Monday, October 10, 2005

It Better Be Signed, Sealed and Delivered

The intersection of state and federal law with respect to copyright has long been problematic, even though the grant itself is entirely federal. The difficulties arise in many areas, such as personal jurisdiction (there is no provision in the Copyright Act on service of process, which leads to application of state law on personal jurisdiction); subject matter jurisdiction (when is a dispute one really arising under the Copyright Act or when is it say a dispute over royalties due, a state law matter?); and contract interpretation. Into this last category fall things that obviously are questions of state law (was there a meeting of the minds?), things that may or may not be questions of state law (does one construe a future technologies clause according to perceived federal policies or state policies?), and questions that are clearly federal, like compliance with the 17 USC Section 204(a) requirement that there be a written agreement signed by the transferor of rights. Today's blog deals with Section 204(a).

The terms of Section 204(a) are absolute: "(a) A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent." This is one of those wonderful provisions of law in which Congress, like Horton the Elephant, declared "I meant what I said and I said what I meant; an elephant's faithful, 100 percent."

Sometimes litigants think otherwise, and rely on state law concepts like performance and accepting benefits makes something a contract. Not true, as the purported transferee of exclusive rights from the copyright owner of the frightening VeggieTales found out. The parties had engaged in extensive negotiations and years of "performance." An officer of the transferor company agreed over the phone and in an internal memo that the agreement was "in force." Too bad, the Fifth Circuit recently said in Lyric Studios, Inc. v. Big Idea Productions, Inc, 420 F.3d 388 (5th Cir. 2005). It may not have to be the "Magna Carta," as Judge Kozinski quipped, and Hollywood may do lunches and not written agreements, as he also once wrote, but such a cavalier approach will have dire consequences: you don't own exclusive rights without complying with 204(a). Get it signed, sealed and delivered.

7 comments:

billb said...

204(a) is currently in play in SCO v Novell (as one of Novell's many counterclaims).

Tom said...

Why are the Veggie Tales frightening? As a vegetarian, do you fear a vegetable revolt?

William Patry said...

I am a vegetarian, but I get scared when they talk to me and when they have religious overtones. I like my broccoli silent and secular.

tom said...

Do carrots of a soul? Yet another theological mystery on par with, "Why did a christian family name their dog Goliath in the classic Davey and Goliath series?" Goliath was a Philistine.

Thos said...

Lyric Studios seems to perpetuate a confusion between assignments and licences. The Copyright Act unhelpfully runs the two together by saying that '"a transfer of copyright" is an assignment, mortgage, exclusive license, or any other conveyance, alienation, or hypothecation of a copyright... but not including a nonexclusive license' (s. 101). However, a licence is not, and never has been, a form of conveyance. It is merely a consent. The inclusion of exclusive licences within the definition of transfer was presumably intended to facilitate infringement actions. What the drafter really wanted to say, I imagine, was that an exclusive licensee should be deemed to be the owner of copyright for the purposes of any infringement action. The UK Act, in fact, follows this approach, and there joinder of the owner by the exclusive licensee is in principle mandatory (s. 102(1), 1988 Act); whereas in the US, an optional facility (s. 501(b)).

I would suggest that section 204 is about the validity of transfers qua transfers, not the enforceability of contracts. Since title to the copyright was not in issue, the court in Lyric Studios really needed to consider the validity of the alleged contractual obligations per se, not the validity of the "transfer".

William Patry said...

I don;t understand anyone naming their son "Ichabod," which, in Hebrew, means without honor. As for Thos. point, the frafters of the definitions in 101, 201 and 204 were very desirous of overthrowing the indivisibility doctrine of the 1909 Act, which not only had standing problems, but also notice problems, like licensees throwing a work into the public domain for lack of a proper notice; hence, two broad buckets: (1) excluisve rights and (2) non-exclusive rights

Anonymous said...

Section 204 seems to be coming into play with increasing frequency as more and more web site forums attempt to capture the copyright to the posts made to their web sites by burying a copyright assignment clause within their terms of service.

The question arises: does the clicking of the “I agree to the terms of service” button count as a signed writing within the meaning of the copyright statute?

As a former copyright student of yours from Cardozo, I'd love to hear your thoughts on this.