By Barry Werbin and Laura Tam, Herrick, Feinstein LLP
It didn't take much deducing for the Court of Appeals for the Seventh Circuit to rule on June 16th that Sherlock Holmes and Dr. Watson, the famous character sleuths created by Sir Arthur Conan Doyle in the early 19th century, are in the public domain and free for public use. The resolution of this closely-watched copyright dispute has significant implications for the creation of future works featuring the Holmes and Watson characters because most aspects of these characters, according to the Seventh Circuit, are now "fair game."
As the Seventh Circuit pointed out, Arthur Conan Doyle published 56 stories and four novels about Sherlock Holmes. The first story was published in 1887 and the last 10 stories were published between 1923 and 1927. Due to the 1998 Copyright Term Extension Act, the American copyrights on the final 10 stories will expire between 2018-2022, 95 years after the respective dates of first publication. The copyrights on the other 46 stories and the four novels, however, previously expired and are in the public domain.
The case began when the Conan Doyle Estate (the Estate) threatened to prevent the distribution of Leslie S. Klinger's proposed compilation of modern stories depicting Sherlock Holmes and Dr. Watson. Klinger had previously co-edited an anthology of such stories entitled A Study in Sherlock: Stories Inspired by the Sherlock Holmes Canon, which was published by Random House in 2011. After the Estate told Random House that it would have to pay $5,000 for a copyright license, Random House paid the license and published the book. In 2012, Klinger decided to publish a sequel to A Study in Sherlock to be called In the Company of Sherlock Holmes and entered into negotiations with Pegasus Books and W.W. Norton & Company. After the Estate threatened to prevent the distribution of the anthology and sue for copyright infringement, Pegasus refused to publish the book until Klinger obtained a license from the Estate.
Instead of obtaining the license, Klinger sued the Estate, seeking declaratory judgment that he is free to use the material from the Sherlock Holmes stories and novels that are no longer under copyright. After the Estate defaulted by failing to appear or respond to Klinger's complaint, the district court gave Klinger leave to file a motion for summary judgment. After Klinger filed his motion, the Estate responded with two main arguments. First, the Estate argued that the district court did not have subject matter jurisdiction, because there was no actual case or controversy between the parties. Second, the Estate argued that even if the court had jurisdiction, the Estate was entitled to judgment on the merits because the copyright of fictional characters, such as Sherlock Holmes or Dr. Watson, whose complexity is not fully developed until a later story, remains under copyright until the expiration of the later story's copyright. The district court granted Klinger's motion for summary judgment, and the Estate appealed to the Seventh Circuit.
First, the Seventh Circuit rejected the Estate's argument that the district court did not have jurisdiction. The Court held that the Estate's threats "to block the distribution of the book by major retailers and to sue for copyright infringement" created an actual controversy that justified the declaratory judgment action. Second, the Court determined that there was no basis for extending a copyright beyond its expiration and that "[w]hen a story falls into the public domain, story elements -- including characters covered by the expired copyright -- become fair game for follow-on authors." (Citing for support the Second Circuit's decision in Silverman v. CBS Inc., 870 F.2d 40, 49 -51(2d Cir. 1989), which involved the fictional characters Amos and Andy).
Although the Estate attempted to draw a distinction between "flat" and "round" fictional characters, arguing that Holmes and Watson did not become fully "rounded" until the last story that Doyle published, the Court stated that it did not "see how that can justify extending the expired copyright on the flatter character." Thus, while the characters of Holmes and Watson were copyrightable, the Court determined that any subsequent features that were added to the characters (for example, that Holmes has grown to like dogs or that Watson has been married twice) did not revive the expired copyrights on the original characters. The Court emphasized that "[t]he copyrights on the derivative works, corresponding to the copyrights on the ten last Sherlock Holmes stories, were not extended by virtue of the incremental additions of originality in the derivative works."
As the Seventh Circuit noted, "[E]xtending copyright protection is a two-edged sword from the standpoint of inducing creativity, as it would reduce the incentive of subsequent authors to create derivative works . . . by shrinking the public domain." The Court seemed particularly concerned about the "spectre of perpetual, or at least nearly perpetual, copyright" and that the Estate was attempting to curtail creativity by "extending the copyright protection of literary characters to . . . extraordinary lengths." Indeed, the Court succinctly rejected the Estate's argument that allowing Holmes and Watson to enter the public domain would disincentivize authors from improving and perfecting their works. As the Court noted, "[O]ther artists will have a greater incentive to improve it, or to create other works inspired by it, because they won't have to pay a license fee to do so provided that the copyright on the original work has expired."
While the Seventh Circuit's decision means that the Estate's heyday of collecting significant copyright license fees and royalties is largely over, it also ensures that artists and authors like Klinger will not be pressured into paying license fees for character rights that have entered the public domain.
A copy of the Seventh Circuit's decision is available here: http://media.ca7.uscourts.gov/cgi-bin/rssExec.pl?Submit=Display&Path=Y2014/D06-16/C:14-1128:J:Posner:aut:T:fnOp:N:1363624:S:0.