Wal-Mart learns a painful copyright lesson

The Wall Street Journal had a front page story by Gary McWilliams yesterday entitled "Candid Camera: Troves of Videos Vexes Wal-Mart." The story doesn't use the word copyright, but copyright is the key element of the story. The story begins:

For nearly 30 years, Wal-Mart Stores Inc. employed a video-production company ... to capture footage of its top executives, sometimes in unguarded moments. Two years ago, the retailing giant stopped using the tiny company. At first, the decision threw Flagler Productions Inc. into a panic. Now's its Wal-Mart that's squirming. In recent months, Flagler has opened its trove of some 15,000 Wal-Mart tapes to the outside world, with an eye toward selling clips. The material is proving irresistible to everyone from business historians and documentary filmmakers to plaintiffs lawyers and union organizers.

Careful readers might way, well what does the contract say? But there was no contract according to the story. Instead, the outside company was "hired on a handshake." In the story a Wal-Mart spokesperson is quoted as saying "It's difficult to understand how [Flagler] could now sell to third parties material we paid it to produce on our behalf. Needless to say, we did not pay Flagler Productions to tape internal meetings with this in mind." To copyright lawyers, its quite easy to understand. Flagler was not an employee of Wal-Mart, had no independent work-for-hire agreement, and such an agreement wouldn't have worked anyway since it is only contributions to audiovisual works that are covered under the second prong of the definition of work for hire in Section 101, and not the audiovisual work as a whole. Finally there was no transfer of rights.

There have been a number of cases where commissioning parties in such situations wake up and smell the coffee too late. One is Quintanilla v. Texas Television Inc., 139 F.3d 494 (5th Cir. 1998); another is the fabulously named Easter Seal Society for Crippled Children and Adults of Louisiana, Inc. v. Playboy Enterprises, Inc., 815 F.2d 323 (5th Cir. 1987). Wholly aside from copyright issues, though, one has to question the judgment of company officials in what they did on the films. In 2005, suit was filed on behalf of a 12 year boy injured by a gas can purchased from Wal-Mart that exploded. I have absolutely no views on the merits of the case, but in one of the tapes made by Flagler, Wal-Mart managers are said to be giving parody testimonials about the same brand of gas can, with one manager joking, "I torched it. Boom! Fired right up." Although this took place before the suit was filed, not surprisingly, plaintiff's attorney has requested that the tape be entered into evidence in the trial.