Thursday, April 10, 2008

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.


Anonymous said...

First, even as an IP attorney, I must admit that this aspect of IP law is so counter-intuitive and such a huge potential trap for the unwary, one has to wonder whether it serves the correct policy goals. It is such a huge trap that, anecdotally, it even captured a very good ip attorney that I know of that was working with an architect on designing his dream home.

As far as I'm concerned, when an author is fully compensated for the work (e.g. the work is created and paid for by the hiring party) then I see no issue in implying a transfer. Is there any non-IP area where the rule is analogous?

Furthermore, as repeat players, it is the content creators that are probably in a better position to request a change in the default rules.

In this case, I think copyright law fails common sense.

Second, that said, one has to wonder whether much of the content of these tapes might be otherwise protected, say by trade secret. I can't imagine that Walmart just lets anyone wander around their headquarters and into meetings with a video camera without some obligation of confidentiality.

William Patry said...

Deat YFTL, my point wasn't that the "I paid for it therefore I own it" attitude is counter-intuitive; for example with wedding pictures, I imagine many couples would assume -- before they sign the contract with the photographer -- that they will "own" the pictures, whatever "own" may mean. But for copyright lawyers, the issue has been clear -- even if not intuitive -- for 30 years. But even if we shouldn't expect Wal-Mart to hire a copyright lawyer for every such deal, to have no contract at all is surprising, given the behind the scenes access provided.

Anonymous said...

I was commenting more generally and not in response to the "clear to copyright attorneys." I realize, of course, that most IP attorneys understand that an author (who's not an employee) is the owner of an original work of authorship absent an agreement to the contrary.

And, wedding pictures are a very good example. You pay a photographer $1000 to take pictures for a night, you'd expect to "own" (get the negatives or digital copies and do whatever you want with them) once the night is over. But the photographer, obviously, has other things in mind: namely, to be the sole supplier of those pictures so that you can't go to your local Walgreens or to Snapfish and have them printed cheaply.

I'm not surprised that there isn't a contract in place for the phototaking (given the duration of this relationship), but I agree that it is a surprise that no one can come up with an agreement of any kind regarding access, etc.

Anonymous said...

"In this case, I think copyright law fails common sense."

Not just in this case. I don't believe it takes much research into copyright before you learn to forget about common sense.

Anonymous said...

Indeed, I'm surprised that hiring a contractor to make a work doesn't also imply ownership of rights to that work by the party who paid for the work. I had been under the misapprehension that such was work for hire and hence the reason that wedding photographers have clients sign "this shall not constitute work for hire" contracts.

So, who owns the copyright to the speeches in the videos? I assume that extemporaneous speech isn't copyright since it is not in a fixed medium. But if it is videotaped it then becomes fixed. Who owns that? The speaker? The videographer? Nobody?

Anonymous said...

There are serious right of privacy/right of publicity concerns as well as issues involving breach of confidence and breach of confidential relations under these facts. You can own the copyright in an image and still not have the right under laws other than copyright to dispose of or exploit the matter depicted in that image. If you've ever seen that Wal Mart dance they do at the weekly Wal Mart HQ meetings, any photographer hired by Wal Mart would understand that those images would be considered hugely embarrassing if shown out of context!

William Patry said...

Thanks Josh: how would you compare the Wal-Mart dance to the Balllmer dance?

Anonymous said...

Mr. Wattles beat me to it, but my first thought - as a copyright lawyer of reasonable experience - wasn't about copyrights at all, but rather rights of privacy/rights of publicity. If the holder of the tapes is selling them to any and all comers, even a First Amendement argument is going to be an uphill battle. They have absolutely no grounds to argue for any kind of release or implied release by virtue of videotaping Wal-Mart employees with Wal-Mart's permission, because almost all jurisdictions require such releases to be in writing and apparently there's no paperwork whatsoever. If any of this work was done in IL or involves IL citizens, or is offered for sale in IL, see 765 ILCS 1075 for what I would call an open-and-shut case by the persons portrayed for statutory and/or actual damages. There is no way that everything in those tapes is newsworthy and justifies a First Amendement pre-emption of these rights, and by making them available in a lump, the holders have created a nearly infinite minefield. I wouldn't be surprised to see the first really big class-action right of publicity/privacy lawsuit ever out of this.

I would agree that there is a copyright concern for speeches, songs, and other performances in the tapes as well, but that could get murky in a hurry. The privacy/publicity rights should be a much more immediate concern for the holders of the tapes.


Anonymous said...

As I understand it this counter intuitive aspect of US copyright law is the result of a change that was made to the existing copyright doctrine in 1976. Before 1976 if you paid you did own.
Is this correct? If so why was the law changed?

William Patry said...

John, the law was changed in the 1976 Act to cut back on expansive applications of work for hire under the previous law.

Anonymous said...

I would think that, whatever the exclusive rights of the videographer, the people recorded in the meeting would also have exclusive rights over their speech. (And since they were employees, their speech presumably was work for hire done for Walmart.) So why doesn't that suffice to prevent the videographer (or anyone else) from copying or distributing the recordings?

William Patry said...

Anon, there are a number of possible answers: assuming the best case -- that the speakers own their speech, fair use for many if not all of the uses mentioned in the article is very likely. Another possibility is joint authorship -- the speakers' words were fixed with their permission, making them a joint author with the videographer; this though merely gives the speakers the right to an accounting of profits, and not a right to prevent licensing. Or, the audiovisual work is an entirely separate work, for which the speakers gave their implied consent -- at least as to the filming and some use. Or, the words spoken simply don't rise to the level of protectibility at all.