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1 of 9 DOCUMENTS PLAYBOY ENTERPRISES, INC. and SPECIAL EDITIONS, LTD., Plaintiffs-Counter-Defendants, Appellants-Cross-Appellees, -v.- JENNIFER DUMAS and JENNIFER DUMAS, INC., Defendants-Counter-Claimants, Appellees-Cross-Appellants. Docket Nos. 94-7500L, 94-7542XAP UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT 53 F.3d 549; 1995 U.S. App. LEXIS 10191; 34 U.S.P.Q.2D (BNA) 1737; Copy. L. Rep. (CCH) P27,410; 132 A.L.R. Fed. 703 December 8, 1994, Argued May 5, 1995, Decided DISPOSITION: [**1] Playboy Enterprises, Inc. and Special Editions, Ltd. (collectively "Playboy") appeal from an order of the United States District Court for the Southern District of New York, Tenney, J., dismissing Playboy's claim for declaratory judgment that Playboy is the sole owner of the copyright of approximately 285 works of art created by Patrick Nagel which appeared in Playboy magazine from 1974 to 1984, and granting the counterclaim for copyright infringement of Jennifer Dumas and Jennifer Dumas, Inc. Judgment is affirmed in part, reversed in part, and vacated in part, and the case is remanded. (Charles D. Ossola, [**2] Alexandria, VA (Lowe, Price, LeBlanc & Becker, of counsel)), for American Society of Media Photographers and Graphic Artists Guild, Amici Curiae. (Irwin Karp, Rye Brook, NY (John M. Kernochan, Law Office of Irwin Karp, of counsel)), for Committee for Literary Property Studies, National Writers Union, and Volunteer Lawyers for the Arts, Amici Curiae. JUDGES: Before: OAKES, WINTER, Circuit Judges. OPINION BY: OAKES COUNSEL: DONALD B. VERRILLI, JR., Washington, DC (Mark D. Harris, Jenner & Block; Kenneth P. Norwick, Norwick & Schad, New York, NY, of counsel), for Plaintiffs-Counter-Defendants, Appellants-Cross-Appellees. ROGER L. ZISSU, New York, NY (Lisa Pearson, Laurence S. Rickles, Weiss Dawid Fross Zelnick & Lehrman, P.C., of counsel), for Defendants-Counter-Claimants, Appellees-Cross-Appellants. (Alan J. Hartnick, New York, NY (Lawrence E. Abelman, Jeffrey A. Schwab, Nancy J. Mertzel, Abel man, Frayne & Schwab, of counsel)), for Magazine Publishers of America, Inc., Amicus Curiae. OPINION [*551] OAKES, Senior Circuit Judge: Appellants Playboy Enterprises, Inc. and Special Editions, Ltd. (collectively "Playboy") appeal from a judgment entered on April 20, 1994 in the United States District Court for the Southern District of New York, Charles H. Tenney, Judge, following a bench trial and the entry of two opinions, dated September 9, 1993 and December 20, 1993 and reported at 831 F. Supp. 295 and 840 F. Supp. 256. The order dismissed Playboy's claim for declaratory judgment that Playboy is the sole owner of all right, title and interest of the copyrights of approximately 285 works of art created by Patrick Nagel CARDAMONE and
Page 2 53 F.3d 549, *551; 1995 U.S. App. LEXIS 10191, **2; 34 U.S.P.Q.2D (BNA) 1737; Copy. L. Rep. (CCH) P27,410 which appeared in Playboy magazine from 1974 to 1984. The order also granted the counterclaim for copyright [*552] infringement of appellees [**3] Jennifer Dumas (Nagel's widow) and Jennifer Dumas, Inc. (collectively "Dumas"). Judgment is affirmed in part, reversed in part, and vacated in part, and the case is remanded. Background The following is not disputed by the parties. Patrick Nagel was a freelance artist who from 1974 until his death in 1984 produced approximately 285 pieces of artwork which were published in Playboy magazine. From August 1975 until July 1984, at least one Nagel painting appeared in every issue of Playboy. At the outset, Nagel was given specific instructions by Playboy as to the content of the paintings--Playboy requested illustrations to accompany specific articles or particular letters for the 'Advisor' section of the magazine. The paintings were, not surprisingly, generally of nude women, in various poses. Sometime after January 1977 but before August 1978, Playboy stopped giving Nagel any specific instructions. Nagel and Playboy settled into a course of conduct whereby Nagel would routinely submit paintings and Playboy would generally publish his work. As the district court found, "as time went on, [Nagel] was given greater freedom to submit the paintings he wanted, which apparently [**4] matched what Playboy was interested in publishing." Playboy Enterprises, Inc. v. Dumas, 831 F. Supp. 295, 300 (S.D.N.Y.), modified, 840 F. Supp. 256 (S.D.N.Y. 1993). From 1974 until 1977, Playboy kept each piece of original artwork that was created for and delivered to it by contributors, including Nagel. Effective April 1, 1977, Playboy adopted a new policy of returning the original works to contributors. 1 Playboy stamped the following legend on each piece of work it returned: PLAYBOY'S ARTWORK REPRODUCTION PROHIBITED WITHOUT PLAYBOY'S PERMISSION The first 104 checks, issued between [**5] 1974 and July 1979, were stamped with the following legend ("Legend A"): Any alteration of this legend agreement voids this check. By endorsement of this check, payee acknowledges payment in full for the assignment to Playboy Enterprises, Inc. of all right, title, and interest in and to the following items: [a description of a painting followed]. The next 60 checks, issued between September 1979 and approximately March 1981, were stamped with this legend ("Legend B"): Any alteration of this legend agreement voids this check. BY ENDORSEMENT, PAYEE: acknowledges payment in full for services rendered on a work-made-for-hire basis in connection with the Work named on the face of this check, and confirms ownership by Playboy Enterprises, Inc. of all right, title and interest (except physical possession), including all rights of copyright, in and to the Work. Finally, the last 94 checks, issued between March 1981 and May 1984, were stamped with this legend ("Legend C"): Any alteration of this legend agreement voids this check. IT CONTAINS THE ENTIRE UNDERSTANDING OF THE PARTIES AND MAY NOT BE CHANGED EXCEPT BY A WRITING SIGNED BY BOTH PARTIES. BY [**6] ENDORSEMENT, PAYEE: acknowledges payment in full for the services rendered on a work-made-for-hire basis in connection with the Work named on the face of the this check and confirms ownership by Playboy Enterprises, Inc. of all right, title, and interest (except physical ownership of the reproduction rights to the work. Playboy paid Nagel for each of the published paintings by check after Nagel delivered the work. He was paid $ 150 to $ 250 for a spot illustration, $ 800 for a full-page illustration, and $ 1200 for a double-page spread. Each check bore a legend endorsement.
1 The parties agree that physical possession of the original work is not determinative of the
Page 3 53 F.3d 549, *552; 1995 U.S. App. LEXIS 10191, **6; 34 U.S.P.Q.2D (BNA) 1737; Copy. L. Rep. (CCH) P27,410 possession), including all copyright, in and to the Work. right of In September 1991, Playboy brought this suit seeking a declaratory judgment that it is the sole owner of all copyrights in the Nagel paintings which had appeared in Playboy magazine. In June 1992, Playboy began marketing a collection of five silkscreen reproductions and five offset productions of Nagel's artwork under the name "The Playboy Collection by Patrick Nagel." The works in the collection were all originally published in Playboy magazine, and all were created after 1978. In October 1992, Dumas filed an amended counterclaim for copyright infringement. In the district court, Playboy argued that Nagel had transferred the copyrights in question to Playboy by means of the legend agreements on the checks. Alternatively, it argued that the Nagel paintings were "works for hire" under both the Copyright Act of 1909 and the Copyright Act of 1976, which thereby made Playboy the "author" of the works and the owner of the copyrights. On September 9, 1993, following a bench trial, the district court issued an opinion and order holding that Nagel transferred only [**9] one-time reproduction rights to Playboy and that the Nagel works were not "works for hire." The court held, accordingly, that Playboy's Nagel Collection reproductions infringed copyrights owned by Dumas. This appeal followed. Discussion The paintings at issue in this case were produced from 1974 to 1984. The Copyright Act of 1976, U.S.C. Title 17, ("the 1976 Act") took effect on January 1, 1978. Accordingly, the paintings produced before that date are governed by the Copyright Act of 1909 ("the 1909 Act"), and the paintings produced on or after that date are governed by the 1976 Act. The district court chose to address first the issue whether the copyrights were transferred to Playboy, and then the issue whether the works were "made for hire." Because the work-for-hire issue determines the author of the works, and therefore who can later transfer the copyright, we discuss that issue first. I. Works For Hire Under the 1909 Act The 1909 Act mentioned works for hire only in the definition section of the statute, [*554] where it specified that "in the interpretation and construction of
At different times the checks were made out to Pat Nagel, Patrick Nagel Studios, Inc., Elias-Berman (an accountant), Raymond MacQueen (also an accountant), or The Art [*553] Factory (Nagel's artist's representative), and they were endorsed and deposited by Nagel himself, his bank, his corporation, his accountant or his artist representative. These endorsed checks constitute the only writings signed by Nagel or his representatives relating to Playboy's ownership of the copyrights in the works produced for Playboy. In producing the paintings, Nagel used his own equipment, tools and materials. He worked at his own studio, on days and times of his own choosing. He hired his own assistants to do work at his studio, and at no time did Playboy withhold taxes from his pay or provide him with employee benefits. Throughout his career, including the time when [**7] he was producing work for Playboy, Nagel produced art for other companies, including American Express and Bank of America. He also painted privately commissioned work and exhibited his paintings in galleries. Upon Nagel's death in 1984, his widow, Jennifer Dumas obtained copyrights and related ownership rights to Nagel's artwork. In 1988, she assigned all of her copyrights in Nagel's works to Jennifer Dumas, Inc. ("JDI"). Before his death, Nagel had entered into an agreement with Mirage Editions, Inc., providing for the publication and marketing of limited editions of reproductions of certain Nagel paintings. The posters and fine art reproductions published and sold by Mirage generated $ 21 million in sales revenues from 1984 to 1990, and another $ 2.5 million in 1991 and 1992. In 1989, Dumas entered into agreements granting reproduction rights to third parties for all Nagel works which had previously appeared in Playboy magazine. Playboy brought an action in the Northern District of Illinois for copyright infringement. The parties settled the dispute by entering into an agreement which specified that Dumas and Playboy would each receive a certain percentage of the income [**8] generated by the exploitation of the Nagel works in question. The agreement was mutually terminated effective June 1, 1991.
Page 4 53 F.3d 549, *554; 1995 U.S. App. LEXIS 10191, **9; 34 U.S.P.Q.2D (BNA) 1737; Copy. L. Rep. (CCH) P27,410 this title . . . the word 'author' shall include an employer in the case of works made for [**10] hire." 17 U.S.C. § 26 (1976) (repealed), reproduced in 5 Melville B. Nimmer & David Nimmer, Nimmer on Copyright ("Nimmer") app. 6-26-29 (1994). Under this definition, an "employer" who hires another to create a copyrightable work is the "author" of the work for purposes of the statute, absent an agreement to the contrary. See, e.g., Tobani v. Carl Fischer, Inc., 98 F.2d 57, 59-60 (2d Cir.), cert. denied, 305 U.S. 650, 83 L. Ed. 420, 59 S. Ct. 243 (1938). The statute, however, did not define the terms "employer" or "works made for hire." Until the mid-1960's, federal courts applied the work-for-hire doctrine only to cases in which a traditional employer/employee relationship existed between the hiring party and the creator of the work. See Community for Creative Non-Violence v. Reid, 490 U.S. 730, 749, 104 L. Ed. 2d 811, 109 S. Ct. 2166 (1989). In 1965, however, the Ninth Circuit applied the doctrine to a case in which an employer commissioned a work by an independent contractor. Lin-Brook Builders Hardware v. Gertler, 352 F.2d 298, 300 (9th Cir. 1965). The court held: When one person engages another, whether as employee or as an independent contractor, [**11] to produce a work of an artistic nature . . . the presumption arises that the mutual intent of the parties is that the title to the copyright shall be in the person at whose instance and expense the work is done. Id. We adopted that holding the next year in Brattleboro Publishing Co. v. Winmill Publishing Corp., 369 F.2d 565, 567-68 (2d Cir. 1966), in which we held that an independent contractor is an "employee" and a hiring party an "employer" for purposes of the statute if the work is made at the hiring party's "instance and expense". We have since defined the "instance and expense" test as being met "when the 'motivating factor in producing the work was the employer who induced the creation.'" Siegel v. National Periodical Publications, Inc., 508 F.2d 909, 914 (2d Cir. 1974) (quoting Picture Music, Inc. v. Bourne, Inc., 457 F.2d 1213, 1216 (2d Cir.), cert. denied, 409 U.S. 997, 34 L. Ed. 2d 262, 93 S. Ct. 320 (1972)). We have also held that in the work-for-hire context under the 1909 Act, "an essential element of the employer-employee relationship, [is] the right of the employer 'to direct and supervise the manner in which the writer performs his work.'" [**12] Picture Music, 457 F.2d at 1216 (quoting Donaldson Publishing Co. v. Bregman, Vocco & Conn, Inc., 375 F.2d 639, 643 (2d Cir. 1967) (quoting Nimmer, Copyright § 62.31 (1964)), cert. denied, 389 U.S. 1036, 19 L. Ed. 2d 823, 88 S. Ct. 768 (1968)). See also Epoch Producing Corp. v. Killiam Shows, Inc., 522 F.2d 737, 744 (2d Cir. 1975), cert. denied, 424 U.S. 955, 47 L. Ed. 2d 360, 96 S. Ct. 1429 (1976) (the hallmark of "an employment for hire" is whether the employer could have exercised the requisite power to control or supervise the creator's work). In Picture Music, we found that the song "Who's Afraid of the Big Bad Wolf" was a work for hire where the employers, Walt Disney Productions and Irving Berlin, recognized that the musical score of a cartoon could be adapted into a popular song, asked Ann Ronell to do the adaptation, and later paid her royalties in exchange for her work. We held that the employers "took the initiative in engaging Miss Ronell to adapt" the song and had the power to "accept, reject, or modify her work." 457 F.2d at 1217. Conversely, in Siegel, we found that the comic strip character Superman was not a work for hire because [**13] although the creators revised and expanded the comic strip at the request of the publishers and were paid for that work, the Superman character was completely developed long before the employment relationship existed. 508 F.2d at 914. Once it is established that a work is made for hire, the hiring party is presumed to be the author of the work. That presumption can be overcome, however, by evidence of a contrary agreement, either written or oral. Roth v. Pritikin, 710 F.2d 934, 937 n.3 (2d Cir.), cert. denied, 464 U.S. 961, 78 L. Ed. 2d 337, 104 S. Ct. 394 (1983). The burden of proof is on the independent contractor to demonstrate by a preponderance of the evidence that such a contrary agreement was [*555] reached. Real Estate Data, Inc. v. Sidwell Co., 809 F.2d 366, 371 (7th Cir. 1987); Yardley v. Houghton Mifflin Co., 108 F.2d 28, 31 (2d Cir. 1939), cert. denied, 309 U.S. 686, 84 L. Ed. 1029, 60 S. Ct. 891 (1940). A. Were the Works "Made For Hire "? The district court applied the instance and expense test to the Nagel paintings. It found that "there is no doubt that Nagel was directed to create at least some of
Page 5 53 F.3d 549, *555; 1995 U.S. App. LEXIS 10191, **13; 34 U.S.P.Q.2D (BNA) 1737; Copy. L. Rep. (CCH) P27,410 the works that appeared in Playboy prior to January [**14] 1, 1978. The portrait of Lillian Hellman, the art accompanying the Nell is article, and illustrations for features on travelers' aids (Playboy, March 1975) must have been 'motivated' or 'induced' by Playboy." Playboy, 831 F. Supp. at 311. The court made no specific findings as to whether any other particular paintings were made at the "instance" of Playboy, but concluded that "many of the Nagel works in the pre-1978 period were created at the instance of Playboy." Id. at 312. The court, however, held that the paintings were not works for hire because they were not made at Playboy's "expense." Although it was undisputed that Playboy paid Nagel a fee for each painting published by Playboy, the court concluded that the paintings were not made at Playboy's expense because "Nagel provided his own tools, worked his own hours, hired his own assistants, and paid his own taxes and benefits" and because "there is no indication that there was any real risk involved for Playboy." Id. at 311. Playboy argues that these factual findings support the conclusion that Nagel was working as an independent contractor rather than as a formal employee of Playboy, but not the conclusion that [**15] the paintings were made at Nagel's expense. Dumas argues that this is an issue of fact, and, accordingly, we may reverse the district court only if its decision was clearly erroneous. The parties do not dispute the underlying facts set forth by the district court: Nagel provided his own tools, worked his own hours, hired his own assistants, and paid his own taxes and benefits. The question which is raised, in our view, is a mixed one which we review de novo: whether those facts, as a matter of law, show that the paintings were made at Nagel's rather than Playboy's expense. See Weissmann v. Freeman, 868 F.2d 1313, 1317 (2d Cir.), cert. denied, 493 U.S. 883, 107 L. Ed. 2d 172, 110 S. Ct. 219 (1989) ("when a district court makes findings of fact predicated upon an incorrect legal standard such findings are not binding on an appellate court"). It appears that the district court used the wrong test to determine whether the works were made at Playboy's expense. The factors considered by the district court, as Playboy points out, are among the factors listed by the Supreme Court in Community for Creative Non-Violence v. Reid, 490 U.S. 730, 751-52, 104 L. Ed. 2d 811, 109 [**16] S. Ct. 2166 (1989), which may be used to show that an artist worked as an independent contractor and not as a formal employee. The factors have no bearing on whether the work was made at the hiring party's expense. Our prior cases on work for hire under the 1909 Act have found the "expense" requirement to be met where a hiring party simply pays an independent contractor a sum certain for his or her work. See Brattleboro, 369 F.2d at 568 (price paid by merchants to newspaper for advertisement fulfilled the "expense" requirement); Yardley, 108 F.2d at 31 ("expense" requirement met when artist was commissioned to paint a mural for pay). In contrast, where the creator of a work receives royalties as payment, that method of payment generally weighs against finding a work-for-hire relationship. See Donaldson Publishing Co. v. Bregman, Vocco & Conn, Inc., 375 F.2d 639, 642 (2d Cir. 1967), cert. denied, 389 U.S. 1036, 19 L. Ed. 2d 823, 88 S. Ct. 768 (1968); Everts v. Arkham House Publishers, Inc., 579 F. Supp. 145, 149 (W.D. Wis. 1984); cf. Picture Music, 457 F.2d at 1216 (finding a work-for-hire relationship where payment was a percentage of royalties, holding that [**17] "the absence of a fixed salary . . . is never conclusive"). The simple fact that Playboy paid Nagel a fixed sum for each of the works published in Playboy magazine is sufficient to meet the requirement that the works be made at Playboy's expense. [*556] As we find that all the works in this time period were made at Playboy's expense, any of those works which were also made at Playboy's instance, and which Playboy had the right to control or supervise, are works for hire under the 1909 Act. See Picture Music, 457 F.2d at 1216. The district court did not reach these issues because it held that the works were not made at Playboy's expense. The court, however, did make a number of factual findings which are relevant to these points. The court found that "there is no doubt that Nagel was directed to create at least some of the works that appeared in Playboy prior to January 1, 1978," Playboy, 831 F. Supp. at 311, and that "Nagel was given specific instructions for his early submissions to Playboy." Id. at 310. The court credited a statement made by Hugh Hefner, the former editor of Playboy magazine, that "At first we asked [Nagel] to illustrate a particular letter to [**18] the 'Advisor' every month, but soon . . . we asked him simply to give us a painting a month." Id. The court also found that:
Page 6 53 F.3d 549, *556; 1995 U.S. App. LEXIS 10191, **18; 34 U.S.P.Q.2D (BNA) 1737; Copy. L. Rep. (CCH) P27,410 Sometime after January 1977 but before August 1978, Nagel and Playboy fell into a course of conduct whereby Nagel would produce a few works for Playboy expecting them to be published; Playboy, in turn, expected to publish a few of Nagel's works. Id. at 310-11. In addition, the court found that "Playboy apparently was no longer controlling characteristics of the works by mid-1978. . . . The instance [beyond mid-1978] cannot be determined, The relationship was a continuing one, and plaintiffs have offered no evidence of any specific orders after 1976." Id. at 313. These findings show that the relationship between Playboy and Nagel evolved over time. The district court found that the evidence presented was insufficient to show the exact date on which Playboy ceased giving Nagel specific assignments. Its best estimate was "after January 1977 but before August 1978." From the court's findings we can draw the conclusion that at least during the time before January 1977, Playboy gave Nagel specific assignments and often asked him to illustrate [**19] particular articles that were to appear in Playboy magazine. It is safe to say that during this phase of their relationship, Playboy was the "motivating factor" in the creation of the paintings. Nagel certainly would not have created those particular paintings if he had not been given the assignments by Playboy. Thus, the paintings made during this time were made at Playboy's instance. The district court also found that before mid-1978, Playboy not only had the right to control the works but it actually controlled certain characteristics of the paintings. Id. This, combined with the fact that the paintings created before January 1977 were made at Playboy's "instance and expense", makes those works "works for hire." The case, however, must be remanded for a determination of whether the paintings made after January 1977 but before January 1, 1978 were also made at Playboy's instance. 2 2 To this end, if the district court finds that Playboy stopped giving Nagel specific assignments before January 1, 1975, our discussion of "instance and expense" in Section II(B) may provide guidance. [**20] B. An Agreement To the Contrary? As noted above, once it is determined that a work is made for hire, the hiring party is presumed to be the author of the work, although this presumption can be overcome by evidence of an agreement to the contrary. The district court found evidence of such a contrary agreement. 831 F. Supp. at 312. 3 3 The district court held that even if the instance and expense test was met, the works were not made for hire because of this agreement. Id. This finding is in error because once the instance and expense and the right to control the product tests are met, the works are for hire under the 1909 Act. An agreement to the contrary contracts around the statutory presumption and only changes which party is considered the author of the work. The court reasoned that if Playboy and Nagel had intended a work-for-hire relationship, Playboy would have confirmed that relationship in the check legends. Instead, it found, Playboy chose to ratify the relationship with the language [**21] of Legend A, which [*557] indicates a general transfer of rights to Playboy. Id. Such an assignment of rights to Playboy, the court reasoned, "would not make sense if the parties presumed that Playboy would be the author of the work for statutory purposes," because if Playboy were the author, Nagel would hold no rights to the paintings and, thus, would have nothing to transfer to Playboy in Legend A. Id. The court supported its conclusion with a reference to industry custom. See May v. Morganelli-Heumann & Assocs., 618 F.2d 1363, 1369 (9th Cir. 1980) (industry custom may be used to prove parties' intent that works not be made for hire). The court found that from 1974 until January 1, 1978, the effective date of the 1976 Act, "the custom in the magazine industry was that absent explicit language to the contrary, a contributor transferred only one time reproduction rights in the work sold for publication." Playboy, 831 F. Supp. at 312. The court found that Legend A, which acknowledges an "assignment to Playboy Enterprises, Inc. of all right, title and interest in and to" the paintings, combined with the custom in the industry showed that the parties intended Nagel to remain [**22] the author of the works. Id. Playboy challenges this finding. It argues that Legend A is not inconsistent with a work-for-hire agreement, which would make Playboy the author of the work for statutory purposes, because the 1909 Act only governed works after they were published. Before
Page 7 53 F.3d 549, *557; 1995 U.S. App. LEXIS 10191, **22; 34 U.S.P.Q.2D (BNA) 1737; Copy. L. Rep. (CCH) P27,410 publication, all works were governed by common law copyright. The checks containing the Legend A transfer agreement were issued pre-publication, and Playboy argues that "to protect Playboy's rights in the illustrations during this period, an assignment of the common law rights was necessary, and Legend Agreement A accomplished just that." Appellants' Brief at 32. As we discuss more fully in Section III, we find it impossible to discern the intent of the parties from the language of Legend A. The legend acknowledges an assignment of rights, but it does not specifically mention copyright--let alone common law copyright. It could intend the transfer of a one-time use right, as the district court found, or of common law copyright, as Playboy argues, or of all rights--including both copyright and possessory rights. As Legend A is not clear, and as Playboy's explanation for the agreement is at least plausible, [**23] we are not convinced that the legend either proves or disproves that the parties intended something other than a work-for-hire relationship. Further, we are not convinced by the district court's recourse to industry custom. The district court used evidence of custom to conclude that the parties intended that Nagel transfer only one-time reproduction rights to Playboy, and that he retain authorship and copyright in the paintings. The court, however, did not consider the impact of the fact, stipulated by the parties, that it was "the regular and consistent policy and practice of Playboy at all relevant times in this action to seek to acquire from all freelance writers, artists and photographers who contribute to Playboy magazine all rights, including copyrights, in and to their contributions." Joint Pre-Trial Order, Stipulated Facts, P 23. This practice is, of course, not conclusive of the intent of these particular parties because it sheds no light on Nagel's intent, but it clearly undercuts the import of the industry custom cited. Given the controverted evidence of a contrary agreement between Playboy and Nagel, we conclude that it was clearly erroneous for the district court [**24] to find that Dumas met her burden of proving that the parties intended a relationship other than work for hire. Hence, by presumption, Playboy is the "author" of the works created before January 1, 1978 that were made for hire. II. Works For Hire Under the 1976 Act The 1976 Act defines the contours of the work-for-hire doctrine in much more detail than its predecessor. The 1976 Act states: In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright. [*558] 17 U.S.C. § 201(b) (1988). The Act explicitly defines works made for hire: A "work made for hire" is (1) a work prepared by an employee within the scope of his or her employment; or (2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an [**25] atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. . . .
17 U.S.C. § 101 (1988). The parties agree that Nagel was not a formal employee of Playboy when he produced the paintings at issue in this case, so the works are "works made for hire" only if they satisfy the requirements of § 101(2). The parties also agree that Playboy magazine is a "collective work" within the meaning of the statute. Accordingly, we
Page 8 53 F.3d 549, *558; 1995 U.S. App. LEXIS 10191, **25; 34 U.S.P.Q.2D (BNA) 1737; Copy. L. Rep. (CCH) P27,410 are left with two questions: 1) were the works "specially ordered or commissioned" by Playboy? and 2) as to each work in question, did the parties "expressly agree in a written instrument signed by them that the work shall be considered a work made for hire"? We consider the writing requirement first. A. The Writing Requirement Section 101(2) requires that the parties "expressly agree in a written instrument signed by them that the work shall be considered a work made for hire." 17 U.S.C. § 101(2) (1988). The checks issued by Playboy are the only writings signed by both Playboy and Nagel (or one of Nagel's representatives) relating to Playboy's ownership of the copyright in [**26] the works published in Playboy. The district court found that even assuming, arguendo, that the works meet all the other statutory requirements of § 101(2), the check legends are not sufficient to meet the writing requirement of that section because they were signed after the creation of the works. Playboy, 831 F. Supp. at 314. The court reasoned that a decision otherwise would render other sections of the Act redundant. It argued that work-for-hire agreements must be executed pre-creation; otherwise they are little more than transfers, which are governed separately under § 204 of the Act. Id. The court also noted that Barbara Ringer of the U.S. Copyright Office testified before Congress that her understanding of the legislation that became the 1976 Act was that a work prepared on special order or commission would not be considered a "work made for hire" if the written agreement was signed after the work was created. Id. (citing H.R. Rep. no. 51-374, 89th Cong., 1st Sess., Part 5, 1964 Revision Bill with Discussion and Comments, at 145 (1965)). The court also relied upon a Seventh Circuit decision, Schiller & Schmidt, Inc. v. Nordisco Corp., 969 F.2d 410 (7th Cir. 1992) [**27] (Posner, J.), which held that § 101(2) requires that a written agreement precede the creation of the work. Judge Posner reasoned that the requirement of a written statement "is not only designed to protect people against false claims of oral agreements." Id. at 412. Rather, "the signed-statement requirement in section 101(2) has a second purpose--to make the ownership of property rights in intellectual property clear and definite, so that such property will be readily marketable." Id. Accordingly, the court held that "the writing must precede the creation of the property in order to serve its purpose of identifying the (noncreator) owner unequivocally." Id. at 413. Playboy argues that this requirement of a pre-creation writing has no basis in the statute. Section 101(2), Playboy notes, is silent as to when the parties' "written instrument" must be executed. In response to the district court's conclusion that a post-creation writing would essentially be a transfer governed by § 204 of the act, Playboy points out that a work-for-hire agreement would make the hiring party the "author" of the work, whereas a transfer would convey only ownership of [**28] the copyright. This difference, it argues, makes the transactions fundamentally different and thus not duplicative. Playboy also argues that the requirement of a precreation writing is contrary to existing [*559] Second Circuit law. Playboy points to Eden Toys, Inc. v. Florelee Undergarment Co., 697 F.2d 27 (2d Cir. 1982), in which we held that the "note or memorandum" of a transfer agreement, required by § 204(a) of the 1976 Act, "need not be made at the time when the license is initiated; the requirement is satisfied by the copyright owner's later execution of a writing which confirms the agreement." Id. at 36. We agree with the Seventh Circuit that the writing requirement was created, in part, to make the ownership of intellectual property rights clear and definite. The Supreme Court, in Community for Creative Non-Violence v. Reid, 490 U.S. 730, 750, 104 L. Ed. 2d 811, 109 S. Ct. 2166 (1989) ("CCNV"), stated that one of Congress's goals in creating the work-for-hire provisions of the 1976 Act was to "ensure predictability through advance planning." In CCNV, the Court rejected the petitioner's argument that independent contractors should be considered "employees" under [**29] § 101(1) if their works were "actually controlled" by the hiring party. That interpretation, the Court reasoned, would "thwart" the purpose of § 101 because it "leaves the door open for hiring parties, who have failed to get a full assignment of copyright rights from independent contractors falling outside the subdivision (2) guidelines, to unilaterally obtain work-made-for-hire rights years after the work has been completed." Id. (quoting Hamilton, Commissioned Works as Works Made for Hire Under the 1976 Copyright Act: Misinterpretation and Injustice, 135 U. Pa. L. Rev. 1281, 1304 (1987)). Likewise, Congress's goal of "predictability" would
Page 9 53 F.3d 549, *559; 1995 U.S. App. LEXIS 10191, **29; 34 U.S.P.Q.2D (BNA) 1737; Copy. L. Rep. (CCH) P27,410 be thwarted if a hiring party and an independent contractor could enter into a work-for-hire agreement years after a work was created. Prior to execution of such an agreement, the parties, as well as third parties, would act with the understanding that the independent contractor was the "author" of the work. Only after the parties agreed retroactively that the work was made for hire would the hiring party somehow become the "author". We also question whether Congress intended that a work could have two separate "authors"--one during [**30] the first phase of its existence, and another after a work-for-hire agreement were executed. We therefore find that the 1976 Act requires that the parties agree before the creation of the work that it will be a work made for hire. We are not convinced, however, that the actual writing memorializing the agreement must be executed before the creation of the work. The Nimmers make a convincing argument in their treatise on copyrights that such a requirement could itself create uncertainty. They argue: One can  imagine claims involving parties each of whom knew of the unanimous intent among all concerned that the work for hire doctrine would apply, notwithstanding that some of the paperwork remained not fully executed until after creation of the subject work. In that  circumstance, the bright line rule could frustrate the intent of the parties, and cloud rather than serve the goal of certainty. 1 Nimmer § 5.03[B][b] (1994). They conclude that "perhaps this rule needs further testing in the crucible of fact patterns by future cases." Id. We agree. In the fact pattern of this case, we will assume that the writing requirement of § 101(2) can be [**31] met by a writing executed after the work is created, if the writing confirms a prior agreement, either explicit or implicit, made before the creation of the work. That leaves us with three questions: 1) whether the language of the legends was sufficient to meet the writing requirement of § 101(2); 2) if so, whether Playboy and Nagel understood at the time the works were created that the works were made for hire, cf. Eden Toys, 697 F.2d at 36 (remanding to the district court to determine whether an oral transfer was made); and 3) whether the legend agreements were signed by both parties or by their authorized agents. 1. Legend A Legend A was stamped on the back of the checks issued from 1974 through July 1979. The legend reads: [*560] Any alteration of this legend agreement voids this check. By endorsement of this check, payee acknowledges payment in full for the assignment to Playboy Enterprises, Inc. of all right, title and interest in and to the following items: [a description of a painting followed]. This agreement does not mention a work-for-hire relationship. It only mentions an "assignment." It does not, therefore, satisfy the writing requirement [**32] of § 101(2) that "the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire." 17 U.S.C. § 101(2) (1988). Therefore, the works created between January 1, 1978 (when the 1976 Act became effective) and July 1979 are not works for hire. 2. Legends B & C In contrast to Legend A, Legends B and C each contain language sufficient to meet the writing requirement of § 101(2). Legend B, which was stamped on checks issued between September 1979 and March 1981, reads: Any alteration of this legend agreement voids this check. BY ENDORSEMENT, PAYEE: acknowledges payment in full for services rendered on a work-made-for-hire basis in connection with the Work named on the face of this check, and confirms ownership by Playboy Enterprises, Inc. of all right, title and interest (except physical possession), including all rights of copyright, in and to the Work. (emphasis added). Legend C, which was stamped on the checks issued
Page 10 53 F.3d 549, *560; 1995 U.S. App. LEXIS 10191, **32; 34 U.S.P.Q.2D (BNA) 1737; Copy. L. Rep. (CCH) P27,410 between March 1981 and May 1984, reads: Any alteration of this legend agreement voids this check. IT CONTAINS THE ENTIRE UNDERSTANDING OF THE PARTIES AND MAY NOT BE [**33] CHANGED EXCEPT BY A WRITING SIGNED BY BOTH PARTIES. BY ENDORSEMENT, PAYEE: acknowledges payment in full for the services rendered on a work-made-for-hire basis in connection with the Work named on the face of the this check and confirms ownership by Playboy Enterprises, Inc. of all right, title, and interest (except physical possession), including all right of copyright, in and to the Work. (emphasis added). Since Legends B and C contain essentially identical language confirming that services were rendered by Nagel on a work-for-hire basis, they meet the statutory writing requirement if they were signed by both Playboy and Nagel and if Playboy can show that the parties had an understanding, before the creation of each work, that the works were to be made for hire. At trial, neither party proffered any direct evidence of the intent of the parties before the creation of the works. As we discussed above, see Section I(A) supra, the evidence of industry custom and the evidence of Playboy's usual practice was conflicting. However, the parties' continued use of Legends B and C is sufficient to show that they intended a work-for-hire relationship. Playboy, by drafting [**34] the legends, clearly intended the works to be made for hire. For his part, Nagel, by endorsing Playboy's checks below Legends B and C, may be assumed to have consented to a continuing practice whereby any works he sold to Playboy would be considered works made for hire. While Nagel's endorsement of Playboy's first check bearing legend B may not evidence his precreation consent to a work-for-hire relationship, Nagel's subsequent pre-creation consent to such a relationship may be inferred from his continued endorsements. Therefore, beginning with the second check containing Legend B, Nagel's endorsement of Playboy's checks constitutes sufficient evidence that the parties agreed before the creation of each work that it would be made for hire. The checks, however, were, as we have said, signed at various times by a number of different persons and entities--Nagel himself, his accountant, his bank, his artist's representative, and others. Our conclusion rests on the assumption that the checks were signed by Nagel himself or by an agent who was authorized to enter into a work-for-hire relationship on Nagel's behalf. The district court expressly reserved decision on the issue of whether the [**35] signatories (other than Nagel himself) had such authority. Playboy, 831 F. Supp. at 308 n.13. Accordingly, the [*561] case must be remanded to the district court for a determination whether the checks were signed by agents authorized to enter into a work-for-hire relationship on Nagel's behalf. B. Specially Ordered or Commissioned Since we conclude that Legends B and C may meet the writing requirement of § 101(2), we next consider whether the works created after September 1979 (the date at which Legend B was first used) were "specially ordered or commissioned" by Playboy. In addressing this question, the district court found that Congress intended to incorporate the "instance and expense" test into the statute through the phrase "specially ordered or commissioned." Playboy, 831 F. Supp. at 313. The Supreme Court has stated, the court noted, that "a party who hires a 'specially ordered or commissioned' work by definition has the right to specify the characteristics of the product desired." Id. (quoting CCNV, 490 U.S. at 741). In a footnote, the district court stated: This court interprets the language of the Supreme Court to mean that the exercise of the right [**36] of artistic control by the party for whom the work is being prepared can be highly indicative of a commissioned relationship. However, this court believes that the waiver or absence of exercise of that right need not negate the possibility of a commission relationship. See Nimmer, § 5.03[B][d], 5-44, n. 171. Id. n.19. The court went on to hold that no work created after January 1, 1978 was "specially ordered or commissioned" as required under the 1976 Act. The court found that the issue of who controlled the characteristics of the works, if
Page 11 53 F.3d 549, *561; 1995 U.S. App. LEXIS 10191, **36; 34 U.S.P.Q.2D (BNA) 1737; Copy. L. Rep. (CCH) P27,410 it had any weight at all, weighed in favor of Nagel because by mid-1978, Playboy no longer controlled these characteristics. Id. at 313. The court also found that it could not determine whether the works were made at Playboy's instance because Playboy offered no evidence of special orders after 1976. Playboy argued that the course of conduct of the parties should be sufficient, but the district court found that "determinations of works made for hire must be established on a work-by-work basis." Id. (citing Weissmann, 868 F.2d at 1317). Finally, the district court relied upon the fact that Nagel bore the expense [**37] of creation (because he supplied his own tools, etc., see Section 1(A) supra) as well as the risk "because there was no commitment on the part of Playboy to purchase the works." Id. Playboy argues that the "instance and expense" test "is a relic of the 1909 Act," Appellants' Br. at 35, and has no place in an analysis of work for hire under the 1976 Act. It further urges that under the 1976 Act, "if the parties claim in an agreement that they contracted on a work for hire basis, and if the particular work falls within one of the nine enumerated categories, the creator has received all the protection the Act contemplates." Id. at 34. We find Playboy's characterization of the requirements of the 1976 Act incomplete. The statute specifies that the work must be either a work prepared by an employee within the scope of his or her employment, or a work "specially ordered or commissioned" and falling within one of nine categories. The legislative history sheds considerable light on the intent of the drafters: "The thought here is that, in the [nine] special cases specifically mentioned . . . the work will be considered a work for hire, but only if it is in fact 'specially [**38] ordered or commissioned' for that purpose . . . ." Supplementary Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law: 1965 Revision Bill, 89th Cong., 1st Sess., Copyright Law Revision, pt. 6, p. 67 (emphasis added). The district court was thus correct to determine whether the paintings were "specially ordered or commissioned" by Playboy. The issue, thus, becomes whether the district court properly interpreted the meaning of "specially ordered or commissioned." We first examine whether it was proper for the district court to consider the fact that Playboy no longer controlled the characteristics of Nagel's work. Two well respected commentators on copyright law are agreed that under the 1976 Act, the issue whether a work [*562] is "specially ordered or commissioned" is unrelated to the issue of which party has artistic control over the product. Professor Patry, in discussing the changes to the Copyright Act proposed in 1965 which were incorporated into the 1976 Act, states: The status of a work created by an independent contractor as a specially ordered or commissioned work made for hire ha[s] nothing to do with whether the commissioning party [**39] exercise[s] any (or complete) supervision and control over the independent contractor's work. William F. Patry, Latman's The Copyright Law at 121 (6th ed. 1986). The Nimmers agree. In the section of their treatise relied upon by the district court, they note that while the fact that an artist retains artistic control over a work is "inconsistent with a 'for hire' relationship under the 1909 Act," it "is not necessarily inconsistent with a commission relationship" under the 1976 Act. 1 Nimmer, § 5.03[B][d], n.171. We agree with these commentators that the hiring party need not possess or exercise artistic control over the product for a work to be "specially ordered or commissioned" within the meaning of § 101(2). The district court took out of context the Supreme Court's comment in CCNV that "a party who hires a 'specially ordered or commissioned' work by definition has a right to specify the characteristics of the product desired." A hiring party, the Court noted, has this right "at the time the commission is accepted, and frequently until it is completed." CCNV, 490 U.S. at 741. In other words, a commissioning party may ask a contractor for any [**40] specific work at the outset of their relationship and may continue to make specific requests to the extent their contractual relationship allows. The Court explicitly rejected the "actual control" test that this court had articulated in Aldon Accessories Ltd. v. Spiegel, Inc., 738 F.2d 548 (2d Cir.), cert. denied, 469 U.S. 982, 83 L. Ed. 2d 321, 105 S. Ct. 387 (1984), as being outside the scope of the statutory language. 490 U.S. at 742. Thus, the district court was in error to the extent that it based its conclusion that Nagel's works were not "specially ordered or commissioned" on the fact that by mid-1978 Playboy no longer actually controlled the characteristics of Nagel's work.
Page 12 53 F.3d 549, *562; 1995 U.S. App. LEXIS 10191, **40; 34 U.S.P.Q.2D (BNA) 1737; Copy. L. Rep. (CCH) P27,410 The issue whether the "instance and expense" test was incorporated into the statute through the words "specially ordered or commissioned" is even more difficult. The starting point for the interpretation of a statute is always its language. Consumer Product Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108, 64 L. Ed. 2d 766, 100 S. Ct. 2051 (1980). The phrase "specially ordered or commissioned," the Court tells us in CCNV, denotes a commercial relationship in which a hiring party pays [**41] an independent contractor for his or her work. 490 U.S. at 742-43. This may arguably be equivalent to the "expense" prong of the old test. The words "specially ordered or commissioned" also imply that the hiring party has specifically asked the independent contractor for a work--arguably the "instance" prong. The Nimmers, in their discussion of the meaning of "specially ordered or commissioned", state: In the ordinary case where one person is requested by another to prepare a copyrightable work, a commissioned relationship exists. The surrounding circumstances, however, may indicate that this is not the case. The key factor would appear to be whether the "motivating factor in producing the work was the [person requesting preparation of the work] who induced [its] creation. . . ." 1 Nimmer § 5.03[B][d] (quoting Siegel v. National Periodical Publications, Inc., 508 F.2d 909, 914 (2d Cir. 1974)) (footnotes omitted). The motivating factor" test is, in fact, an interpretation of the "instance and expense" test under the 1909 Act. See Siegel, 508 F.2d at 914. It appears, therefore, that the phrase "specially ordered or commissioned" has essentially [**42] the same meaning as "instance and expense". The district court applied the instance and expense test, but relied erroneously, as discussed in Section 1(A), on its conclusion that the works were not made at Playboy's expense. We have held above that the paintings were made at Playboy's [*563] expense, and we find that the method of payment used by Playboy is consistent with a commission relationship. Thus, in order to determine whether the works created after July 1979 were "specially ordered or commissioned," the district court must determine whether the works were made at Playboy's instance--in other words, following the suggestion of the Nimmers, whether Playboy was the "motivating factor" in the creation of the works. As discussed above in Section 1(A), the district court found that sometime between January 1977 and August 1978, Playboy and Nagel had settled into a course of conduct whereby Nagel would produce paintings and Playboy would publish them. An employee of Playboy testified at trial that "at some point we told [Nagel] we are going to be running this and it looks like this is going to be a regular feature, but there was no commitment on either part that it couldn't be stopped [**43] at any point." Playboy, 831 F. Supp. at 311. The question is whether under this course of conduct Playboy was the "motivating factor" behind the creation of the paintings. The evidence presented at trial shows that Playboy made specific requests for illustrations until at least January 1977, and perhaps until mid-1978. During those years, Nagel painted illustrations to accompany specific articles or letters. After mid-1978, however, Nagel was free to draw anything he liked. Hugh Hefner described the evolution of the relationship as follows: At first, we asked [Nagel] to illustrate a particular letter to the 'Advisor' every month, but soon it was clear that trying to funnel such a large talent so narrowly was like telling Irwin Shaw or Ray Bradbury what to write about. We asked him simply to give us a painting a month. As it turned out, the painting he gave us invariably illuminated one, two, three or all of that month's 'Advisor' letters in a way no commissioned illustration ever had. Id. at 310. The district court on remand may find that during the second phase of their relationship Playboy was not the motivating factor behind Nagel's paintings. Playboy [**44] no longer made specific requests for paintings, and Playboy had no commitment to purchase any of Nagel's work. The evidence further shows that during this time an independent market existed for Nagel's work. Hence, the district court may find that the works were not "specially ordered or commissioned" by Playboy, and therefore were not works for hire under the statute. Alternatively, the court may find that although
Page 13 53 F.3d 549, *563; 1995 U.S. App. LEXIS 10191, **44; 34 U.S.P.Q.2D (BNA) 1737; Copy. L. Rep. (CCH) P27,410 Playboy was not assigning Nagel specific projects, Playboy and Nagel had an implicit understanding that Nagel would submit at least one work per month to Playboy. The evidence at trial showed that every issue of Playboy from August 1975 to July 1984 contained at least one Nagel illustration. Additionally, the evidence showed that after 1978, Nagel was paid for approximately 20 to 30 paintings which he submitted but which Playboy did not publish. Playboy's payment for paintings which it did not publish would support the conclusion that the parties understood that Playboy implicitly requested paintings each month. The district court may, therefore, also conclude on remand that the paintings made after mid-1978 were "commissioned" within the meaning of the 1976 Act. III. [**45] Transfer Because we find that all of Nagel's works created before January 1977 are works made for hire, and that, accordingly, Playboy is their "author", we need not address whether Nagel transferred copyright in those works to Playboy by Legend A. We also need not address whether copyright in Nagel's works created from January 1977 through January 1, 1978 (governed by the 1909 Act) and Nagel's works created from September 1979 through 1984 (governed by the 1976 Act) were transferred by the check legends because the issue will not arise unless the district court finds that the works were not made for hire. We have held, however, that Nagel is the "author" of works created between January 1, 1978 and July 1979. Accordingly, we address whether the copyrights in those [*564] works, governed by the 1976 Act, were transferred from Nagel to Playboy by Legend A. The 1976 Act provides that: 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. 17 U.S.C. § 204(a) (1988). The [**46] legend agreements on the backs of the checks issued by Playboy as payment to Nagel are the only writings signed by Nagel or Nagel's agents that could arguably convey copyright to Playboy. We must therefore examine whether those writings are sufficient to satisfy § 204(a). Legend A, which was stamped on the checks for works created between January 1, 1978 and July 1979, states that "payee acknowledges payment in full for the assignment to Playboy Enterprises, Inc. of all right, title and interest in and to the following items: [a description of a painting followed]." The district court found the legend to be ambiguous because it does not mention the word "copyright," and because it transfers rights to "items" while "ownership of copyright in a work is distinct from ownership of the material object." Playboy, 831 F. Supp. at 308. The court also noted that the language does not describe a present transfer; it confirms a previous transfer of rights. Id. at 309. Playboy, however, "introduced no credible evidence as to any existing prior agreement." Id. at 305. Accordingly, the court concluded, "given the lack of evidence surrounding the agreements said to underlie checks [**47] bearing Legend A . . . Legend A was insufficient, by itself, to transfer copyright ownership in any of the Nagel works." Id. at 309. Playboy argues that the plain meaning of the phrase assignment . . . of all rights, title and interest" includes the assignment of all copyrights. It notes that after April 1, 1977, Playboy returned artwork to Nagel bearing a stamp stating "Playboy's artwork[;] reproduction prohibited without Playboy's permission." Since a copyright owner controls reproduction of a work, Playboy argues, the stamp shows that the parties understood that Nagel had transferred copyright in the works to Playboy. At the very least, Playboy contends, Nagel never objected to the stamp, thereby acquiescing in its contents through his course of action. The Seventh Circuit, in Schiller & Schmidt, Inc. v. Nordisco Corp., 969 F.2d 410 (7th Cir. 1992), found a transfer agreement that did not mention "copyright" sufficient to meet the writing requirement of § 204(a). "It is true that the Copyright Act requires that assignments be in writing," the court reasoned, "but we have the writing . . . . The issue is its interpretation." Id. at 413. The court concluded from the [**48] circumstances surrounding the agreement that the parties intended to transfer copyright by the agreement. Id. Here, the district court found it impossible to determine the intent of the parties, and we cannot find the court's decision clearly erroneous. Legend A does not
Page 14 53 F.3d 549, *564; 1995 U.S. App. LEXIS 10191, **48; 34 U.S.P.Q.2D (BNA) 1737; Copy. L. Rep. (CCH) P27,410 expressly mention copyright. While we do not agree with the district court that the parties could have intended to transfer only physical pieces of artwork, we believe, as we discuss above in Section 1(B), that the evidence is conflicting as to whether the parties intended a one-time transfer of reproduction rights or a transfer that included copyright. We also believe the district court was within its prerogative to determine that the stamp on the back of the artwork was not indicative of an understanding between the parties. Given the ambiguity of the agreement and the accompanying circumstances, we must defer to the district court's determination that Legend A is insufficient to meet the writing requirement of § 204(a). Conclusion For the reasons stated above, the judgment of the district court is affirmed in part, reversed in part, and vacated in part, and the case is remanded for a determination of [**49] whether the works created between January 1977 and January 1, 1978 were made at Playboy's "instance", whether the persons who endorsed the checks on Nagel's behalf from September 1979 to May 1984 were authorized [*565] by Nagel to enter into a work-for-hire agreement, whether the works during that time period were "specially ordered or commissioned" within the meaning of the 1976 Act, and, if necessary, whether Nagel transferred copyright in the works created in the above-mentioned time intervals to Playboy by means of the check legends. We hold that the works created before January 1977 were works for hire under the 1909 Act and, because Dumas failed to meet her burden in proving an agreement to the contrary, Playboy is the "author" of those works and owns their copyrights. We hold that the works created between January 1978 and July 1979 were not works for hire because Legend A does not meet the writing requirement under the 1976 Act, and we uphold the district court's finding that copyright in those works was not transferred by Legend A and therefore remained with the artist. Judgment in accordance with opinion.
2 of 9 DOCUMENTS JEROME SIEGEL and JOSEPH SHUSTER, Plaintiffs-Appellants, v. NATIONAL PERIODICAL PUBLICATIONS, INC., JACOB S. LIEBOWITZ, IRWIN DONENFELD and PAUL H. SAMPLINER, Defendants-Appellees Docket No. 73-2844, No. 36 - September Term, 1974 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT 508 F.2d 909; 1974 U.S. App. LEXIS 5777; 184 U.S.P.Q. (BNA) 257 November 7, 1974, Argued December 5, 1974, Decided PRIOR HISTORY: [**1] Appeal from an order of the United States District Court for the Southern District of New York, Lasker, J., granting defendants' motion to dismiss the complaint which sought a declaratory judgment regarding the ownership of copyright renewal rights. Siegel v. National Periodical Publications, Inc., 364 F. Supp. 1032, 1973 U.S. Dist. LEXIS 11458 (S.D.N.Y., 1973) DISPOSITION: Affirmed.
COUNSEL: Gordon T. King, New York, New York (Coudert Brothers, New York, New York, Carleton G. Eldridge, Jr., of Counsel), for Plaintiffs-Appellants. Michael D. Hess, New York, New York, (Weil, Gotshal & Manges, New York, New York, Edward C. Wallace,
Page 15 508 F.2d 909, *; 1974 U.S. App. LEXIS 5777, **1; 184 U.S.P.Q. (BNA) 257; Copy. L. Rep. (CCH) P27,410 Heather G. Florence, Defendants-Appellees. of Counsel), for products [**3] and work done by said Employee [plaintiffs] for said Employer [Detective] during said period of employment, shall be and become the sole and exclusive property of the Employer, and the Employer shall be deemed the sole creator thereof, the Employee acting entirely as the Employer's employee." The agreement also gave Detective the right of first refusal for any new strips the plaintiffs might produce. In 1938, for the first time, plaintiffs submitted their 1933 Superman materials to Detective to be considered for use in a new magazine, Action Comics. Detective asked plaintiffs to revise and expand the materials into a full-length production suitable for magazine publication, and this was done. Thereafter, and prior to the first appearance of Superman in Action Comics, Detective prepared a written release, dated 1 March 1938, which was executed by plaintiffs and accepted by Detective. This release sold and transferred to Detective "such work and strip [Superman], all good will attached thereto and exclusive rights to the use of the characters and story, continuity and title of strip contained therein, to you [Detective] and your assigns to have and hold forever and to be [**4] your exclusive property. . . . The intent hereof is to give you exclusive right to use and acknowledge that you own said characters or story and the use thereof exclusively . . .." On 19 December 1939, a supplemental employment agreement was entered into. It raised plaintiffs' compensation for the increasingly popular Superman strip, and in addition contained the following language: That we, Detective Comics, Inc., are the sole and exclusive owners of the comic strip entitled "SUPERMAN".. and to [sic] all rights of reproduction of all said comic strips and the titles and characters contained therein, and the continuity thereof, including but not limited to the fields of magazine or other book publication, newspaper syndication . . . and all other form of reproduction. We have all right of copyright and all rights to secure copyright registration in respect of all such forms of reproduction. . . . No further written agreements between the parties
Philip B. Wattenberg, New York, New York, for Amicus Curiae Music Publishers' Association of the United States, Inc. Irwin Karp, New York, New York, for Amicus Curiae Authors League of America, Inc. JUDGES: Kaufman, Chief Judge, Anderson and Mulligan, Circuit Judges. OPINION BY: MULLIGAN OPINION [*910] MULLIGAN, Circuit Judge: This is an appeal from the granting of summary judgment dismissing the complaint upon the order of the Hon. Morris E. Lasker, filed on October 18, 1973. While the opinion below, 364 F. Supp. 1032 (S.D.N.Y. 1973), sets forth the facts [*911] in detail, it will be [**2] necessary to repeat some of the more salient factual background. I The issue presented is who has the copyright renewal rights in the famous "Superman" cartoon character. In 1933, plaintiff Jerome Siegel conceived the idea of Superman -- a person of unprecedented physical prowess dedicated to acts of derring-do in the public interest. In the same year, together with plaintiff Joseph Shuster, he created a Superman comic strip which consisted of several weeks' worth of material, some of which was completely "inked in" and ready for publication, and some of which consisted of mere black-and-white pencil drawings. The new strip was not published at this time, although plaintiffs continued to collaborate on other strips that were then in publication. One of plaintiffs' customers for these other strips was Detective Comics, Inc. (Detective), the predecessor in interest of the present defendant National Periodical Publications, Inc. (National). On December 4, 1937 Detective entered into a written employment contract with plaintiffs, whereby the latter would furnish two other strips exclusively to Detective for a period of two years. The plaintiffs further agreed "that all of these
Page 16 508 F.2d 909, *911; 1974 U.S. App. LEXIS 5777, **4; 184 U.S.P.Q. (BNA) 257; Copy. L. Rep. (CCH) P27,410 were ever executed, although plaintiffs were paid compensation at ever-increasing rates. By 1947, plaintiffs' total compensation for the strip exceeded $400,000. In that year plaintiffs instituted an action against [**5] defendant National in the New York State Supreme Court, Westchester County, to annul the contracts between the parties for various reasons. The March 1938 agreement was specifically attacked as void for lack of mutuality and consideration. In addition, plaintiffs [*912] asked for a declaration of the rights of the parties in the Superman character. Referee J. Addison Young, in an opinion dated 21 November 1947, concluded that the March 1938 agreement was valid and that it transferred to Detective "all of plaintiffs' rights to Superman" (emphasis added). Shortly thereafter, on 12 April 1948, the referee signed findings of fact and conclusions of law. The first such conclusion stated: 1. By virtue of the instrument of March 1, 1938, plaintiffs transferred to DETECTIVE COMICS, INC. all of their rights in and to the comic strip SUPERMAN including the title, names, characters and concept . . . and by virtue of said instrument DETECTIVE COMICS, INC. became the absolute owner of the comic strip SUPERMAN . . .. On 19 May 1948 the parties signed a stipulation which called for the payment of certain moneys by National to plaintiffs. In addition the stipulation repeated [**6] the above quoted conclusion of law, and also stated that: Defendant NATIONAL COMICS PUBLICATIONS, INC. is the sole and exclusive owner of and has the sole and exclusive right to the use of the title SUPERMAN and to the conception, idea, continuity, pictorial representation and formula of the cartoon feature SUPERMAN as heretofore portrayed and published . . . and such sole and exclusive ownership includes, but is not limited to, the fields of book and magazine publications, [etc.] and all other forms of reproduction and presentation, whether now in existence or that may hereafter be created, together with the absolute right to license, sell, transfer or otherwise dispose of said rights. The final consent judgment filed by the referee on 21 May 1948 incorporated the above stipulation and further DECLARED AND ADJUDGED that by virtue of the instrument of March 1, 1938, plaintiffs validly transferred to DETECTIVE COMICS, INC. . . . all of their rights in and to the comic strip SUPERMAN . . . and that by virtue of said instrument, said DETECTIVE COMICS, INC. became the absolute owner of the comic strip SUPERMAN . . . and it is further DECLARED AND ADJUDGED [**7] that defendant NATIONAL COMICS PUBLICATIONS, INC. is the sole and exclusive owner of and has the sole and exclusive right to the use of the title . . . and . . cartoon feature SUPERMAN . . . and it is further ORDERED AND ADJUDGED that plaintiffs . . . be and they hereby are enjoined and restrained from creating, publishing, selling or distributing . . . any material of the nature heretofore created, produced or published under the title SUPERMAN . .. Plaintiffs now seek a declaration that they, and not defendant National, own the copyright renewal rights to the Superman strip. National counterclaims for a similar declaration in its favor. It is stipulated that both parties made timely renewal filings with the Register of Copyright. The court below granted defendants summary judgment dismissing the complaint, primarily for three reasons: 1) The 1947 Westchester action bars relitigation of
Page 17 508 F.2d 909, *912; 1974 U.S. App. LEXIS 5777, **7; 184 U.S.P.Q. (BNA) 257; Copy. L. Rep. (CCH) P27,410 questions concerning the rights of the parties in Superman, because of res judicata; 2) Superman was a "work for hire" within the meaning of the Copyright Act, 17 U.S.C. § 26 (Supp. 1974), and therefore the renewal rights are in the employer; 3) the various [**8] agreements between the parties consistently manifested an intention to give to Detective all of plaintiffs' rights in Superman, including the right of renewal of copyright, though it was never mentioned expressly in any of the agreements. II We are persuaded here that the court below properly decided that the state court judgment of May 21st, 1948 effectively estopped the plaintiffs from relitigating the issue of the ownership of [*913] the renewal copyright. 1 In the state action the present plaintiffs sought, inter alia, a declaratory judgment with respect to the rights of the parties in Superman. After a trial the official referee rendered an opinion as well as detailed findings of fact and conclusions of law. An interlocutory judgment was entered on April 12, 1948 and notices of appeal were filed by both parties. Settlement negotiations then ensued which resulted in a stipulation of settlement and the entry of a final consent judgment of May 21st, 1948. No appeals were taken, and no question has been raised as to the validity of the judgment. There is no doubt that the judgment of the state court is binding in this subsequent federal action. See Vernitron Corp. v. Benjamin, 440 F.2d 105, 108 [**9] (2d Cir.), cert. denied, 402 U.S. 987, 29 L. Ed. 2d 154, 91 S. Ct. 1664 (1971). 1 The parties on this appeal have used the terms "res judicata" and "collateral estoppel" interchangeably. The distinction depends upon whether or not the former judgment was rendered on the same cause of action (res judicata) or on a different cause of action (collateral estoppel). 1B J. Moore, Federal Practice para. 0.441 (2d ed. 1974); Restatement of Judgments § 68, comment a (1942). Since we hold that the state judgment action determined that the defendants owned all of the rights to the Superman strip without reservation, the doctrine of res judicata is properly applicable. It is equally clear that a consent judgment does have res judicata effect, Stuyvesant Insurance Co. v. Dean Construction Co., 254 F. Supp. 102, 110 (S.D.N.Y. 1966), aff'd sub nom. Stuyvesant Ins. Co. v. Kelly, 382 F.2d 991 (2d Cir. 1967); [**10] 1B J. Moore, supra, para. 0.409; see United States v. Swift & Co., 286 U.S. 106, 115, 76 L. Ed. 999, 52 S. Ct. 460 (1932). The only issue before us is whether the state judgment actually determined whether the copyright renewal rights to Superman were vested in the defendants here. While it is true that the term "renewal copyright rights" was not mentioned in the state court judgment, we are persuaded that the state court action finally determined that Detective, predecessor in interest to National, owned all rights to Superman without limitation. The injunction in the 1948 decree, which enjoined the plaintiffs from publishing Superman, is not limited to the copyright period or what remained thereof but is perpetual. The plaintiffs were represented by counsel in the state court and there is no limiting language in the judgment which would support the present contention that renewal rights were preserved. On the contrary, a reading of the judgment and the findings inescapably leads to the conclusion that the decree settled for once and for all that the defendants had all right and title to Superman for all time. Appellants argue that the agreements did not [**11] convey the renewal rights because, as a rule, a general transfer of an original copyright without mention of renewal rights does not convey the latter without proof of a contrary intention. Edward B. Marks Music Corp. v. Charles K. Harris Music Publishing Co., 255 F.2d 518, 521 (2d Cir.), cert. denied, 358 U.S. 831, 3 L. Ed. 2d 69, 79 S. Ct. 51 (1958). The ready answer to this argument is that the state court action determined that the agreements conveyed all of the plaintiffs' rights in Superman to the defendants and not just the original copyright term. Under the doctrine of res judicata we are not free collaterally to re-examine the agreements to determine whether or not the construction placed upon them was warranted. Restatement of Judgments § 48, comment a; 1B Moore, supra, para. 0.405, at 629. We also should point out that in Venus Music Corp. v. Mills Music, Inc., 261 F.2d 577 (2d Cir. 1958) this court held that general words of assignment can include renewal rights if the parties had so intended. Accord, cases cited in Annot. [**12] , 2 A.L.R. 3d 1403,
Page 18 508 F.2d 909, *913; 1974 U.S. App. LEXIS 5777, **12; 184 U.S.P.Q. (BNA) 257; Copy. L. Rep. (CCH) P27,410 1415-16 (1965). That intent is to be determined by the trier of the facts. Here the March 1938 agreement between the parties did not simply purport to convey a copyright; in fact, the term is not mentioned in that agreement. Rather, the sale of the Superman strip conveyed the "exclusive [*914] right to the use of the characters and story, continuity and title of [the] strip . . . to you and your assigns to have and hold forever" (emphasis added). Moreover, the authors agreed not to "employ said characters or said story . . . or sell any like strip or story . . . at any time hereafter to any other person, firm or corporation . . ." (emphasis added). The state court was called upon to construe these instruments and the determination of that court that the plaintiffs intended to convey all their rights, including implicitly the renewal of the copyright, was, in our view, entirely proper. In any event, that decision is binding on us here. III The court below held that Superman was also a "work for hire" within the meaning of the Copyright Act, 17 U.S.C. § 26; since this conclusion was based upon the fact findings [**13] of the state court, the court below further concluded that res judicata would bar the plaintiffs from relitigating the factual basis of the "work for hire" point. We disagree. While it is evident that the state court concluded as a matter of law that the plaintiffs conveyed all their rights in Superman to the defendants, there was no conclusion of law in the state court that the comic strip was a work for hire so as to create the presumption that the employer was the author. That issue was not litigated at all in the state court. On the contrary, that court's finding of fact no. 8 was that the plaintiffs were "the originators and authors of the cartoon character SUPERMAN and of the title SUPERMAN and first created cartoon material in which the said character and title first appeared in 1934. . . ." The court below instead relied upon finding of fact no. 22 in which the state court found that the plaintiffs did revise and expand the Superman material at the request of the defendants and that this revised material constituted the formula for the ensuing series of strips. We do not consider this tantamount to a conclusion that Superman was a work for hire. [**14] That doctrine is applicable only when the employee's work is produced at the instance and expense of the employer, Brattleboro Publishing Co. v. Winmill Publishing Corp., 369 F.2d 565, 567 (2d Cir. 1966), or, in other words, when the "'motivating factor in producing the work was the employer who induced the creation . . .,'" Picture Music, Inc. v. Bourne, Inc., 457 F.2d 1213, 1216 (2d Cir.), cert. denied, 409 U.S. 997, 34 L. Ed. 2d 262, 93 S. Ct. 320 (1972). Superman had been spawned by the plaintiffs four years before the relationship between his authors and the defendants existed. We consider Scherr v. Universal Match Corp., 417 F.2d 497 (2d Cir. 1969), cert. denied, 397 U.S. 936, 25 L. Ed. 2d 116, 90 S. Ct. 945 (1970), cited below, to be distinguishable. In that case two servicemen had created a small clay model of an infantryman. Their Army superiors directed them thereafter to sculp a statute 25 feet high with a 12 foot figure of a charging infantryman; the court found this larger creation to differ from the model. The copyright was held to be the property of [**15] the United States under the work for hire doctrine. In the case before us Superman and his miraculous powers were completely developed long before the employment relationship was instituted. The record indicates that the revisions directed by the defendants were simply to accommodate Superman to a magazine format. We do not consider this sufficient to create the presumption that the strip was a work for hire. Accordingly, we affirm the dismissal of the complaint, but only on the ground that the 1947 state court action, in interpreting the agreements between the parties, precludes the plaintiffs from contesting ever again that all rights in Superman, including the renewal copyright, have passed forever to defendants.
3 of 9 DOCUMENTS NATIONAL COMICS PUBLICATIONS, Inc. v. FAWCETT PUBLICATIONS, Inc. et al.
Page 19 191 F.2d 594, *; 1951 U.S. App. LEXIS 4117, **; 90 U.S.P.Q. (BNA) 274; Copy. L. Rep. (CCH) P27,410 No. 197, Docket 21832 UNITED STATES COURT OF APPEALS SECOND CIRCUIT 191 F.2d 594; 1951 U.S. App. LEXIS 4117; 90 U.S.P.Q. (BNA) 274 May 4, 1951, Argued August 30, 1951, Decided found it unnecessary to decide whether "Republic" had infringed the copyrights, or whether, if it had, it could recover against "Fawcett" upon a contract between the two in which "Fawcett" agreed to hold 'Republic' harmless for its use of the pictures in suit. On the other hand he found that, in publishing the exploits of "Captain Marvel" in "Whiz Comics" and its other magazines, "Fawcett" copied from "strips"- a "strip" consists of a series of pictures, carrying legends- which had appeared in "Action Comics," and had done so with the degree of detail which in Detective Comics v. Bruns Publications, 2 Cir., 111 F.2d 432, we found to infringe earlier [**3] copyrights of "Superman" by another plagiarist. The evidence does much more than show that this finding was not "clearly erroneous"; it leaves no possible doubt that the copying was deliberate; indeed it takes scarcely more than a glance at corresponding "strips" of "Superman" and "Captain Marvel" to assure the observer that the plagiarism was deliberate and unabashed. Whether "Fawcett" copied only from "Action Comics" in the end makes no difference, as will appear; but we shall assume arguendo that at times it also made use of "Detective's" other magazine, "Superman." The judge based his decision upon the ground that "Detective" had "abandoned" the copyrights in suit, and it is necessary at the outset to distinguish between "abandonment", strictly speaking, [*598] and what for convenience we shall call "forfeiture." we do not doubt that the "author or proprietor of any work made the subject of copyright" by the Copyright Law 1 may "abandon" his literary property in the "work" before he has published it, or his copyright in it after he has done so; but he must "abandon" [**4] it by some overt act which manifests his purpose to surrender his rights in the "work," and to allow the public to copy it. There was no evidence in this case of any such an intent on the part either of "Detective" or "McClure"; indeed, although "McClure's" negligent omissions may have invalidated many of the copyrights in suit, the very fact that it continuously attempted to publish "strips" with some sort
COUNSEL: [**1] Phillips, Nizer, Benjamin & Krim, New York City (Louis Nizer, Walter S. Beck, Paul Martinson, and Seymour Shainswit, all of New York City, of counsel), for plaintiff-appellant. Wallace H. Martin, and DeWitt, VanAken & Nast, all of New York City, Macdonald DeWitt, Harry H. Van Aken, Marion L. Severn, Robert Bonynge, all of New York City (Nims, Verdi & Martin, New York City, of counsel), for defendant Fawcett Publications, Inc. Meyer H. Lavenstein, New York City (Theodore R. Black, Charles E. Oberle, New York City, of counsel), for the Republic defendants-appellees. JUDGES: Before CHASE, FRANK and L. HAND, Circuit Judges. OPINION BY: HAND OPINION [*597] The plaintiff appeals from a judgment, dismissing after trial its complaint against Fawcett publications, Inc., and Republic Pictures Corporationtogether with its affiliate, Republic Productions, Inc.- in an action based upon the infringement of its copyrights. The appeal of the Fawcett Company is from that part of the judgment which denied it any allowance for its attorneys' fees. The "opinion and decision" of the district court is reported in 93 F.Supp. 349, and we shall not repeat the substance [**2] of the controversy which is there stated or the facts found, which we accept in so far as we do not indicate the contrary. In referring to the parties we shall call the plaintiff and its predecessors collectively, 'Detective'; the Fawcett Company, "Fawcett"; and the two Republic Companies, "Republic." We shall also call the McClure Newspaper Syndicate, "McClure." The judge dismissed the complaint because he held that "Detective" had "abandoned" its right to any copyrights in "Superman," and, having so decided, he
Page 20 191 F.2d 594, *598; 1951 U.S. App. LEXIS 4117, **4; 90 U.S.P.Q. (BNA) 274; Copy. L. Rep. (CCH) P27,410 of copyright notice affixed, however imperfect that may have been, is conclusive evidence that it wished to claim a copyright upon them; and indeed it would have had no conceivable purpose in allowing its rights to lapse. It is of course true that the publication of a copyrightable "work" puts that "work" into the public domain except so far as it may be protected by copyright. That has been unquestioned law since 1774; 2 and courts have often spoken of it as a "dedication" by its "author or proprietor." That, however, is a misnomer, for "dedication," like "abandonment," presupposes [**5] an intentional surrender, which is in no sense necessary to the "forfeiture" of a copyright. An author, whose work is "forfeited," need have had no such purpose, and ordinarily does not; it was indeed long doubtful whether he did "forfeit" his rights by publication, and when it was settled that he did, the result was a consequence, imposed invitum upon him because of his failure to comply with the prescribed formalities. In the case at bar this confusion has led to the erroneous conclusion that because "McClure" with "Detective's" supposed acquiescence may have been negligent in protecting the copyrights upon many of the "strips" in suit, "Detective" abandoned its right to copyright all pictorial portrayals of the exploits of "Superman." Since it did nothing of the kind, the case can be disposed of only be determining the validity of the copyright on each "strip" separately, and we shall state what we deem the essential factors in such a determination. "Detective" "affixed" proper notices upon all issues of "Action Comics" and upon its other magazine, "Superman," as well, with the possible exception of Numbers 5 and 6- of which more hereafter. We agree with the judge [**6] that the publication in "Superman" under the copyright date, "1939," of "strips"which had already appeared in 1938 in 'Action Comics,' did not 'forfeit' the the copyrights upon those 'strips,' and our consideration may therefore be limited to the acts of 'McClure' and any asserted acquiescence of of "Detective." Apparently, "McClure" borrowed some "strips" from 'Action Comics,' and published them in its 'syndicated' newspapers; but the great bulk of the 'strips' in suit were those which 'McClure' itself produced under the contract of September 22, 1938, and the original copyrights on which it took, or tried to take, in its own name. Before considering the effect of 'McClure's' conduct upon either the copyrights of the borrowed 'strips,' or upon those produced under the contract, it will be clearer to consider the relations between 'McClure' and 'Detective' which the contract itself created. It begins by giving 'McClure' an eight months option upon the 'newspaper syndication of a daily strip * * * entitled 'Superman." 'Detective' promises to continue to pay the salaries of the 'artists,' Siegel and Shuster, who were already in its employ; but it 'agrees to permit them [**7] to supply 'Superman' strips exclusively to us for syndication * * * for a minimum period of five years after June 1, 1939,' with an option for an added period of five years. 'McClure' is to have 'reasonable editorial supervision of the feature which the Artists agree to maintain at the standard shown in the sample submitted.' 'The material contained in the feature which we syndicate will be copyrighted in our [*599] name, but copyright reverts to Detective at the termination of this contract.' 'McClure' agrees 'to provide Detective with all the original drawings of the 'Superman' strip, so that said drawings may be used by Detective in the publication, 'Action Comics,' six months after newspaper release without charge or for any substituted magazine.' The judge, apparently without suggestion from either party, construed this agreement to be a 'joint venture,' and for that reason held that 'McClure's' failure to affix the 'required' notices to the 'strips' had the same effect upon the copyrights in suit as though 'McClure' were the 'proprietor.' We agree with the result, but because we think that 'McClure' was indeed the 'proprietor' of the copyrights, and for that [**8] reason we do not find it necessary to decide whether the contract constituted a 'joint venture,'- incidentally one of the most obscure and unsatisfactory of legal concepts. Our reasons for this interpretation are two: (1) it is only on the assumption that 'McClure' was the 'proprietor' of the 'work'- i.e. of the 'strips' prepared by the 'Artists' under the contract- that any valid copyrights could be secured by publication in the 'syndicated' newspapers; and, (2), the text of the contract forbids any other conclusion. In support of the first point we need invoke no more than Sec. 10. Section 9 declares that it is the 'author or proprietor of any work' who is entitled to its copyright, Sec. 10 declares that he may obtain it by 'publication' with the 'required' notice 'affixed,' and Sec. 19 prescribes what the notice must be. Unless therefore 'McClure' was a 'proprietor' of the 'strips' the purpose of the parties to copyright them was defeated; and we ought to construe the words to effect that purpose, so far as it is possible to do so. In support of the second point we say [**9] that the text itself comports only with the conclusion that 'McClure' was to be the 'proprietor.' As has appeared
Page 21 191 F.2d 594, *599; 1951 U.S. App. LEXIS 4117, **9; 90 U.S.P.Q. (BNA) 274; Copy. L. Rep. (CCH) P27,410 above, the 'material'- the 'strips'- is to be copyrighted in 'McClure's' name, but the copyright 'reverts to Detective at the termination of this contract.' That necessarily meant that, until the contract came to an end, 'McClure' was to have the 'title' to the copyrights, for property cannot 'revert' from one person to another unless the person from whom it 'reverts' holds title to it. Even though he holds it in trust, its fate depends upon his acts, not upon his beneficiary's. The sentence which immediately follows reinforces this conclusion; it reads: 'The title 'Superman' shall always remain the property of Detective.' That disclosed a plainly deliberate distinction between the word, 'Superman,' used as a 'title,' and the 'works' which were to be produced in the future and published by 'McClure' in the 'syndicated newspapers': the title was to remain 'Detective's' 'property'; the copyrights were only in the future to become its 'property.' In final confirmation of this interpretation is the clause in which 'McClure' assumed 'to provide Detective with [**10] all the original drawings * * * so that said drawings may be used by Detective in the publication 'Action Comics' six months after newspaper release.' That is the language of a 'proprietor,' who assumes power to license another to copy the 'works.' Since for these reasons 'McClure' became the 'proprietor' of any copyrights upon 'strips' published under the contract, in so far as it failed to affix the 'required' notices upon the first publication of a 'strip' and upon each copy published thereafter, Section 10, the 'work' fell into the public domain. On the other hand, as we have already implied, the absence of any notice, or the affixing of an imperfect notice, upon one 'strip' had no effect upon the copyright upon another 'strip' depicting a different exploit. We do not mean that the 'proprietor' of a number of copyrights may not evince such a consistent disregard of his right to copyright them as to justify the inference that he intends to 'abandon' all future 'works'; but, as we have said, the evidence in the case at bar precludes any such inference. Nor do we forget that every copyrighted 'work' must be original, or that the 'strips' in question had much resemblance [**11] in their subject matter: 'Superman' is the same in all; he is only displayed in different magical feats. But [*600] a copyrighted 'work,' unlike a patent, demands no 'invention'; and the copyright of a later exploit of 'Superman' was valid, in so far as the picture differed from those that had gone before. That follows from Section 7 which provides for the copyright of 'abridgments, adaptations, arrangements * * * or other versions'; for all of these are variants of some already published 'work.' The same result also follows from the fact that a copyright never extends to the 'idea' of the 'work,' but only to its 'expression,' and that no one infringes, unless he descends so far into what is concrete as to invade that 'expression.' We can add nothing to what we said in Nichols v. Universal Pictures Corp., 2 Cir., 45 F.2d 119, and Sheldon v. Metro-Goldwyn Pictures Corp., 2 Cir., 81 F.2d 49, except that it was precisely on this account that in our earlier [**12] 'Superman' case itselfDetective Comics, Inc., v. Bruns Productions, supra, 2 Cir., 111 F.2d 432- we limited the copyright to the specific exploits of 'Superman,' as each picture portrayed them. The judge answered by saying that 'the syndicated newspaper stories were not identical with the 'Action Comics' stories but they were so nearly similar that, if they had been published by a stranger, they would clearly be held to be infringements of the copyrights on the 'Action Comics' stories.' To that test we cannot agree. There may indeed be limits to the protection that will be given to the variant of an earlier 'work,' even when the variations in it are plagiarized to the last particular. Added phrases in a written 'work,' or changes of a few lines or colors in a pictorial one, may be too trivial to be noticeable by an ordinarily attentive reader or observer; and we will assume arguendo that in such cases the variant cannot be copyrighted. But there were much greater variations than these between the different 'strips,' and each 'strip' was an original 'work,' capable of independent copyright. We come therefore to the attacks which 'Fawcett' [**13] makes upon the copyrights of the separate 'strips' in 'Action Comics,' and in 'Superman,' so far as it may have copied any of the 'strips' from that magazine. 'Fawcett' asserts that the copyright had been lost upon many of these which appeared in 'McClure's' 'syndicated' newspapers, and it is of course true that, if so, they were not revived when published in 'Action Comics.' As we have already suggested, there may be a difference between 'strips' which 'McClure' borrowed from 'Action Comics,' and those which it produced and published under the contract; and we shall consider the borrowed 'strips' first. Although the judge did not find the terms of the agreement under which they were borrowed, we must suppose that there was one; and at best 'McClure' could have become no more than a licensee, for it is not suggested that 'Detective' transferred the copyrights in them. The question is whether the absence or the imperfection of the notices on these 'strips' 'forfeited' their copyrights, when they were published in the 'syndicated'
Page 22 191 F.2d 594, *600; 1951 U.S. App. LEXIS 4117, **13; 90 U.S.P.Q. (BNA) 274; Copy. L. Rep. (CCH) P27,410 newspapers. The answer depends upon the terms of the contract of borrowing. [**14] Section 10 provides that the first publication of a 'work' with the 'required' notice secures the copyright; but it implies that a failure to affix the notice upon each copy, later published 'by authority of the copyright proprietor,' will 'forfeit' it; and such is the law. 3 If 'Detective' gave 'McClure' an unconditional license to publish the 'strips,' their publication without the 'required' notice was 'by authority of the copyright proprietor,' and had the same effect upon the copyrights that similar publication by 'Detective' would have had: it 'forfeited' them unless Section 21 saved them. On the other hand if 'McClure' promised to affix the 'required' notice upon the borrowed 'strips'- as it did upon the 'strips' made under the contract- the performance of that contract was a condition upon the license, for 'Detective' certainly did not mean to be remitted only to the inadequate remedy of an action for damages for breach of the promise. The decision [*601] of the Seventh Circuit in American Press Association v. Daily Story Publishing Co., 120 F. 766, supports this interpretation of such a contract, and we regard it as unanswerable. 'Detective' [**15] may indeed have waived the performance of such a promise, if one was made, but the judge made no finding on the matter, and we leave the issue open, except to say that the exchange of letters between 'Detective' and 'McClure' in August, 1940, would not support a finding of waiver. Next, and much more important, are any omissions by 'McClure' or the 'syndicated' newspapers to affix the 'required' notices upon those 'strips' which were produced and published under the contract of September, 1938. Since 'McClure' was the 'proprietor' of these 'strips,' if it omitted to affix the notice upon the copy, or 'mat,' which it sent to a newspaper to be published, the copyright upon it was lost upon publication, unless Section 21 saved it. On the other hand, if upon the 'mat' sent to a newspaper 'McClure' had affixed the 'required' notice, the situation was the same as in the case of a borrowed 'strip': i.e. if 'McClure' exacted a promise from the newspaper to affix the notice upon all copies which the newspaper published, performance of that promise became a condition upon that newspaper's license to publish; and publication without the 'required' notice was not 'by authority [**16] of the copyright proprietor' and did not 'forfeit' the copyright. But, if 'McClure' did not exact any such promise from the newspaper to which it sent a 'mat,' it gave 'authority' to the newspaper to publish as it chose, and the copyright was 'forfeited,' if the newspaper failed to annex the 'required' notice. In short, as to 'strips' published under the contract of September, 1938, 'McClure' stood in the same relation to the newspapers that 'Detective' stood to 'McClure' as to any borrowed 'strips.' It remains to consider the effect of Section 21 upon those situations in which except for it the copyrights would be 'forfeited.' That section provides that when the 'proprietor has sought to comply * * * with respect to notice, the omission by accident or mistake of the prescribed notice from a particular copy or copies shall not invalidate the copyright' as against an infringer who has 'actual notice'; and 'Fawcett' was such an infringer. In order to invoke the section, the 'proprietor' must have sought to 'comply' with Sections 10 and 19, and if he omits to affix any notice [**17] whatever he has not done so. It makes no difference that that omission may itself have been the result of 'accident or mistake'; the section does not come into play at all unless he has taken some step towards compliance; it excuses only faulty notices, not a publication bare of any. 4 It follows that, so far as 'McClure' sent out 'mats' without any notice at all, the copyrights on those 'strips' were lost, regardless of Section 21. Next, as to any later omission or later mutilation of a notice upon specific copies by a newspaper during the publication of a 'strip.' Several courts have held that Section 21 does not excuse the omission 'of the prescribed notice' upon all subsequent copies, even though the notice on the first published copy was proper. 5 They have based this ruling on the word, 'particular,' in the phrase 'particular copy or copies', and again we agree, since it is difficult otherwise to give any effect to that word. We shall not try to say in advance upon how many copies the notice may be omitted or defective, and yet the omissions or defects be deemed to be upon only 'particular copies'; although some courts have said that such copies must be 'very [**18] few,' in spite of the fact that the section is remedial and should be generously construed. The question may not arise in the case at bar, and we will say no more at present than that, although the [*602] first newspaper to publish a 'strip' affixes the 'prescribed' notice on all copies then published, the failure to affix proper notices upon all copies of a later issue of the same 'strip' by that, or another newspaper, is an 'omission' upon more than 'particular copies'; and Section 21 may not be invoked.
Page 23 191 F.2d 594, *602; 1951 U.S. App. LEXIS 4117, **18; 90 U.S.P.Q. (BNA) 274; Copy. L. Rep. (CCH) P27,410 Next is the question as to how far the notices must exactly conform to those which Section 19 prescribes. It had been decided before Section 21 was passed that, if the notice affixed carried an earlier date than the true one, the error did not 'forfeit' the copyright, although the law required the notice to state the true year; 6 and that ruling has been followed later. 7 The rationale of these decisions, and their avowed justification, is that, since the purpose of the notice is to advise the public of the 'proprietor's' claim, any notice will serve which does in fact advise it that there is a 'proprietor' who does claim copyright, provided the notice does [**19] not affirmatively mislead. It is true that Section 21 would not protect imperfect notices which appeared upon more than 'particular copies'; nevertheless it would be absurd to construe it as limiting any latitude that the preceding law had allowed to a notice not strictly in accord with Section 19. Therefore we hold that any notice is sufficient which gives the substance of what is prescribed in Section 19. As applied to the alternative in Section 19 of the letter 'C,' in place of 'Copyright,' there are indeed decisions to the contrary of this. The Eighth Circuit in Advertisers Exchange v. Anderson, 144 F.2d 907, and Judge Barksdale in Deward & Rich v. Bristol Savings & Loan Corp., D.C., 34 F.Supp. 345- affirmed without comment on this point in 120 F.2d 537- held that it 'forfeited' a copyright to affix the letter 'C' instead of the word 'Copyright' if the 'work' was not within subsections (f) to (k) of Section 5. It is not altogether plain to us why such a notice should not have been held sufficient under the doctrine we have just [**20] mentioned; but the actual holding in these decisions need not trouble us, for in the case at bar the 'strips' were 'pictorial illustrations,' and within subsection (k) of Section 5. The 'proprietor' of such 'works' has a choice between using the work 'Copyright' and the letter 'C,' and either will serve. Last is the question whether the copyrights on the 'strips' appearing in Numbers 5 and 6 of the magazine, 'Superman,' were 'forfeited' because the notice gave the corporation, Superman, Inc., as the name of the 'proprietor,' instead of 'Detective,' the 'proprietor' in fact. Once more, Section 21 did not excuse this, if the notice was insufficient, because an issue of 'Superman' covered more than 'particular copies.' There is, however, no necessity to invoke that section, for we think that the notice was sufficient because of the relation of Superman, Inc., to 'Detective.' It was a corporation having the same officers, directors and shareholders as 'Detective' had appointed it in January, 1940, as its 'exclusive agent to exploit 'Superman' the trade-marks and copyrights and/or other rights therein, in any manner whatsoever,' although it had confined the subsidiary 1292 *20 [**21] to the exploitation of 'Superman.' It is true that the agreement did not authorize Superman, Inc., to take out copyrights; and we agree that, if Superman, Inc., had, like 'McClure,' been a corporation, having an independent will, and owned by shareholders who had interests separate from 'Detective's,' we should not be justified in holding that the mistake fell within the doctrine of the decisions we have mentioned. Since, however, the interests of the two corporations were precisely the same, we think that a notice was sufficient which used the dummy's name as 'proprietor.' Anyone who should act in reliance upon the proprietorship of Superman, Inc., would not find himself in any different position because it turned out that that corporation was only a dummy; certainly 'Detective' [*603] could not for that reason have escaped any liability. We are unwilling to allow a bare-faced infringer to invoke an innocent deviation from the letter that could not in the slightest degree have prejudiced him or the public. Wildman v. New York Times Co., D.C., 42 F.Supp. 412, held that Section 21 did not excuse mistakes of law; and, although for the reasons given the section did [**22] not apply as to these issues of 'Superman,' the same argument may be made to confute the latitude we are allowing to the notice. If so, we answer that although the doctrine does persist in some circumstances that a mistake of law will not excuse, it is a principle more honored in the breach than in the observance, and that we are unwilling to introduce it here. pit is true that in our decision in Fleischer Studios, Inc., v. Ralph A. Freundlich, Inc., 2 Cir., 73 F.2d 276, the only mistake in the 'proprietor's' name was the omission of the suffix, 'Inc.'; nevertheless, the reason for our disregarding that mistake was because it was trivial, and surely the measure of triviality is not whether on its face the mistake seems important, but whether it is in fact. The dismissal of 'Detective's' claim for 'misappropriation' and 'unfair competition' was clearly right. There could be no misappropriation of any 'strips,' once published, if they were not copyrighted; as we said at the outset, they went at once into the public domain and anyone might copy them. International News Service v. Associated Press, 248 U.S. 215, 39 S.Ct. 68, 63 L.Ed. 211, [**23] is authority only for the situation there at bar, as has been over and over decided. The claim for unfair competition is equally baseless. In the first place 'Fawcett's' magazines bore its name which had
Page 24 191 F.2d 594, *603; 1951 U.S. App. LEXIS 4117, **23; 90 U.S.P.Q. (BNA) 274; Copy. L. Rep. (CCH) P27,410 no resemblance to 'Detective's,' and there was no reasonable ground for supposing that readers would mistake one for the other. But the misapprehension goes much deeper. The owner's right to protect his name or mark from being copied depends primarily upon the likelihood that those who may wish to deal with him will be misled into dealing with the infringer; and that presupposes, not only that the mark has become associated with the owner as the source of the goods, but that this association is an inducement to deal with the owner. In the case of these silly pictures nobody cares who is the producer- least of all, children who are the chief readers- ; the 'strips' sell because they amuse and please, and they amuse and please because they are what they are, not because they come from 'Detective.' To allow the first producer of such pictures to prevent others from copying them, save as he can invoke the Copyright Law, would sanction a completely indefensible monopoly. [**24] There remains the claim of 'Detective' against 'Republic' and 'Republic's Cross-claim against 'Fawcett,' both of which the judge necessarily dismissed after he found that 'Detective' had 'abandoned' all the copyrights in suit. He made no findings except to say that Republic produced a serial motion picture photoplay, using the comic strips of 'Captain Marvel' which had appeared in 'Whiz Comics"; and that this was 'exhibited in many theatres in the United States.' 'Republic' in its brief appears to suppose that, because its 'photoplay' differed from 'Superman' in essential details of plot and in general pattern, it did not infringe. Nothing could be more mistaken; a plagiarist can never excuse his wrong by showing how much he did not plagiarize. In so far as 'Republic' copied the details of those 'strips' which 'Fawcett' had copied from 'Action Comics' or 'Superman,' it infringed; although 'Detective' must of course point out the exploits which 'Republic' did reproduce, and must prove that the reproduction was close enough in detail to satisfy the doctrine of Detective Comics, Inc., v. Bruns Publications, supra, 2 Cir., 111 F.2d 432. How [**25] far it must prove notice of 'Detective's' copyrights in addition to the notice which 'Fawcett' got, we need not say except to refer to DeAcosta v. Brown, 2 Cir., 146 F.2d 408. On the new trial the court will have to decide what valid copyrights 'Republic' did infringe, and we shall have findings to guide us. On this record we cannot dispose of the claim. Nor will we pass upon the merits of the cross-claim of 'Republic' against 'Fawcett' upon its agreement to hold [*604] 'Republic' harmless for we have no findings. Finally, we will not decide whether the district court had a dependent jurisdiction over the cross-claim under the doctrine of Hurn v. Oursler, 289 U.S. 238, 53 S.Ct. 586, 77 L.Ed. 1148, now embodied in the Judiciary Code. That question the briefs did not argue; and indeed did no more than incidentally allude to; it must await development upon the new trial. Judgment reversed; and cause remanded for further proceedings consistent with the foregoing opinion. 1. 2. [**26] 3. Mifflin v. Dutton, 190 U.S. 265, 23 S.Ct. 771, 47 L.Ed. 1043; Louis DeJonge & Co. v. Breuker & Kessler Co., 235 U.S. 33, 35 S.Ct. 6, 59 L.Ed. 113; Deward & Rich, Inc., v. Bristol Savings & Loan Corp., 4 Cir., 120 F.2d 537. 4. United Thrift Plan v. National Thrift Plan, Inc., D.C., 34 F.2d 300; Weil on Copyright, Section 907. 5. Krafft v. Cohen, 3 Cir., 117 F.2d 579; Deward & Rich v. Bristol Savings & Loan Corp., supra, 4 Cir., 120 F.2d 537; Goes Lithographing Co. v. Apt. Lithographic Co., D.C., 14 F.Supp. 620; W. S. Bessett, Inc., v. Germain, D.C., 18 F.Supp. 249. 6. Callaghan v. Myers, 128 U.S. 617, 9 S.Ct. 177, 32 L.Ed. 547. 7. American Code Co. v. Bensinger, 2 Cir., 282 F. 829, 836; Shapiro, Bernstein & Co., Inc., v. Jerry Vogel Music Co., Inc., 2 Cir., 161 F.2d 406; Southern Music Publishing Co. v. Bibo-Lang, Inc., D.C., 10 F.Supp. 972. Section 9, Title 17 U.S. Code. Donaldson v. Becket, 4 Burrows 2408.
4 of 9 DOCUMENTS
Page 25 2002 U.S. Dist. LEXIS 10593, * 90 U.S.P.Q. (BNA) 274; Copy. L. Rep. (CCH) P27,410 DC COMICS, Plaintiff, -versus- KRYPTONITE CORPORATION, Defendant. 00 Civ. 5562 (AGS) UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK 2002 U.S. Dist. LEXIS 10593
June 12, 2002, Decided June 13, 2002, Filed DISPOSITION: [*1] Plaintiff's motion to amend its complaint denied. Plaintiff's request for protective order granted, as modified. agreement ("Agreement") between the parties governing Kryptonite's use of the words "Kryptonite," "Kryptonite Design" and "Krypto [*2] Grip." DC also alleges that KC's use of comic book style artwork, and terms such as "Men of Steel" and "Up, Up and Away" violate the Agreement. DC now moves the Court for leave to amend its complaint to add a claim of mutual mistake and reformation to correct an error allegedly caused by KC's predecessor's alleged inaccurate description of its trademark filings, and a request for a declaration from the Court that the term "security devices" in the Agreement should be interpreted to mean the parties' purported intention in the Agreement to limit the use of the various "Krypto" words by KC to the goods KC and its predecessor were producing or had immediate plans to produce in 1983. Additionally, DC seeks a protective order providing for DC's disclosure of certain documentary and testimonial evidence pursuant to a limited privilege waiver. For the reasons set forth below, DC's motion to amend its Complaint is DENIED. DC's request for a protective order is GRANTED, as MODIFIED by the Court. Factual Background DC Comics ("DC") is the publisher of comic books and magazines featuring a variety of beloved superhero characters, including Wonder Woman, Batman, and, most famously, [*3] Superman. Superman's biography is well-known. Born as Kal-El, the infant Superman was sent by his father Jor-El aboard a spacecraft to escape his dying home planet, Krypton. His spacecraft crashed into the Earth, and he was discovered by Jonathan and Martha Kent, who raised him as their son, naming him, "Clark." On Earth, Superman possesses superhuman abilities, including the ability to fly, tremendous strength and
COUNSEL: For DC COMICS, plaintiff: Carol F. Simkin, Patrick T. Perkins, Ronald E. Wiggins, Fross, Zelnick, Lehrman & Zissu, P.C., New York, NY. For KRYPTONITE CORPORATION, defendant: Jonathan E. Moskin, Lavatus V. Powell, III, Pennie & Edmonds L.L.P., New York, NY. For KRYPTONITE CORPORATION, counter-claimant: Jonathan E. Moskin, Lavatus V. Powell, III, Pennie & Edmonds L.L.P., New York, NY. For DC COMICS, counter-defendant: Carol F. Simkin, Patrick T. Perkins, Ronald E. Wiggins, Fross, Zelnick, Lehrman & Zissu, P.C., New York, NY. JUDGES: ALLEN G. SCHWARTZ, U.S.D.J. OPINION BY: ALLEN G. SCHWARTZ OPINION MEMORANDUM ORDER ALLEN G. SCHWARTZ, DISTRICT JUDGE: Introduction DC Comics ("DC") filed the instant action against Kryptonite Corporation ("KC") on July 26, 2000, alleging breach of contract, trademark infringement, unfair competition, trademark dilution, and related New York state law claims. According to DC, KC violated a 1983
Page 26 2002 U.S. Dist. LEXIS 10593, *3 90 U.S.P.Q. (BNA) 274; Copy. L. Rep. (CCH) P27,410 speed, and x-ray vision. Superman's sole weakness is his vulnerability to several forms of Kryptonite, an element from Superman's home planet. The most well-known form of Kryptonite is Green Kryptonite, which weakens and can kill Superman. DC has also featured a variety of other forms of Kryptonite, including Gold Kryptonite, Blue Kryptonite, and Anti-Kryptonite. When the costumed hero is not fighting crime and defending humanity against assorted villains, Superman goes by his adopted name, "Clark Kent," and poses as a mild-mannered reporter for the Daily Planet. See Complaint, at PP 9-22. DC acquired the rights to Superman in 1938 from Jerry Siegel and Joe Shuster. Since then, DC has focused "an enormous amount of attention and effort to develop the Superman mythos, [*4] including the character, his associates, his world, and other indicia associated with him." Complaint, at P 10. Today, Superman comic books and other serializations have been published in roughly twenty languages in approximately forty-five countries. See id. at P 17. Superman's comic book success also spawned several successful television series and feature films. Kryptonite Corporation ("KC") is a well-known manufacturer of bicycle and motorcycle locks and accessories. According to DC, KC's predecessor, KBL Corporation ("KBL"), began using the "Kryptonite" mark on a limited basis in 1972 in connection with its security devices, without the permission of DC. See Complaint, at P 29. DC first became aware of KBL's activities in 1976 when its trademark application, Serial No. 60,884, for the Kryptonite mark for bicycle locks was published for opposition. See id. at P 30. The ensuing correspondence between DC and KBL led to the execution of an agreement in early 1983 ("Agreement") between the parties (appended to Patrick T. Perkins Declaration ("Perkins Declaration") as Exhibit ("Ex.") 4). According to DC, the Agreement limited KBL's use (and by extension KC's use) of the [*5] terms "Kryptonite," "Kryptonite Design," and "Krypto Grip" (collectively, "KBL's Marks") to KBL's products, defined as "(1) security devices and accessories therefore, without limitation, such as mechanical and electronic locking means and accessories therefore, and (2) accessories primarily for two wheeled vehicles, such as handle bar grips" ("KBL's Products"). See Agreement, at 1. DC contends that while for fifteen years, KBL's and later KC's use of the "Kryptonite" mark remained more or less unchanged, in the late 1990's, KC sought to "drastically change its business" by filing a number of trademark applications indicating an intention to use the "Kryptonite" trademark with products "well beyond" locks and handle bar grips. See Plaintiff DC Comics' Memorandum of Law in Support of its Motion for Leave to Amend the Complaint ("Motion Brief"), at 2. For example, according to DC, KC has applied to use KBL's Marks in connection with items including tote bags, briefcases, helmets, pants, jerseys, polishing agents, and computer hardware and software. See Complaint, at P 37; Motion Brief, at 13. Additionally, DC maintains that KC is using and has applied for and/or registered [*6] "Krypto" stem words in violation of the Agreement, including "Kryptonium," "Kryptoflex," "Kryptovault," and "Kryptokoil." See Complaint, at P 36. In light of KC's alleged wrongdoing, DC filed this action on July 26, 2000, seeking to enjoin KC from (1) using the marks "Kryptonite" and "Krypto-Grip" with the products mentioned above, except "as allowed for in the 1983 Agreement, namely, in connection with providing mechanical and electronic security devices and accessories and accessories for two-wheeled vehicles, such as handle bar grips"; (2) using any "Krypt" formative marks other than "Kryptonite" and "Krypto-Grip"; (3) imitating, copying, or using on a web site or otherwise any marks prohibited under the 1983 Agreement or otherwise associated with DC; (4) using any trademark, service mark, trade name, trade dress, logo, business name, domain name or other computer address that is likely to confuse the public as to an authorization or association between DC and KC and its products; and (5) diluting or tarnishing DC's marks. The complaint also seeks monetary relief and attorney's fees. See Motion Brief, at 3-4. KC's answer included six affirmative defenses, but no counterclaims. [*7] See id. at 4. In late March, 2001, DC became aware that KC had redesigned its brand identity and had adopted a new logo comprised of a glowing green "K" superimposed on a glowing "planet-like orb." Id. at 5. DC asserted this new logo violated the Agreement and sought, by an order to show cause, a temporary restraining order and a preliminary injunction. DC submitted its First Amended Complaint on April 23, 2001 in light of KC's argument that DC's motion for a preliminary injunction required a pleading amendment. See id. at 5. According to DC, KC's
Page 27 2002 U.S. Dist. LEXIS 10593, *7 90 U.S.P.Q. (BNA) 274; Copy. L. Rep. (CCH) P27,410 argument that DC needed to amend its complaint was a pretext for KC to amend its own pleading, because KC's amended answer included six previously unpleaded counterclaims, and nine new affirmative defenses. See id. at 6. On July 27, 2001, the Court denied DC's motion for a preliminary injunction. As is clear from the above, the 1983 Agreement is central to this dispute. The Agreement includes a list of various applications KBL made worldwide for registering the "Kryptonite" mark ("Schedule A," appended to the Agreement). DC notes that the language in the Agreement which defines KBL's products (in the second "whereas" clause) [*8] was culled from, and is virtually identical to, the language in Schedule A appearing next to the Australian application. See Motion Brief, at 15. The language of the Australian application differs markedly from the language used in the other eleven countries and the Benelux region listed in Schedule A. DC claims that it has now discovered that the purported language of the Australian application referenced in Schedule A (which was allegedly the mold for the language defining KBL's products in the Agreement itself) is, in fact, materially different from the actual Australian application. See Motion Brief, at 17. Indeed, according to DC, the Australian application's language is less expansive than the language in Schedule A which was apparently intended to mirror the language in the Australian application. See id. at 17. 1 Perhaps most significantly, DC avers that the "security devices and accessories therefore, without limitation" language never existed in the actual Australian application. In light of the fact that Schedule A was intended to use the same language as the actual Australian application but instead used different, more expansive language, DC claims there [*9] was a mutual mistake between the parties at the time of the signing of the Agreement and seeks a reformation of the wording of the Agreement to comport with the language of the actual Australian trademark application. See Motion Brief, at 11. It also seeks to add a claim for declaratory relief, asking the Court to declare that KC is entitled to use the trademarks, "Kryptonite," "Kryptonite and Design," and "Krypto Grip" solely in connection with bicycle and motorcycle locks and accessories therefore, and accessories to be physically attached to two-wheeled vehicles such as handle bar grips. The proposed declaratory claim includes a request for an order enjoining KC from using the above trademarks with any other products. See Proposed Second Amended Complaint, appended to Perkins Declaration as Exhibit 14, at 28. 1 According to DC, the actual Australian application describes the KBL's products as: "Security devices including but not limited to mechanical and electronic locking means and accessories therefore included in this Class [Class 6], bicycle locks and other accessories for two wheeled vehicles; and all other goods in this Class." Motion Brief, at 17. [*10] Separately, DC moves for a protective order providing for disclosure of certain documentary and testimonial evidence pursuant to a limited privilege waiver. DC intends to waive its attorney-client and work product privileges with respect to the negotiations between DC and KBL overseen by DC's former in-house counsel, Amy Katz. DC states that it will produce all correspondence and memoranda in its possession of its in-house and outside counsel dating from June 8, 1982 through February 1, 1983 relating to the negotiations of the 1983 Agreement. It asks the Court for an order holding that the production of this material will not operate as a privilege waiver with respect to other documents and/or testimony. DC has appended a proposed order as Exhibit 21 of the Perkins Declaration. Legal Analysis I. Amendment of the Complaint According to Fed. R. Civ. P. 15(a), a party may amend its pleading "once as a matter of course" before a responsive pleading is served. Thereafter, a "party may amend the party's pleading only by leave of the court or by written consent of the adverse party." Id. The Rules instruct the court that "leave shall be freely given when justice so requires. [*11] " Id. The basic rule for amendments of the complaint is set forth in Madison Fund, Inc. v. Denison Mines, Ltd., 90 F.R.D. 89, 91 (S.D.N.Y. 1981), a case relied upon by DC: Absent undue delay, bad faith, failure to cure deficiencies by amendments previously allowed, futility of the amendment or, most important, undue prejudice to the opposing party in allowing the amendment, leave to amend should be granted. (citing Forman v. Davis, 371 U.S. 178, 182, 9 L. Ed. 2d
Page 28 2002 U.S. Dist. LEXIS 10593, *11 90 U.S.P.Q. (BNA) 274; Copy. L. Rep. (CCH) P27,410 222, 83 S. Ct. 227 (1962)). Permitting DC to amend its complaint at this stage in the litigation would be inappropriate because DC's proposed mutual mistake and reformation amendment would be futile. Additionally, its proposed declaratory judgment claim is superfluous and would only serve to delay the resolution of this dispute. A court need not permit the amendment of a complaint if doing so would be futile. See Foman v. Davis, 371 U.S. 178, 182, 9 L. Ed. 2d 222, 83 S. Ct. 227 (1962); Leonelli v. Pennwalt Corp., 887 F.2d 1195, 1198 (2d Cir. 1989). "A motion to amend is futile if the claims sought to be added are barred by the relevant [*12] statute of limitations." Northbrook Nat'l Ins. Co. v. J & R Vending Corp., 167 F.R.D. 643, 647 (E.D.N.Y. 1996) (citing Deluca v. Atlantic Ref. Co., 176 F.2d 421 (2d Cir. 1949)). See also Corcoran v. Sinclair, 1999 U.S. Dist. LEXIS 3732, 97 Civ. 9286 (DLC), 1999 WL 177444, at *13 (S.D.N.Y. Mar. 30, 1999), aff'd 201 F.3d 430 (2d Cir. 1999), cert. denied 529 U.S. 1109 (2000). In the instant case, DC's proposed amendment of the complaint is futile because its proposed additional claim of mutual mistake is time-barred. Under New York law, the statute of limitations for an action based on mutual mistake is six years. See N.Y. C.P.L.R. § 213(6) (McKinney 2001). The cause of action accrues on the date of the mistake, not on the date of discovery. See, e.g., F.D.I.C. v. Five Star Mgmt., 258 A.D.2d 15, 692 N.Y.S.2d 69, 72 (1st Dep't 1999); First Nat'l Bank of Rochester v. Volpe, 217 A.D.2d 967, 629 N.Y.S.2d 906, 907-08 (4th Dep't 1995). Indeed, the framers of the C.P.L.R. considered a discovery clause (so that the period of limitations would not begin to run until the mistake was discovered) but ultimately rejected [*13] it. See N.Y. C.P.L.R. § 213 Practice Commentaries, C213:6. It is undisputed that the agreement at issue here was signed in 1983, nearly two decades ago. Assuming DC had a valid claim for mutual mistake and reformation, it needed to file an action by 1989. DC does not discuss the application of the statute of limitations in its Motion Brief. Instead, it delayed until its Reply Memorandum of Law in Further Support of Plaintiff's Motion for Leave to Amend the Complaint and for a Protective Order ("Reply Brief") to argue a new legal foundation for its claim--fraud. 2 DC, in effect, having initially sought to add a claim of mutual mistake, has converted the claim to one of fraud--a claim which is not made in DC's proposed Second Amended Complaint. See Perkins Declaration, Ex. 14. Instead, DC's proposed Second Amended Complaint states that the allegedly incorrect language in Schedule A was caused by "scrivener's error, mutual mistake, or some other error in wording." Id. at P 106. DC states that a finding of constructive fraud is supported by facts alleged in the proposed Second Amended Complaint, citing paragraph 47. See Reply Brief, at 9. However, paragraph 47 reads [*14] in relevant part that "at the time the parties entered into the 1983 Agreement, both were under the mistaken belief that the statements included in Schedule A describing the Australian Application were accurate." See id. at P 47 (emphasis added). While the same paragraph states that KC did not "inform DC comics that its Australian trademark application, as filed, was different from what had been represented by DC Comics in the Agreement," this, without more, does not constitute an implicit, much less explicit, allegation of fraud. Indeed, DC concedes as much when it states that the Court should find the "clear inference" of fraud. See Reply Brief, at 9. In any event, DC did not ever fraud with particularity in either its Complaint, its First Amended Complaint, or proposed Second Amended Complaint, as required by Fed. R. Civ. P. 9(b). Fraud cannot be plead by mere "inference." Although the mistake (or fraud) claim is brought under state law, the federal pleading requirements apply. See, e.g., Stern v. General Elec. Co., 924 F.2d 472, 476 n.6 (2d Cir. 1991). 2 Under New York law, where there is an element of fraud on the defendant's part, the cause of action accrues when the plaintiff discovers or should have discovered the mistake. In the case of fraud, the statute of limitations is the greater of six years from the commission of the fraud or two years from the time of real or imputed discovery. See Cappelli v. Berkshire Life Ins. Co., 276 A.D.2d 458, 713 N.Y.S.2d 756, 757 (2d Dep't 2000); N.Y. C.P.L.R. §§ 203(f); 213(8). Thus, unlike an action grounded in mistake, an action grounded in fraud would be timely. [*15] Turning to DC's proposed declaratory judgment claim, it is unclear how this claim differs substantively from the existing claim for injunctive relief. See First Amended Complaint, at 22-25. In its proposed declaratory claim, DC seeks a declaration that KC is entitled to use the trademarks "Kryptonite," "Kryptonite and Design," and "Krypto Grip" solely in connection with bicycle and motorcycle locks and accessories therefore,
Page 29 2002 U.S. Dist. LEXIS 10593, *15 90 U.S.P.Q. (BNA) 274; Copy. L. Rep. (CCH) P27,410 and accessories to be physically attached to two-wheeled vehicles such as handle bar grips. See Perkins Declaration, Ex. 14, at 28. The proposed declaratory relief also includes an order enjoining KC from using the above marks with any other products. The existing First Amended Complaint similarly seeks to permanently enjoin KC from using the same three "Krypto" words in conjunction with any products except mechanical and electronic security devices and accessories and accessories for two-wheeled vehicles, such as handle bar grips. See First Amended Complaint, at 22-23. The addition of the new claim for declaratory relief is, if anything, superfluous and thus unnecessary. The proposed relief seeks a declaration to the effect that KC's stated plans [*16] violate the 1983 Agreement and that there is an actual controversy within the Court's jurisdiction. However, these matters will inevitably be addressed by the trier of fact and the Court, respectively, during trial or upon the resolution of a dispositive motion. As such, the proposed claim for declaratory relief is superfluous because it in essence duplicates the extant claim for injunctive relief. 3 Thus, permitting the addition of a declaratory judgment claim will only serve to further postpone and delay the resolution of this dispute on the merits. Moreover, unlike the proposed mutual mistake claim which purportedly relies upon newly-discovered evidence, the claim for declaratory relief could have been included in the original Complaint or the First Amended Complaint. The fact that DC could have made the claim in either of its two previous pleadings militates against permitting another amendment of the Complaint. The "liberality with which a court grants leave to amend does not impart to litigants the privilege of re-shaping their legal theories endlessly [...]" Sanders v. Thrall Car Mfg. Co., 582 F. Supp. 945, 953 (S.D.N.Y. 1983), aff'd 730 F.2d 910 (2d Cir. 1984). [*17] This action has been pending for nearly two years and the facts date back nearly two decades. A further amendment at this time would result in a further extension of discovery and inordinate delay and added expense to the prejudice of KC. Accordingly, further amendment of the Complaint is denied. 3 It should be noted that KC argues that the proposed claim for declaratory relief is futile because it is based on evidence that is inadmissible as a matter of law (because it violates the parol evidence rule). The instant motion is simply for leave to amend the Complaint. Therefore, the Court need not address this question at this juncture. II. DC's Proposed Protective Order As noted, DC seeks a protective order which would limit DC's waiver of attorney-client and work product privileges for all privileged correspondence and memoranda of all its in-house and outside counsel dating from June 8, 1982 through February 1, 1983 that relates to the negotiation of the 1983 Agreement. 4 KC objects to the allegedly [*18] arbitrary temporal limitation DC seeks. 5 DC states that June 8, 1982 represents the first day attorney Amy Katz became involved with the negotiations which led to the 1983 Agreement, and that February 1, 1983 is the effective date of the 1983 Agreement. 6 4 DC mistakenly states the beginning date as June 8, 1992 in its Motion Brief. 5 In Kryptonite Corporation's Opposition to DC Comics' Motion for Leave to Amend the Complaint and Request for Protective Order Providing for Disclosure of Documentary and Testimonial Evidence Pursuant to a Limited Privilege Waiver ("Opposition Brief"), KC objects to the fact that DC's protective order would ostensibly permit the disclosure only of documents written by attorney Amy Katz. See Opposition Brief, at 8. In its Reply Brief, however, DC states that the proposed protective order would permit the disclosure of documents written by all in-house and outside counsel for the relevant period. 6 KC states, incorrectly, that February 1, 1983 is one month after DC signed the 1983 Agreement. See Opposition Brief, at 9. In fact, the 1983 Agreement was signed on February 1, 1983. See Perkins Declaration, Ex. 4. [*19] While, as DC points out, a privilege waiver should be no broader than is strictly necessary to prevent prejudice to the other party, Kirschner v. Klemons, 2001 U.S. Dist. LEXIS 17863, 99 Civ. 4828, 2001 WL 1346008, at 4 (S.D.N.Y. Oct. 31, 2001) (citing In re Grand Jury Proceedings, 219 F.3d 175, 184 (2d Cir. 2000)), the attorney-client privilege "cannot at once be used as a shield and a sword." United States v. Bilzerian, 926 F.2d 1285, 1292 (2d Cir. 1991). In other words, DC may not disclose or affirmatively rely on privileged communications regarding the interpretation of the Agreement and then shield from scrutiny other
Page 30 2002 U.S. Dist. LEXIS 10593, *19 57 U.S.P.Q.2D (BNA) 1593; Copy. L. Rep. (CCH) P27,410 communications made at other times on the same subject. As the Second Circuit has held: [...] it has been established law for a hundred years that when the client waives the privilege by testifying about what transpired between her and her attorney, she cannot thereafter insist that the mouth of the attorney be shut [...] From that has grown the rule that testimony as to part of a privileged communication, in fairness, requires production of the remainder. In re von Bulow, 828 F.2d 94, 101-02 (2d Cir. 1987) [*20] (citations omitted). The purpose of the rule is "to prevent prejudice to a party and distortion of the judicial process that may be caused by the privilege-holder's selective disclosure during litigation of otherwise privileged information." Id. at 101. The proposed commencement date of DC's privilege waiver is troubling. Although DC claims that it will reveal documents produced by lawyers other than Amy Katz, its proposed window of disclosure begins not with the commencement of the negotiations of the 1983 Agreement but with Amy Katz's involvement therein. See Reply Brief, at 12. If, as DC claims, the subject matter of the waiver is "those communications relating to the negotiations of the 1983 Agreement," then the privilege waiver should extend to the entire negotiation of the 1983 Agreement, not just the negotiations after Amy Katz began to participate in them. DC notes that it and KC's predecessor, KBL, began negotiating a settlement as early as 1976. See Motion Brief, at 23. On the other hand, DC's proposed closing date of the privilege waiver is logical. The proposed window closes on February 1, 1983, the date the Agreement was signed by DC (it had [*21] previously been signed by KC's predecessor, KBL, on January 17, 1983). Communications after February 1, 1983, the date of the Agreement, do not relate to its negotiation. KC's argument against the February 1, 1983 date is based on the mistaken belief that that date is one month after the Agreement was signed (as noted, the Agreement became effective upon the final signature on February 1, 1983). See Perkins Declaration, Ex. 4, at 4. In light of the foregoing, the Court will modify DC's request for a protective order. If DC seeks to introduce privileged materials, it will thereby waive the attorney-client and work product privileges with respect to all of the privileged correspondence and memoranda of all of its in-house and outside counsel dating from January 1, 1976 through February 1, 1983 (inclusive) that relates to the negotiation of the 1983 Agreement. 7 Of course, if DC decides not to introduce any privileged documents or testimony, this protective order will be moot and the documents will remain privileged. 7 The Court takes no position on whether any document from the 1976 negotiations (or any other document) relates to the negotiation of the 1983 Agreement. Instead, January 1, 1976 is the earliest possible date that any document could conceivably relate to the Agreement. [*22] Conclusion For the reasons set forth above, DC's motion to amend its Complaint is hereby DENIED. DC's request for a protective order is granted as follows: if DC elects to waive its attorney-client and work product privileges, it must produce all correspondence and memoranda of its in-house and outside counsel relating to the negotiation of the 1983 Agreement, dating from January 1, 1976 through February 1, 1983. SO ORDERED. ALLEN G. SCHWARTZ, U.S.D.J. Dated: New York, New York June 12, 2002
5 of 9 DOCUMENTS DANIEL S. DECARLO, Plaintiff, -against- ARCHIE COMIC PUBLICATIONS,
Page 31 127 F. Supp. 2d 497, *; 2001 U.S. Dist. LEXIS 386, **; 57 U.S.P.Q.2D (BNA) 1593; Copy. L. Rep. (CCH) P27,410 INC., Defendant. 00 Civ. 2344 (LAK) UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK 127 F. Supp. 2d 497; 2001 U.S. Dist. LEXIS 386; 57 U.S.P.Q.2D (BNA) 1593
January 22, 2001, Decided DISPOSITION: [**1] Plaintiff's motion to remand action to New York State court for lack of subject matter jurisdiction denied. Defendant's motion for summary judgment granted in part and denied in part. Plaintiff's cross motion for summary judgment striking ACP's defenses denied and its motion for summary judgment dismissing ACP's counterclaim granted. Plaintiff's motion to disqualify defendant's counsel denied as moot. DeCarlo's motions to remand the case to the state court from which it was removed and to disqualify ACP's attorneys and ACP's motion for summary judgment dismissing the complaint and granting their counterclaim, as well as DeCarlo's cross motion for summary judgment striking ACP's affirmative defenses and dismissing its counterclaim. Facts COUNSEL: For Plaintiff: Whitney North Seymour, Jr., Sharron Ash, LANDY & SEYMOUR. For Defendant: Leora Herrmann, Edmund J. Ferdinand, III, GRIMES & BATTERSBY. JUDGES: Lewis A. Kaplan, United States District Judge. OPINION BY: Lewis A. Kaplan OPINION [*499] MEMORANDUM OPINION LEWIS A. KAPLAN, District Judge. Plaintiff Daniel S. DeCarlo long has drawn the She's Josie comic strip, including the characters Josie, Melody and Pepper, for defendant Archie Comic Publications, Inc. ("ACP") and been compensated on a flat per-page rate and by certain royalties. Now that ACP is embarked on much more extensive and lucrative commercialization of these characters, including a motion picture, DeCarlo claims that he owns the characters and that ACP's commercialization exceeds the rights he granted to it. [**2] The matter now is before the Court on Plaintiff's Claim The Start of the Relationship DeCarlo has been a comic book artist since the 1950's. He claims to have begun developing the character Josie in the mid-1950's at about which time he began working full time as a freelancer for a number of enterprises, including ACP for which he continues to work. 1 He contends that he showed a Josie comic strip, including the Melody and Pepper characters, which he claims also to have created, to ACP in or about 1961. 2 Following an unsuccessful effort to syndicate the proposed strip, ACP itself decided to publish it and brought out the first She's Josie comic book in 1963. 3 It paid DeCarlo $ 23 per page for his work on the Josie comic books and, according to the complaint, paid him a 5 percent royalty on revenues earned therefrom [**3] from June 1966 through October 1969. 4 In addition, it sent him a check for $ 1,406.25 in 1998 without any explanation. 5 1 Cpt PP 5-7. 2 Id. P 9. 3 Id. P 11. 4 Id. P 12-14. These payments allegedly were made pursuant to an oral agreement between the parties. Id. 5 Id. P 15.
Page 32 127 F. Supp. 2d 497, *499; 2001 U.S. Dist. LEXIS 386, **3; 57 U.S.P.Q.2D (BNA) 1593; Copy. L. Rep. (CCH) P27,410 The 1988 Agreement On October 25, 1988, DeCarlo and ACP entered into a so-called Newsstand Comic Independent Contractor's Agreement (the "1988 Agreement"). The contract began with a series of recitals, including that . ACP "is the publisher of comic strips and comic books . . . of which [ACP] is the sole and exclusive owner," . ACP "seeks to supplement its own existing comic strips and comic books (hereinafter the 'Existing Archie Works') by the purchase of the entire right, title and interest in existing third party comic strips and pages for its comic books (hereinafter the 'Existing Third Party Works')," . ACP "desires to retain third parties to [**4] modify or otherwise work with the Existing Archie Works and/or the Existing Third Party Works . . . on a work made for hire basis, to create modified comic strips and pages for its comic books (hereinafter the 'Modified Works')," and . The Contractor [i.e., DeCarlo] desires to confirm the assignment to [ACP] of the Contractor's entire right, title and interest in and to whatever comic strips and pages for comic books the Contractor may have heretofore provided [ACP] in furtherance of this project and further desires to work with [ACP] in the future under the [*500] terms and conditions hereinafter expressed." 6 work with [ACP] on a work for hire basis to: "(i) create and develop for [ACP's] exclusive use [**5] Additional Works, and "(ii) perform modifications of Existing Archie Works, Existing Third Party Works (including Existing Third Party Works of others) and Additional Works . . ." 7 *** "2. (a) The Contractor hereby assigns to [ACP] all right, title and interest in and to all Works submitted under this Agreement as well as to any patent rights, copyrights, trademark rights and/or applications therefore which relate thereto. The Contractor agrees to execute all documents which are reasonably required to perfect such assignment. It is agreed and understood that such Works shall constitute Works Made for Hire and shall be the sole and exclusive property of [ACP]. To the extent any work of Contractor shall not be deemed under law to constitute subject matter which may be treated as work made on a Work Made for Hire basis, then Contractor hereby assigns and conveys to [ACP] all of its rights, title and interest in any such work. "(b) The Contractor hereby expressly waives all claim of right which it may have to any ownership interest in such Works and/or the ARCHIE property." 8
6 Cpt Ex. B, at 1. 7 Id. P 1. It then set forth covenants in relevant part as follows: "1. (a) The Contractor hereby assigns and conveys to [ACP] all of its rights, title and interest in the Existing Third Party Works heretofore submitted to [ACP]. "(b) The Contractor further agrees to [**6] 8 Id. P 2. The 1996 Agreement The 1996 Agreement is entitled a Work for Hire Agreement between DeCarlo and ACP. It began with a series of introductory recitals:
Page 33 127 F. Supp. 2d 497, *500; 2001 U.S. Dist. LEXIS 386, **6; 57 U.S.P.Q.2D (BNA) 1593; Copy. L. Rep. (CCH) P27,410 . ACP "is in the business of producing and/or publishing comic strips and comic books that include characters, artwork, stories, plots, trademarks, logos, and other creative expressions ('Properties'). All references to 'Properties' in this Agreement will include existing and future-created Properties that are commission by [ACP] and/or used in any of [ACP's] publications or licensed products." 9 . "All past, pending and future uses of all Properties, including uses by [ACP's] licensees, will be collectively referred to in this Agreement as 'Works.'" 10 Works or Properties."
The Conduct of the Parties The foundations of plaintiff's position here are that he was the sole creator of the Josie strips and characters, that he granted to ACP only [**8] the right to use his drawings in its comic books and strips, and that plaintiff retains all other ownership interests in the characters Josie. Melody and Pepper. He alleges that ACP, in derogation of his retained rights, has licensed or otherwise used the Josie, Melody and Pepper characters for purposes other than comic strips and comic books -purposes such as dolls, recordings, animated cartoons and live action motion pictures -- without his consent and without payment of fair and reasonable compensation. 11 Defendant disputes each of these propositions, but that is immaterial for present purposes. 11 Id. P 20. DeCarlo admits having known for many years that ACP claimed rights in his alleged work product far more extensive than he now acknowledges having granted. He concedes, for example, that he understood in 1963 that Radio Comics, an ACP subsidiary, claimed sole ownership of the copyright in She's Josie # 1, one of the comic books, and, indeed, that he "didn't think it was right" for it to [**9] have done so. 12 He knew that the creator credits on the covers of Josie # 22 (published in 1966) through Josie and the Pussycats # 47 (published in 1970) with the exception of one issue read "by Dan 'n Dick," a reference to DeCarlo and Richard Goldwater of ACP, despite DeCarlo's contention that he was the sole creator of these characters. 13 Indeed, he knew that ACP licensed the Josie property to Hanna-Barbera for the production of animated programs that were telecast on CBS from 1970 to 1974 and that ACP, in his words, was "making a fortune" from the shows, yet DeCarlo neither received nor then demanded any additional compensation. 14 He knew also that ACP had authorized release of Josie cartoons on videocassette and licensed the production of Josie underwear. 15 Indeed, when he learned in 1993 that Josie and the Pussycats cartoons were being aired on The Cartoon Network, he was, in his words, "pretty much hardened. * * * They're doing anything they want with the show, the character. And they were." 16 Yet through this entire period, plaintiff concededly never voiced any discontent to ACP about its
9 Cpt Ex. C, P 1. 10 Id. P 2. The 1996 Agreement then set forth provisions defining the relationship of the parties, their understanding regarding compensation, [**7] and so on. The key provisions included the following: "5. Contractor's full and complete compensation for each assignment . . . will be a fixed sum based on a rate to be mutually agreed upon . . . . Contractor will not be entitled to royalties, to income derived from licensing or merchandising, or to additional compensation for the creation of new Properties . . . ." "19. To the extent that any past, pending or future contributions by Contractor to the Works or Properties do not qualify as a Work for Hire, Contractor will and hereby does assign to [ACP] any right, title and interest that he/she has or may obtain therein, including all copyrights, patents, trademarks and other proprietary rights. Contractor will sign, upon request, any documents needed [*501] to confirm that any specific Works or Properties are Works for Hire, to effectuate the assignment of his/her rights in any Works or Properties to [ACP] and/or to obtain copyright, trademark and/or patent protection for any of the
Page 34 127 F. Supp. 2d 497, *501; 2001 U.S. Dist. LEXIS 386, **9; 57 U.S.P.Q.2D (BNA) 1593; Copy. L. Rep. (CCH) P27,410 use of the Josie characters or asserted any of the claims [**10] of ownership he now asserts. 17 12 See DeCarlo Dep. 215; Def. 56.1 St. P 14; Pl. 56.1 St. at 3. 13 See DeCarlo Dep. 178; Def. 56.1 St. P 15; Pl. 56.1 St. at 3. 14 See DeCarlo Dep. 146, 197-202, 221-26; Goldwater Dep. at 89-90; Goldwater Dec. P 11; Def. 56.1 St. P 17; Pl. 56.1 St. at 3. 15 See DeCarlo Dep. 231-32, 261-62; Def. 56.1 St. P 20; Pl. 56.1 St. at 3. 16 See DeCarlo Dep. 234-36; Def. 56.1 St. P 21; Pl. 56.1 St. at 3. 17 See Def. 56.1 St. P 23 (citing DeCarlo Dep. 73-74, 145-46, 148, 334-35, 178-79, 215-17, 219-20, 230-32, 236, 241-43, 311); Pl. 56.1 St. at 3. In due course, ACP entered into negotiations with Universal City Studios with a view to licensing motion picture rights in the Josie property. Not surprisingly, particularly in view of DeCarlo's reticence over the decades, it acted on the premise that it owned the entire right, title and interest in it. When Universal inquired in 1998 whether DeCarlo ever had made [**11] any claim to ownership or co-ownership in the property, ACP truthfully responded that he had not. Indeed, based on DeCarlo's silence, ACP took the position that Universal's [*502] "concerns vis-a-vis the copyright issue . . . are without any merit" and a "non-issue." Indeed, when it succeeded in licensing the motion picture rights, it relied upon DeCarlo's silence in agreeing to indemnify Universal against the consequences of any dispute that might arise as to ownership of the Josie characters. 18 18 See Def. 56.1 St. PP 58, 60 (citing Silberkleit Exs. 13A, 15, 16; DeRosa-Grund Decl. P 2). Prior Proceedings Plaintiff commenced this action in New York Supreme Court, County of New York. The complaint contains five causes of action. The first sets forth no discernable legal theory, but alleges that DeCarlo created the Josie, Melody and Pepper characters, that the 1988 and 1996 Agreements were limited to comic strips and books, and that ACP is using or licensing the characters for additional purposes [**12] including motion pictures. It seeks a declaration that plaintiff is the sole owner of the characters and has the exclusive right to use or license them for purposes other than comic books and comic strips. The second claims that ACP has breached its oral and written contracts with plaintiff by failing to pay certain royalties and by licensing the characters for unauthorized uses. The third and fourth are substantially identical to the second, but seek relief for alleged breaches of an implied covenant of good faith and fair dealing and of fiduciary duty, respectively. Finally, the fifth cause of action seeks to impose a constructive trust on assets derived from the allegedly improper use of the characters. ACP has counterclaimed for breach of the 1996 Agreement, claiming that DeCarlo has breached a covenant precluding him from taking actions inconsistent with ACP's exclusive rights in the Works. On March 28, 2000, ACP removed the action to this Court. It asserts that plaintiff's first cause of action in fact arises under the Copyright Act and therefore is within the exclusive jurisdiction of the federal courts. It contends also that the Court should exercise supplemental jurisdiction [**13] over the balance of the complaint. Plaintiff disputes defendant's jurisdictional theory, contending that entire action is grounded exclusively in the common law of New York. In addition, ACP has moved for summary judgment dismissing the complaint and awarding it judgment on its counterclaim. Discussion I. Subject Matter Jurisdiction Section 1338(a) of the Judicial Code 19 confers jurisdiction on United States district courts "of any civil action arising under any Act of Congress relating to . . . copyrights." ACP removed this action on the premise that plaintiff's first cause of action 20 arises under the Copyright Act of 1976. 21 DeCarlo moves to remand on the theory that the complaint does not invoke the Copyright Act and that there is no federal subject matter jurisdiction. 19 28 U.S.C. § 1338(a). 20 The second through fifth causes of action concededly do not arise under federal statutes and afford no basis for removal. 21 U.S.C. § 101 et seq. [**14] DeCarlo starts from the so-called "well pleaded complaint" rule -- that the presence or absence of a claim arising under a federal statute ordinarily is determined from the face of the complaint -- and from its
Page 35 127 F. Supp. 2d 497, *502; 2001 U.S. Dist. LEXIS 386, **14; 57 U.S.P.Q.2D (BNA) 1593; Copy. L. Rep. (CCH) P27,410 corollaries, that the plaintiff is the master of its complaint and that federal question jurisdiction is not properly invoked on the basis of a federal defense to a state law claim. 22 As the first cause of action, he contends, rests solely on state law, the complaint raises no federal question. But [*503] DeCarlo overlooks the fact that "a plaintiff may not defeat removal by clothing a federal claim in state garb, or, as it is said, by use of 'artful pleading.'" 23 "If a plaintiff has pled what must necessarily be a federal claim, he has no state law available to choose as the basis for his suit." 24 22 See, e.g., Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 10, 77 L. Ed. 2d 420, 103 S. Ct. 2841 (1983); Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 152, 53 L. Ed. 126, 29 S. Ct. 42 (1908); Dukes v. U.S. Healthcare, 57 F.3d 350, 353 (3d Cir.), cert. denied, 516 U.S. 1009, 133 L. Ed. 2d 489, 116 S. Ct. 564 (1995). [**15] 23 Travelers Indem. Co. v. Sarkisian, 794 F.2d 754, 758 (2d Cir.), cert. denied, 479 U.S. 885, 93 L. Ed. 2d 253, 107 S. Ct. 277 (1986) 24 Id. The essence of DeCarlo's claim is that he owns the Josie characters by virtue of state law, that he licensed them to ACP for limited purposes, and that he therefore has a state law claim for ACP's unlicensed uses. He rests his position on the premise that his "First Cause of Action . . . is not, as defendant claims, brought under the Copyright Act, but under principles of equity enunciated by the New York Court of Appeals in the landmark case of Fisher v. Star Co.," 25 But the Fisher case 26 simply will not bear the weight that DeCarlo places upon it. 25 Pl. remand mem. at 12. 26 231 N.Y. 414, 132 N.E. 133 (1921). The plaintiff in Fisher, also a comic strip cartoonist, sued a newspaper publisher for printing [**16] purported versions of his comic strip drawn by another after its contract to publish the real thing had expired. Fisher held that this was tortious under New York unfair competition law on a "passing off" theory: Where "figures and names have been so connected with . . . the originator or author, . . . the use by another of new cartoons exploiting the characters . . . would be unfair to the public and the plaintiff. No person should be permitted to pass off as his own the thoughts and works of another." 27 While the court did characterize the plaintiff as "the owner of the property right existing in the characters" and suggested that this right derived from his creation of them, 28 these comments were unnecessary to the result. 29 Indeed, if there were any doubt that authorship was the basis for relief in Fisher, it was laid to rest by Gotham Music Service, Inc. v. Denton & Haskins Music Publishing Co.
27 Id. at 433. 28 Id. at 432. 29 Unfair competition is a tort. 1 J. THOMAS MCCARTHY, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 1.8, at 1-15 (4th ed. 2000); see, e.g., Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 157, 103 L. Ed. 2d 118, 109 S. Ct. 971 (1989). Insofar as it concerns passing off, the conduct at issue in Fisher, its rationale is the protection of consumer interests against deception -- the portrayal of goods or services as products of a source other than those of their creator. See generally, e.g., id; RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 2 & comment (1995). The question whether the cartoonist enjoyed "property" rights in his drawings and, if so, the precise nature of those rights was immaterial to the decision in Fisher. [**17] 30 259 N.Y. 86, 181 N.E. 57 (1932). The plaintiffs in Gotham Music revived an old, public domain song originally known as "Gambler's Blues," promoted it as "St. James' Infirmary," and turned it into a hit. A year latter, the defendant brought out the same tune under the title "St. James' Infirmary or Gambler's Blues" in the evident hope of "linking both titles under one name so that a customer who called for either might be supplied" with defendant's music. 31 The plaintiffs obtained an injunction against the use of "St. James' Infirmary" in defendant's title, but the Court of Appeals reversed. In doing so, it distinguished Fisher -despite the fact that the plaintiffs had created the title "St. James' Infirmary" -- because the title was associated with the music rather than with the plaintiffs as the authors of the music, and therefore "no question of imitation or deception or mistake arises." 32 Gotham Music therefore demonstrates that the basis of Fisher was the passing off [*504] or deception as to the source of the comic strips,
Page 36 127 F. Supp. 2d 497, *504; 2001 U.S. Dist. LEXIS 386, **17; 57 U.S.P.Q.2D (BNA) 1593; Copy. L. Rep. (CCH) P27,410 not a property right stemming from the plaintiff [**18] cartoonist's creation of the comic strip characters. If the basis of protection in Fisher had been some common law property right arising from the cartoonist's creation of the characters alone, then a similar common law property arising from the plaintiffs' creation of the title in Gotham Music should have led to precisely the opposite result in that case. 31 Id. at 89. 32 Id. at 90. The fact that there is no basis in Fisher for DeCarlo's claimed state law cause of action is not necessarily dispositive of the jurisdictional issue. The question, after all, is whether he has asserted a claim that necessarily depends on federal law; the absence of a state law basis for it goes only part of the way toward resolving that issue. The determinative point lies in the 1976 Copyright Act. Under the Copyright Act of 1909, federal copyright attached upon publication of a work with the requisite copyright notice. 33 Protection of literary property in unpublished [**19] works was left to state law. 34 Indeed, DeCarlo implies that his claimed rights derive from his original sketches of the Josie, Melody and Pepper characters, which never were published and which therefore were outside the scope of federal copyright protection at the time of their creation. The Copyright Act of 1976, 35 however, took a different approach. It provides that federal copyright protection attaches upon the fixation of a work in tangible form, 36 thus rendering publication immaterial for this purpose. It preempts state copyright law. 37 Moreover, the 1976 Act extinguished all common law copyright in unpublished works, although it provides that unpublished works created before January 1, 1978 are protected by federal law until December 31, 2002. 38 In consequence, if DeCarlo ever had any common law rights in these characters by virtue of his long unpublished original drawings, they were transformed by the 1976 Act into federally protected copyrights. 33 17 U.S.C. § 10 (1976) (repealed 1978). 34 See 1 MELVILLE B. NIMMER & DAVID NIMMER, NIMMER ON COPYRIGHT § 1.01[B], at 1-8 to 1-9 (2000) (hereinafter NIMMER). [**20] 35 17 U.S.C. § 101 et seq. 36 Id. § 102(a). 37 See 17 U.S.C. § 301 (preempting state laws that create legal or equitable rights equivalent to any of the exclusive rights provided by § 106 of the Copyright Act). 38 17 U.S.C. § 303. See also H.R. REP. NO. 94-1476, 94th Cong., 2nd Sess. 139 (1976) (§ 303 intended "to substitute statutory for common law copyright for everything now protected at common law"). To be sure, "not even, case involving federal copyright laws 'arises under' those laws such that federal jurisdiction is proper . . ." 39 For example, many cases involving contracts relating to copyrights raise subtle questions as to whether the "arising under" standard is satisfied. But, after some years of uncertainty in our circuit, the test now is clear: a claim arises under the Copyright Act if "'(1) 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 (2) 'the complaint [**21] . . . asserts a claim requiring construction of the Act . . . .'" 40 39 Berger v. Simon & Schuster, 631 F. Supp. 915, 917 (S.D.N.Y. 1986) (citing T.B. Harms Co. v. Eliscu, 339 F.2d 823 (2d Cir. 1964), cert. denied, 381 U.S. 915, 14 L. Ed. 2d 435, 85 S. Ct. 1534 (1965)). 40 Bassett v. Mashantucket Pequot Tribe, 204 F.3d 343, 349 (2d Cir. 2000) (quoting T.B. Harms Co., 339 F.2d at 828. DeCarlo's first cause of action alleges that he is the creator of the Josie characters, 41 that he granted ACP certain rights to use them, and that ACP is using them to DeCarlo's detriment beyond the scope of the rights granted to it. He seeks a declaration that he "is the sole [*505] owner of the comic book characters Josie, Melody and Pepper, and has the exclusive right to use or license them for purposes other than comic strips and comic books," as well as an injunction against and an accounting for revenues derived [**22] from improper use by ACP. 42 Thus, it is authorship that forms plaintiff's only alleged basis for rights in the Josie characters. Since the effective date of the Copyright Act of 1976, the exclusive source of rights arising from authorship of a work fixed in tangible form is that statute. 41 Cpt PP 5-7, 9, 22. 42 Cpt at 15-16.
Page 37 127 F. Supp. 2d 497, *505; 2001 U.S. Dist. LEXIS 386, **22; 57 U.S.P.Q.2D (BNA) 1593; Copy. L. Rep. (CCH) P27,410 Plaintiff's first cause of action thus satisfies both alternative prongs of the test that determines whether a claim arises under the Copyright Act. The relief he seeks -- a declaration of ownership of the characters, an injunction against infringement of his claimed rights, and an accounting with respect to infringing uses -- is that traditionally available under the Act in cases of copyright infringement. 43 Moreover, his claim of authorship -- in a situation in which there are conflicting stories about exactly who did what in creating these characters and comic strips -- will require construction of the Act's work-for-hire provisions, among other relevant sections. 43 17 U.S.C. §§ 501-504. [**23] Plaintiff nevertheless argues that his claim does not arise under the Copyright Act because comic strip characters are not susceptible of federal copyright protection. But he misconstrues the law. While the copyrightability of literary characters can present a troublesome question, "there has been no doubt that copyright protection is available for characters portrayed in cartoons. . . ." 44 This is so, explained one court, because the difficulties of distinguishing distinct attributes of a literary character from its embodiment of more general ideas and themes (the test for copyrightability offered by the Second Circuit in Nichols v. Universal Pictures Corp. 45) do not arise, at least to the same degree, with visual images. "While many literary characters may embody little more than a protected idea, a comic book character, which has physical as well as conceptual qualities, is more likely to contain some unique elements of expression." 46 Such elements have been held to include "what the character thinks, feels, says and does and the descriptions conveyed by the author through the comments of other characters in the work," as well as "the visual perception . . . [which] [**24] tends to create a dominant impression . . . ." 47 Moreover, the protectible attributes in an animated character "extend . . . not merely to the physical appearance of the animated figure, but also to the manner in which it moves, acts and portrays a combination of . . . characteristics." 48 In consequence, DeCarlo's contention that cartoon characters are not protectible under the Copyright Act is, at best, a vast oversimplification. 49 44 Warner Bros., Inc. v. American Broadcasting Companies, Inc., 720 F.2d 231, 240 (2d Cir. 1983) (citing Walt Disney Productions v. Air Pirates, 581 F.2d 751 (9th Cir.), cert. denied, 439 U.S. 1132, 59 L. Ed. 2d 94, 99 S. Ct. 1054 (1978)); Detective Comics, Inc. v. Bruns Publications, Inc., 111 F.2d 432, 433-34 (2d Cir. 1940); King Features Syndicate v. Fleischer, 299 F. 533 (2d. Cir. 1924); Hill v. Whalen & Martell, Inc., 220 F. 359 (S.D.N.Y. 1914)). 45 45 F.2d 119 (2d. Cir.), cert. denied, 282 U.S. 902 (1931). [**25] 46 Walt Disney Productions, 581 F.2d at 755. See generally Note, When Mickey Mouse Is As Strong As Superman: The Convergence of Intellectual Property Laws to Protect Fictional Literary and Pictorial Characters, 44 STAN. L. REV. 623 (1992) (discussing cases and noting that "in contrast to the plight of literary characters, pictorial characters had a far easier time receiving protection against unauthorized use because of their physical embodiment"). 47 Warner Bros., Inc., 720 F.2d at 240. 48 United Artists Corp. v. Ford Motor Co., 483 F. Supp. 89, 91 (S.D.N.Y. 1980). 49 Plaintiff relies upon a circular published by the U.S. Copyright Office that gives a general background on what aspects of cartoon strips and characters are eligible for federal copyright protection. It notes that cartoons and comic strips are protected by federal copyright, but that such protection "does not extend to the title or general theme for a cartoon or comic strip or to the general idea or name for the characters depicted." It goes on to say that " intangible attributes of characters are not copyrightable, but a drawing, picture or depiction . . . of a character may be registered for copyright. However, copyright does not extend to the idea for the character itself." This circular does not support plaintiff's position. DeCarlo does not claim ownership of the "general theme" or "idea" of a trio of female friends who have a rock and roll band. He claims ownership of the original unpublished renderings of the characters, including Josie's "unique bouffant hairstyle," as well as the spotted cat costume that inspired the development of the character's appearance as a "pussycat," and the right to make derivative works based on those renderings. See Cpt at P 6. These elements are not "a mere delineation" of an idea or theme. They are, in fact, not necessary to the general theme of
Page 38 127 F. Supp. 2d 497, *505; 2001 U.S. Dist. LEXIS 386, **25; 57 U.S.P.Q.2D (BNA) 1593; Copy. L. Rep. (CCH) P27,410 Josie at all; instead, they are distinct "pictorial and literary details [that] embody an arrangement of incidents and literary expressions original with the author, [and as such are] proper subjects of copyright." Detective Comics, 111 F.2d at 433-34. [**26] [*506] Plaintiff here has engaged in "artful pleading." 50 Plaintiff's first cause of action alleges ownership of the literary property in the characters and requests injunctive relief from defendant's creation of derivative works. The protection due owners of literary and pictorial works, such as the cartoon characters at issue here, is governed exclusively by the federal copyright laws. The relief plaintiff seeks is that customarily available in actions for infringement. The claim therefore arises under the Copyright Act. As the second through fifth claims derive from a common nucleus of operative fact, the Court will exercise supplemental jurisdiction over them. 51 Accordingly, the motion to remand for want of subject matter jurisdiction is denied. 50 See Travelers Indemnity Co., 794 F.2d at 758. 51 28 U.S.C. § 1367. II. Defendant's Motion for Summary Judgment Defendant moves for summary judgment dismissing all of plaintiff's claims and on its counterclaim [**27] for breach of the 1996 Agreement, which prohibits plaintiff from taking "'any action inconsistent with or that limits or challenges Archie's exclusive right to exploit the Works.'"
consisting of the original Josie sketches from which the comic strips were derived; (2) the illustrated comic book series; and (3) the comic book periodicals, a compilation of the illustrated series. He claims ownership of the underlying work and contends he never transferred those rights. He concedes that he transferred to ACP limited rights in the illustrated series in the 1988 and 1996 Agreements. He concedes that ACP has a valid copyright in the periodicals, though only as a compilation. The basis for DeCarlos's claim to rights in the series is unclear. His brief states that "only one [level of rights] is factually disputed," and it is clear from the brief that plaintiff is referring to the dispute as to who created the original characters that form the "underlying work." But his attorney's declaration asserts that "the illustrated stories remained unquestioned as the separate property of Mr. DeCarlo . . . independently for many years, until ACP claims they were transferred to ACP under agreements signed in 1988 and 1996." Seymour Decl. at 3. It is unclear whether plaintiff asserts independent ownership in the series or ownership based on his rights in the underlying work. If the former is the case, then it appears that plaintiff disputes that the illustrated series constituted a work made for hire. It is impossible to ascertain plaintiff's position in regard to this issue, as he has refused to make any arguments applicable to the copyright issues in this case. [**28] 54 508 F.2d 909 (2d Cir. 1974). 55 Siegel held that the original renderings of the Superman cartoon character constituted the original works, later elaborations of which constituted derivative works. 508 F.2d at 914. See also 1 NIMMER § 5.03[B][b], at 5-31 n. 92. As discussed above, and assuming that DeCarlo in fact was the sole creator of these characters as he claims, he presumably enjoyed common law copyright in the unpublished original sketches prior to the 1978 effective date of the Copyright Act of 1976. At that time, however, the new Act preempted common law copyright and established federal protection for unpublished works, although Section 301(b)(2) preserved state law claims with respect to "any cause of action arising from
52 Def. mem. 34 (quoting 1996 Agreement P 20). A. Plaintiff's Ownership Claim Plaintiff seeks a declaratory judgment that he is the creator and owner of the Josie characters. 53 He points to Siegel [*507] v. National Periodical Publications Inc. 54 for the proposition that his original sketches are the works underlying defendant's later-published derivative works, e.g., the Josie comic books, 55 and asserts that he owns the characters as the creator of the original sketches. ACP, however, contends that plaintiff's claim to ownership is barred by the statute of limitations. 53 Plaintiff asserts there are three levels of rights involved in this case: (1) "the underlying work,"
Page 39 127 F. Supp. 2d 497, *507; 2001 U.S. Dist. LEXIS 386, **28; 57 U.S.P.Q.2D (BNA) 1593; Copy. L. Rep. (CCH) P27,410 undertakings commenced before January 1, 1978." 56 56 17 U.S.C. § 301(b)(2). The extent to which DeCarlo's claims arise from pre-1978 "undertakings" within the meaning of Section 301(b)(2) is not entirely clear. Most courts have held that the "undertaking" in an infringement claim is the alleged infringement, not the creation of the underlying work. See Hays v. Sony Corp. of Am., 847 F.2d 412, 415 (7th Cir. 1988); Mayer v. Josiah Wedgwood & Sons, Ltd., 601 F. Supp. 1523, 1531 (S.D.N.Y. 1985). Where the claim is one of ownership the "undertaking" at least arguably would be the defendant's alleged action in derogation of the plaintiff's ownership rights. See Merchant v. Levy, 92 F.3d 51, 56 (2d Cir.), cert. denied, 519 U.S. 1108, 136 L. Ed. 2d 833, 117 S. Ct. 943 (1997) (ownership or co-ownership claims accrue when the claim knows or has reason to know of injury caused by competing claim). But the precise meaning of "undertakings" here is immaterial. Even if DeCarlo retained a cause of action under state law for ACP's pre-1978 acts, that claim would be time-barred. See N.Y. CPLR § 214 (McKinney 1990) (three year statute of limitations for claims involving injury to property); Christian Thee v. Parker Bros. Inc., 1978 U.S. Dist. LEXIS 19115, No. 75 Civ. 1554 (CPS), 1978 WL 950, at *4 (E.D.N.Y. March 7, 1978) (applying § 214's three year statute of limitations to common law copyright claims). [**29] Section 507(b) of the 1976 Act provides that "no civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued." 57 As the Second Circuit held in Merchant v. Levy, "[a] cause of action [for a declaration of copyright ownership] accrues when a plaintiff knows or has reason to know of the injury upon which the claim is premised." 58 Plaintiff here has known for many years that ACP claimed ownership of the Josie characters, including the rights to license motion pictures, merchandise, and other uses going well beyond comic strips and comic books. Indeed, DeCarlo testified at his deposition that he was well aware that ACP was "doing anything they want with the show, the character." Yet he did nothing until the commencement of this suit. 57 17 U.S.C. § 507(b). 58 92 F.3d at 56. Merchant is closely in point. Plaintiffs there claimed to have co-authored the song "Why Do Fools Fall [**30] in Love" 1955. Frankie Lymon subsequently modified the song and made it a hit record of the 1950's, and did not list plaintiffs' names as authors on the Copyright. Plaintiffs were aware of Lymon's actions at the time. In 1987, plaintiffs sued those who owned the copyright, whose rights derived from Lymon, for a declaration that they were co-owners. But the Court of Appeals held that plaintiffs' ownership claim accrued in 1961, when they reached majority and were charged with knowledge of the competing claims, and that the claim to ownership therefore was barred by the statute of limitations: "We hold that plaintiffs claiming to be co-authors are time-barred three years [*508] after accrual of their claim from seeking a declaration of copyright co-ownership rights and any remedies that would flow from such a declaration. [citation omitted] Our conclusion promotes the principles of repose integral to a properly functioning copyright market." 59
59 Id. at 56-57. As there is no meaningful [**31] distinction between an action seeking a declaration of co-ownership and one seeking a declaration of sole ownership, the same result follows here. And the result is sound for the same reason -- the interest in repose after all these years is compelling, particularly after DeCarlo silently watched ACP claim ownership in these characters literally for decades. B. The Remaining Claims Plaintiff's remaining claims are for breach of contract, breach of fiduciary duty, and breach of the implied covenant of good faith and fair dealing. He purports also to assert a claim for the imposition of a constructive trust, although that of course is a remedy rather than a cause of action. As previously noted, however, all of these claims rest on a single premise: that DeCarlo's original sketches are the works underlying all subsequent iterations of the Josie characters and that he
Page 40 127 F. Supp. 2d 497, *508; 2001 U.S. Dist. LEXIS 386, **31; 57 U.S.P.Q.2D (BNA) 1593; Copy. L. Rep. (CCH) P27,410 owns those sketches and the literary property inherent in them. Everything else -- such as the licensing of merchandise, animated cartoons and live-action motion pictures -- he contends, is derivative of those sketches. Accordingly, he maintains that all of ACP's exploitation of the characters violated plaintiff's rights [**32] except to the extent that plaintiff licensed ACP's actions by the parties' agreements. 60 60 Cpt. P 24. Assuming arguendo that DeCarlo was the sole creator of the underlying sketches and characters, a proposition that defendant sharply disputes, there would be an interesting question as to whether the 1996 Agreement assigned his entire right, title and interest to ACP. 61 But it is unnecessary to resolve that issue, as defendant correctly contends that plaintiff is equitably [*509] estopped to pursue his remaining claims. 61 Section 19 of the 1996 Agreement assigned to ACP any right, title and interest DeCarlo may have had in "any past, pending or future contributions by [DeCarlo] to the Works or Properties," including all copyrights and other proprietary rights. "Properties" was defined in the first sentence of the Agreement as "comic strips and comic books that include characters, artwork, stories, plots . . . and other creative expressions" produced and/or published by ACP. The Agreement provided further that "references to 'Properties" . . . will include existing and future-created Properties that are commissioned by [ACP] and/or used in any of [ACP''s] publications or licensed products." (Emphasis added.) "Works" were defined as "all past, pending, and future uses of 'Properties.'" 1996 Agreement PP 1-2. Thus, the pivotal question is whether any rights DeCarlo had in the underlying sketches or the characters properly are characterized as "contributions" to the Works or Properties. DeCarlo argues that the "Properties" referred to in paragraph 19 of the 1996 Agreement were solely comic books and comic strips and, in consequence, that his "contributions" to the "Properties" were limited only to the end-product drawings that ACP commissioned him to produce for publication. Thus, he would have the Court conclude that his original sketches and characters were not "contributions" to the "Properties" and therefore were not assigned to ACP. DeCarlo's argument is difficult to reconcile with the fact that the Agreement defined "Properties" to include "licensed products." Plaintiff concedes that the "licensed products" include dolls, recordings, animated cartoons, and live-action motion pictures. Cpt. P 23(b). The Agreement therefore implies that plaintiff made "contributions" to "licensed products." Those contributions of necessity could not be limited to the end-product comic strips he drew. They must include other aspects of the characters. Nevertheless, in view of the basis upon which the Court disposes of defendant's motion for summary judgment dismissing the complaint, it is unnecessary to determine whether the Agreement is sufficiently unequivocal to warrant a determination as a matter of law that plaintiff assigned any right, title and interest in the original sketches and characters to defendant or, instead, whether it is ambiguous and thus raises a genuine issue of fact. [**33] Equitable estoppel applies in both law and equity to deny a litigant "the right to plead or prove an otherwise important fact because of something he has done or omitted to do." 62 It applies in actions for breach of contract and fiduciary duty 63 as well as for copyright infringement--a fact that is significant here, as plaintiff's breach of contract action may well be preempted by the Copyright Act. 64 Whether applied to contract actions under New York law or copyright infringement actions under federal law, equitable estoppel requires proof that (1) plaintiff had knowledge of defendant's conduct; (2) plaintiff either (a) intended that defendant rely on plaintiff's acts or omissions or (b) acted or failed to act in such a manner that defendant had a right to believe it was intended to rely on plaintiff's conduct; (3) defendant was ignorant of the true facts; and (4) defendant relied on plaintiff's conduct to its detriment. 65 62 Broadcast Music, Inc. v. Hearst/ABC Viacom Entertainment Services, 746 F. Supp. 320, 329 (S.D.N.Y. 1990) 63 Plaintiff asserts breach of contract, breach of the covenant of good faith and fair dealing, and breach of fiduciary duty. Because the covenant of
Page 41 127 F. Supp. 2d 497, *509; 2001 U.S. Dist. LEXIS 386, **33; 57 U.S.P.Q.2D (BNA) 1593; Copy. L. Rep. (CCH) P27,410 good faith and fair dealing stems from the contractual relationship, it is subsumed in the breach of contract claim for purposes of the equitable estoppel defense. The fiduciary duty between plaintiff and defendant stems, if at all, from the relationship borne of the Josie series. Because equitable estoppel is a defense founded on plaintiff's conduct in the relationship, it is a defense to the breach of fiduciary duty claim, as well, and the discussion of equitable estoppel here applied to both claims. [**34] 64 Where a claim for breach of contract fails to assert an "extra element" outside those necessary for a claim of copyright ownership or infringement, it "can serve as a subterfuge to control nothing other than reproduction, adaptation, distribution, etc., of works within the subject matter of copyright" and therefore is preempted by the Copyright Act. 1 NIMMER § 1.01[B][a], at 1-19 to 1-22. By parity of reasoning, the same principle extends to other theories of relief. Here, the essence of plaintiff's second through fifth causes of action arguably is substantially identical to that of an infringement claim. As estoppel extends to these claims regardless of how they are characterized, however, there is no need to resolve the preemption issue. 65 See Penguin Books U.S.A., Inc. v. New Christian Church of Full Endeavor, Ltd., 2000 U.S. Dist. LEXIS 10394, No. 96 Civ. 4126 (RWS), 2000 WL 1028634, at *17 (S.D.N.Y. July 25, 2000) (copyright infringement); General Elec. Cap. Corp. v. Armadora, 37 F.3d 41, 45 (2d Cir. 1994) (contract). See also 3 NIMMER § 13.07, at 13-133 n. 2 (contract actions for royalties). While the elements are worded slightly differently in infringement actions to account for the facts unique to such cases, the essential requirements are identical. [**35] The first element plainly is satisfied here, as DeCarlo indisputably knew that ACP conducted itself as if it owned the rights that DeCarlo now claims belong to him. He admits that in 1963 he read the copyright notice in She's Josie # 1, which claimed sole copyright in "cover and content" in ACP's subsidiary, Radio Comics. He admits that he understood in 1963 that Radio Comics, an ACP affiliate, claimed sole ownership of the copyright; he testified in fact that he "didn't think it was right" for it to do so. 66 He knew that the covers of Josie # 22 (published in 1966) through Josie and the Pussycats # 47 (published in 1970) bore the creator credit "by Dan 'n Dick", in reference to plaintiff and Richard Goldwater, then the managing editor and now co-owner of ACP. 67 He learned of ACP's license of the Josie property to Hanna-Barbera for the production of animated programs which aired on CBS from 1970 to 1974, and admits he knew ACP was "making a fortune" from the shows although he received no compensation. 68 He learned "a long time ago" that [*510] some of the Josie cartoons had been released on videocassette and that there had been a Josie underwear license. 69 DeCarlo testified at [**36] his deposition that he "had heard some talk about 'Josie' merchandising . . . maybe ten years ago." 70 He knew in 1993 that Josie and the Pussycats cartoons were being aired on The Cartoon Network, and testified in his deposition, "I was pretty much hardened at that point. This is it. They can do -- They're doing anything they want with the show, the character. And they were." 71 66 See DeCarlo Dep. at 215; Def. 56.1 St. P 14; Pl. 56.1 St. at 3. 67 See DeCarlo Dep. at 178; Def. 56.1 St. P 15; Pl. 56.1 St. at 3. 68 See DeCarlo Dep. at 146, 221-26; Def. 56.1 St. P 17; Pl. 56.1 St. at 3. 69 See DeCarlo Dep. at 231-32; Def. 56.1 St. P 20; Pl. 56.1 St. at 3. 70 See DeCarlo Dep. at 261; Def. 56.1 St. P 20; Pl. 56.1 St. at 3. 71 See DeCarlo Dep. at 234-36; Def. 56.1 St. P 21 Pl. 56.1 St. at 3. The second element of equitable estoppel also is present: DeCarlo conducted himself in a manner that gave ACP a right to believe it was intended [**37] to rely on his acquiescence in its actions. Silence or inaction in the face of an explicit contrary assumption by the opposing party may be sufficient to induce justifiable reliance by a defendant that a plaintiff will not later assert a claim. 72 Moreover, the "duty to speak need not be a purely legal one." 73 It is, instead, a duty of good faith: "When one party in a relationship with another has an opportunity to speak in order to avoid harm or injury to the other party and fails to do so to the ultimate prejudice of the other party, he will be estopped from relying
Page 42 127 F. Supp. 2d 497, *510; 2001 U.S. Dist. LEXIS 386, **37; 57 U.S.P.Q.2D (BNA) 1593; Copy. L. Rep. (CCH) P27,410 thereafter on that relationship." 74 Finally, "it is immaterial to a claim of estoppel that there was no actual attempt to defraud or mislead." 75 72 See General. Elec. Cap. Corp., 37 F.3d at 45-46 (defendant's silence in the face of plaintiff's assertion of its interpretation of contract provision falsely misrepresented defendant's intent to later challenge the interpretation, and induced plaintiff's reliance that defendant would not so challenge). C.f. Merchant v. Lymon, 828 F. Supp. 1048, 1064-65 (S.D.N.Y. 1993), rev'd on other grounds, Merchant v. Levy, 92 F.3d 51 (2d Cir.) cert. denied, 519 U.S. 1108, 136 L. Ed. 2d 833, 117 S. Ct. 943 (1997) (acknowledging silence and inaction may induce justifiable reliance by defendant in copyright infringement action that plaintiff would not pursue an infringement claim). [**38] 73 CBS, Inc. v. Stokely-Van Camp, Inc., 522 F.2d 369 (2d Cir. 1975) (citing Simmons v. Westwood Apartments Co., 46 Misc. 2d 1093, 261 N.Y.S.2d 736, 740 (Sup. Ct. Onondaga Co. 1965), aff'd on other grounds, 26 A.D.2d 764, 271 N.Y.S.2d 731, leave to appeal denied, 18 N.Y.2d 786, 275 N.Y.S.2d 271 (1966)). 74 Id. (internal citations omitted). 75 Id. (citing Rothschild v. Title Guarantee & Trust Co., 204 N.Y. 458, 462, 97 N.E. 879 (1912)). While there are cases to support the view that omissions rarely satisfy the elements of estoppel in copyright infringement actions, they do not control here. Unlike the defendants in Merchant v. Lymon, 76 defendant here was not "in the position to ascertain the extent of the competing claim." 77 Until filing this suit, plaintiff admits that he had never so much as voiced his discontent to ACP about its use of the Josie characters, or said anything to ACP regarding the existence of his alleged ownership rights or the alleged contractual obligations [**39] of ACP which he now asserts. 78 Plaintiff does not deny that he never complained to ACP or otherwise made it known to them that he claimed rights to the Josie characters; rather, he argues that ACP knew of his claim to the characters "from at least 1962 when it copyrighted only the comic book periodical [*511] as a 'composite work.'" 79 However, ACP's copyright notice on the Josie periodicals read "Cover and content protected by copyright throughout the world," indicating that ACP indeed did believe that it possessed the rights not only to the composite work but also to the individual works within it. The fact that plaintiff never attempted to register or renew a copyright in any work that included any Josie character would indicate to ACP that plaintiff had no claim to the Josie characters, or at least never intended to pursue such a claim. And plaintiff did nothing to refute that assumption. In short, DeCarlo's failure ever to voice a complaint or make a competing claim in the face of numerous opportunities to do so--not least, at the point where he signed the 1996 Agreement with which he was "very unhappy" 80--gave ACP the right to rely on his silence. 81 76 828 F. Supp. 1048 (S.D.N.Y. 1993). [**40] 77 Id. at 1064-1065. In Merchant, defendants not only knew of plaintiffs' claim to ownership of the copyright, but also attempted to conceal the royalties from plaintiffs and in part caused plaintiffs silence and inaction. 78 See Def. 56.1 St. P 23 (citing DeCarlo Dep. at 73-74, 145-46, 148, 334-35, 178-79, 215-17, 219-20, 230-32, 236, 241-43, 311); Pl. 56.1 St. at 7. 79 Pl. 56.1 St. at 7. 80 See DeCarlo Dep. at 168-174. 81 Though a defense of equitable estoppel often raises issues of fact, see Petrelli v. City of Mount Vernon, 9 F.3d 250, 256 (2d Cir. 1993), it does not always do so. If there is no evidence upon which a trier of fact reasonably could find for the plaintiff the issue may be decided upon a motion for summary judgment. See id. (citing Anderson v. Liberty Lobby Inc., 477 U.S. 242, 251-52, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986) (when "evidence is so one-sided . . . one party must prevail as a matter of law")). Courts, in fact, have decided the issue of justifiable reliance as a matter of law. See City of New York v. Shalala, 34 F.3d 1161, 1168 (2d Cir. 1994); Hospital Association of New York State, Inc. v. Toia, 577 F.2d 790, 797 (2d Cir. 1978). [**41] And rely defendant did--to its detriment. In connection with ACP's negotiations with Universal to license film rights in the Josie property, Universal in September 1998 asked ACP whether "DeCarlo ever made any claim to ownership or co-ownership to the property." ACP answered the question truthfully in the negative.
Page 43 127 F. Supp. 2d 497, *511; 2001 U.S. Dist. LEXIS 386, **41; 57 U.S.P.Q.2D (BNA) 1593; Copy. L. Rep. (CCH) P27,410 Based on DeCarlo's silence throughout decades of ACP's use of the characters as well as two written agreements, ACP also took the position that Universal's "concerns vis-a-vis the copyright issue . . . are without any merit" and "a non-issue which is being over-lawyered." It decided not to investigate any potential claims to ownership DeCarlo might have had and urged Universal to execute the licensing agreements without further delay. Indeed, ACP agreed to indemnify Universal should any dispute arise as to ownership of the Josie characters. 82 82 See Def. 56.1 St. at 58,60 (citing Silberkleit Ex. 13A, 15, 16; DeRosa-Grund Decl. P 2). Finally, ACP plainly was ignorant of the facts now [**42] alleged by DeCarlo, i.e., that he claims ownership in the Josie characters. In these circumstances, DeCarlo is equitably estopped from claiming that ACP has violated his rights in the Josie property and characters, whether those claims are couched in terms of copyright, contract or some other legal theory. Defendant is entitled to summary judgment dismissing the second through fifth causes of action. III. Defendant's Counterclaim Defendant moves for summary judgment on its counterclaim for breach of paragraph 20 of the 1996 Agreement, which provides that "Contractor will not take any action that is inconsistent with or that limits or challenges Archie's exclusive right to exploit the Works and/or the Properties . . . ." 83 Defendant claims that plaintiff's initiation of this action constituted a breach and requests damages in the form of attorneys' fees and litigation costs, as well as compensation for lost work of employees involved in this litigation. DeCarlo moves for summary judgment dismissing ACP's counterclaim. 83 See 1996 Agreement P 20. [**43] Attorney's fees ordinarily "are incidents of litigation" and may not be recovered from the losing party absent an agreement between them, a statute, or a [*512] rule. 84 Moreover, an agreement may not require indemnification for attorneys fees unless the intention to indemnify "is Dated: January 22, 2001 Lewis A. Kaplan United [**45] States District Judge SO ORDERED. unmistakably clear from the language of the promise." 85 The same rules apply by analogy to the other litigation-related costs of which ACP requests recovery. 84 Coastal Power Int'l, Ltd. v. Transcontinental Capital Corp., 10 F. Supp. 2d 345, 370 (S.D.N.Y. 1998) (quoting Hooper Associates, Ltd. v. AGS Computers, Inc., 74 N.Y.2d 487, 491, 549 N.Y.S.2d 365, 366, 548 N.E.2d 903 (1989)). 85 Id. at 492, 549 N.Y.S.2d at 367. The clause relied upon by ACP does not explicitly provide for indemnification of litigation costs; it states only that DeCarlo "will not take any action that is inconsistent with or that limits or challenges" ACP's rights to exploit the Works and/or Properties. [**44] The New York Court of Appeals has found language less vague than that here to be inexplicit for purposes of recovering attorneys fees. 86 Accordingly, this Court finds no basis under New York law for enforcing paragraph 20 of the 1996 agreement against DeCarlo by compelling him to pay ACP's legal fees. 86 Id. Conclusion For the foregoing reasons, plaintiff's motion to remand the action to the New York State court for lack of subject matter jurisdiction is denied. Defendant's motion for summary judgment is granted to the extent that it seeks dismissal of the complaint. Insofar as it seeks judgment in favor of defendant on its counterclaim, the motion is denied. Plaintiff's cross motion for summary judgment striking ACP's defenses is denied, and its motion for summary judgment dismissing ACP's counterclaim is granted. In view of the disposition of these motions, plaintiff's motion to disqualify defendant's counsel is denied as moot.
Page 44 2000 U.S. Dist. LEXIS 18328, *; 57 U.S.P.Q.2D (BNA) 1346; Copy. L. Rep. (CCH) P28,379; Copy. L. Rep. (CCH) P27,410 6 of 9 DOCUMENTS JAMES NISS, Plaintiff, -against- COLUMBIA PICTURES INDUSTRIES, INC., ENCORE MEDIA CORPORATION, and HOME BOX OFFICE, a Division Of Time Warner Entertainment Co., L.P., Defendants. 97 Civ. 4636 (LAP) UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK 2000 U.S. Dist. LEXIS 18328; 57 U.S.P.Q.2D (BNA) 1346; Copy. L. Rep. (CCH) P28,379
December 20, 2000, Decided December 21, 2000, Filed DISPOSITION: [*1] Defendants' motion for summary judgment granted and plaintiff's cross-motion for partial summary judgment denied. All pending motions denied as moot. copyright infringement against defendants Columbia Pictures Industries, Inc. ("Columbia"), Encore Media Corporation and Home Box Office (collectively, "defendants"). Defendants have moved for summary judgment declaring that the copyrights are owned by Columbia. Plaintiff has cross-moved for partial summary judgment declaring that the renewal copyrights in the motion picture and in the story outline and screenplays of Pendulum "insofar as they are disclosed in the motion picture" have vested in plaintiff. For the reasons discussed below, [*2] defendants' motion is granted and plaintiff's motion is denied. 1 The documents refer to the project as "The Pendulum" and "Pendulum" interchangeably. The motion picture carries the title "Pendulum." BACKGROUND While the subject matter of this case involves literary works, the case is essentially one of contract interpretation. Plaintiff asks the Court to ignore clear language in various agreements and contracts while spinning his own tale to support his position. As a preliminary matter, plaintiff has no personal or hearsay knowledge of the contractual arrangements involved in this case, (Def. Decl. Ex. R at 67), or the events that took place, (Pl. Decl. at 1), and fails to present any evidence to support his interpretation of the events. While I am sympathetic to plaintiff's desire to have a "symbolic" connection to his father by attempting to retain the Pendulum copyrights, (id. Ex. E203), the copyrights are not his to retain.
COUNSEL: For JAMES NISS, plaintiff: James Niss, New York, NY. For COLUMBIA PICTURES INDUSTRIES, INC., defendant: David Goldberg, Cowan, Leibowitz & Latman, P.C., Robert J. Bernstein, Cowan, Liebowitz & Latman, P.C., New York, NY. JUDGES: LORETTA A. PRESKA, United States District Judge. OPINION BY: LORETTA A. PRESKA OPINION ORDER AND MEMORANDUM LORETTA A. PRESKA, United States District Judge: This case determines the ownership of the copyrights to the story outline, screenplay and motion picture Pendulum ("Pendulum"). 1 Plaintiff brought an action for, among other things, a judgment declaring that he is the owner of the renewal copyrights as the sole heir of his father pursuant to 17 U.S.C. § 304(a)(2)(B), and for
Page 45 2000 U.S. Dist. LEXIS 18328, *2; 57 U.S.P.Q.2D (BNA) 1346; Copy. L. Rep. (CCH) P28,379; Copy. L. Rep. (CCH) P27,410 I. The Short Story Like the screenwriting process itself, I begin [*3] with a broad outline of the rather complicated facts of the case before presenting the detailed story. The events material to this case occurred between 1967 and 1968. 2 Stanley Niss ("Niss") was a Hollywood screenwriter and producer who died in 1969. In early 1967, Niss was employed by Metro-Goldwyn-Mayer ("MGM") to work on a project based on two Dashiell Hammett stories. In May 1967, Niss contracted with MGM to develop a new project he had previously presented to MGM; this project came to be called "Pendulum." In November 1967, MGM quitclaimed to Columbia its rights in the Pendulum project. That same month, Niss entered into contracts with Columbia to finish the Pendulum screenplay and produce and distribute the motion picture. Finally, in June 1968, Pendulum Productions ("Pendulum Productions"), a California corporation established by Niss to produce the film, entered a memorandum of agreement with Columbia that specified various details of the previous Niss-Columbia contract. The film Pendulum was released in 1969 bearing the copyright "Pendulum Productions." The original copyright expired on December 31, 1996. The question before me is who owns the copyrights to the Pendulum [*4] properties. 2 The various contracts involved in this action range in date from May 26, 1967 to November 29, 1967. Plaintiff asserts that the contracts were backdated and do not reflect the actual date of execution. See e.g., Pl. Rule 56.1 Statement PP TT, UU, VV; Pl. Mem at 6 n.21. Defendants do not contest plaintiff's assertions with respect to PP TT, UU, VV. Plaintiff, however, does not make any claim that the contracts are invalid or void for any reason. In any event, the precise dates of the contracts do not change their legal significance or the outcome of this motion for summary judgment. Accordingly, for purposes of this motion, I will use the dates that appear on the contracts. II. The Long Story A. Niss' Pre-Pendulum Employment With MGM On January 26, 1967, Niss entered into an employment agreement with MGM to write a treatment 3 and screenplay based on two Dashiell Hammett stories ("Hammett contract"). (Id. Exs. E137-E150; E12). Niss delivered the completed treatment on March 23, 1967 and [*5] began the "first consultation period" that was to last no more than three weeks. (Id. Exs. E136; E138). 4 3 A "treatment" is "an adaptation of a story, book, play or other literary dramatic or dramatico-musical material for motion picture purposes in form suitable for use as the basis of a screen play." (Pl. Decl. Ex. E74). 4 Plaintiff asserts that Niss' employment under the Hammett contract ended on April 14, 1967. (Pl. Mem. at 5). However, plaintiff offers no probative evidence on this point. B. MGM-Niss Pendulum Contracts On April 18, 1967, Niss sent a three-page inter-office memorandum on MGM stationery to Lewis Morton, then the executive head of MGM's Studio Story Department. (Id. Exs. E54-E56; E53). The memo presented the story outline ("Story Outline") for "Pendulum," which Niss believed "might make a good film." (Id. Ex. E56). 5 On May 23, 1967, Niss submitted to MGM 28 pages of an unfinished screenplay of Pendulum "as further inducement for MGM to accept his proposal." (Pl. Mem [*6] at 6). On May 26, 1967, Niss entered into an employment agreement ("Employment Agreement") with MGM to write a treatment of not less than 50 pages based on the Story Outline. (Pl. Decl. Exs. E38-E40). 6 The Employment Agreement provided that MGM would pay Niss $ 8,750 for the treatment. (Id.). It also gave MGM an irrevocable option to employ Niss to write three drafts of the Pendulum screenplay for an additional $ 25,000 ("Screenplay Option") which would be paid upon delivery of the final screenplay. (Id.). The option could be exercised no later than three weeks after delivery of the treatment. (Id. E38). 5 In his inter-office memo, Niss does not name the story, but in the subsequent employment agreement, the story carries the name "The Pendulum." (See Pl. Decl. Ex. E38). 6 In the Agreement, MGM refers to the Story Outline as the "Basic Story." The Employment Agreement referenced a separate agreement, also dated May 26, 1967, in which Niss granted to MGM an irrevocable option to acquire [*7] from Niss all rights in the Story Outline for $ 5,000 ("Story Option"). (Id. Exs. E38; E34-36). The Screenplay Option and Story Option were to work in tandem, that is,
Page 46 2000 U.S. Dist. LEXIS 18328, *7; 57 U.S.P.Q.2D (BNA) 1346; Copy. L. Rep. (CCH) P28,379; Copy. L. Rep. (CCH) P27,410 MGM's exercise of the Screenplay Option under the Employment Agreement was deemed to be an exercise of the Story Option. (Id. Ex. E44). The Employment Agreement required that "notice of exercise of [the Screenplay] option must be in writing; oral notice of exercise of said option shall be ineffective." (Id. Ex. E38). The Employment Agreement also referenced a "doubled starred" rider dated May 26, 1967, (id. Ex. E37), which provided that in the event MGM did not exercise the Screenplay Option and the Story Option, all rights in and to the [Story Outline] and in and to said treatment shall revert to [Niss] upon the condition precedent that [Niss] pay to [MGM] one hundred percent (100%) of [MGM's] "costs" in connection with such [Story Outline] and treatment in the event that [Niss] makes any subsequent sale, lease or other disposition of said [Story Outline] and/or said treatment, or any variation thereof, to any other person, firm or corporation. (Id.). The "costs" [*8] would include the $ 8,750 paid to Niss under the Employment Agreement to write treatment as well as fringe benefits and expenses related to his employment. (Id.). Finally, the Employment Agreement incorporated by reference and annexed MGM's Standard Terms. (Id. Ex. E40; see id. Ex. E41-E43). Thus, when read together, the term of the writing period for the treatment was to commence on May 29, 1967 and was not to exceed nine weeks. (Id. Exs. E39; E41 P 2). 7 7 Defendants argue that "the term of Niss' employment in writing the treatment, though initially estimated at 9 weeks, was expressly deemed to 'continue until the completion of all the writer's services hereunder,' with the duration of each period to 'continue until the delivery of the respective item of work.'" (Def. Rule 56.1 Statement P 7, quoting the Standard Terms P 2; see also id. P 37). This interpretation, however, cannot be sustained. Paragraph 2 of the Standard Terms specifically states that "subject to the maximum times stated in paragraph 3 of the principal agreement," the term of each writing period will "continue until the delivery of the respective item of work." (Pl. Decl. Ex. E41). Thus, only if the maximum times are not defined in the principal agreement, as they were in this case, will the writing periods continue until delivery of the item of work. Defendants rely on their interpretation of the writing period provision to argue that since Niss never wrote a treatment for the Pendulum project, the writing period for the treatment continued beyond nine weeks and that the time to exercise the Screenplay and Story Options had not expired when MGM quitclaimed to Columbia its rights in the Pendulum materials. Therefore, defendants assert the rights had not reverted to Niss. See id. PP 20, 21. Such an interpretation, however, is not necessary to find that MGM sold the rights in the Pendulum project to Columbia and that these rights did not revert to Niss. See discussion below. [*9] The Standard Terms also included an exclusivity provision and ownership of work provision. The exclusivity provision required that "during the term [of the Employment Agreement Niss] shall render services exclusively for [MGM] and shall not render services for the writer or any other person or company." (Id. Ex. E42 P 5). The ownership of work clause provided, among other things, that MGM, "as employer of the writer, shall be the sole and exclusive owner of the work, in whatever stage of completion it may be from time to time, including but not limited to the copyright thereof and all renewals and extensions and rights of renewal and extension of copyright thereof. . . . The writer by virtue of his . . . employment hereby assigns all such rights to [MGM], without condition, reservation or limitation." (Id. Ex. E42 P 7). The ownership of work clause further required the writer to provide upon request by MGM a certificate stating that the writer was a paid employee under contract with MGM and that MGM is the owner of all rights in the work, including the copyright and all renewals. (Id.). Finally, the ownership of work provision stated: All rights hereby vested [*10] in or granted to [MGM] do so vest immediately upon the creation of the work, whether or not the writer completes the writer's
Page 47 2000 U.S. Dist. LEXIS 18328, *10; 57 U.S.P.Q.2D (BNA) 1346; Copy. L. Rep. (CCH) P28,379; Copy. L. Rep. (CCH) P27,410 services, whether or not this agreement is terminated, with or without cause, before the expiration of its appointed term, and whether or not the writer executes the certificate prescribed above. (Id.). Notwithstanding the detailed contracts, Niss never wrote a treatment, (Pl. Mem. at 8; Def. Decl. Ex. O at 8), and MGM did not give written notice exercising its options. Rather, Niss continued to write drafts of the Pendulum screenplay, and MGM paid him. The parties agree that MGM paid Niss the $ 8,750 plus fringe benefits, (Def. Response to Pl. Rule 56.1 Statement P J), and also acknowledge that Niss wrote two Pendulum manuscripts while under contract with MGM, one dated July 12, 1967 of 172 pages; the other dated August 16, 1967 of 160 pages (id. PP I, M; Pl. Decl. Ex. E52). C. MGM-Columbia Quitclaim/Niss-Columbia Contracts In an agreement dated November 29, 1967 (the "Quitclaim"), MGM quitclaimed to Columbia "all of [MGM's] right, title and interest in and to" the Pendulum property. 8 (Id. Exs. E50-E51). Of particular importance [*11] in this document is a separate waiver signed by Niss that reads: Notwithstanding that pursuant to the provisions of the double-starred rider to Paragraph 2 of the [Employment Agreement] the rights in the property were to revert to the undersigned in the absence of this agreement, the undersigned hereby agrees that such rights shall not revert to the undersigned, and the undersigned hereby approves and consents to the foregoing agreement between [MGM] and [Columbia]. (Id. Ex. E51). 8 Attached to the Quitclaim and incorporated by reference therein was an itemized list of the Pendulum properties including the 28-page manuscript dated May 23, 1967 "together with the title, theme, plot, characters, story, copyright, right of copyright (including renewals and/or extensions) and all other rights and interests of whatever kind pertaining to said literary work"; the May 26, 1967 Employment Agreement between MGM and Niss; the Story and Screenplay Options dated May 26, 1967; the July 12, 1967 manuscript; and the August 18, 1967 manuscript. (Pl. Decl. Ex. E52). [*12] On November 29, 1967, Columbia and Niss entered into an authors contract ("Authors Contract") by which Columbia acquired "all common law rights and/or all copyrights and/or the right to secure copyright . . . in and to 'Pendulum'." (Id. Ex. E47 P 1). The contract provided that Niss "grant(s), sell(s), assign(s), and set(s) over to [Columbia] forever all renewals of copyright and also the right to renew and secure renewals of copyright." (Id.). Additionally, the contract stated that Niss "warrant(s) and represent(s) that [he] is the sole owner of the copyright and the right to secure copyright, and of the manuscript of such work, and all rights of every character in such work and (has) . . . full right and authority to grant the rights hereby conveyed." (Id. Ex. E47 P 3). Under the contract, Niss also agree(s) to duly execute and deliver or cause to be duly executed and delivered, to [Columbia] any and all further assignments and other instruments that may be necessary or expedient to carry out and effectuate the purposes and intent of this agreement and to convey to [Columbia] all rights in such work, during the original term of the United States copyright [*13] and other copyrights in such work and during all renewals and extensions thereto. In case of the failure or refusal of [Niss] to so execute and deliver or cause to be so executed and delivered any assignment or other instrument herein provided for, then [Columbia] shall be deemed to be, and [Niss] hereby nominates, constitutes and appoints [Columbia], the true and lawful attorney in fact of [Niss], irrevocably, to execute and deliver all such assignments and other instruments in the name of [Niss]. (Id. Exs. E47-E48 P 6). Finally, the Authors Contract provided that [Niss] acknowledges that he has been advised by [Columbia] that concurrently with the execution hereof [Columbia] is
Page 48 2000 U.S. Dist. LEXIS 18328, *13; 57 U.S.P.Q.2D (BNA) 1346; Copy. L. Rep. (CCH) P28,379; Copy. L. Rep. (CCH) P27,410 entering into an agreement with [MGM] under and pursuant to the terms of which [Columbia] is acquiring all the right, title and interest, if any, of [MGM] in, to and with respect to the [Pendulum property], and as an inducement to [Columbia] to enter into this agreement and to the aforesaid agreement with [MGM] [Niss] acknowledges and agrees that no further or additional moneys are or shall be payable to [Niss] under or pursuant to the terms of any agreement [*14] between him and [MGM], or otherwise, and that the amounts herein provided to be paid to [Niss] are in lieu of any other payments to which [Niss] might be entitled in connection with and with respect to the use, exploitation and turning to account of the [Pendulum properties] and the rights therein and with respect thereto. (Id. Ex. E49 P 9). The Authors Contract called for Columbia to pay Niss $ 50,000 upon its execution and delivery as well as other sums relating to the release of a sequel to the original Pendulum film, a remake of the original Pendulum film, or a television release utilizing the Pendulum properties. (Id.). Columbia required Niss to "furnish" a corporation with which Columbia would also contract for the production and distribution of the Pendulum film. (Id. Ex. 123; Def. Response to Pl. Rule 56.1 Statement P JJ). "[A] newly formed single purpose corporation whose sole purpose was to produce the specified motion picture" was beneficial both to the independent producer and Columbia by, among other things, limiting liability to the producer and improving the financial picture of the studio. (Def. Decl. Ex. EE, Response to Interrogatory [*15] 19). In addition, the bank providing financing for a film required such a "sole purpose" corporation whose obligations were limited to the specific film and guaranteed by Columbia. (Id.). On November 23, 1967, Pendulum Productions was incorporated in California. (Pl. Decl. Ex. E23-26). The three incorporators and directors included Niss' attorney, Richard Mark, his law partner and associate; Niss was neither an incorporator nor a director of the corporation. (Kopald Decl. at 1). On November 27, 1967, Pendulum Productions and Columbia entered into a production-distribution agreement ("P-D Agreement") for the film Pendulum. (Pl. Decl. Exs. E57-E59). The agreement provided that Niss would function as the film's "individual producer and writer" and would be paid $ 50,000. (Id. Ex. E57). The P-D Agreement also stated that the film would be financed by a bank loan, was subject to various Columbia approvals (e.g., locations, budget), and that "Columbia will acquire rights in [the] original screenplay from [MGM] and [Niss] and will grant [Niss a] one (1) picture license." (Id. Exs. E57-E59 PP 5, 12, 13a, 19). The P-D Agreement also included a separate typewritten note [*16] at the end of the agreement: It is agreed that a formal agreement will be prepared and executed in due course covering the above terms and provisions and such other incidental and ancillary provisions as are usual and customary with Columbia in such agreements. (Id. Ex. E59). In April 1968, Niss, as president, and Richard Mark, as secretary-treasurer, signed a corporate resolution authorizing Pendulum Productions to borrow $ 2,300,000 from the Bank of America. (Def. Decl. Ex. CC). This was the loan referred to in the P-D Agreement, (Pl. Decl. Ex. E59), and guaranteed by Columbia (Def. Decl. Ex. X). On June 14, 1968, Pendulum Productions and Columbia signed a detailed production and distribution agreement (the "June 1968 Agreement"), specifying, among other things, the budget, financing (including details with respect to the bank loan), schedule, delivery, editing and distribution of the film. In the agreement, Pendulum Productions acknowledged that Columbia had granted Pendulum Productions "the right to utilize [the] original screenplay in and in connection with the production, distribution and exploitation of the picture." (Id. Ex. B at 1). The June 1968 [*17] Agreement also provided: The copyright in the picture and all renewals and extensions thereof shall be held in [Columbia's] name or (in [Columbia's] discretion) in that of any of [Columbia's] subsidiaries and a copyright notice may be affixed to the picture and physical properties thereof accordingly.
Page 49 2000 U.S. Dist. LEXIS 18328, *17; 57 U.S.P.Q.2D (BNA) 1346; Copy. L. Rep. (CCH) P28,379; Copy. L. Rep. (CCH) P27,410 [Columbia] or any said subsidiary may renew and extend such copyright. Such copyright shall be held by [Columbia] or said subsidiary for [Pendulum Productions and Columbia's] benefit as [Columbia's] interests may hereunder appear. [Columbia] shall comply with all copyright formalities in connection with the Picture in accordance with [Columbia's] practices from time to time currently in effect but shall in no event incur any liability in the event of any defect in any copyright or renewal or extension thereof. (Id. at 61-62). Finally, as security for performance agreement, Pendulum Productions agreed to of the or instruments consistent with this agreement and in form satisfactory to [Columbia]. In case of [Pendulum Productions'] failure or refusal to execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered to [Columbia], [*19] any such additional instruments, then [Columbia] shall be deemed to be and [Pendulum Productions] hereby nominate[s], constitute[s] and appoint[s] [Columbia Pendulum Productions'] true and lawful attorney-in-fact irrevocably to execute and deliver all such instruments in [Pendulum Productions'] name or otherwise, it being acknowledged that such power is a power coupled with an interest. (Id. at 67-69). Notwithstanding the clear language in the June 1968 Agreement, in January 1969, Pendulum Productions registered the copyright for the film Pendulum in the name of Pendulum Productions. (Pl. Decl. Ex. E21). 9 The initial term of the copyright was 28 years and, thus, the initial copyright was to expire on December 31, 1996. 17 U.S.C. § 304(a)(1)(A). 9 The copyright notice was dated 1968. On July 10, 1987, Columbia wrote to plaintiff in an attempt to identify the successor-in-interest to Pendulum Productions in order to acquire a copyright assignment from Pendulum [*20] Productions. (Def. Decl. Ex. II). 10 On August 30, 1987, plaintiff wrote to Columbia and, assuming he was the successor-in-interest to Pendulum Productions, stated that "for purely sentimental reasons, [he was] reluctant to assign the copyright" to "Pendulum." (Pl. Decl. Ex. E203). In response, Columbia referred plaintiff to the June 1968 Agreement and explained that the agreement required that the copyright in the film was to be in the name of Columbia or its subsidiary and that Pendulum Productions agreed to execute any additional instruments. (Pl. Dec. Ex. E204-06). Plaintiff refused to sign the copyright assignment. Relying on the attorney-in-fact provision in the June 1968 Agreement, on January 17, 1969, Columbia signed a copyright assignment from Pendulum Pictures to Columbia. (Def. Decl. Ex. D). In February
grant, bargain, sell, assign, transfer, hypothecate, mortgage, pledge and set over to [Columbia] the picture and all of [Pendulum Productions'] right, title and interest therein, and grant to [Columbia] a first and continuing [*18] lien upon the picture and upon all of the items delivered by [Pendulum Productions] to [Columbia] in connection with the picture, and upon the literary, dramatic and musical material used therein or acquired in connection with the production thereof, and upon the copyright of said literary, dramatic and musical material to the extent that you own the same, and upon [Pendulum Productions'] interest in the copyright of the picture. . . . If at any time [Columbia] deem[s] it necessary or advisable that any further instrument or instruments be executed and delivered by [Pendulum Productions] to establish more definitely [Columbia's] lien on the property rights and material above described, or any part thereof, or to create, maintain, evidence or defend [Columbia's] said lien or rights hereunder, then [Pendulum Productions] agree[s], from time to time, upon written demand by us, to execute and deliver any such instrument
Page 50 2000 U.S. Dist. LEXIS 18328, *20; 57 U.S.P.Q.2D (BNA) 1346; Copy. L. Rep. (CCH) P28,379; Copy. L. Rep. (CCH) P27,410 1996, Columbia renewed its copyright. Pl. Decl. Ex. E191-93). The renewal listed Pendulum Productions as the author of the film. (Id. at E192). In May 1996, plaintiff also filed a registration of renewal copyright of "Pendulum," listing Niss as the author of the film. (Id. at E94-E95). 10 Columbia had released Pendulum in the video market and was concerned about acts of piracy. Columbia stated that it required the copyright assignment in order to defend and protect its and Pendulum Productions' interests in any copyright infringement actions. (Def. Decl. Ex. II). [*21] Plaintiff filed the instant suit in 1997 seeking, among other things, a declaration that he is the owner of the copyrights to the Story Outline, screenplay and motion picture pursuant to 17 U.S.C. § 304(a)(2)(B). 11 Plaintiff filed an amended complaint in September 1999. Defendants filed a motion for summary judgment declaring that the copyrights are owned by Columbia. Plaintiff cross-moved for partial summary judgment declaring that the renewal copyrights in the motion picture and in the story outline and screenplays of Pendulum "insofar as they are disclosed in the motion picture" have vested in plaintiff. 11 While plaintiff cites 17 U.S.C. § 304(a)(2)(B), I believe the subsection he means to rely upon is 17 U.S.C. § 304(a)(1)(C)(ii), which states: In the case of any . . . copyrighted work [by an individual author], the widow, widower, or children of the author, if the author is not living, shall be entitled to a renewal and extension of the copyright in such work for a further term of 67 years. the moving party as a matter of law." Chambers v. TRM Copy Centers Corp., 43 F.3d 29, 36 (2d Cir. 1994); see Fed. R. Civ. P. 56(c); see generally Celotex Corp. v. Catrett, 477 U.S. 317, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986); Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). An issue of fact is genuine when "a reasonable jury could return a verdict for the nonmoving party," and facts are material to the outcome of the particular litigation if the substantive law at issue so renders them. Anderson, 477 U.S. at 248. The burden of establishing that no genuine factual dispute exists rests on the party seeking summary judgment. Chambers, 43 F.3d at 36. "In moving for summary judgment [*23] against a party who will bear the ultimate burden of proof at trial," however, "the movant's burden will be satisfied if he can point to an absence of evidence to support an essential element of the nonmoving party's claim." Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir. 1995); accord Gallo v. Prudential Residential Servs., Ltd. Partnership, 22 F.3d 1219, 1223-24 (2d Cir. 1994) ("The moving party may obtain summary judgment by showing that little or no evidence may be found in support of the nonmoving party's case."). The moving party, in other words, does not bear the burden of disproving an essential element of the nonmoving party's claim. If the moving party meets its burden, the burden shifts to the nonmoving party to come forward with "specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P.56(e); accord Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522, 525-26 (2d Cir. 1994). The nonmoving party must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586. Instead, the nonmovant must "'come forward [*24] with enough evidence to support a jury verdict in its favor, and the motion will not be defeated merely . . . on the basis of conjecture or surmise.'" Trans Sport v. Starter Sportswear, 964 F.2d 186, 188 (2d Cir. 1992) (citation omitted). In assessing materials such as affidavits, exhibits, interrogatory answers and depositions to determine whether the moving party has satisfied its burden, the court must view the record "in the light most favorable to the party opposing the motion" by resolving "all
[*22] ANALYSIS I. Legal Standard "A motion for summary judgment may not be granted unless the court determines that there is no genuine issue of material fact to be tried and that the facts as to which there is no such issue warrant judgment for
Page 51 2000 U.S. Dist. LEXIS 18328, *24; 57 U.S.P.Q.2D (BNA) 1346; Copy. L. Rep. (CCH) P28,379; Copy. L. Rep. (CCH) P27,410 ambiguities and drawing all factual inferences in favor of the party against whom summary judgment is sought." Chambers, 43 F.3d at 36. "If, as to the issue on which summary judgment is sought, there is any evidence in the record from any source from which a reasonable inference could be drawn in favor of the nonmoving party, summary judgment is improper." Id. at 37. "On cross-motions for summary judgment, the standard is the same as that for individual motions. In evaluating each motion, the court must look at the facts in the light most favorable to the non-moving party. See Aviall, Inc. v. Ryder Sys., Inc., 913 F. Supp. 826, 828 (S.D.N.Y. 1996), [*25] aff'd, 110 F.3d 892 (2d Cir. 1997). 'Simply because the parties have cross-moved, and therefore have implicitly agreed that no material issues of fact exist, does not mean that the court must join in that agreement and grant judgment as a matter of the law for one side or the other. The court may conclude that material issues of fact do exist and deny both motions.' Id. (internal citation omitted)." McGovern v. Local 456, Intern. Broth. Of Teamsters, Chauffeurs & Warehousemen & Helpers of America, AFL-CIO, 107 F. Supp. 2d 311, 316 (S.D.N.Y. 2000). See also Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir. 1993). II. Columbia Owns The Copyright In The Story Outline And Screenplay A. The Story Outline and Screenplay Were Works for Hire 1. The Copyright Act of 1909 and Work For Hire The Story Outline and drafts of the screenplay were written in 1967 and therefore fall under the Copyright Act of 1909 (the "1909 Act") and the case law interpreting the 1909 Act. Playboy Enterprises, Inc. v. Dumas, 53 F.3d 549, 553 (2d Cir. 1995). Under the 1909 Act, 17 U.S.C. § 26 (repealed), [*26] an "author" of a work includes "an employer in the case of works for hire." Id. at 554; Brattleboro Publishing Co. v. Winmill Publishing Corp., 369 F.2d 565, 567 (2d Cir. 1966). An "employer" includes someone "who hires another to create a copyrightable work," whether the creator of the work is a traditional employee or an independent contractor. Playboy, 53 F.3d at 554. In the absence of an agreement to the contrary, an employer is the author of a work and thereby owns the copyright if the work is created at the "instance and expense" of the employer. Id.; Brattleboro, 369 F.2d at 567. The "instance and expense" test is met "'when the motivating factor in producing the work was the employer who induced the creation.'" Playboy, 53 F.3d at 554, quoting Siegel v. National Periodical Publications, Inc., 508 F.2d 909, 914 (2d Cir. 1974) (internal quotation marks omitted). Additionally, "in the work-for-hire context under the 1909 Act, 'an essential element of the employer-employee relationship, [is] the right of the employer to direct and supervise the manner in which the writer performs [*27] his work.'" Playboy, 53 F.3d at 554, quoting Picture Music, Inc. v. Bourne, Inc., 457 F.2d 1213, 1216 (2d Cir.), cert. denied, 409 U.S. 997, 34 L. Ed. 2d 262, 93 S. Ct. 320 (1972) (internal quotation marks omitted and change in original). 12 12 The copyright in a work made for hire is not subject to reversion. Under 17 U.S.C. § 304(a)(1)(B)(ii), "in the case of any work copyrighted by a corporate body . . . or by an employer for whom such work is made for hire, the proprietor of such copyright shall be entitled to a renewal and extension of the copyright in such work for the further term of 67 years." 2. The Pendulum Story Outline and Screenplay The Story Outline and drafts of the screenplay (the "Work") were works for hire, written at the instance and expense of MGM. Under the 1909 Act, the "expense" prong is met when "a hiring party simply pays an independent contractor a sum certain for his or her work." Playboy, 53 F.3d at 555. [*28] Here, there is no factual dispute that MGM paid Niss the $ 8,750 stated in the Employment Agreement (plus fringe benefits and costs) for the work Niss completed prior to the Quitclaim to Columbia. (Def. Response to Pl. Rule 56.1 Statement; Pl. Decl. Ex. E118). Thus, the Work was written at MGM's expense. The Work was also produced at the instance of MGM. Plaintiff argues that the Work was not written at the instance and expense of MGM because MGM was not the motivating factor in Niss' development of the project. Rather, plaintiff relies on Siegel to argue that his father had fully developed the Pendulum story and, therefore, under the 1909 Act, his father was the author of the Work. (Pl. Mem. at 14-15). This argument is without merit. Siegel involved the creation in 1933 of cartoons "suitable for newspaper syndication" featuring the
Page 52 2000 U.S. Dist. LEXIS 18328, *28; 57 U.S.P.Q.2D (BNA) 1346; Copy. L. Rep. (CCH) P28,379; Copy. L. Rep. (CCH) P27,410 Superman character. 508 F.2d at 911. In 1937, the cartoonists entered into an employment agreement with Detective Comics, Inc. ("Detective") to develop new cartoons. The agreement stated that all work done by the cartoonists during the term of the contract was deemed owned by Detective. In 1938, the cartoonists submitted the 1933 [*29] Superman comics to Detective, which directed the cartoonists to "revise and expand" the cartoons for publishing. Id. Thereafter, the cartoonists entered an agreement granting Detective all their rights in the Superman comic strip. Id. Affirming the dismissal of the complaint on the grounds of res judicata, the Court of Appeals, in dicta, stated that the cartoons were not works for hire. First, the court found that the Superman cartoon had been "spawned" by the cartoonists four years before they were hired by Detective. Second, the Superman character was "completely developed long before the employment relationship was developed." Third, the revisions made at the direction of Detective "were simply to accommodate Superman to a magazine format." Id. at 914. The instant case is distinguishable from Siegel. First, the Work was not fully developed prior to Niss' May 26, 1967 contract with MGM. The Story Outline represented the "bare bones" of a story, (Pl. Decl. Ex. E56), and the 28-page screenplay was incomplete (Id. Ex. E52). Second, unlike the four years which transpired between the development of the Superman character and the cartoonists' employment [*30] by Detective, the Story Outline is dated at most four days after Niss completed work for MGM under the Hammett contract and fewer than six weeks before Niss entered the Employment Contract with MGM. Additionally, the 28-page script is dated only three days before the Employment Agreement. 13 Third, Niss was already under contract with MGM to develop the Pendulum project when he submitted to MGM the July 1967 and August 1967 draft screenplays. See In re Marvel Entertainment Group, 254 B.R. 817, 2000 WL 1677764 (D. Del. 2000) (comic book characters were not fully developed before employment and therefore the employer holds the copyright. The court stated in reference to two particular characters, "Here, Wolfman merely had a nascent idea for a character and a story. Even assuming that Wolfman produced a half-page write-up of the character's background and look, Wolfman had not completely developed the characters of Blade and Deacon Frost as the plaintiffs had in Siegel. Wolfman's Siegel argument does not account for the transition from a story idea to a story ready for publication. Wolfman spent time and energy while employed at Marvel developing a script with [*31] proposed panel art and text for 'The Tomb of Dracula.' Wolfman performed this work at the instance and expense of Marvel."). 13 While plaintiff argues that the dates on the contracts were backdated and were actually executed at times months later, for purposes of his argument, plaintiff accepts the April 18, 1967 date on the Story Outline and asserts that his father conceived and wrote this outline after Niss was no longer employed by MGM on the Hammett project. (Pl. Mem. at 5). Plaintiff offers no evidence to show when his father conceived and/or wrote the Story Outline. Additionally, in the Story Outline, Niss states that he recently read a news story about a murder that he believed would make the basis of "a good film." (Pl. Decl. Ex. E56). The article to which Niss refers is not included in the evidence, and, therefore, there is no record of the date of the article. Plaintiff states that "around [the time the Hammett contract terminated on April 14, 1967], reports in the news of a double murder in Los Angeles gave [Niss] the idea of an original screenplay. (Pl. Mem. at 5). From all the evidence offered, it is clear that plaintiff has no knowledge of when Niss conceived and wrote the Story Outline. [*32] Plaintiff's own admissions also support the conclusion that MGM was the motivating factor in Niss' development of the Work. Plaintiff concedes that it was his father's practice to offer a new idea to the studio for which Niss had most recently worked. (Pl. Mem. at 6 n.19). In fact, plaintiff asserts that Niss wrote the Story Outline and sent it to Lew Morton on April 18, 1967 "to sell the project to MGM." (Pl. Mem. at 5). Additionally, plaintiff argues that his father wrote 28 pages of a draft screenplay "as further inducement for MGM to accept his proposal." (Id. at 6). On May 26, 1967, Niss and MGM entered into the Employment Agreement, providing that MGM would pay Niss $ 8,750 for a treatment and giving MGM an option to employ Niss to write a screenplay. Thus, MGM was the motivating factor for the development of the Pendulum project. This finding is supported by Wilkes v. Rhino Records Inc., 1997 U.S. App. LEXIS 35721, 96 Civ. 56238, 1997
Page 53 2000 U.S. Dist. LEXIS 18328, *32; 57 U.S.P.Q.2D (BNA) 1346; Copy. L. Rep. (CCH) P28,379; Copy. L. Rep. (CCH) P27,410 WL 800275 (9th Cir. 1997), in which the Court of Appeals for the Ninth Circuit held that the copyright in works created by an artist before he was hired by the Monterey International Pop Festival Foundation were works made for hire. The Court found [*33] that the artwork was created "for the purpose of auditioning for [the] position" of art director of the Monterey Festival and, thus, the Festival was the motivating factor for the production of the artwork. Id. at **1. Similarly, Scherr v. Universal Match Corp., 417 F.2d 497 (2d Cir. 1969), held that the United States Government held any copyrights in a statute produced by two servicemen. In Scherr, two army servicemen on leisure time made a "small clay table model of an infantryman." Id. at 499. "Their creativity caught the eye of a public relations officer who brought them and their work to the attention of the deputy post commander [who] suggested the construction of a larger, life-size statute of an infantryman which would serve as a symbol of Fort Dix." Id. As in Wilkes and Scherr, Niss "auditioned" to write the Pendulum project by sending his superior at MGM the three-page Story Outline, and "caught the eye" of MGM as evidenced by the May 26, 1967 Employment Agreement. MGM was the author of the Work and the owner of the copyrights. 3. Columbia Acquired the Rights to the Story Outline and Draft Screenplays from MGM Plaintiff [*34] argues that the rights in the Work reverted to Niss at the time of the MGM-Columbia Quitclaim. As a result, plaintiff asserts, Niss sold the project to Columbia directly. (Pl. Mem. at 8-10). This argument is squarely contradicted by the documentary evidence. First, Niss signed a separate waiver contained in the Quitclaim agreement that stated that "such rights shall not revert to" Niss and that Niss "approves and consents to the foregoing agreement between [MGM] and [Columbia]." (Id. Ex. E51). Thus, Niss, himself, acknowledged that MGM owned the rights to the Work and that Columbia as the buyer under the Quitclaim acquired those rights. Additionally, under the Authors Contract, Columbia acquired "all common law rights and/or all copyrights and/or the right to secure copyright . . . in and to 'Pendulum', (id. Ex. E47 P 1), and Niss granted to Columbia all renewals of copyright, (id. Ex. E47 P 3). Niss also acknowledged that under the MGM-Columbia agreement, Columbia acquired "all the right, title and interest, if any, of [MGM] in, to and with respect to the" Pendulum property. (Id. Ex. E49 P 9). 14 14 Plaintiff argues that the fact that Columbia had Niss sign an assignment of rights in the Pendulum project signifies Columbia's acknowledgment that the work was not a work-for-hire, that Niss owned the rights, and that Columbia did not purchase the rights from MGM. (Pl. Mem. at 10). In response, Jared Jussim, Executive Vice President of Columbia and a thirty-year employee of the company, states Depending upon, inter alia, the facts of the particular transaction and the varying practices of the attorneys handling the transaction, an assignment may have been executed even though a screenplay was created as a work-for-hire. . . . The fact that Columbia . . . obtained an assignment from Stanley Niss does not change the pre-existing status of those draft screenplays as works-for-hire, the rights to which were transferred by MGM to Columbia. Def. Decl. Ex. P at 4. [*35] Finally, under the Authors Contract Columbia paid Niss $ 50,000 for the Story Outline and draft screenplays, and Niss agreed that this payment was "in lieu of any other payments to which [Niss] might be entitled" from MGM in connection with the Pendulum project and the rights therein. (Id.). 15 15 Plaintiff argues that at the time of the Quitclaim, Columbia reimbursed on Niss' behalf MGM's costs pursuant to the double-starred rider, thereby causing the Pendulum rights to revert to Niss and permitting him to make a subsequent sale of the project to Columbia. (Pl. Mem. at 9-10). Such an argument flies in the face of the documentary evidence. As discussed previously, Niss, himself, signed a waiver acknowledging that the rights in the Pendulum Work did not revert to him by operation of the Quitclaim. In addition,
Page 54 2000 U.S. Dist. LEXIS 18328, *35; 57 U.S.P.Q.2D (BNA) 1346; Copy. L. Rep. (CCH) P28,379; Copy. L. Rep. (CCH) P27,410 rather than a payment on Niss' behalf, the reimbursement appears to represent consideration for MGM's transfer of its rights in the Work, that is, the payment matched the moneys MGM had already incurred in employing Niss to write the Pendulum project. [*36] Thus, as a result of the Quitclaim, Columbia stepped into MGM's shoes and became the owner of the copyrights in the Pendulum Story Outline and draft screenplays. III. Columbia Owns The Copyright In The Film Pendulum A. The Film Was a Work For Hire The film Pendulum was also a work for hire. As is clear from the contemporaneous documents, Columbia is the author of the film. First, it is beyond question that Columbia underwrote the costs of the entire production, including guaranteeing the $ 2.3 million bank loan. Second, under the P-D Agreement, Columbia agreed to pay Niss an additional $ 50,000 in his capacity as producer of the film. Third, although Columbia required Niss to establish a corporation through which to produce the film and Niss acted as the producer, at all times Columbia retained the right "to direct and supervise the manner in which the work was performed." Playboy, 53 F.3d at 554. For example, Columbia retained control over the budget, financing, locations, title, purchase of music, cutting and editing, shooting and delivery schedule, and advertising. See Def. Decl. Exs. W, B, X. Plaintiff also argues that the renewal copyrights have vested [*37] in him because the film was not copyrighted by MGM or Columbia. (Pl. Mem. at 19). This argument must fail as well. The June 1968 Agreement plainly stated that "the copyright in the picture and all renewals and extensions thereof shall be held in [Columbia's] name or (in [Columbia's] discretion) in that of any of [Columbia's] subsidiaries." (Def. Decl. Ex. B at 61-62). The fact that Pendulum Productions registered the original copyright in its own name evidences that the corporation breached the agreement, not that it is the owner of the copyright. Additionally, while the film was produced through Pendulum Productions, Columbia was the "ultimate employer." The film was paid for by Columbia, and the work was ultimately done for Columbia. See Excel Promotions Corp. v. Babylon Beacon, Inc., 1979 U.S. Dist. LEXIS 9523, 207 U.S.P.Q. 616, 620 (E.D.N.Y. 1979) (the advertiser, not the newspaper, was the ultimate employer and owner of the copyrights in the ads where the advertiser paid for the production and printing of the ads and it was the advertiser for whom the ads were ultimately prepared. "The fact that the plaintiff-paper is the employer of [the] staff [that [*38] produced the ads] is irrelevant."). 16 16 Defendants make an alternate argument that the film was a work for hire of Pendulum Productions and, therefore, the copyright is not subject to reversion under 17 U.S.C. § 304(a). (Def. Mem. at 5). I do not reach this argument because I find that Columbia was the ultimate employer and owner of the copyright in the film. Finally, plaintiff argues that the renewal rights vest in him because Pendulum Productions was the alter ego of Niss and, therefore, the film was not copyrighted by an employer, but rather by Niss as an individual. (Pl. Mem. at 20-21). Plaintiff points to the fact that Pendulum Productions' board was comprised of Niss' attorney, his law partner and associate, (Kopald Decl.), and makes the unsupported allegation that "no one besides my father participated in the management of Pendulum Productions, and no one else had any interest in it." (Pl. Mem. at 20). These facts, in and of themselves, do not lead to the conclusion that Pendulum [*39] Productions was Niss' alter ego. There is no indication that Pendulum Productions was a sham corporation, and plaintiff does not argue that his father perpetrated a fraud by establishing the corporation. In fact, the evidence shows that corporate formalities were adhered to, (see e.g., Def. Decl. Ex. CC), and that both parties benefitted from the corporate structure (id. Ex. EE, Response to Interrogatory 19). The corporation was established solely to produce the film, and the record contains no evidence that it was used for any other purpose. 17 17 Even assuming arguendo that Pendulum Productions is the owner of the copyright, which it is not, the corporation would be the owner, not plaintiff. Accordingly, I find that the film Pendulum was a work for hire and that Columbia is the author of the film and owner of the copyright. 18 18 Defendants further contend that pursuant to the June 1968 Agreement, Columbia properly completed the copyright assignment in 1989
Page 55 2000 U.S. Dist. LEXIS 18328, *39; 57 U.S.P.Q.2D (BNA) 1346; Copy. L. Rep. (CCH) P28,379; Copy. L. Rep. (CCH) P27,410 giving all rights in the film Pendulum to Columbia. (See Def. Decl. Ex. D). Because I find that the film is a work for hire and that Columbia is the ultimate employer, I do not address this aspect of defendants' argument. [*40] CONCLUSION For the reasons set forth above, I hold that Columbia is the owner of the copyrights in the Pendulum Story Outline, screenplay and motion picture. Accordingly, defendants' motion for summary judgment is granted and plaintiff's cross-motion for partial summary judgment is denied. The Clerk of the Court shall mark this action closed and all pending motions denied as moot. SO ORDERED: Dated: New York, New York December 20, 2000 LORETTA A. PRESKA, U.S.D.J.
8 of 9 DOCUMENTS Jerome SIEGEL and Joseph Shuster, Plaintiffs, v. NATIONAL PERIODICAL PUBLICATIONS, INC., et al., Defendants No. 69 Civ. 1429 UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK 364 F. Supp. 1032; 1973 U.S. Dist. LEXIS 11458; 180 U.S.P.Q. (BNA) 575
October 18, 1973 SUBSEQUENT HISTORY: Affirmed by Siegel v. National Periodical Publications, Inc., 508 F.2d 909, 1974 U.S. App. LEXIS 5777 (2d Cir. N.Y., 1974) Related proceeding at Siegel v. Time Warner Inc., 2007 U.S. Dist. LEXIS 56910 (C.D. Cal., July 27, 2007) rest of us, are not so fortunate. Jerome Siegel and Joseph Shuster are Superman's creators. They seek a declaration that they, and not the defendant National (the other defendants are National's officers) are entitled to the copyright renewal rights of the renowned comic strip. National counterclaims for a declaration in its favor. It is stipulated that both plaintiffs and defendants have made timely renewal filings with the Register of Copyright. The matter comes before us on defendants' motion for summary judgment dismissing the complaint and declaring National to be the owner of the copyright of all Superman strips during the renewal term. We find, on the material facts as to which there is no genuine issue, that National is the owner of the copyright renewal term and grant the motion. I.
JUDGES: [**1] Lasker, District Judge. OPINION BY: LASKER OPINION [*1033] LASKER, District Judge. Although Clark Kent, generally known as Superman, is happily capable of solving all problems without going to court, his creators and exploiters, mere mortals like the
Page 56 364 F. Supp. 1032, *1033; 1973 U.S. Dist. LEXIS 11458, **1; 180 U.S.P.Q. (BNA) 575; Copy. L. Rep. (CCH) P27,410 This is not the first time the parties have locked horns in a contest as to rights to Superman. As indicated below, plaintiffs instituted an action [**2] on the subject against National in 1947 in the New York Supreme Court for the County of Westchester. The court made voluminous findings of fact and conclusions of law. Although the issue of renewal rights was not specified in that litigation, we hold that, on the facts found by the court, which are binding on the parties here, National is the owner of all rights in Superman. The facts, as we now describe them, are those found by the State Court, 1 as supplemented by correspondence between the parties marked at a deposition in this action, and, where appropriate, references are made to those findings. 1 The plaintiffs' 9(g) statement submitted on this motion "disputes" certain findings of fact made by the State court and the interpretation of some of those findings as set forth in defendants' 9(g) statement. The principles of collateral estoppel and res judicata bar plaintiffs' "dispute" of any finding by the State court. As to the question of interpretation of the findings, we disagree with plaintiffs' view and agree with defendants. [**3] II. In 1933, Siegel conceived the idea of a cartoon strip, whose feature character was a man of superhuman strength who would perform great feats for the public good. Siegel discussed his idea with Shuster, an artist, and together they prepared a comic strip embodying the idea. They did not publish the strip but continued to collaborate on other cartoon strips, some of which they sold for publication between 1933 and 1938. [*1034] One of their customers during that period was the Nicholson Publishing Co., which purchased material from plaintiffs on behalf of Detective Comics, Inc. (National's predecessor in interest). When, in late 1937, Nicholson went out of business, Detective acquired some of its magazine properties. On December 4, 1937 Detective entered into a written employment contract with plaintiffs (Exhibit B, annexed to Answer) relating to two features known as "Slam Bradley" and "The Spy" which plaintiffs had been furnishing to Nicholson. This contract provided that the plaintiffs would give their exclusive services as artists in producing "Slam Bradley" and "The Spy" for a period of two years and that "all of these products and work done by said Employee for said [**4] Employer during said period of employment, shall be and become the sole and exclusive property of the Employer". The agreement also provided that any new or additional features were to be submitted first to Detective who was given an option on them. When, in 1938, Detective decided to issue a new comic magazine, to be named Action Comics, it reviewed the Superman material which plaintiffs had prepared in 1933, and requested them to revise and expand it to a full length production suitable for magazines. Plaintiffs submitted the expanded material in February, 1938. On March 1, 1938, prior to the first printing of the first issue of Action Comics, Detective sent Siegel a proposed release (Exhibit A, annexed to Answer). The release, which plaintiffs executed, transferred to Detective the first thirteen page Superman strip, "all good will attached thereto and exclusive right to the use of the characters and story, continuity and title of strip . . . to have and hold forever and to be your exclusive property . . ." (emphasis supplied). On April 18, 1938, Detective published the Superman strip prepared by plaintiffs in the first issue of Action Comics. After the initial publication, [**5] plaintiffs continued to supply Detective with Superman strips for publication. On September 22, 1938, Detective, plaintiffs, and McClure Newspaper Syndicate executed agreements for the newspaper syndication of Superman and other strips. Plaintiffs and Detective simultaneously executed a new long-term employment agreement which stated that Detective was "exclusive owner" of Superman and of the "right to publish" Superman comics. (Findings of Fact 44-46, Exhibit D, annexed to Answer). As Superman became increasingly popular, certain changes occurred in the relationship between plaintiffs and Detective. Plaintiffs ceased work on other cartoon features to concentrate on the Superman strip. With this change, plaintiffs and Detective executed a supplemental employment agreement on December 19, 1939, increasing plaintiffs' compensation and reiterating that Detective was the "sole and exclusive owner" of Superman, of "all rights of reproduction and of "all copyright and all rights to secure copyright registration in respect of all such forms of reproduction . . ." (Opinion of Judge Young in the Westchester action, Exhibit C, annexed to Answer, emphasis added). The 1939 agreement was [**6] the last written
Page 57 364 F. Supp. 1032, *1034; 1973 U.S. Dist. LEXIS 11458, **6; 180 U.S.P.Q. (BNA) 575; Copy. L. Rep. (CCH) P27,410 agreement between the parties until 1947. During the intervening years plaintiffs' compensation increased to $1,000. per release plus royalties from newspaper syndication and other forms of commercial exploitation. By 1947, plaintiffs' total compensation from all sources for the strip amounted to over $400,000. III. In 1947, plaintiffs brought the action we have described against National, Detective's successor, and several of its officers, seeking, among other things, a determination that the March 1, 1938 release was void, and a declaration of the rights of the parties. The Westchester action was tried before Official Referee J. Addison Young who rendered a detailed opinion on November [*1035] 1, 1947, finding the March 1, 1931 release valid and holding that National, not plaintiffs, owned all rights to Superman. On April 12, 1948, Judge Young signed Findings of Fact and Conclusions of Law. His Conclusions of Law included the following: "1. By virtue of the instrument of March 1, 1938, plaintiffs transferred to DETECTIVE COMICS, INC. all of their rights in and to the comic strip SUPERMAN including the title, names, characters and concept as same [**7] were set forth in the first release of said comic strip published in the June, 1938 issue of the magazine 'Action Comics' and by virtue of said instrument DETECTIVE COMICS, INC. became the absolute owner of the comic strip SUPERMAN, including the title, names, characters and concept as the same were set forth in the said first release." (Exhibit D, annexed to Answer, emphasis added) This conclusion was incorporated almost verbatim in an interlocutory judgment signed on April 12, 1948, from which neither side perfected an appeal. Instead, the parties began settlement negotiations, and, on May 19, 1948, signed a stipulation under which National was to pay (and subsequently did pay) some $94,000. in exchange for all rights to Superman and to "Superboy," another cartoon strip created by plaintiffs whose ownership was contested. The stipulation (Exhibit F, annexed to Answer) recited the first conclusion of law just quoted and further stated that: "7. Defendant NATIONAL COMICS PUBLICATIONS, INC. is the sole and exclusive owner of and has the sole and exclusive right to the use of the title SUPERMAN and to the conception, idea, continuity, pictorial representation [**8] and formula of the cartoon feature SUPERMAN as heretofore portrayed and published . . . and such sole and exclusive ownership includes, but is not limited to the fields of book and magazine publications, newspaper syndication, radio broadcasts, dramatic presentations, television, motion picture reproduction and all other forms of reproduction and presentation, whether now in existence or that may hereafter be created, together with the absolute right to license, sell, transfer or otherwise dispose of said rights." (Emphasis added). On May 21, 1948, Judge Young signed a final consent judgment incorporating this provision and stating: "ORDERED AND ADJUDGED that plaintiffs, their agents, servants and employees, be and they hereby are enjoined and restrained from creating, publishing, selling or distributing or permitting or causing to be created, published, sold or distributed any material of the nature heretofore created, produced or published under the title SUPERMAN, or any material created, produced or published in imitation thereof, or from using, permitting or causing to be used in connection with any comic strip or other material created by them the title SUPERMAN [**9] or any title imitative of the title SUPERMAN or which shall contain as part thereof the word 'SUPER'." (Exhibit G, annexed to Answer).
Page 58 364 F. Supp. 1032, *1035; 1973 U.S. Dist. LEXIS 11458, **9; 180 U.S.P.Q. (BNA) 575; Copy. L. Rep. (CCH) P27,410 Defendants move for summary judgment on two grounds: first, that the initial Superman strip was a "work for hire" within the meaning of the Copyright Act and second, that the various agreements between the parties, as well as the consent judgment in the Westchester action divested plaintiffs of the renewal copyrights. Before we discuss these contentions, we note that the findings of the State Supreme Court in the Westchester action are binding upon us here. Vernitron Corp. v. Benjamin, 440 F.2d 105, 108 (2d Cir. 1971). The terms of the stipulation of settlement in that action, and the consent judgment are also binding. Stuyvesant Insurance Co. v. Dean Construction Co., 254 F. Supp. 102, 110 (S.D.N.Y.1966), aff'd on opinion below, 382 F.2d 991 (2d Cir. [*1036] 1967). Furthermore, the issues which plaintiffs want to litigate in this action could have been raised in the Westchester action, and consequently are barred by res judicata as well, so that summary judgment must be entered on this ground in addition to those we are about to discuss. [**10] We find that Superman is a "work for hire" within the meaning of the Copyright Act, 17 U.S.C. § 26. In Picture Music, Inc. v. Bourne, 314 F. Supp. 640, 650-651 (S.D.N.Y.1970), Judge Pollack ably described the elements of an employment for hire: "The existence of an arrangement going beyond an assignor -- assignee relationship," the payment of wages or other remuneration, the "right of the employer to direct and supervise the manner in which the work is performed," and the "existence of an express contract for hire, especially one calling for an author to devote his exclusive artistic services to his employer." These elements were indisputably present in the relationship between plaintiffs and Detective. The Westchester Court found that on December 4, 1937, plaintiffs entered into a written contract of employment with Detective with reference to two comic features known as "Slam Bradley" and "The Spy" (Finding of Fact 15) which provided that plaintiffs would "give their exclusive services as artists" in producing these features and that "any new and additional features which Employees produce for use in a comic magazine are to be first submitted to Employer, who reserves the right [**11] to accept or reject same within a period of Sixty days" (Finding of Fact 15). The Westchester court also found as a fact that after examining the 1933 Superman material, Detective "returned it to plaintiffs for revision and expansion into a full-length thirteen page comic strip release suitable for magazine publication" and that plaintiffs complied with Detective's requests (Findings of Fact 21, 22). The court further found that the release executed by plaintiffs on March 1, 1938, represented the exercise by Detective of the option granted to it by the employment agreement of December 4, 1937 (Finding of Fact 29). These findings, particularly when viewed in conjunction with the correspondence between the parties during 1937-38, establish that Detective as employer supervised and directed the work of plaintiffs in connection with Superman. Even if the relationship between Detective and plaintiffs was not a classic employment relationship, the Second Circuit's decision on appeal in Picture Music, Inc. v. Bourne, 457 F.2d 1213, 1216-1217 (2d Cir. 1972), requires a finding that Superman was a "work for hire." There the court, in holding that the work of an independent contractor was [**12] a work for hire if it was done "at the instance" of one who commissioned the work, observed that "The purpose of the statute is not to be frustrated by conceptualistic formulations of the employment relationship." There can be no doubt that the plaintiffs' revisions of the 1933 Superman strip in 1938 were done at the instance of Detective. Plaintiffs contend, however, that notwithstanding the employment relationship, Superman was a fully developed work by 1933 so that, as a matter of law it cannot be a "work for hire". The authority cited for this proposition, Scherr v. Universal Match Corp., 417 F.2d 497 (2d Cir. 1969) actually militates against plaintiffs' position. That case dealt with the copyright status of a statue in an Army post, which the plaintiffs, two enlisted men, had constructed pursuant to an Army work assignment. The assignment grew out of a clay model of the statue created by the two men during their leisure time. In deciding that the larger statue was a work made for hire, the court said: "While the idea for the statue originated from the smaller clay model, the statue differs from the model. Moreover, plaintiffs never attempted to secure a copyright for their [**13] original clay model. Their claim of infringement [*1037] rests solely upon whether they possess an effective copyright in the
Page 59 364 F. Supp. 1032, *1037; 1973 U.S. Dist. LEXIS 11458, **13; 180 U.S.P.Q. (BNA) 575; Copy. L. Rep. (CCH) P27,410 finished statue." ( Scherr, supra, at 499). The court's reasoning in Scherr is controlling here. The court in the Westchester action explicitly found that the original (1933) embodiment of the Superman concept consisted of "a few panels suitable for newspaper syndication" (Finding of Fact 19), and that the strip was suitable for magazine publication only after plaintiffs "resubmitted such revised and expanded material" to Detective (Findings of Fact 21, 22). Moreover, the Westchester court found that the Action Comics strip of 1938, rather than the 1933 newspaper strip, "constituted the formula for the continuing SUPERMAN series to come" (Finding of Fact 22). Res judicata bars plaintiffs from relitigating this issue. V. Defendants also argue that the various agreements between the parties, as well as the stipulation of settlement and the consent judgment in the Westchester action transferred the renewal copyrights to Detective. Concededly, none of the agreements between the parties, or the findings in the Westchester action expressly refer [**14] to the transfer of the renewal rights. Therefore, the intent of the parties must be established from the language of the agreements and the attendant circumstances. We believe that the various agreements between the parties consistently reiterated an intention to give to Detective all of the rights in Superman, with no reservation of any kind in plaintiffs. The 1937 employment agreement stated that all work on these features "shall be and become the sole and exclusive property of the Employer, and the Employer shall be deemed the sole creater thereof . . .," and gave Detective an option on "any new or additional features" created by plaintiffs. The Westchester court found that the March, 1938 release represented an exercise of that option for the Superman strip. The release transferred "such work and strip, all good will attached thereto and exclusive right to the use of the characters and the story, continuity and title of [the] strip . . . to [Detective] and [its] assigns to have and to hold forever and to be your exclusive property." It also stated that "The intent hereof is to give you exclusive right to use and acknowledge that you own said characters or story and the [**15] use thereof exclusively." The supplemental employment agreement of September 22, 1938 "expressly confirmed that DETECTIVE COMICS, INC. was the exclusive owner of the comic strip known as SUPERMAN . . ." and the consent judgment permanently enjoined plaintiffs from using or furnishing the product to any other person or publication (Finding of Fact 45). The Westchester court's conclusions of law in the 1947 action stated that by the March 1, 1938 instrument plaintiffs transferred "all their rights in and to the comic strip 'SUPERMAN'" and that Detective became the "absolute owner" of the strip (Conclusions of Law #1, Exhibit D, annexed to Answer). The language of the interlocutory judgment in that action, as well as the language of the final judgment and the stipulation of settlement is similarly unequivocal. By the stipulation, Paragraph 10, plaintiffs further acknowledged defendants' "absolute right to license, sell, transfer or otherwise dispose of said rights" (Exhibit F, annexed to Answer). In the face of this repeatedly unequivocal language, plaintiffs cite several authorities for the proposition that general language of assignment does not convey the renewal copyright unless [**16] the intention to convey it appears by unambiguous extrinsic evidence. Venus Music Corp. v. Mills Music, Inc., 261 F.2d 577 (2d Cir. 1958); Edward B. Marks Music Corp. v. Charles K. Harris Music Publishing Co., 255 F.2d 518 (2d Cir. 1958) cert. denied, 358 U.S. 831, 79 S. Ct. 51, 3 L. Ed. 2d 69 (1958). While we [*1038] agree with this argument as a general proposition, these cases are not controlling here. In both Venus and Marks, the creator of the property executed general assignments of the property to one party with no mention of renewal rights, and subsequently executed specific assignments of the renewal rights to another party. The trial courts in both cases had to decide which of these ostensibly inconsistent instruments conveyed the renewal, and consequently looked to extrinsic evidence to establish the intent of the earlier, general assignments. Neither case suggests, however, that extrinsic evidence is required where, as here, the disputed agreements are internally consistent. We believe that Geisel v. Poynter Products, Inc., 295 F. Supp. 331, 341-342 (S.D.N.Y.1968) is more in point. In Geisel, the plaintiff argued that implicit in the
Page 60 364 F. Supp. 1032, *1038; 1973 U.S. Dist. LEXIS 11458, **16; 180 U.S.P.Q. (BNA) 575; Copy. L. Rep. (CCH) P27,410 language of general [**17] assignment was a trade custom to the effect that defendant would hold the copyright in trust for him. It was undisputed there that defendant owned the renewal term, plaintiff contending that certain other rights were reserved to him. In confirming the assignment, the court said: "In ordinary acceptance, the expressions 'all rights' or 'complete rights' have a non-technical and literal meaning. Plaintiff has failed to sustain the burden of proof which is upon him when he seeks to impart to these words a connotation that is diametrically opposite to their plain, colloquial sense . . . The terms . . . when understood according to their plain meaning, signify a totality of rights . . . ( Geisel, supra, at pp. 341-342.) Plaintiffs also assert that the renewal term exists to give the creator a second chance to exploit a property whose marketability was uncertain at the time it was created. They point out that Detective was staffed by thoroughly experienced businessmen who surely would have explicitly referred to the renewal term in the various agreements between the parties had it actually been bargained for. But these arguments prove too much. Plaintiffs certainly knew by 1947, [**18] if not before, that Superman was an extraordinarily marketable man, as well as one of unusual powers. Both parties were represented by distinguished counsel in the 1947 proceedings, which resulted in a stipulation worded in all-inclusive language. The fact that this language makes no specific reference to renewal rights militates as much as if not more strongly against plaintiffs than defendants, in whose favor all rights to Superman were confirmed on the face of the various agreements. Since we find that plaintiffs are precluded from relitigating matters which could have been raised in the 1947 action, and since, on the material facts before us, Detective owns the renewal copyrights as a matter of law, defendants' motion for summary judgment to dismiss the complaint is granted. It is so ordered.
9 of 9 DOCUMENTS NATIONAL COMICS PUBLICATIONS, Inc. v. FAWCETT PUBLICATIONS, Inc., et al. No Number in Original UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK 93 F. Supp. 349; 1950 U.S. Dist. LEXIS 2324; 87 U.S.P.Q. (BNA) 12
April 10, 1950 DeWitt, Van Aken, Nast & Chapman, and Nims, Verdi & Martin, all of New York City, for defendant Fawcett Publications, Inc. (Wallace H. Martin, Edgar H. A. Chapman, Walter J. Halliday and Marion L. Severn, all of New York City, of counsel).
COUNSEL: [**1] Phillips, Nizer, Benjamin & Krim, New York, for plaintiff (Louis Nizer, Walter S. Beck, Paul Martinson and Seymour Shainswit, all of New York City, of counsel).
Page 61 93 F. Supp. 349, *; 1950 U.S. Dist. LEXIS 2324, **1; 87 U.S.P.Q. (BNA) 12; Copy. L. Rep. (CCH) P27,410 Meyer H. Lavenstein, New York City, for defendants Republic Pictures Corp. and Republic Productions, Inc. OPINION BY: COXE OPINION [*351] This is an action against Fawcett Publications, Inc. (hereinafter referred to as 'Fawcett') and Republic Pictures Corporation and the latter's wholly-owned subsidiary, Republic Pictures, Inc. (both hereafter referred to as 'Republic'), for copyright infringement under the 1909 Copyright [*352] Act, as amended, 17 U.S.C.A. § 1 et seq., and for unfair competition. The action was instituted on September 5, 1941, by Detective Comics, Inc. (hereafter referred to as 'Detective') and by Superman, Inc.; they were later merged into National Comics Publications, Inc., which has been substituted as sole plaintiff. An amended complaint was filed in November [**2] 1945, but the action was not brought to trial until March 1948. Damages and an injunction are sought because of alleged infringements of the copyrights upon all the issues of two comic magazines published by Detective and Superman, respectively, viz., 'Action Comics' and 'Superman'. It is asserted by plaintiff that there was published in these magazines a large amount of original matter, including 'a variety and series of original cartoons, scenes, characters, incidents and pictorial delineations revolving principally about the figure and character of 'Superman'.' The infringements alleged in the amended complaint are: (1) The publication by Fawcett of two magazines, entitled 'Whiz Comics' and 'Captain Marvel Adventures', which contained 'a continuity of comic strips revolving about a principal character known as 'Captain Marvel", which strips were copied from plaintiff's copyrighted material, and the publication by Fawcett of additional magazines, entitled 'Captain Marvel, Jr.', 'Mary Marvel Comics'. 'WOW Comics', 'America's Greatest Comics' and 'Master Comics', likewise containing the continuous strip cartoon known as 'Captain Marvel'. (2) The production and exhibition throughout [**3] the United States during the period of 1940-1941 by Republic of a motion picture serial photoplay entitled 'The Adventures of Captain Marvel'; and (3) The manufacture and distribution, in connection with these magazines and the motion picture, of certain articles of merchandise, upon which the figure of 'Captain Marvel' was depicted, and which constituted unfair competition. The principal defenses are non-infringement, that the copyrights are either invalid or have been abandoned, and absence of unfair competition. Republic also asks that, if it is found liable to plaintiff, it have judgment over against Fawcett for the amount thereof under its indemnity agreement with Fawcett. The 'Action Comics' Magazine. Detective, which, with its affiliated companies, had been engaged in publishing comic magazines, began the publication in June 1938 of a new monthly comic magazine, entitled 'Action Comics'. Each number contained 64 pages and sold for ten cents a copy. Publication was continued until the time of the trial. Each number was copyrighted in the name of Detective. The magazine contained several comic cartoon strips featuring different characters. A strip consists of a series of panels. [**4] The panels contain scenes and incidents revolving about a principal character and, in a so-called balloon, a catch-phrase, or a remark, or a description of the incident represented. Thus the strips may be called short stories in pictorial form. The leading feature in each number was a comic cartoon strip or story which depicted the figure and actions of an athletic human being, a new character called 'Superman', with distinctive features and a distinctive type of costume, who was portrayed in various scenes and incidents as having and exercising superhuman qualities and being a blessing to mankind as an avenger of all evil, and as being in ordinary life one Clark Kent, a meek newspaper reporter wearing eye glasses. Jerome Siegel and Joseph Shuster, the authors and artists of the strips or stories, produced them under a contract with Detective. The 'Superman' stories in the first six numbers of 'Action Comics', published from June to November 1938, were reprinted by Detective, with a 1939 copyright date, in Numbers 1 and 3 of the 'Superman' magazine, published in the summer and winter of 1939, respectively. Fawcett insists that this resulted in loss of the copyrights upon the stories. [**5] This would be so if it were not for the fact that these two numbers of 'Superman' magazine contained substantial new and
Page 62 93 F. Supp. 349, *352; 1950 U.S. Dist. LEXIS 2324, **5; 87 U.S.P.Q. (BNA) 12; Copy. L. Rep. (CCH) P27,410 original matter, [*353] in addition to the 'Superman' stories, which made them 'new works subject to copyright' under Section 6 of the Act. This section contained no provision as to the date of the copyright notice to be used with respect to such 'new works', but it did provide that 'the publication of any such new works shall not affect the force or validity of any subsisting copyright' upon the original works or 'be construed * * * to secure or extend copyright in such original works.' Manifestly, publication of these two numbers of the 'Superman' magazine with a 1939 copyright date did not result in loss of the copyrights upon the stories originally published in 'Action Comics' with a 1938 date. See West Publishing Co. v. Edward Thompson Co., 2 Cir., 176 F. 833, 837; Adventures in Good Eating v. Best Places to Eat, 7 Cir., 131 F.2d 809, 813; Amdur, Copyright Law & Practice, Chap. XIV, § 29, pp. 495-497; Ball, Law of Copyright and Literary Property, § 76, pp. 173-174. I find that all the numbers of 'Action Comics' have been properly copyrighted in the [**6] name of Detective and that the copyrights upon them, and the 'Superman' stories published in them, have not been lost as the result of republication in the 'Superman' magazine. The 'Superman' Magazine. In the spring of 1939, Detective began to publish quarterly another comic magazine, entitled 'Superman', which also contained 64 pages and sold for ten cents a copy. Publication of the magazine was continued until the time of the trial. The magazine was devoted exclusively to 'Superman', and its contents were almost entirely either reprints of 'Superman' stories previously published in 'Action Comics' or of 'Superman' stories previously published in newspapers under an agreement between Detective and The McClure Newspaper Syndicate (hereafter referred to as 'McClure'). The first four numbers were copyrighted by Detective. All subsequent numbers were copyrighted by Superman, Inc., which was not incorporated until October 1939. Both companies had the same officers and directors. Starting with Number 6, published in the fall of 1940, the magazine was charged to a bimonthly magazine. It is contended by plaintiff that Superman, Inc. acquired the right to copyright these later numbers in [**7] its own name by virtue of an agreement between the two companies, dated January 18, 1940. By this agreement Detective appointed Superman, Inc., for the period ending March 31, 1945, its 'exclusive agent to exploit 'Superman', the trade-marks and copyrights and/or other rights therein in any manner whatsoever', except that Superman, Inc. should not have the right 'to print, publish or distribute any pictorial or textual sequence containing the likeness of 'Superman', other than through the magazine known as 'Superman'.' The agreement further provided that 'all copyrights, trade-marks and/or other rights with respect to 'Superman' now existing' should remain in Detective and continue to be owned by it, and that 'when any further copyrights, trade-marks * * * or other similar rights are required to carry out the terms of this agreement', they should be obtained by Detective in its own name and the ownership of such rights should remain in it. The agreement contained no provision requiring or authorizing Superman, Inc. to take out copyrights in its own name. Notwithstanding this, Numbers 5 and 6, published in May and August 1940, were copyrighted in the name of Superman, Inc. It seems [**8] to have been discovered about August 1940 that this might have been an error. At any rate, Detective wrote Superman, Inc. on August 14, 1940, ratifying and confirming the copyrighting by the latter in its own name of the 'Superman' magazine since January 18, 1940, and agreeing to the amendment of the agreement, as of January 18, 1940, so as to provide that further copyrights should be obtained by Superman, Inc. in its own name and be assigned to Detective upon demand or at the termination of the agreement. This letter could not, however, operate retroactively to validate the copyrights on Numbers 5 and 6. There was some testimony as to an oral modification, made prior to May 1940, of [*354] the January 1940 agreement, to the same effect as the August 1940 letter, but I do not credit it. 'Superman' magazine No. 12 was published with the following notice: 'Sept.-Oct. 1941, No. 12. Superman is published bi-monthly by Superman, Inc.., 480 Lexington Ave., New York, N.Y. * * * Entire contents copyrighted by Superman, Inc.' Fawcett's contention that this notice was not a sufficient compliance with the statute, in that the year of publication was omitted from the sentence 'Entire contents [**9] copyrighted by Superman, Inc.', cannot be sustained. It was a substantial compliance, and that was enough. Shapiro, Bernstein & Co. v. Jerry Vogel Music Co., 2 Cir., 161 F.2d 406, 409, certiorari denied 331 U.S. 820, 67 S.Ct. 1310, 91 L.Ed. 1837; Bentley v. Tibbals, 2 Cir., 223 F. 247, 253. Nor can Fawcett's further contention be sustained
Page 63 93 F. Supp. 349, *354; 1950 U.S. Dist. LEXIS 2324, **9; 87 U.S.P.Q. (BNA) 12; Copy. L. Rep. (CCH) P27,410 that none of the copyrights upon the 'Superman' magazine taken out in the name of Superman, Inc. is valid. It is argued that Superman, Inc. never became the proprietor of any material for which such copyrights could be taken out by it, but was merely an 'exclusive agent'. But the agreement between it and Detective, as modified on August 14, 1940, expressly authorized it to take out copyrights upon the magazine in its own name. Such an agreement is lawful, and a copyright taken out in accordance therewith is valid. In fact, that is the only way by which the rights of the publisher can be protected. Superman, Inc. holds the legal title to the copyrights as trustee, both for itself as the publisher and for Detective as the legal owner of the copyrighted material. Quinn-Brown Publishing Corp. v. Chilton Co., Inc., D.C.S.D.N.Y., 15 F.Supp. 213. I find [**10] that all the numbers of 'Superman' magazine have been properly copyrighted, either by Detective or by Superman, Inc., except Numbers 5 and 6, published in May and August 1940, and that the copyrights on these two numbers are invalid. This finding is not to be construed as validating copyrights on such strips or stories as were reprints of those previously published without proper copyright notice. The Fawcett Magazines. About October 1939, Fawcett, which had previously published only detective stories, began the work of preparing for the publication of a new monthly comic magazine, to be entitled 'Whiz Comics' and to sell for the same price as 'Action Comics'. The first number appeared in January 1940. Each number contained several comic cartoon strips or stories, featuring different characters, the principal one being entitled 'Captain Marvel', who was represented as a human being possessing superhuman attributes and as 'an avenger of evil', and who had a dual personality with one Billy Batson, a radio reporter. 'Captain Marvel' closely resembled 'Superman' in his athletic figure and in his costume, as well as in the superhuman feats performed. In June 1940 Fawcett published a [**11] 'Special Edition Comics', another new monthly comic magazine, which, in the second number in February 1941, became 'Captain Marvel Adventures'. It sold for the same price as 'Action Comics'. Its contents were almost entirely cartoon strips or stories depicting the exploits of 'Captain Marvel'. Fawcett continued to publish both these magazines until the time of the trial, despite a demand of Detective in June 1941 that it cease. The other Fawcett magazines need not be further considered, for they were similar in every way to 'Whiz Comics' and 'Captain Marvel Adventures', and plaintiff's evidence related chiefly to the first two magazines. The Republic Motion Picture Photoplay. On October 9, 1940, Fawcett entered into an agreement with Republic under which it granted to Republic the right to produce and exhibit a serial photoplay and to use in its production any of the characters, incidents and other material in the comic strips theretofore or thereafter published by it and entitled 'Captain Marvel', together with the names of the characters, and the words'Captain Marvel', either alone or in conjunction with other words, as a title for the picture. Fawcett also warranted that it was [**12] the sole originator, author and owner [*355] of the characters, incidents and other material in the 'Captain Marvel' strips, and that they had been duly copyrighted. Thereafter Republic produced a serial motion picture photoplay, using the comic strips of 'Captain Marvel' which had appeared in 'Whiz Comics'. The title, as projected on the screen, was 'Republic Pictures Presents Adventures of Captain Marvel * * * . Material from Whiz Comics, Copyright 1940 and 1941, Fawcett Publications, Inc.' The picture was completed in February 1941 and was thereafter exhibited in many theatres in the United States, despite a notice to desist given by Detective in June 1941. Originality. The 'Superman' character and strips are clearly original. It was so held in Detective Comics v. Bruns Publications, 2 Cir., 111 F.2d 432, 433, an action for infringement of the copyrights upon the first eleven issues of 'Action Comics', and there is no evidence in the present case to support a contrary finding. The court there said: 'So far as the pictorial representations and verbal descriptions of 'Superman' are not a mere delineation of a benevolent Hercules, but embody an arrangement of incidents and [**13] literary expressions original with the author, they are proper subjects of copyright and susceptible of infringement because of the monopoly afforded by the act. * * * the complainant is not entitled to a monopoly of the mere character of a 'Superman' who is a blessing to mankind'.
Page 64 93 F. Supp. 349, *355; 1950 U.S. Dist. LEXIS 2324, **13; 87 U.S.P.Q. (BNA) 12; Copy. L. Rep. (CCH) P27,410 Access. Access to the 'Action Comics' and 'Superman' magazines by those employees of Fawcett who had to do with the creation, development and portrayal of the character of 'Captain Marvel' and the cartoon strips featuring him, and with the preparation and publication of the early issues of the 'Whiz Comics' magazine, is conceded. Copying. The evidence as to actual copying is conflicting. Plaintiff called some of the employees of Fawcett just referred to. They testified to instructions from their superiors to imitate the 'Superman' strips and the dialogue and script as closely as possible, and that they did so. Fawcett called the superiors, who denied having given any such instructions and denied any copying. An independent artist testified to admissions by Beck, Fawcett's chief artist, who drew the first 'Captain Marvel' cartoons, as to his having copied 'Superman'. Beck, however, denied having made [**14] any such admissions. Experts were called by both parties, who contradicted each other as to the significance of claimed similarities and dissimilarities between the portrayals of the two characters, their facial appearances, costumes, etc., and the superhuman feats performed by them. It would serve no useful purpose to recite in detail the conflicting testimony, for I am satisfied from all the evidence that there was actual copying. Both 'Captain Marvel' and 'Superman' have the same athletic physique. Both have substantially the same clean-cut faces. Both wear the conventional regalia of the gymnast or circus acrobat- skin-tight uniforms, boots and a cape which is used in flying. The only real difference is in the color of their costumes, 'Superman's' being blue and 'captain Marvel's' red. The incredible feats, performed by both, such as leaping great distances, flying through the air, exhibitions of marvelous strength and speed, and imperviousness to bullets, shells, explosions, knives and poisons, are identical, and the settings in which the feats are performed are often closely similar. Substantially all of the feats performed by 'Superman' are later duplicated by 'Captain Marvel.' [**15] Identical phrases, expressions and dialogues are frequently found in the panels. 'Superman' is represented as a normal human being, a meek newspaper reporter wearing eye glasses (Clark Kent), who, by throwing off his regular clothes, appears in his athletic costume and becomes a superhuman being and performs superhuman feats in the interests of justice and to overthrow evil. 'Captain Marvel' is likewise represented as a normal human being, a radio reporter (Billy Batson), who, by uttering the magic word 'Shazam', is transformed [*356] into a superhuman being, and, in that capacity, also performs superhuman feats in the interests of justice and to overthrow evil. There are villains in both stories, mad scientists who resemble each other in appearance, and who, by similar devices and methods, attempt to dispose of the hero ('Superman' or 'Captain Marvel'), so that they can execute their plans of destruction without molestation. The stories depicted in the respective panels are much the same, as, for example, the experiences of both Clark Kent and Billy Batson in applying for jobs as reporters, being turned down, and finally being accepted as the result of having performed the [**16] same superhuman feat. In other instances they are different. For example, there is no romantic element in the 'Captain Marvel' stories, such as Lois Lane, the girl reporter, who is a permanent member of the 'Superman' cast; nor do the 'Superman' stories have an ever-present evil enemy of the hero, like Sivana. The McClure Newspaper Syndicate Agreement On September 22, 1938, Detective, Siegel and Shuster and McClure entered into an agreement. Briefly, it provided for the exclusive daily syndication by McClure in newspapers throughout the world of the 'Superman' strips to be supplied by the artists, copyrights thereon to be taken out by McClure in its own name but to revert to Detective at the termination of the agreement, the title 'Superman' to remain the property of Detective, McClure to return to Detective the original drawings, and Detective to have the right to use the strips, six months after newspaper release, in 'Action Comics' or any substituted magazine. McClure was to have only newspaper rights. The artists were to be paid by Detective, and McClure was to pay Detective a stipulated share of the receipts. By a separate agreement Siegel and Shuster were employed by Detective [**17] on the same day to do the work, and they agreed that all the material should be owned by Detective and, at its option, copyrighted in its name or in the names of parties designated by it.
Page 65 93 F. Supp. 349, *356; 1950 U.S. Dist. LEXIS 2324, **17; 87 U.S.P.Q. (BNA) 12; Copy. L. Rep. (CCH) P27,410 These newspaper strips were serialized,- i. e., the sequence of events continued on from one strip to another until the story was completed and a new one begun. The strips were first published on January 16, 1939 in three newspapers- the Boston Transcript, the Milwaukee Journal and the San Antonio Express. The number of newspapers steadily increased and the aggregate number up to 1944 amounted to at least 160. A very few of these strips as published in the newspapers carried the form of copyright notice required for a book. All the others carried no copyright notice whatever, or carried one of the following notices, viz.: (a) the words 'McClure Newspaper Syndicate' alone, or (b) numerals representing the year, followed by the words 'McClure Newspaper Syndicate', or (c) the letter 'C' within a circle, followed by numerals representing the year, and the words 'McClure Newspaper Syndicate' (the letter 'C' in many cases being so small, or so blurred, that it appears to be only a dot or is to be discernible [**18] only with the aid of a magnifying glass), or (d) the word 'Copyright' (sometimes spelled 'Copyrig'), followed by numerals representing the year. None of these notices, except those few which employed the book form, was sufficient to support a valid copyright. Section 18 of the Act required that, in the case of books, the copyright notice should consist either of the word 'Copyright' or of the abbreviation 'Copr', accompanied by the name of the copyright proprietor, and, if the work was a printed literary work, the year of publication, but that, in the case of prints and pictorial illustrations, the notice might consist of the letter 'C', enclosed within a circle, accompanied by the initials, mark or symbol of the copyright proprietor. (There is no requirement in the latter case that the notice shall contain the year of publication.) I think that Section 18 required that each 'Superman' strip, as published in the newspapers, should be copyrighted as a book. Each strip was a printed literary work, and the word 'book' is not to be limited [*357] to a bound volume but includes 'any species of publication which the author selects to embody his literary product.' Holmes v. Hurst, [**19] 174 U.S. 82, 89, 19 S.Ct. 606, 609, 43 L.Ed. 904. It is not correct to say that these 'Superman' strips are prints or pictorial illustrations. A single panel might be called a print. But each strip consists of a number of panels, comprising a continuous sequence of events, with accompanying explanatory text. The panels are not used merely to illustrate the text, as the illustrations in a novel or other literary work do; rather, the panels themselves, together with the explanatory text, constitute the literary work- the story intended to be depicted. As the strips were not prints or pictorial illustrations, the use of the letter 'C' in a circle as the form of copyright notice did not result in obtaining valid copyrights. Advertisers Exchange v. Anderson, 8 Cir., 144 F.2d 907. But, even if Section 18 permitted the use of a notice in the form authorized for prints, it is necessary that, in substance at least, all the requirements of the section be complied with,- that is, that the notice contain the letter 'C' in a circle, and the initials, mark or symbol of the copyright proprietor. Omission of either of these two elements is fatal. Mifflin v. R. H. White Co., 190 U.S. 260, 264, [**20] 23 S.Ct. 769, 47 L.Ed. 1040. And where the letter 'C' in a circle is used, the letter must be distinguishable by the naked eye, unaided by the use of a magnifying glass. Goes Lithographing Co. v. Apt. Lithographing Co., D.C.S.D.N.Y., 14 F.Supp. 620; Deward & Rich v. Bristol Savings & Loan Corp., D.C.W.D. Va., 34 F.Supp. 345, affirmed 4 Cir., 120 F.2d 537. Detective, however, insists that these were errors and omissions of McClure, by which it is not bound, for McClure was merely a licensee, and a licensee cannot relinquish or abandon the rights of his licensor. I think that this contention is unsound, as the agreement with McClure was not a mere license to use the strips but an agreement of joint adventure. In Ross v. Willett, 76 Hun 211, 213, 27 N.Y.S. 785, 786, which has often been cited by the New York courts, it was said: 'A joint adventure is a limited partnership; not limited in a statutory sense as to liability, but as to its scope and duration; and under our law joint adventures and partnerships are governed by the same rules.' And in Forman v. Lumm, 214 App.Div. 579, 583, 212 N.Y.S. 487, 490, a joint adventure was defined as follows: 'A joint adventure is defined as a 'special [**21] combination of two or more persons, where combination of two or more persons, where in some specific venture a profit is jointly sought without any actual partnership or corporate designation.' Schouler, Personal Property (5th Ed.) § 167a. It is an association of two or more persons to carry out a single business enterprise for profit, for which
Page 66 93 F. Supp. 349, *357; 1950 U.S. Dist. LEXIS 2324, **21; 87 U.S.P.Q. (BNA) 12; Copy. L. Rep. (CCH) P27,410 purpose they combine their property, money, effects, skill, and knowledge. * * * 'A contract by and in pursuance of which parties engage in a joint enterprise is to be enforced, and the rights and liabilities of the parties determined, upon the same principles as are applied by courts of equity to partnership transactions.' See also Chisholm v. Gilmer, 4 Cir., 81 F.2d 120, affirmed on other grounds 299 U.S. 99, 57 S.Ct. 65, 81 L.Ed. 63; Taylor v. Brindley, 10 Cir., 164 F.2d 235, 240-241. The agreement with McClure contains all the elements of a joint adventure. The subject matter of the joint enterprise was the use of the 'Superman' strips for the sole purpose of newspaper syndication. The artists agreed to create and draw the strips, Detective agreed to pay them for their work and to furnish the strips to McClure, and McClure agreed to [**22] sell the strips to newspapers. Both the artists and Detective agreed to cooperate with McClure. The proceeds of the sales (there could be no losses) were to be divided between Detective and McClure. As the agreement was one of joint adventure, the errors and omissions of McClure are chargeable to Detective, for the rights and obligations of joint adventurers are substantially those of partners, and each participant in a joint adventure is an agent for the others. Fawcett's contention that McClure was neither the author, nor the proprietor, [*358] nor the assign of the literary property in the strips, but was a mere licensee, and that it could not, therefore, take out valid copyrights upon the strips, is unsound. Section 8 of the Act limited the right to copyright a work to the author, or the proprietor, or the executors, administrators or assigns of the author or proprietor. The word 'proprietor' in this section means assign. Public Ledger v. N.Y. Times, D.C.S.D.N.Y., 275 F. 562, affirmed 279 F. 747, certiorari denied 258 U.S. 627, 42 S.Ct. 383, 66 L.Ed. 798; Egner v. E. C. Schirmer Music Co., 1 Cir., 139 F.2d 398. Although McClure was neither the author, nor the proprietor, [**23] nor an assign, it agreed with Detective that it would copyright the syndicated strips in its own name and that the copyrights would revert to Detective at the termination of the agreement. Such an agreement is lawful, and a copyright taken out in accordance therewith is valid. Quinn-Brown Publishing Corp. v. Chilton Co., D.C.S.D.N.Y., 15 F.Supp. 213. Nor can Fawcett's further contention be sustained, that, as McClure was not the proprietor of one of the complete divisions of literary property created by the Act, it could not take out valid copyrights upon the strips. The argument is that Section 5 of the Act sets forth the divisions for which copyright may be secured, that subdivision (b) reads 'Periodicals, including newspapers', that, as the agreement with McClure gave it rights in newspapers only, less than a statutory division was transferred to it and it could not, therefore, be a proprietor entitled to take out a copyright. But subdivision (b) does not contain two separate classes- periodicals and newspapers. Like all the other subdivisions, it specifies only one class, periodicals, and it must be read as though the language were 'periodicals, which shall be construed as including [**24] newspapers'. The reason for thus mentioning newspapers by name probably was that in 1900, only a few years before the passage of the Act, it was held that newspapers could not be copyrighted. Tribune Co. of Chicago v. Associated Press, C.C.N.D. Ill., 116 F. 126. I find that, with very few exceptions, the copyrights upon the McClure syndicated newspaper strips are invalid, and that therefore these strips have been dedicated to the public. Abandonment. The question remains whether the publication of this large number of syndicated newspaper strips without proper copyright notices resulted in an abandonment of the copyrights on the strips published in 'Action Comics' with proper copyright notices. (It is not necessary, in this connection, to refer to the copyrights on the 'Superman' magazine, for the strips published in that magazine were not original but merely reprints.) There were sixty-seven different 'Superman' stories published in the monthly issues of 'Action Comics' from June 1938 to December 1943 (the only ones in evidence). During approximately the same period, i. e., from January 1939 to December 1943, there were published daily, without proper copyright notices, in many [**25] of at least 160 newspapers throughout the United States, numerous stories portraying 'Superman' and all of his superhuman feats, closely paralleling the stories published in 'Action Comics'. The number of issues of the newspapers carrying these stories literally ran into thousands.
Page 67 93 F. Supp. 349, *358; 1950 U.S. Dist. LEXIS 2324, **25; 87 U.S.P.Q. (BNA) 12; Copy. L. Rep. (CCH) P27,410 It is quite true that the syndicated newspaper stories were not identical with the 'Action Comics' stories, but they were so nearly similar that, if they had been published by a stranger, they would clearly be held to be infringements of the copyrights on the 'Action Comics' stories. If a copyright owner authorizes or permits the republication of its copyrighted material without copyright protection, it forfeits, i.e., abandons the copyright. Dejonge & Co. v. Breuker & Kessler Co., 235 U.S. 33, 35 S.Ct. 6, 59 L.Ed. 113; Deward & Rich v. Bristol Savings & Loan Corp., 4 Cir., 120 F.2d 537; Atlantic Monthly Co. v. Post Pub. Co., D.C., Mass., 27 F.2d 556. I think the same result must certainly follow in the present case, where Detective has permitted publication in the newspapers, without copyright protection, of stories which were [*359] the same in all material respects as its own copyrighted stories. [**26] I find, therefore, that the publication of the McClure syndicated newspaper strips without proper copyright notices resulted in the abandonment by plaintiff of the copyrights on the 'Action Comics' stories. With this disposition it is unnecessary to consider any of the other instances in which the 'Superman' stories or the 'Superman' figure were published without proper copyright notices. Unfair Competition. The evidence does not justify any finding of unfair competition by either Fawcett or Republic; there is no proof either of palming off or of confusion; nor is there any misrepresentation, or any misappropriation 'of what equitably belongs to a competitor'. Schechter Corp. v. United States, 295 U.S. 495, 532, 55 S.Ct. 837, 844, 79 L.Ed. 1570. I see nothing in International News Service v. Associated Press, 248 U.S. 215, 39 S.Ct. 68, 63 L.Ed. 211, to the contrary. The amended complaint accordingly is dismissed as against defendant Fawcett, with costs; and it necessarily follows that there be a similar dismissal as against both Republic defendants. On Motion for Retaxation. In view of the finding already made that there was 'actual copying' by defendant Fawcett of plaintiff's [**27] cartoon strips, I am not disposed to make any allowance to Fawcett for an attorney's fee. See Advertisers Exchange v. Anderson, D.C.S.D. Iowa, 52 F.Supp. 809, affirmed 8 Cir., 144 F.2d 907; Krafft v. Cohen, D.C.E.D. Pa., 38 F.Supp. 1022. The situation as to the Republic defendants is different. They were charged only as contributory or secondary infringers; it was not found that they had copied plaintiff's strips. An allowance of $ 1,000 will be made to these defendants as an attorney's fee. Plaintiff has moved to re-tax the costs of the defendants by striking from the costs as taxed by the Clerk to Fawcett the sum of $ 2132.71, and from the costs taxed to the Republic defendants the sum of $ 972.18, the amounts disbursed by them respectively for transcripts of depositions before trial of various witnesses examined by the parties. Plaintiff insists that these expenditures are not taxable unless they do more than serve the convenience of counsel in preparing the case for trial, and unless the depositions actually assist the court in deciding the case. It is customary in this District to tax such disbursements as costs where the depositions were taken in good faith, and whether or [**28] not they were actually used upon the trial. Here some of the depositions were introduced in evidence; some others were used on cross-examination. Many of them were used to develop facts which proved to be of considerable help in deciding the case. The Clerk properly included these amounts in his taxation of costs. The Republic defendants have also moved to re-tax their costs by including the sum of $ 1017.73, the cost of a daily transcript of the trial proceedings. No direction was made by the court that any such daily transcript be furnished, and there appears to have been no necessity therefor. The motion of the Republic defendants for retaxation is accordingly denied. Stallo v. Wagner, 2 Cir., 245 F. 636. Judgment in accordance with this memorandum has been signed.
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