Wednesday, July 27, 2005

The Ninth Circuit's Struggles with Transfers

On July 15th, Chief Judge Joe Fish (give me an "F", what's that spell?) of the Northern District of Texas handed down a straightforward opinion in an easy case, Curtis Trey Seastrunk v. Darwell Intergrated Technology, Inc., 2005 U.S. Dist. LEXIS 14191, rejecting plaintiff's claim that an assignment of all rights in software, "including all rights of copyright" by "implication" included preexisting causes of action. The case law, including ABKCO Music, Inc. v. Harrisongs Music, Ltd., 944 F.2d 971, 980 (2d Cir. 1991) is to the contrary. If you want to buy preexisting causes of action, you have to expressly have include them in the transfer agreement, or, purchase them separately after the fact. Otherwise, the transferor retains them and is the only person who can sue for their infringement.

The plain language of Section 501(b) mandates this result: "The legal or beneficial owner of an exclusive right under a copyright is entitled, subject to the requirements of section 411, to institute an action for any infringement of that particular right committed while he or she is the owner of it."

Another consequence of this plain language is that only legal or beneficial owners (the latter being someone who was a legal owner but transferred those rights in exchange for royalties and the like) can sue. This plain meaning, however, eluded the Ninth Circuit, even though the court en banc reversed a panel which had held one could assign a mere chose in action. There were two dissenting opinions and the majority, while reaching the right result, found the statutory language ambiguous and issued an opinion that could be described as ugly. Silvers v. Sony Pictures Entertainment, Inc.. (2005).

I am quite aware that some very fine judges believe all statutory construction requires interpretation if only to say that meaning is plain, but I confess to being baffled by the Ninth Circuit's repeated inability to read the Copyright Act's transfer provision. Another decision by that court pertaining to transfers is of a piece with Silvers, Gardner v. Nike (2002). Gardner held that unless a exclusive licensee gets in the transfer document the right to further assign, it can't, wreaking havoc in the motion picture industry. The language of Sections 201 and 204 are clearly to the contrary, as is the legislative history. There is also Rano v. Sipa Press, a 1993 opinion that has been widely ridiculed by other circuits and commentators for holding that a non-exclusive agreement lacking a termination date can't be terminated until the 35 period set out in Section 203, which has nothing to do with the issue.

The lesson is that if you're in Texas, there's nothing Fish-y about transfers, but if you are on the West Coast you're in a whale of trouble.

1 comment:

Anonymous said...

What do you say in response to the first point made in Berzon's dissent? If the statute is so clear (and I agree with you that it is), how do we make sense of the outcome in ABKCO, where an assignee who was not the owner when the action accrued nevertheless is entitled to sue? That seems squarely at odds with the plain language, no?