Unusual Cases Sharpen Copyright Law Principles

Most litigated cases present fairly routine fact patterns with well-established legal principles. The main point of contention is mustering proof of the facts. Occasionally, courts confront unusual cases which can serve to sharpen understanding of the underlying legal principles involved. These cases also highlight and help define for the bar legal concepts that take on a new understanding when reviewed in light of unusual situations.

We review here three recent copyright decisions from New York federal courts that involve unusual facts or legal postures. Review of these decisions can be both a valuable review of basic copyright concepts and can yield a more nuanced understanding of them. The lessons learned from these cases include (1) use of the fair use doctrine for obtaining copyright; (2) work for hire principles; and (3) interaction of state contract law and copyright.

Fair Use – Not Just For Defense

From the very beginning of Copyright law in this country, federal courts have allowed a defense to a charge of copyright infringement referred to as the “fair use” defense. Now codified in Section 107 of the Copyright Act, certain uses of a copyrighted work – including criticism, comment, news reporting, teaching, scholarship – are deemed “not an infringement of copyright.” Courts are charged with reviewing four statutory factors to determine whether the use is “fair;” if the Court concludes it is, that constitutes a complete defense to a claim of copyright infringement.

The defense is valid even though the defendant copied protected parts of the copyrighted work, used them in a new work, and did so without authorization. One famous fair-use example is Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 575 (1994), where the Supreme Court held that Luther Campbell’s raunchy version of the famous song Pretty Woman was a parody, and hence protected as a fair use.

Can fair use also be used to gain a copyright? In a recent decision, Keeling v. Hars, 809 F.3d 43 (2015), the Second Circuit answered affirmatively. Plaintiff Jaime Keeling was the author of Point Break Live, a “parody stage adaptation of the 1991 Hollywood action movie Point Break.” Keeling’s parody drew heavily on the movie’s characters and dialogue; she added jokes, props, exaggerated staging, and humorous theatrical devices to transform the plot of the movie into a parodic, interactive stage experience.

Keeling persuaded a production company to stage the parody for two months. Afterwards, the company continued to stage it for four more years without paying anything, arguing that she had no rights in it at all. At trial, a jury awarded Keeling $250,000; the defendant appealed to the Second Circuit.

On appeal, a major issue was what rights, if any, Keeling had in her parodic stage play. Since the play was based on and drew heavily from the movie, her rights, if any, in the play would be as a “derivative work,” defined as a “work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted.” 17 U.S.C. § 101.

One of the copyright owner’s exclusive rights in the Copyright Act is to “prepare derivative works based upon the copyrighted work.” 17 U.S.C. § 106. Creating a derivative work without the copyright owner’s permission is an act of infringement. Conversely, an author or one authorized by an author who creates a derivative work becomes the owner of a copyright in the derivative work, which “extends only to the material contributed by the author of such [derivative] work, as distinguished from the preexisting material employed in the work, and does not imply any exclusive right in the preexisting material.” 17 U.S.C. § 103.

For example, an author of a novel owns a copyright in the novel and all its parts (characters, plot, etc.); if he then writes a sequel, he owns a derivative-work copyright in the new, protectable portions of the sequel, but not the copyrightable expression already in the first work.

Typically, derivative works are prepared either by the author or under license from the author. If the creator of the derivative work thereby infringed the original work – and as noted preparing a derivative work is itself an infringement – then the Copyright Act denies all protection: “protection for a work employing preexisting material in which copyright subsists does not extend to any part of the work in which such material has been used unlawfully.” 17 U.S.C. § 103.

But what if the use was unauthorized but still not unlawful? Keeling decided just that question in the creator’s favor: the use by Keeling of the protectable expression in the movie was a fair use (which the jury found and the defendant did not challenge on appeal) because it was a parody. Keeling’s use was not “unlawful,” and she therefore held a copyright in her new, parodic work.

To be sure, her copyright rights were limited. Nothing taken from the original movie was protectable as to Keeling. But, the court held, “Keeling’s creative contribution, and thus her copyright, is in the original way in which [she] has selected, coordinated, and arranged the elements of . . . her work to create new parodic meaning.” Keeling’s rights extended, therefore, to whatever original contribution she added in creating the parodic work.

It is a truism that most new works and inventions build upon what was created and known before. Intellectual property law recognizes this, and does not deny protection to works that incorporate prior works. What Keeling illustrates is that, so long as the use is not unlawful, a new contribution will be protected.

Work For Hire – Something Old, Something New

Ownership of a copyright vests in the “author” of the work – usually the creator. The “work for hire” doctrine, however, is an exception – the one who hired the creator is considered the “author,” and copyright vests in the one who employed or engaged the creator. Since enactment of the new Copyright Act in 1978, work for hire is generally limited to employees working within the scope of their employment.

But under the prior, 1909 Copyright Act, work for hire also extended to a creator who acted at the “instance and expense” of another – meaning the other person caused him to engage in creation, perhaps oversaw the artistic effort, and funded it.

A recent case applied both Acts to a dispute over ownership of thousands of photographs created over a period of sixteen years. Lewin v. Richard Avedon Foundation, (S.D.N.Y. 2015). Gideon Lewin worked as an assistant to the famous photographer Richard Avedon, since deceased. He claimed that his job duties did not include taking photographs – he only made prints, set up lighting, and performed administrative tasks. Over a period of sixteen years while working for Avedon, Gideon claimed he produced some 4,200 photographs, all on his own time.

Richard Avedon Foundation, the successor to all of Avedon’s rights, claimed otherwise; it claimed that Gideon’s duties included taking pictures, and apart from that claimed that some of the photographs were done at the “instance and expense” of Avedon, and hence owned by Avedon and then the Foundation as his successor.

The district court denied summary judgment as to ownership on most of the photographs, finding that there were issues for trial as what Lewin’s duties were and, even if his duties included taking pictures, whether those at issue in the case were done during “off the clock” hours for Lewin’s own purposes or not.

For a few groups of pictures, however, the district court granted summary judgment. First, in 1973, Avedon travelled to Baja, California to photograph Raquel Welch for Vogue magazine. Lewin accompanied him. Avedon and Welch had a disagreement and then a confrontation. To distract Welch, Avedon asked Lewin to photograph the model, so he could then proceed with the shoot.

The photographs resulting from this “distraction” photography belonged to Avedon (and hence the Foundation). They were performed by Lewin as part of his job, were Avedon’s idea and were done for his, not Lewin’s, benefit.

Similarly, Avedon asked Lewin to take photographs of a group who had gathered in Avedon’s home to raise money for a play. Lewin admitted that he likely used a studio camera to take the pictures. Since Avedon had provided the impetus for taking them, told Gideon who to photograph and where, the court held they were taken at his “instance.” Use of the studio camera meant they were taken at his “expense.”

Applying the “instance and expense” test under the 1909 Act, the court held these too were owned by the Foundation.

Lewin illustrates two points. First, although the 1909 Act was superseded almost 40 years ago (in 1978), its legal standards still control disputes that concern pre-1978 events.

Second, it embodies the old lawyers’ saw that an oral contract is not worth the paper it is printed on. Lewin worked for Avedon for sixteen years, yet the opinion is devoid of even a mention of any kind of written employment contract. A written contract that delineated Lewin’s employment duties and provided for ownership of works created might have gone a long way to resolving much of the dispute.

The third decision we consider, I.C. by Solovsky v. Delta Gail USA, 135 F.Supp.3d 196 (SDNY 2015), dealt with ownership of a copyright by a child. Defendant Miss Matched Inc., a clothing and accessories company, sponsored a contest in a New York elementary school where students were given a chance to submit original designs for T-shirts. The winner received a $100 prize plus five T-shirts with their design; the contest rules broadly assigned all copyrights in the designs to the company.

I.C., a second-grader, entered the contest and won with a fairly simple smiley-face design. Both she and her mother signed the submission form that included the copyright transfer. She was one of two winners, and collected her prize.

Subsequently, the clothing company created a whole line of clothing based on her design. I.C. sent a letter purporting to cancel the assignment. I.C. then attempted to register the design with the Copyright Office, but the application was rejected as lacking sufficient originality. She then brought suit for copyright infringement against the clothing company and its successor.

One major issue the court had to deal with was ownership. Was I.C.’s copyright assignment, co-signed by her mother, effective? First, the court noted that while the dispute was over a copyright, the underlying contract issues were governed by New York law. The court rejected the argument that, as a minor, I.C. was incapable of assenting to a contract. To the contrary, New York law presumes that she read and understood the agreement. Absent a showing of fraud or mistake, youth alone is not a reason to void the contract.

The court did note that New York law allows an infant to disaffirm a contract. But, this is permitted only where, after disaffirmance, the infant would not be in a superior position than if she had never entered the contract. At minimum, this would require return of the $100 prize money and the five T-shirts she received. I.C. alleged she tendered them back. But that was still insufficient:

[B]y repudiating the contract after [defendant] has created an entire catalogue of clothing and accessory lines using the design, plaintiff would regain ownership of the design at a significant advantage—after Miss Matched has spent resources developing and marketing that catalogue. Plaintiff may not retain this “fruit of the contract” under New York law. . . . Because New York law prohibits a minor from using the privilege of infancy as a sword, gaining an advantage through repudiation she would not otherwise have enjoyed, plaintiff cannot disaffirm the contract.

The district court did find that, at least on the face of the allegations of the complaint, I.C. raised sufficient allegations that the assignment was void as “unconscionable.” Under New York law, voiding a contract for unconscionability requires a showing of both procedural and substantive unconscionability.

As to the former, the court noted the superior bargaining position of the defendant clothing company as compared to a second grader, and that the contest was conduct through her elementary school, which had significant authority over her. As to the latter, the court expressed doubts whether substantive unconscionability could be shown, since all that I.C. had to do was submit a simple drawing. Still, given that the two operate on a “sliding scale,” the court refused to dismiss the complaint, and set down the issue for an evidentiary hearing.

Next, the district court considered whether the design was copyrightable at all. Although the Copyright Office rejected it as not sufficiently original, that meant little in the case. When the Copyright Office rejects an application, the applicant has two avenues open to her. She can appeal the denial under the Administrative Procedures Act and Section 701(e) of the Copyright Act. In that case, the Copyright Office’s determination is reviewed deferentially.

But, the applicant can also proceed by instituting infringement litigation under Section 411(a), which allows those who have been refused registration to proceed upon notice to the Copyright Office (which may intervene in the case). In such litigation, the court reaches its own determination with no deference to the Copyright Office.

Turning to that issue, the Court noted that I.C.’s design was simple: an upturned smiley-face with the word HI on the front; a downturned smiley face with the word BYE on the back. Although the elements that made up the design were simple, the selection and arrangement of her design was sufficiently original to warrant copyright protection, since under Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 345 (1991), “the requisite level of creativity is extremely low,” and “[t]he vast majority of works make the grade quite easily, as they possess some creative spark, no matter how crude, humble or obvious it might be.”

Finally, the Court noted that there was a strong case of copying – the new line of clothing was offered in the same announcement that congratulated I.C. (and one other student) for winning the contest, and offered the shirts at a discount to her classmates “to celebrate these two student designs.”

The I.C. decision illustrates several important points. First, copyright can inhere in something very simple – literally something a child can create, which might well form the basis of a commercially successful endeavor. Second, the mere fact of rejection by the Copyright Office is not reason to despair – courts can and do find originality notwithstanding rejection.

Third, contract law always hovers in the background of intellectual property law. Whether governing employment relations, assignment of rights, or licensing, contracts, and contract law, are a major part of intellectual property practice. In the I.C. case, where the company ran a design contest among elementary school students, the law of contracting with minors certainly played a huge role.


A previous version of this post appeared in the New York Law Journal, December 21,2015