Commonly Used Copyright Assignment Language Is Invalidated by Appeals Court

Assignments of copyright and other intellectual property rights are common both in employment and other types of agreements. 

For copyrights, many form agreements include standard assignment clauses that use some variation of language that the work will be deemed a “work for hire” and hence owned by the hiring party. 

In T.D. Bank v. Hill (3d Cir. 2019), the Third Circuit considered such widely used language in an agreement meant to transfer copyright in a manuscript.  It held that language invalid.     

Work for hire is a creation of the Copyright Act, whereby a work created by an employee in the scope of his employment is deemed to have been authored by the employer. 

Parties cannot agree to “deem” a work one for hire – it has to be one under the Copyright Act through application of the factors set out by the Supreme Court.

T.D. Bank now squarely calls into question the use of such language in assignment agreements and counsel involved in drafting such assignments should strongly consider using different language if the intended result is to be achieved.. 

It is recommended that additional language be included, to the effect that if the work is not deemed “for hire,” then alternatively the person agrees to assign all rights to the hiring party.

Miley Cyrus Case Shows Importance of Early Copyright Registration

A recent copyright case, May v. Sony Music Entm't and Cyrus, involving a top-of-the-charts song illustrates the importance of early copyright registration, before any infringement begins.

Later registration will not preclude suit, but it will limit the relief that can be collected.  In some cases, that limitation may turn what seems like a winning case into a loser.

The case also highlights an effective strategy for those defending against copyright infringement claims, especially in cases involving “copyright trolls.”

Lawsuits are about more than who is liable – they are also about remedies, including how much to pay in damages.  If there is a way to limit the awardable damages, that can go a long way towards disposing of a suit.

Second Circuit Holds that Statutory Right to Adapt Software Preempts Contractual Terms

A recent Second Circuit decision, Universal Instruments Corp. v. Microsystems Engineering Inc. (2d Cir. 2019) provides important lessons for parties involved in negotiating software and other technology development contracts.

One key holding is that where the copyrighted software was licensed to the customer pursuant to terms of a development contract, then the customer had a statutory right, under Section 117(a) of the Copyright Act, to have a different developer modify and adapt the software for the customer’s use.  And, that statutory right pre-empted any claim that the contract limited such adaptation rights. 

The Second Circuit also construed license terms to allow both MSEI and the second developer to use the software anywhere in the world to service MSEI’s system.  

Together, these rulings meant that once the developer had created and licensed the software, it was powerless to stop the customer from employing other companies to use, adapt, and modify the software, at least for the customer’s own business. 

Parties involved in negotiating development licenses should be aware that the Copyright Act may vest additional rights in a customer beyond that provided in the contract – and that contrary contracts terms will be preempted by the law.

Copyrighted Works Deemed “Published” When Shown to Potential Wholesale Purchasers in Salesmen’s Look Books

The Copyright Act protects both published and unpublished works, but there are a number of differences between them. 

One important difference is registration.  For many copyright owners, a collection of unpublished works can be registered as a unit, which generally cannot be done for published works. 

Registering works as a collection is a major cost efficiency for copyright owners having large numbers of works.

But a recent Ninth Circuit decision, Urban Textile, Inc.  v. Rue 21, Inc.  (9th Cir. 2019) highlights a trap for the unwary.  It held that inclusion of the claimed copyrighted fabric designs in a look book of fabrics used by the manufacturer to solicit orders from its customers constituted “publication” of the designs.  That invalidated the registrations and led to dismissal of the infringement claims on summary judgment.

This kind of “publication” is common in many industries, especially those involving fashion.Many companies will show their next season’s line to buyers well in advance of making them available for sale to the public.Such companies need to be aware that this kind of pre-showing can constitute a publication – and if copyright is important, the works should be registered before the showing

Copyright Case Teaches How to Deal with Trolls

A recent decision dealt with a “copyright troll,” an attorney that had filed over 500 copyright cases in the Southern District of New York alone.  Pereira v. 3072541 Canada Inc.  Although the case denied attorney’s fees to the defendant, the history of the case recites several procedural steps that defense counsel used to thwart the plaintiff, who had sought a substantial settlement ($25,000) largely on the procedural burden of litigating the case.

The case teaches valuable lessons in how to effectively deal with a troll

Failure to Do Due Diligence in IP Acquisition Means Copyright Infringement Claim Is Barred

Companies which acquire IP rights must, of course, make efforts to ensure that ownership of what they are acquiring is secure. 

As one company learned in a recent copyright decision by the Second Circuit, Latin America Music Co. v. Spanish Broadcasting System (2018), failure to undertake proper due diligence as to the chain of title may mean the loss of the ability to enforce those rights. 

The takeaway, of course, is that any time rights are transferred (whether through a straight acquisition, merger, or corporate reorganization), the acquiring entity must make sure that no one else has claimed rights in the works at issue.Otherwise, it may discover that it has acquired an unenforceable and hence worthless right

Ninth Circuit Decision Requires Greater Pre-Suit Investigation for Copyright Piracy Cases

A recent Ninth Circuit decision, Cobbler Nevada, LLC v. Gonzales (2018), requires greater due diligence before a copyright enforcement suit can be brought.

Downloading of movies and other copyrighted content is a major problem for many copyright owners, and they have fought back by tracing the illegal downloading to an IP address.  But the Ninth Circuit has held that merely identifying the IP address and its associated subscriber is insufficient to bring suit. 

The take away is that copyright owners are going to need to do a more thorough pre-suit investigation – and perhaps use advances in technology – to more precisely trace infringing downloads before bringing suit.

News-Indexing Site Case Limits Fair Use

Copyright protection has long been limited by the fair use doctrine, which allows unlicensed use of others’ content for certain “fair” purposes. 

Many recent decisions have focused on whether a use is “transformative” to determine whether it is fair – meaning it creates something new and different.  But a recent Second Circuit decision involving large quantities of video content rejected a fair use defense even though finding the use transformative.  Companies considering use of others’ content would be well advised to consider the ramifications of the decision.

In the digital world, often there are often huge quantities of copyrighted information that users may wish to sift through to find content they are interested in.  Secondary businesses have arisen that compile and index the content and then allow users to search and locate what they need or are interested in.  Three years ago, in Authors Guild v. Google, Inc., 804 F.3d 202 (2d Cir. 2015), the Second Circuit found such a commercial indexing scheme to constitute “fair use” of the underlying content. 

But recently, in Fox News Network, LLC v. TVEyes, Inc. (2d Cir. 2018), the Second Circuit found another such scheme as not being protected as fair use.  The contrast between the two cases informs users of copyrighted content as to where to draw the line between fair and not fair use.

New York Federal Court Holds Embedding Photos May Infringe Copyright

A New York federal court in Goldman v. Breitbart News has held that the common internet practice of “embedding,” also referred to as “in-linking” infringes the copyright of content that is embedded. 

A very common practice for a website involves including a link to another site where content (articles, photographs) is stored, and then displayed on the website.  The content it is never stored on the linking site but rather on the linked-to website. 

In 2007, the Ninth Circuit Court of Appeals held in Perfect 10 v. Google that this practice does not infringe on the exclusive “display” right in the Copyright Act. But in February a federal court in New York rejected the Ninth Circuit’s view and held that embedding infringes on the right of display. 

Plaintiff Justin Goldman, a photographer, took a photo of quarterback Tom Brady and posted it to his Snapchat page.  The photo then spread around the internet, and was eventually posted to Twitter.  The defendants – who include Breitbart News, Time, Gannett and the Boston Globe – wrote articles about Brady (and his involvement in the Boston Celtics recruiting Kevin Durant), and then embedded the Twitter post, displaying the photograph of Brady with the articles.   Goldman sued for copyright infringement, asserting that this practice infringed on his exclusive right to “display” the photos.

            This decision has the potential for a major impact on many websites and blogs, which often link to content on other sites.  These sites now must consider whether they need a license to use linked-to content.  A further thing to consider is whether sites that allow uploading need to amend their Terms of Use to permit linking of some kind. 

Fourth Circuit DMCA Case Teaches How to Ensure Immunity For Third Party Postings

A recent Fourth Circuit decision, BMG Rights Mgmt LLC v. Cox Communications Inc. (4th Cir. 2018) affirmed summary judgment that an internet service provider, an ISP, was not entitled to claim Digital Millenium Copyright Act (DMCA) immunity from copyright infringement for third-party postings through its service, opening up the company to massive copyright liability. 

A central part of the DMCA, a part of U.S. copyright law, is the exemption from direct and indirect liability of internet service providers and other intermediaries on the internet.

In Cox, the ISP had failed to implement a reasonable policy to remove repeat infringers, a condition of DMCA immunity, and so lost its immunity.

The Cox decision teaches several important lessons to companies who wish to use the DMCA to avoid copyright liability. 

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.

Recent Second Circuit Cases Make Evidentiary Use of Copyrighted Materials Easier

In this digital age, electronic evidence is ubiquitous.  Websites, blog postings, social media pages and emails abound.  Even in the “real world,” a video or still camera is almost always at hand – most smartphones and tablets have such a function.  For lawyers, these materials are rich with potential evidence in a wide variety of cases.

But what about rights to copyright?  Under the Copyright Act, copyright vests as soon as copyrightable expression is fixed in a tangible medium ─ no registration being required. As soon as someone snaps a picture (or videos an event) on their iPhone, they are an author and hence copyright owner.  

Is a lawyer who gathers such evidence and submits it in a court or arbitration proceeding without permission an infringer?

Two recent cases in the Second Circuit have fact patterns illustrative of how copyrighted materials can be used as evidence. Hollander v. Steinberg, 419 Fed.Appx. 44 (2d Cir. 2011) and Scott v. Worldstarhiphop, Inc., 2011 WL 5082410 (S.D.N.Y. 2011).  These cases strongly suggest that such use will often be protected by the doctrine of fair use, codified at 17 U.S.C. § 107.  

Impact of Second Circuit’s Preliminary Injunction Standard After Salinger

Preliminary injunctions, though available in any type of case, are not uncommon in copyright and trademark cases.  For over thirty years, federal courts in the Second Circuit used a two-part test first announced in Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir. 1979), requiring a party in any case seeking a preliminary injunction to show: “(a) irreparable harm and (b) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief.”  

Furthermore, in both copyright and trademark cases, the Second Circuit held that once likelihood of success was shown, there arose a presumption of irreparable harm.  Thus, as a practical matter, a trademark or copyright owner seeking a preliminary injunction had to focus on proving a strong likelihood of success on the merits.  Once proven, and absent unusual circumstances (most usually delay in seeking relief), entry of a preliminary injunction was almost routine.

In April 2010, in Salinger v. Colting, 607 F.3d 68 (2d Cir. 2010), a copyright case,  the Second Circuit held that the Jackson Dairy standard was effectively abrogated by the Supreme Court’s ruling in eBay, Inc. v. MercExchange, LLC,  547 U.S. 388 (2006), a patent case involving a permanent injunction. Salinger adopted a four-part test modeled after eBay.  

Furthermore, with respect to irreparable harm, the Second Circuit, again relying on eBay, rejected prior Circuit law that held that in copyright cases there is a presumption of irreparable harm upon a showing of likelihood of success.  See id. at 82.