Tuesday, December 18, 2007

Arising Under Jurisdiction, Copyright, and Community Property

On August 30th, I did a posting about the potential joint liability of spouses in community property states, and noted that my very first published article on copyright (1981) was on the intersection of copyright and community property. On December 10, 2007, a federal court in Washington state issued an opinion in a community property dispute over copyright between spouses, Westmorland v. Westmorland, 2007 WL 4358309, that raises the question of when a case or controversy "arises under" the Copyright Act within the meaning of 28 USC 1338(a).

The posture of the case is unusual. Mr. Westmorland, a photographer, filed for divorce in the Washington State King County Superior Court. Both before and during the marriage, he had worked as a commercial photographer. In the course of the divorce proceeding, he asserted that (the still) Mrs. W. was seeking a distribution of the copyrights obtained by him before the marriage. My understanding of community property law is that property obtained before the marriage as well as monies received post-nuptial bliss from that property remain individual assets. In order to prevent the state court from actually awarding these non-community assets, Mr. W. filed suit in federal court seeking to enjoin Mrs. W. from seeking them in state court. The court granted the Mrs.’s motion to dismiss for lack of subject matter jurisdiction. According to the court, Mr. W.’s dispute did not arise under the Copyright Act.

Certainly, the state court could and should deny Mrs. W.’s request as a matter of state law, and in this regard, the fact that the pre-nuptial property is ownership of copyrights is no different than ownership of anything else. In dismissing Mr. W.’s case, the federal court engaged in a fairly standard plugging in of the facts to Judge Friendly’s T.B. Harms opinion, T.B. Harms Co. v. Eliscu, 339 F.2d 828 (2d Cir.1964). Judge Friendly, despite his massive intellect and specialized knowledge of federal jurisdiction, recognized that the Supreme Court had yet to settle on an intelligible approach to when a dispute may be said to arise under federal law. “Mindful of the hazards of formulation in this treacherous area,” he held for the court that an action “arises under” the Copyright Act:

if and only if the complaint is for a remedy expressly granted by the Act, e.g., a suit for infringement or for the statutory royalties for record reproduction …, or asserts a claim requiring construction of the Act, as in De Sylva v. Ballentine, 351 U.S. 570, 76 S. Ct. 974, 100 L. Ed. 1415 (1956)], or, at the very least and perhaps more doubtfully, presents a case where a distinctive policy of the Act requires that federal principles control the disposition of the claim. The general interest that copyrights, like all other forms of property, should be enjoyed by their true owner is not enough to meet this last test.

It cannot be said, regrettably, that Judge Friendly was any more successful than the Supreme Court in this “treacherous area.” For example, by using “remedy,” T.B. Harms invites attention away from whether the claim is one for a right created by the Copyright Act and toward nondispositive issues such as remedial measures for violation of the right. Is a claim that requests an injunction a copyright claim merely because an injunction is sought? The answer is no. Injunctive relief may be, and often is demanded with declaratory relief under state law. Is a claim that seeks an accounting of the defendants' profits a copyright claim? The answer here, too, is no, since disgorgement of ill-gotten gains is common in many state law actions, such as unfair competition. Is a claim that seeks statutory damages under § 504(c) a copyright claim merely because, in the prayer for relief, that measure of damages is sought? Here, statutory damages are an uncommon remedy, and certainly when asked for in the amounts provided by § 504(c), unique to that section, but a state cause of action is not transformed into a federal cause of action merely by requesting statutory damages.

Either the cause of action on the merits is one arising under the Copyright Act or it is not. If it is not, asking for monetary damages found uniquely under the Act does not change the elements of the cause of action. The correct approach is to determine whether the plaintiff's complaint actually pleads the elements required for an infringement action—if so, one would expect the prayer for relief to request infringement, rather than contract remedies, but it is the cause of action that determines whether jurisdiction exists. However, one reads numerous opinions in copyright cases, citing T.B. Harms, finding subject-matter jurisdiction based on the damages sought.

In the Westmorland case, the court noted that Mr. W did not seek a remedy provided under the Copyright Act, or interpretation of a provision of the Act, but he did argue that the preemption of such a state award was an important federal policy. The court answered this in a manner it thought clear, but I don’t: “preemption is not a policy promoted by the Copyright Act. Although Congress invoked that principle in order to implement the policies behind the Copyright Act, … preemption itself is not the policy.” Huh? I thought the argument was that the award of copyrights that had no basis in state law conflicted with federal law, or at least, that is the argument I would have made.

In the end, there seems another basis for dismissing the case, justiciability: the state court had not awarded anything yet, and might well get the issue correct. Moreover, the issue did not appear to raise any issues unique to federal law: the state court could award at least half of the proceeds from copyrighted works created and exploited during the marriage; and may be able to award co-ownership of them (although not co-authorship). The fact that it cannot do so for works created before the marriage has nothing to do with their status as copyrighted works, but rather with principles of community property law applicable to all forms of property.

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