan v. Holder, upholding Congress' authority to restore foreign copyrights. (See generally Golan v. Holder, Docket Nos. 09-1234, 09-1261, 2010 WL 2473217 (10th Cir. 2010)).

Nearly a decade of litigation . . .

The statute at issue is Section 514 of the Uruguay Round Agreements Act (URAA) (now codified in the Copyright Act at 17 U.S.C. §§104A, 109), an important copyright provision that restores copyright status to certain foreign works that had fallen into the public domain due to failure to comply with statutory formalities.( Section 514 of the Uruguay Round Agreements Act (URAA), Pub. L. No. 103-465, 108 Stat. 4809, 4976-80 (1994), codified as 17 U.S.C. §104A, 109). Section 514 places the United States in compliance with Article 18 of the Berne Convention, which requires each signatory to provide the same copyright protections to authors in other member countries that it provides to its own members. (Berne Convention for the Protection of Literary and Artistic Works, Art. 18, Sept. 9, 1886, revised at Paris July 24, 1971). The statute contains certain provisions to protect "reliance parties"--that is, people that had been using the formerly public domain work. For instance, in order to enforce the restored copyright, an owner must file a notice with the Copyright Office or otherwise place the reliance party on notice. (17 U.S.C. §104A(d)(2)). Further, a reliance party has a twelve month grace period in which they may continue to sell or exploit the restored work (although they cannot make additional copies of the work). (Id. at §104A(d)(2)(A)(ii), §104A(d)(2)(B)(ii)). And, only after that period had elapsed, would a license fee be due to the copyright holder, or the reliance party had to cease its use of the work.

In 2001, the plaintiffs, consisting of educators, performers, publishers, film archivists, and motion picture distributors, each claiming to rely on the use of public domain works to support themselves, brought suit in the United States District Court for the District of Colorado against the government seeking to enjoin on constitutional grounds the enforcement of Section 514 and the Copyright Term Extension Act (CTEA). (Golan v. Ashcroft, 310 F.Supp.2d 1215 (D. Col. 2004)). Plaintiffs included violinist and conductor Lawrence Golan and the Symphony of the Canyons, who had publicly performed restored works such as Prokofiev's Classical Symphony and Peter and the Wolf and Stravinsky's Petroushka. Plaintiffs also included film distributors, who had invested significant resources identifying and restoring public domain films such as Hitchcock's 1932 film, Number Seventeen, and the 1940 British film, Night Train to Munich. (Golan v. Gonzales, 501 F.3d 1179, 1182 (10th Cir. 2007)). These "reliance parties" claimed that Section 514 not only harmed their free speech, but also their economic interests, having spent time and money restoring or preparing the works on the expectation that the works would remain in the public domain.

The case was stayed briefly because the Supreme Court had agreed to hear the Eldred v. Ashcroft case, discussed below, which similarly involved First Amendment challenges to the Copyright Act. (Eldred v. Ashcroft, 537 U.S. 186 (2003)). Upon the lift of the stay, the district court dismissed plaintiffs' claims, concluding that Congress had the authority under the Copyright Clause of the Constitution to remove works from the public domain and there was a rational basis for enactment of Section 514, i.e., the protection of American authors' copyrights abroad. (Golan v. Gonzales, 2005 U.S. District Lexis 6800 at *42, 43-47 (D. Col. 2005)). The district court did not fully analyze the Plaintiff's First Amendment claims.

Plaintiffs appealed on the basis that the Supreme Court's Eldred v. Ashcroft decision required further First Amendment scrutiny of Section 514. The Tenth Circuit agreed and reversed, holding that although Congress has the authority under the Copyright Clause to enact Section 514 and restore protection to foreign works in compliance with the Berne Convention, the legislation "must still comport with other express limitations in the Constitution," notably the First Amendment. (Golan v. Gonzales, 501 F.3d 1179, 1187 (10th Cir. 2007), citing Eldred v. Ashcroft, 537 U.S. 186 (2003)). The Circuit Court found that copyright works historically followed the same sequence: creation, copyright, then public domain. Because Section 514 presented a departure from this sequence (by restoring copyright to public domain works), the court, relying on Justice Ginsberg's language in Eldred, held that Section 514 "altered the traditional contours of copyright protection" and on this basis, remanded the case to the district court for further First Amendment analysis.( Id).

The district court, finding that Section 514 was content-neutral, applied an intermediate level of scrutiny, as opposed to a heightened scrutiny standard. (Golan v. Holder, 611 F. Supp.2d 1165, 1170 (D. Col. 2009)). Nonetheless and even though the district court recognized that Section 514 advances a significant governmental interest, it concluded that the Berne Convention did not require full restoration of copyrights because the reliance parties could have been completely exempted.( Id. at 1174). In finding a First Amendment violation, the court concluded that Section 514 was substantially broader than necessary to achieve the government's interests.( Id). The government appealed to the Tenth Circuit.

Nine years after the initiation of the lawsuit and three U.S. attorney generals later, on June 21, 2010, the Tenth Circuit reversed the district court, holding that Section 514 did not violate the First Amendment. (Golan v. Holder, 2010 WL 2473217 (10th Cir. June 21, 2010)). In Golan v. Holder, the Court found that the statute satisfied intermediate scrutiny because it (1) advanced important governmental interests unrelated to the suppression of free speech and (2) did not burden substantially more speech than necessary to further those interests (or was "narrowly tailored").( Id. at *4).

As to the first prong, the Circuit Court found important governmental interests on the basis that securing foreign copyrights for American works preserves the authors' economic and expressive interests.( Id. at *5). In assessing the government's asserted harm, the Circuit Court held that substantial deference, particularly in matters of foreign affairs, should be given to Congress in its judgments of potential harm: "Our sole obligation is to assure that, in formulating its judgments, Congress has drawn reasonable inferences based on substantial evidence."( Id). The Court pointed to testimony before Congress at the time of Section 514's passing that the United States' historically lax position on copyright restoration had been harming our citizens' copyright interests abroad. (Id. at *7). The theory adopted by the Court was that if the U.S. was to pass restorative legislation for foreign works, other nations would be more likely to pass similar legislation.( Id).

As to the second prong, the plaintiffs argued that there was a less restrictive way of implementing copyright restoration, specifically urging the adoption of the United Kingdom model where the reliance party is allowed to continue making those uses of the work it had made, or incurred commitments to make, before the copyright is restored, but the reliance party can be bought out by the owner of the restored copyright.( Id. at *12-13). In rejecting this argument, the court held that even if there were other options available to Congress, the less restrictive analysis is never a part of the inquiry into the validity of a content-neutral statute, so long as the means chosen are not substantially broader than necessary to achieve the government's interest.( Id. at *13). Moreover, the court noted that there was no real different between Section 514's protections for the reliance parties and the U.K.'s protections, stating that the difference between the "buy out" and "notice" is only that one is economic protection and the other expressive protection. (Id. at *14).

The Importance of International Treaty Compliance

The Tenth Circuit's decision in Golan represents significant progress in the United States' compliance with international treaties relating to the protection of intellectual property. In upholding Section 514, the Court considered the evidence presented to Congress in support of Section 514's passing, such as evidence that foreign countries were willing to provide, at most, reciprocal copyright protections to American works. (Id. at *7 citing General Agreement on Tariffs and Trade (GATT): Intellectual Property Provisions: Joint Hearing on H.R. 4894 and S. 2368 Before the Subcomm. on Intellectual Property and Judicial Administration of the H. Comm. on the Judiciary and the Subcomm. on Patents, Copyrights, and Trademarks of the S. Comm. on the Judiciary, 103d Cong., 2d Sess. 249 (1994) (hereafter "Joint Hearings") at n.2, statement of Eric Smith, Executive Director and General Counsel of the International Intellectual Property Alliance). Otherwise stated, foreign countries would restore American copyrights only if the U.S. restored copyrights of their citizens. The Court also noted evidence in the legislative history that the U.S. often served as an example to other countries--U.S. restoration to foreign works in our public domain would induce other countries with whom the U.S. recently established copyright relations to follow suit. (Id., citing Joint Hearings at 225, statement of Irwin Karp, Counsel, Committee for Literary Studies).

While at first this appears to be a copyright protection quid pro quo, the facts presented to Congress indicated that the United States would continue to lose billions of dollars each year because foreign countries were not providing copyright protections to American works. (Id. at *6, citing Joint Hearings at 225, statement of Eric Smith). Projections from RIAA Chairman and CEO Jason S. Berman supported this, stating "[t]here are vastly more US works currently unprotected in foreign markets than foreign ones here, and the economic consequences of [granting retroactive copyright protection] are dramatically in favor of U.S. industries." (Id. at *6, citing Joint Hearings at 262, statement of Jason S. Berman, Chairman and CEO of the Recording Industry Association of America). The U.S. has a strong economic incentive to comply with international treaties, particularly given the increasing importance of export revenue from U.S. intellectual property.

While much of the Golan analysis focused on the reliance parties, it is important to remember that a significant number of foreign copyright owners routinely lost their rights because of a failure to comply with U.S. formalities that were in place prior to the 1976 Copyright Act. Under the 1909 Copyright Act, in order to create a valid copyright under U.S. law -even if the work was already in published form--a creator or owner was required to post a notice of copyright on the work, i.e., "©", and register the work with the United States Copyright Office. (Copyright Act of 1909, Pub. L. No. 60-349, 35 Stat. 1075 (March 4, 1909)). The 1909 Act also required a renewal to be filed after the expiration of the first 28-year term of copyright (to extend protection for another 28-year term). (Id).

The 1976 Act abandoned these formalities as a pre-requisite to a valid copyright, and instead, provided that copyright is created when expression is fixed in a tangible form. (Copyright Act of 1976, Pub. L. No. 94-553, 90 Stat. 2541 (October 19, 1976), codified as Title 17 of the United States Code). Now, notice of copyright and registration are only required in order to bring a lawsuit for infringement and obtain statutory damages and attorneys' fees. (17 U.S.C. §§411, 412). Somewhat ironically in view of Golan, a primary goal of the 1976 Act (and its abandonment of formalities) was to harmonize U.S. copyright law with international treaties and practice, where formalities were not a requirement for copyright protection.

Authority over matters relating to international treaty obligations and the consequences of non-compliance lies exclusively with the Executive Branch. And as the Tenth Circuit ultimately acknowledged in its recent decision, when it comes to matters of foreign policy and international affairs, Congress should be afforded significant deference.

Heightened First Amendment Scrutiny of Copyright Legislation

In Eldred v. Ashcroft, the Supreme Court upheld the constitutionality of the Sonny Bono Copyright Term Extension Act and in doing so, refused to apply anything beyond the rational basis review. (Eldred v. Ashcroft, 537 U.S. 186, 205 (2003)). The Court noted that the Copyright Act's "built-in free speech safeguards" are generally adequate to address First Amendment concerns. (Id). Only if Congress altered the "traditional contours of copyright protection," the court stated, would further First Amendment scrutiny be necessary. (Id. at 221). The "traditional contours of copyright protection" referred to by the Eldred Court comprise copyright law's "built-in free speech safeguards" of fair use and the idea/expression dichotomy (i.e., that ideas are not copyrightable).

Given that the Tenth Circuit in Golan ultimately applied intermediate scrutiny (as opposed to rational basis review), it would follow that Section 514 was found to be outside the "traditional contours of copyright protection." In Tenth Circuit's first Golan decision, the court interpreted Eldred quite broadly, finding that the "history of American copyright law" should inform its inquiry. The Circuit Court then performed a detailed analysis of the history of the Copyright Act and its treatment of the public domain (including the Framers' intent) and concluded that there simply was no history or tradition of removing works from the public domain. As such, the Court found that the statute presented a departure from the traditional creation, copyright, and public domain sequence. The Court did not specifically analyze the impact of the statute on fair use or the idea/expression dichotomy--if it did, it would see that those protections remained in tact regardless of whether a work was restored from the public domain.

If such a broad interpretation of Eldred was to persist, Congress' discretion would be hindered. It is important for the Copyright Act to continue to evolve--particularly in view of new media and technology developments as well as the growing international landscape for intellectual property. For instance, the Digital Millennium Copyright Act was a game-changing addition to copyright laws, and certainly in many ways, had no precedent. (Digital Millennium Copyright Act of 1998, Pub. L. No. 105-304, 112 Stat. 2860, 2887, enacted October 28, 1998, codified as Title 17 of the United States Code).

In closing, although Section 514 appears to have survived First Amendment scrutiny, it wouldn't be surprising if further attacks are brought against the Copyright Act on the basis that certain amendments exceed the Act's "traditional contours." Lawrence Lessig (in connection with the Stanford Law School Center for Internet and Society) represented the plaintiffs in both the Eldred and Golan cases, and given the Center's zeal in challenging the Copyright Act, it was somewhat predictable that on October 20, 2010, a petition for writ of certiorari was filed with the Supreme Court seeking review of the Tenth Circuit's Golan decision. It will be interesting to see if the Supreme Court is willing to accept certiorari to clarify what the Court meant in Eldred with regard to the "traditional contours of copyright protection."


Golan v. Holder: The Long Road to Restoration

This blog is an update to the article of the same title in the current issue of the EASL Journal.

By Joan McGivern and Christine Pepe

In 1994, Congress amended our copyright laws to allow for the restoration of foreign copyrights, which had lapsed into the public domain, thereby, placing the U.S. in compliance with our foreign treaty obligations under the "Uruguay Round Agreement". (Section 514 of the Uruguay Round Agreements Act (URAA), Pub. L. No. 103-465, 108 Stat. 4809, 4976-80 (1994), codified as 17 U.S.C. §104A, 109. As stated in Golan v. Holder, the Uruguay Round General Agreement on Tariffs and Trade included the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs). The TRIPs agreement required, in part, that its signatories, which included the U.S., comply with Article 18 of the Berne Convention, and thus, extend copyright protection to all works of foreign origin whose term of protection had not expired. See Golan v. Holder, 2010 WL 2473217 at *1-3 (10th Cir. 2010), citing Berne Convention for the Protection of Literary and Artistic Works, Art. 18, Sept. 9, 1886, revised at Paris July 24, 1971.) Foreign copyright owners rejoiced; many had lost valuable rights due to their inability or lack of knowledge of the arcane formality requirements imposed under the U.S.'s pre-1976 Copyright Act. U.S. copyright owners also stood to benefit because their copyrights, due to the U.S.'s failure to comply, were not being similarly protected through restoration abroad.

However, people in the U.S., who had built livelihoods in reliance on these works being in the public domain, were not happy. They alleged that once a work was in the public domain, the work had become part of the common culture and could never be "restored." Some alleged that their First Amendment rights were encroached and that no action by Congress, even to comply with an international treaty obligation, can justify the "unconstitutional" action of trammeling their First Amendment rights. Congress had also enacted detailed provisions to address and balance the concerns of such users of public domain works with the rights of foreign copyright holders of restored works. Nonetheless, the users of these public domain works were not satisfied.

And with these allegations, so began a long challenge, which seemingly came to an end this past summer, with the Tenth Circuit, on its second review of Golan v. Holder, upholding Congress' authority to restore foreign copyrights. (See generally Golan v. Holder, Docket Nos. 09-1234, 09-1261, 2010 WL 2473217 (10th Cir. 2010)).

Nearly a decade of litigation . . .

The statute at issue is Section 514 of the Uruguay Round Agreements Act (URAA) (now codified in the Copyright Act at 17 U.S.C. §§104A, 109), an important copyright provision that restores copyright status to certain foreign works that had fallen into the public domain due to failure to comply with statutory formalities.( Section 514 of the Uruguay Round Agreements Act (URAA), Pub. L. No. 103-465, 108 Stat. 4809, 4976-80 (1994), codified as 17 U.S.C. §104A, 109). Section 514 places the United States in compliance with Article 18 of the Berne Convention, which requires each signatory to provide the same copyright protections to authors in other member countries that it provides to its own members. (Berne Convention for the Protection of Literary and Artistic Works, Art. 18, Sept. 9, 1886, revised at Paris July 24, 1971). The statute contains certain provisions to protect "reliance parties"--that is, people that had been using the formerly public domain work. For instance, in order to enforce the restored copyright, an owner must file a notice with the Copyright Office or otherwise place the reliance party on notice. (17 U.S.C. §104A(d)(2)). Further, a reliance party has a twelve month grace period in which they may continue to sell or exploit the restored work (although they cannot make additional copies of the work). (Id. at §104A(d)(2)(A)(ii), §104A(d)(2)(B)(ii)). And, only after that period had elapsed, would a license fee be due to the copyright holder, or the reliance party had to cease its use of the work.

In 2001, the plaintiffs, consisting of educators, performers, publishers, film archivists, and motion picture distributors, each claiming to rely on the use of public domain works to support themselves, brought suit in the United States District Court for the District of Colorado against the government seeking to enjoin on constitutional grounds the enforcement of Section 514 and the Copyright Term Extension Act (CTEA). (Golan v. Ashcroft, 310 F.Supp.2d 1215 (D. Col. 2004)). Plaintiffs included violinist and conductor Lawrence Golan and the Symphony of the Canyons, who had publicly performed restored works such as Prokofiev's Classical Symphony and Peter and the Wolf and Stravinsky's Petroushka. Plaintiffs also included film distributors, who had invested significant resources identifying and restoring public domain films such as Hitchcock's 1932 film, Number Seventeen, and the 1940 British film, Night Train to Munich. (Golan v. Gonzales, 501 F.3d 1179, 1182 (10th Cir. 2007)). These "reliance parties" claimed that Section 514 not only harmed their free speech, but also their economic interests, having spent time and money restoring or preparing the works on the expectation that the works would remain in the public domain.

The case was stayed briefly because the Supreme Court had agreed to hear the Eldred v. Ashcroft case, discussed below, which similarly involved First Amendment challenges to the Copyright Act. (Eldred v. Ashcroft, 537 U.S. 186 (2003)). Upon the lift of the stay, the district court dismissed plaintiffs' claims, concluding that Congress had the authority under the Copyright Clause of the Constitution to remove works from the public domain and there was a rational basis for enactment of Section 514, i.e., the protection of American authors' copyrights abroad. (Golan v. Gonzales, 2005 U.S. District Lexis 6800 at *42, 43-47 (D. Col. 2005)). The district court did not fully analyze the Plaintiff's First Amendment claims.

Plaintiffs appealed on the basis that the Supreme Court's Eldred v. Ashcroft decision required further First Amendment scrutiny of Section 514. The Tenth Circuit agreed and reversed, holding that although Congress has the authority under the Copyright Clause to enact Section 514 and restore protection to foreign works in compliance with the Berne Convention, the legislation "must still comport with other express limitations in the Constitution," notably the First Amendment. (Golan v. Gonzales, 501 F.3d 1179, 1187 (10th Cir. 2007), citing Eldred v. Ashcroft, 537 U.S. 186 (2003)). The Circuit Court found that copyright works historically followed the same sequence: creation, copyright, then public domain. Because Section 514 presented a departure from this sequence (by restoring copyright to public domain works), the court, relying on Justice Ginsberg's language in Eldred, held that Section 514 "altered the traditional contours of copyright protection" and on this basis, remanded the case to the district court for further First Amendment analysis.( Id).

The district court, finding that Section 514 was content-neutral, applied an intermediate level of scrutiny, as opposed to a heightened scrutiny standard. (Golan v. Holder, 611 F. Supp.2d 1165, 1170 (D. Col. 2009)). Nonetheless and even though the district court recognized that Section 514 advances a significant governmental interest, it concluded that the Berne Convention did not require full restoration of copyrights because the reliance parties could have been completely exempted.( Id. at 1174). In finding a First Amendment violation, the court concluded that Section 514 was substantially broader than necessary to achieve the government's interests.( Id). The government appealed to the Tenth Circuit.

Nine years after the initiation of the lawsuit and three U.S. attorney generals later, on June 21, 2010, the Tenth Circuit reversed the district court, holding that Section 514 did not violate the First Amendment. (Golan v. Holder, 2010 WL 2473217 (10th Cir. June 21, 2010)). In Golan v. Holder, the Court found that the statute satisfied intermediate scrutiny because it (1) advanced important governmental interests unrelated to the suppression of free speech and (2) did not burden substantially more speech than necessary to further those interests (or was "narrowly tailored").( Id. at *4).

As to the first prong, the Circuit Court found important governmental interests on the basis that securing foreign copyrights for American works preserves the authors' economic and expressive interests.( Id. at *5). In assessing the government's asserted harm, the Circuit Court held that substantial deference, particularly in matters of foreign affairs, should be given to Congress in its judgments of potential harm: "Our sole obligation is to assure that, in formulating its judgments, Congress has drawn reasonable inferences based on substantial evidence."( Id). The Court pointed to testimony before Congress at the time of Section 514's passing that the United States' historically lax position on copyright restoration had been harming our citizens' copyright interests abroad. (Id. at *7). The theory adopted by the Court was that if the U.S. was to pass restorative legislation for foreign works, other nations would be more likely to pass similar legislation.( Id).

As to the second prong, the plaintiffs argued that there was a less restrictive way of implementing copyright restoration, specifically urging the adoption of the United Kingdom model where the reliance party is allowed to continue making those uses of the work it had made, or incurred commitments to make, before the copyright is restored, but the reliance party can be bought out by the owner of the restored copyright.( Id. at *12-13). In rejecting this argument, the court held that even if there were other options available to Congress, the less restrictive analysis is never a part of the inquiry into the validity of a content-neutral statute, so long as the means chosen are not substantially broader than necessary to achieve the government's interest.( Id. at *13). Moreover, the court noted that there was no real different between Section 514's protections for the reliance parties and the U.K.'s protections, stating that the difference between the "buy out" and "notice" is only that one is economic protection and the other expressive protection. (Id. at *14).

The Importance of International Treaty Compliance

The Tenth Circuit's decision in Golan represents significant progress in the United States' compliance with international treaties relating to the protection of intellectual property. In upholding Section 514, the Court considered the evidence presented to Congress in support of Section 514's passing, such as evidence that foreign countries were willing to provide, at most, reciprocal copyright protections to American works. (Id. at *7 citing General Agreement on Tariffs and Trade (GATT): Intellectual Property Provisions: Joint Hearing on H.R. 4894 and S. 2368 Before the Subcomm. on Intellectual Property and Judicial Administration of the H. Comm. on the Judiciary and the Subcomm. on Patents, Copyrights, and Trademarks of the S. Comm. on the Judiciary, 103d Cong., 2d Sess. 249 (1994) (hereafter "Joint Hearings") at n.2, statement of Eric Smith, Executive Director and General Counsel of the International Intellectual Property Alliance). Otherwise stated, foreign countries would restore American copyrights only if the U.S. restored copyrights of their citizens. The Court also noted evidence in the legislative history that the U.S. often served as an example to other countries--U.S. restoration to foreign works in our public domain would induce other countries with whom the U.S. recently established copyright relations to follow suit. (Id., citing Joint Hearings at 225, statement of Irwin Karp, Counsel, Committee for Literary Studies).

While at first this appears to be a copyright protection quid pro quo, the facts presented to Congress indicated that the United States would continue to lose billions of dollars each year because foreign countries were not providing copyright protections to American works. (Id. at *6, citing Joint Hearings at 225, statement of Eric Smith). Projections from RIAA Chairman and CEO Jason S. Berman supported this, stating "[t]here are vastly more US works currently unprotected in foreign markets than foreign ones here, and the economic consequences of [granting retroactive copyright protection] are dramatically in favor of U.S. industries." (Id. at *6, citing Joint Hearings at 262, statement of Jason S. Berman, Chairman and CEO of the Recording Industry Association of America). The U.S. has a strong economic incentive to comply with international treaties, particularly given the increasing importance of export revenue from U.S. intellectual property.

While much of the Golan analysis focused on the reliance parties, it is important to remember that a significant number of foreign copyright owners routinely lost their rights because of a failure to comply with U.S. formalities that were in place prior to the 1976 Copyright Act. Under the 1909 Copyright Act, in order to create a valid copyright under U.S. law -even if the work was already in published form--a creator or owner was required to post a notice of copyright on the work, i.e., "©", and register the work with the United States Copyright Office. (Copyright Act of 1909, Pub. L. No. 60-349, 35 Stat. 1075 (March 4, 1909)). The 1909 Act also required a renewal to be filed after the expiration of the first 28-year term of copyright (to extend protection for another 28-year term). (Id).

The 1976 Act abandoned these formalities as a pre-requisite to a valid copyright, and instead, provided that copyright is created when expression is fixed in a tangible form. (Copyright Act of 1976, Pub. L. No. 94-553, 90 Stat. 2541 (October 19, 1976), codified as Title 17 of the United States Code). Now, notice of copyright and registration are only required in order to bring a lawsuit for infringement and obtain statutory damages and attorneys' fees. (17 U.S.C. §§411, 412). Somewhat ironically in view of Golan, a primary goal of the 1976 Act (and its abandonment of formalities) was to harmonize U.S. copyright law with international treaties and practice, where formalities were not a requirement for copyright protection.

Authority over matters relating to international treaty obligations and the consequences of non-compliance lies exclusively with the Executive Branch. And as the Tenth Circuit ultimately acknowledged in its recent decision, when it comes to matters of foreign policy and international affairs, Congress should be afforded significant deference.

Heightened First Amendment Scrutiny of Copyright Legislation

In Eldred v. Ashcroft, the Supreme Court upheld the constitutionality of the Sonny Bono Copyright Term Extension Act and in doing so, refused to apply anything beyond the rational basis review. (Eldred v. Ashcroft, 537 U.S. 186, 205 (2003)). The Court noted that the Copyright Act's "built-in free speech safeguards" are generally adequate to address First Amendment concerns. (Id). Only if Congress altered the "traditional contours of copyright protection," the court stated, would further First Amendment scrutiny be necessary. (Id. at 221). The "traditional contours of copyright protection" referred to by the Eldred Court comprise copyright law's "built-in free speech safeguards" of fair use and the idea/expression dichotomy (i.e., that ideas are not copyrightable).

Given that the Tenth Circuit in Golan ultimately applied intermediate scrutiny (as opposed to rational basis review), it would follow that Section 514 was found to be outside the "traditional contours of copyright protection." In Tenth Circuit's first Golan decision, the court interpreted Eldred quite broadly, finding that the "history of American copyright law" should inform its inquiry. The Circuit Court then performed a detailed analysis of the history of the Copyright Act and its treatment of the public domain (including the Framers' intent) and concluded that there simply was no history or tradition of removing works from the public domain. As such, the Court found that the statute presented a departure from the traditional creation, copyright, and public domain sequence. The Court did not specifically analyze the impact of the statute on fair use or the idea/expression dichotomy--if it did, it would see that those protections remained in tact regardless of whether a work was restored from the public domain.

If such a broad interpretation of Eldred was to persist, Congress' discretion would be hindered. It is important for the Copyright Act to continue to evolve--particularly in view of new media and technology developments as well as the growing international landscape for intellectual property. For instance, the Digital Millennium Copyright Act was a game-changing addition to copyright laws, and certainly in many ways, had no precedent. (Digital Millennium Copyright Act of 1998, Pub. L. No. 105-304, 112 Stat. 2860, 2887, enacted October 28, 1998, codified as Title 17 of the United States Code).

In closing, although Section 514 appears to have survived First Amendment scrutiny, it wouldn't be surprising if further attacks are brought against the Copyright Act on the basis that certain amendments exceed the Act's "traditional contours." Lawrence Lessig (in connection with the Stanford Law School Center for Internet and Society) represented the plaintiffs in both the Eldred and Golan cases, and given the Center's zeal in challenging the Copyright Act, it was somewhat predictable that on October 20, 2010, a petition for writ of certiorari was filed with the Supreme Court seeking review of the Tenth Circuit's Golan decision. It will be interesting to see if the Supreme Court is willing to accept certiorari to clarify what the Court meant in Eldred with regard to the "traditional contours of copyright protection."


December 30, 2010

Common Law Copyright

By Joel L. Hecker

There is an interesting decision dated December 21, 2010, and published in the December 30, 2010 New York Law Journal, concerning common law copyright to the list created by Oskar Schindler, which became famous through the 1993 Steven Spielberg film "Schindler's List".. The case is Rosenberg v. Zimet, Index No. 601183/2010, Supreme Court, New York County.
 
Apparently there are three original versions of this list of "essential" workers, created by Schindler, which contain the names of the more than 1,100 Jews he saved. One list, discovered in his suitcase, is at the Yad Vashem Museum in Israel. A second one was left to the plaintiff by Schindler's widow, with the plaintiff claiming common law copyright in it. The third one was kept by his accountant, and then given to the accountant's nephew, who wants to sell it. This copy is nearly identical to the one owned by the plaintiff.
 
The court rejected plaintiff's motion for a preliminary injunction to prohibit the sale, on the grounds that the defendant intended only to sell the list, as opposed to publishing it. Since the sale is not a copyright right, held the court, plaintiff's purported copyright rights, which were in any event in dispute, were irrelevant.
 
The judge did refer to an earlier case (Chamberlain v. Feldman, 300 NY 135) concerning an unpublished Mark Twain manuscript, where that court barred publication under copyright law because of the inability of establishing a right to publish it, but held it did not apply to a sale.
 
Not addressed in the opinion is whether the exhibition of the list at Yad Vashem, or elsewhere, would constitute publication, and therefore place all of the lists in the public domain.
 
Thus, common law copyright appears to remain alive and well in the state courts!

About December 2010

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