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Second Circuit Court Holds That Director Does Not Own Separate Copyright for His Contribution

By Robert L. Seigel

Over the years, there has been a metaphorical dance in which a media project's attorney often has to chase down cast or crew members to sign agreements that include the customary "work for hire" language. Some cast and crew members (and their respective representatives) have been less than helpful in this manner. Sometimes it is forgetfulness; however, sometimes these personnel and their representatives believe that if they do not sign their agreements, there will be a resulting problem with the "chain of title" for the production company. They often think that by not signing, they may hinder or prevent the production company from signing a sales or distribution agreement and completing delivery of the required elements of a media project to the sales company, distributor or licensee.

Then the case of 16 Casa Duse v. Merkin, No. 13-3865 (2d Cir. 2015) arrived on the legal landscape.

Robert Krakovski, the principal of the film production company 16 Casa Duse, LLC (Casa Duse), purchased the rights to a screenplay titled "Heads Up" from a third party, and asked Alex Merkin to direct the film. As part of standard operating procedure, Krakovski then hired a cast and crew for the film, and each cast and crew member (other than Merkin) signed an Independent Contractor Agreement with Casa Duse, which was a work-for-hire agreement providing that Casa Duse would own all rights in the film.

Everyone signed the agreement except for Merkin, despite Krakovski's repeated attempts requesting Merkin to sign the agreement. Despite Krakovski not receiving a signed agreement from Merkin, the film's production commenced and principal photography as well as post production occurred.

Compounding matters, Krakovski gave Merkin a hard drive that included the film's raw footage, so that Merkin could prepare an initial, or "rough cut" of the film. Although Merkin would not sign his director's agreement, he did sign a media agreement, which permitted him to edit the raw footage, but he could license, sell or copy the footage without the production company's permission.

However, a problem arose when Krakovski began submitting the film to film festivals, and scheduled a screening at the New York Film Academy (NYFA) with a reception to follow the screening. Krakovski placed a deposit of $1,956.58 for the reception. On the date of the screening, the NYFA canceled the screening because Merkin's attorney, Maurice Reichman, had sent it a cease-and-desist notice. This cancellation resulted in Krakovski losing his restaurant deposit.

To refute Merkin's claims that the production company was liable to Merkin for copyright infringement and that Merkin had a copyright interest in the film, the production company brought a declaratory action to address such issues, not only against Merkin, but also his attorney.

The district court granted a temporary restraining order and preliminary injunction enjoining Merkin from interfering with Casa Duse's use of the film. Casa Duse also moved for summary judgment on its claims and its requests for fees and sanctions. Merkin cross-moved for summary judgment, requesting that the district court vacate the preliminary injunction and dismiss the production company's request for fees and sanctions.

The district court declined to vacate the injunction and granted summary judgment to the production company on all claims, along with fees against Merkin and sanctions against Reichman. It also dismissed all of Merkin's counterclaims, except for his claim for breach of contract, which Merkin agreed to voluntarily dismiss without prejudice. The district court entered final judgment, awarding Casa Duse (1) $1,956.58 in damages resulting from Merkin's interference with the NYFA screening event; and (2) $185,579.65 in attorneys' fees and costs, of which Merkin and Reichman would be jointly and severally liable for $175,634 and Reichman would be solely liable for the remaining $9,945.65. Merkin and Reichman appealed to the Second Circuit.

The Second Circuit noted that the case presented a question of first impression in the Circuit: Can a contributor to a creative work whose contributions are inseparable from and integrated into the work maintain a copyright interest in his or her contributions alone? The question was answered in the negative.

The Court first addressed the competing copyright claims. Merkin argued that the district court erred in concluding that he could not copyright his creative contributions to the film, and that he lacked a copyright ownership interest in the "raw film footage." The production company countered that the individual contributions to a film, such as direction, are not themselves subject to copyright protection, and that the production company retained sole copyright ownership of the final film and the film's raw footage. The parties agreed that Merkin was not a "joint author" or "co-author" of the film under the Copyright Act, and that Merkin's efforts could not be deemed a "work made for hire," which would have precluded Merkin's copyright infringement claims.

The Second Circuit concluded that copyright protection does not subsist in creative contributions to a work that are inseparable from the work itself. The Copyright Act's definitional terms and legislative history supported the conclusion that Merkin's contributions to the film did not themselves constitute a "work of authorship" sufficient on its own to be provided copyright protection. Although the Copyright Act does not define "works of authorship," it does list examples of categories of "works of authorship," which do not include integral, non "stand alone" constituent parts of a work. The Second Circuit also relied upon the Ninth Circuit's decision in Garcia v. Google, Inc., which held that an actor did not own a copyright interest in her performance in a completed film, because such a theory of copyright law would result in a "legal morass" making "Swiss cheese of copyrights." According to the Second Circuit, filmmaking is a collaborative process that typically involves artistic contributions from large numbers of people, including producers, directors, screenwriters, actors, designers and cinematographers. Although these various contributors can contribute original artistic expressions that are arguably fixed in the medium of film footage, this alone is not sufficient. Authors are not entitled to copyright protection except for the "works of authorship" they create and fix, which does not include non-freestanding contributions to an integrated work.

The Second Circuit next considered the parties' competing copyright claims with respect to the raw film footage. It agreed with the district court that the production company was the "dominant author" of the film, based on the production company's decision-making authority over production of the film, its purchase of the underlying screenplay, and its work-for-hire agreements with the cast and crew. The record did not reflect any developments that occurred between the creation of the raw film footage and the production company's attempts to create a finished product that would alter the analysis as to the raw footage. Therefore, the production company, not Merkin, owned the copyright to the finished film and its prior versions.

Addressing the production company's claim for tortious interference with business relations under New York law, the Second Circuit disagreed with the district court, concluding that the undisputed material facts required judgment in Merkin's favor. To support its claim, the production company was required to show that Merkin's conduct rose to the level of a crime or a tort, or that Merkin engaged in the conduct solely for the purpose of inflicting intentional harm. The Court maintained that the production company failed to show that Merkin acted for a wrongful purpose, or used dishonest, unfair or improper means. It also rejected as insufficient the production company's argument that Merkin acted with a willful blindness to the factual and legal realities of his position. Finally, the Second Circuit held that the district court did not err in awarding fees and costs to the production company and imposing sanctions against Reichman.

On a practical level, does this decision mean that producers should not secure "work for hire" or assignment of rights agreements? Obviously not. The Second Circuit's decision leaves certain issues unaddressed, such as whether such contributions and a screenplay or a music score could be deemed an independent contribution. The licensees and purchasers of audio-visual media works, such as a motion picture feature, will still require such documentation for chain of title purposes to enter into such agreements, as well as secure Errors and Omissions (E & O) insurance. This decision, however (hopefully extended in such circuits as the Ninth), shall permit production counsel to take a collective breath when those that work on a media project (or their representatives) attempt to engage in what be called unfair and "strong-arm" tactics in negotiations.

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This page contains a single entry from the blog posted on November 9, 2015 9:34 AM.

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