By admin
After Danish Plaintiff had created and copyrighted “Good Luck Troll” dolls, their sale without copyright notice invalidated Plaintiff’s registration until Uruguay Round Agreements Act restored Plaintiff’s copyright so that Defendant’s marketing of such dolls before URAA’s enactment did not make Defendant “reliance party” to whom URAA would have accorded one year to clear its inventory of infringing dolls
In the late 1950s, Thomas Dam, a Danish wood carver, created a troll doll with an oversized head, big grin, potbelly, and frizzy hair, calling it a “Good Luck Troll.” Dam began selling his doll in the United States in 1961. In 1962, Dam founded “Dam Things Establishment (DTE) ,” and listed it as the creator of the dolls on his U.S. copyright registration. As some dolls had been sold in the U.S. without the proper copyright notice, the copyright was invalidated in 1962 on the grounds that the dolls had entered the public domain. Many companies then began marketing the dolls in the U.S.
In 1963 64, DTE licensed Uneeda Doll Co., Inc. (UDCI), Defendant’s predecessor, to distribute troll dolls. From time to time, UDCI sold a line of troll dolls under the name “Wish Niks” between 1965 and 1984, and, according to UDCI’s chairman, probably as late as 1996. In that year, UDCI sold all of its assets, including its copyrights and other intellectual property rights, to Uneeda (Defendant).
After Thomas Dam died in 1989, his heirs granted Troll Co. (Plaintiff), a Danish company, the exclusive right to exploit and license the dolls. The Copyright Act, 17 U.S.C. Section 104A, enacted as part of the Uruguay Round Agreements Act (URAA), Pub. L. No. 103 465, 108 Stat. 4809 (1994), restored the Good Luck Troll copyright on January 1, 1996. After Plaintiff had obtained a registration certificate in 2000, it set about enforcing its restored copyright.
In August 2005, Plaintiff was getting ready for a major re launch of its troll dolls, when it found out that Defendant was selling newly produced Wish niks to Wal Mart bearing copyright notices in Defendant’s name. After Plaintiff informed Wal Mart that the dolls infringed Plaintiff’s copyright, Wal Mart withdrew the dolls.
After bringing this copyright infringement action against Defendant in a New York federal court on October 7, 2005, Plaintiff obtained a preliminary injunction enjoining Defendant from manufacturing, distributing, or selling Wish nik dolls pending resolution of the case. Defendant appealed the preliminary injunction based on its contention that Plaintiff is unlikely to succeed on the merits of its infringement claim.
On appeal, Defendant made two supporting arguments. The first was that Plaintiff has not shown that it owns the restored copyright. The second was that Defendant qualifies as a “reliance party” within the meaning of Section 104A of the Copyright Act. This entitled it to sell off its inventory of Wish niks for one year following Plaintiff’s service of a notice of intent to enforce the restored copyright. The U. S. Court of Appeals for the Second Circuit, however, affirms.
The Court rejects Defendant’s first argument, finding that, under the URAA, Plaintiff would likely be able to establish ownership of the restored copyright. “First, Uneeda points out, the original 1965 registration certificate listed [DTE] not Dam himself, as the ‘author’ of the Good Luck Trolls. Consequently, Uneeda argues, [Plaintiff] must establish a chain of ownership from [DTE] but not from Dam through his heirs, as [Plaintiff] argued in the District Court.”
“But the URAA specifies that authorship is to be determined by reference to the source country’s law, not by reference to U.S. copyright registration. See 17 U.S. C. Section 104A(b); see, e.g., Alameda Films S A v. Authors Rights Restoration Corp., 331 F.3d 472, 477 (5th Cir. 2003) (applying Mexican law). Neither party submitted evidence of Danish law to the District Court [Editorial Note: see Fed. R. Civ. Proc . 44.1.]
In any event, to obtain a preliminary injunction, [Plaintiff] needed to show only that it was likely to prove ownership, and it seems likely that Danish law would consider Dam to be the ‘author’ of the troll dolls since he created the dolls several years before he established [DTE].” [155].
After pointing out that the URAA restored copyrights as of January 1, 1996, the Court lays out the relevant categories of reliance parties. “Much of 17 U.S.C. Section 104A concerns the enforcement of restored copyrights against parties that were legitimately exploiting works in reliance on their public domain status. The statute creates a category of prior exploiters called ‘reliance parties,’ who may continue to exploit the work until the owner of the restored copyright makes known its intent to enforce its copyright. The Second Circuit then determines that the court below had incorrectly determined the date on which Denmark became an eligible country, and hence whether Defendant was a reliance party by having acted prior to that date.
“Thus, subsections (A) and (B) make the status of a reliance party turn on whether a person took certain actions with respect to a work prior to the date that the source country of that work became an eligible country. And, for purposes of subsections (A) and (B), a source country that was a member of the Berne Convention for the Protection of Literary and Artistic Works of 1886 [as revised and amended, in effect for U. S., March 1, 1989, Sen. Treaty Doc. No. 99 27] when the URAA was enacted (as well as Danish legislation) Denmark became an eligible country on the date of the URAA’s enactment, December 8, 1994. See id. Section 104A(h)(3)(B) [Cites].”
“The District Court mistakenly looked to the date of copyright restoration, January 1, 1996, rather than the date of the URAA’s enactment, to determine the date when Denmark became an eligible country and hence whether [Defendant] or its predecessor was a reliance party by reason of having acted with respect to the troll dolls prior to that date. [Cite]” [157]
Finding the text of Section 104(h)(4)(A) ambiguous as to its use of “continues,” the court looks to the legislative history. “The legislative history of Section 104A suggests that Congress understood Section 412 to mean that a post registration act of infringement will not be deemed to have commenced before registration if the infringing activity ceased for an appreciable period of time. In such a case, the copyright owner could recover statutory damages and attorney’s fees for that new, post registration act of infringement.”
“By using the word ‘continues,’ Congress must have intended to incorporate this same principle into Section 104A (h)(4)(A). We therefore construe this subsection … to confer reliance party status only on persons whose infringement is ongoing and without more than trivial interruption. This limitation is consistent with the purpose of the URAA’s reliance provisions.” “A party that has invested time and resources into ongoing exploitation of a work in reliance on the work’s public domain status would incur substantial harm from the sudden inability to engage in that business; the URAA therefore requires owners of restored copyrights to notify such parties of their intent to enforce and gives those parties a year after notification to sell off their inventories.”
“By contrast, a party that has voluntarily ceased exploitation for a non trivial period of time, here, nine or ten years – even where such exploitation was episodic due to the cyclical nature of consumers’ interest in the product – has a less substantial interest in being able to resume that exploitation after restoration.” [158 59].
Applying this standard to Defendant, the court concludes that, although Defendant’s predecessor UDCI may have initially been a reliance party, Defendant’s nine or ten year hiatus precluded Defendant from claiming that status. “… [W]e first observe that [Defendant] initially may have been a reliance party under Section 104A(h)(4)(A) following the URAA’s enactment. According to the evidence before the District Court, [Defendant] ‘sold Wish nik dolls beginning in 1992 and continuing into the mid 1990s, at least through 1994 and probably up to 1996.’ Because the District Court mistakenly deemed reliance party status to turn on the date of restoration, January 1, 1996, it concluded that [Defendant] could not have been a reliance party.”
“However, … the critical date for assessing reliance party status is December 8, 1994. If the District Court were to credit [Defendant's] evidence and find that [Defendant] sold Wish niks in 1995, [Defendant] would have been a reliance party under Section 104A (h)(4)(A) because it would have continued to engage in infringing acts after December 8, 1994.”
“Notwithstanding this observation, we need not remand the case for reexamination of [Defendant's' claim to reliance party status. Even if we assume that [Defendant] was a reliance party for some period of time, UDCI and [Defendant ]as its successor, would have retained that status only to the extent that they continued to engage in such infringing acts. For the reasons set forth above, [Defendant's] renewed manufacture and sale of Wish niks after a nine or ten year hiatus is not a continuation of infringement under Section 104A (h)(4)(A). Accordingly, [Defendant] cannot claim protection as a reliance party under this provision.” [159 60].
The Court also rejects Defendant’s reliance party claim under Section 104 (h)(4)(B), construing the statutory language so as to avoid results that would be not only absurd but also incompatible with the URAA’s goals. “The text of Section 104A(h)(4)(B) is ambiguous on this point, and there is no legislative history clarifying Congress’s intent. However, it is an elemental principle of statutory construction that an ambiguous statute must be construed to avoid absurd results. [Cite].”
“[Defendant's] proposed interpretation would render the statute absurdly broad: any entity that purchased even one Wish nik doll many years ago while the troll dolls were in the public domain could decide to begin manufacturing troll dolls after the restoration of the copyright and thereby become a reliance party. Conferring reliance party status on such entities would be incompatible with the URAA’s dual goals of restoring copyright protection and safeguarding legitimate reliance interests. … [W]e conclude that Congress intended to limit the benefit of reliance party status under Section 104A (h)(4)(B) only to those copies made or acquired before the URAA’s enactment.”
“Because [Defendant] intends to sell recently manufactured Wish niks and does not claim to be disposing of Wish niks made by [Defendant] before the URAA’s enactment, it is not entitled to reliance party status as UDC’s successor under Sections 104A(h)(4)(B) ( c).”
Citation: Troll Co. v. Uneeda Doll Co., 483 F.3d 150 (2nd Cir. 2007).
Filed in: 2007 International Law Update, Issue6
By admin
In dispute over restoration of copyrights for foreign authors previously in the public domain, federal district court rules that Uruguay Round Agreements Act (URAA) does not violate U.S. Constitution
The Plaintiffs in the following case (plaintiffs) sued the U.S. Attorney General, the Register of Copyrights, and the U.S. Copyright Office (defendants), challenging the constitutionality of Section 514 of the Uruguay Round Agreements Act, Pub.L. 103-465 (URAA) (17 U.S.C. Section 104A). It restores copyright protection to foreign works which are not in the public domain in their own countries but which had entered the U.S. public domain due to non-compliance with U.S. copyright law. The defendants moved for summary judgment, alleging that the URAA does comply with the U.S. Constitution.
In particular, Section 104A provides that: “(a) Copyright subsists … in restored works, and vests automatically on the date of restoration. … (h)(6) The term ‘restored work’ means an original work of authorship that – … (B) is not in the public domain in its source country through expiration of term of protection; ( C) is in the public domain in the United States due to – (1) non-compliance with formalities imposed at any time by United States copyright law …”
The U.S. District Court for Colorado denies the motion. First, the Court addresses the issue of whether the U.S. Constitution grants Congress the power to enact Section 514 of the URAA. The plaintiffs claim that the Section improperly removes works from the public domain contrary to the U.S. Constitution, Art. I, Section 8, cl. 8, the so-called Intellectual Property Clause. It provides that “Congress shall have Power … To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective writings and Discoveries; …”
Congress has clearly favored the restoration of intellectual property rights in the past. First, the 1832 Patent Act intended to restore patent protection in cases where the invention had passed into the public domain. With the 1919 and 1941 Copyright Acts, Congress authorized the president to restore copyright protection to foreign authors of certain works published during World Wars I and II. Second, the Court determines whether URAA Section 514 is rationally related to a legitimate Government interest.
The relevant House Reports notes that Congress passed the URAA to make federal copyright and other laws comply with international treaties, including the Berne Convention for the Protection of Literary and Artistic Works. Thus, Congressional action was rationally related to its mandate to promote the progress of science and the useful arts.
In particular, the Senate Judiciary Committee explained that Section 514: “includes language to restore copyright protection to certain foreign works from countries that are members of the Berne Convention or WTO that have fallen into the public domain for reasons other than the expiration of their normal term of protection. The Agreement requires WTO countries to comply with Article 18 of the Berne Convention. … Article 18 requires that the terms of the convention apply to all works that have fallen into the public domain by reasons other than the expiration of its term of protection.” S.Rep. 103-412 at 225.
The plaintiffs also urged that the burdens of complying with URAA Section 514 infringed their First Amendment rights. In their view, it has brought about the protection of works that were once freely disseminated. They contended that the burden of having to contact each copyright owner of each of these works for permission to use or quote from them is unduly heavy.
The district court rejects these claims. “Though the plaintiffs reasonably relied upon the entry of works at issue into the public domain, any expectations that they had of perpetual rights of exploitation could not reasonably have been settled. … As established above, Congress has on several occasions throughout its history removed works from the public domain.”
“Any rights that the plaintiffs acquired in these particular works by virtue of their exploitation of them were thus anything but inviolate. It remained at all times within Congress’ authority to rectify the unfairness with which foreign authors were afflicted. … As the Supreme Court has noted, ‘If every time a man relied on existing law in arranging his affairs, he were made secure against any change in legal rules, the whole body of our law would be ossified forever.’ …” [Slip op. 51-52]
Citation: Golan v. Gonzalez, 2005 WL 914754 (D.Colo. 2005).
Filed in: 2005 International Law Update, Issue 5
By admin
Ninth Circuit decides that U.S. plaintiff may not recover damages for copyright infringement outside U.S., and that exception to general rule against extraterritorial application of Copyright Act when completed domestic infringement enables infringements abroad is inapplicable
The copyrighted works at issue in the following case are the controversial video recordings of “The Beating of Reginald Denny” and “Beating of Man in White Panel Truck” that were recorded at Florence Avenue and Normandie Boulevard in Los Angeles during the 1992 riots.
Los Angeles News Service (LANS) had produced the recordings and sold a license to rebroadcast them to several other companies, including the National Broadcasting Company (NBC) which used the recordings for its Today Show. NBC, in turn, forwarded the Today Show broadcast to Visnews International (USA), Ltd., pursuant to a news supply agreement, resulting in further distribution.
LANS then sued several Reuters companies (jointly “Reuters”) and Visnews for copyright infringement and other claims. The U.S. district court found that no liability arose under the Copyright Act for infringements that allegedly took place outside the U.S. Accordingly, it granted Reuters and Visnews a partial summary judgment on the issue of extraterritorial infringement.
The act of copying the works within the U.S. for further distribution, however, was a domestic act of infringement that could not be excused as fair use. For this, the district court awarded LANS statutory damages of $60,000. LANS appealed, arguing that it should have been allowed to recover its actual damages. The U.S. Court of Appeals for the Ninth Circuit affirms.
“This Court had previously reviewed the district court’s
interpretation of the Copyright Act with regard to extraterritorial acts in L.A. News Serv. v. Reuters TV Int’l, Ltd. (Reuters III), 149 F.3d 987, 992 (9th Cir. 1998). The Court had held that, while the Copyright Act does not apply extraterritorially, an exception may apply where an infringer’s activity is completed entirely within the U.S. but where domestic infringement enabled further exploitation abroad. Here, LANS was allegedly entitled to damages resulting from the exploitation abroad of defendants’ local infringement.”
“On the whole, we conclude that Reuters III adhered very closely to our decision in Subafilms, Ltd. v. MGM-Pathe Communs. Co., 24 F.3d 1088 (9th Cir. 1994) (en banc). Subafilms reaffirmed that the copyright laws have no application beyond the U.S. border, id. at 1095-98, and expressly took no position on the merits of the Update Art [Update Art, Inc. v. Modiin Publ'g, Ltd., 843 F.2d 67 (2d Cir. 1988)] court’s apparent willingness to award damages … LANS’s appeal thus presents the precise question that Subafilms reserved … and as the prior panel recognized, such question should be resolved in light of the principles the en banc court laid down.”
“The import of such principles counsel a narrow application of the adoption in Reuters III of the exception to the general rule. In particular, the … constructive trust rationale [of Sheldon v. Metro-Goldwyn Pictures Corp., 106 F.2d 45 (2d Cir. 1939), aff'd, 309 U.S. 390 (1940)] includes a territorial connection … that preserves consistency with Congress’s decision to keep the copyright laws – presumably including Section 504, which prescribes remedies – territorially confined.”
“Moreover, no rational deterrent function is served by making an infringer whose domestic act of infringement – from which he earns no profit – leads to widespread extraterritorial infringement, liable for the copyright owner’s entire loss of value or profit from that overseas infringement, particularly if the overseas infringement is legal where it takes place. … Moreover, the resulting over-deterrence might chill the fair use of the copyrighted works in close cases.” [Slip Op. 15-16]
As a result, the Court reads Reuters III to allow only a narrow exception for the recovery of the infringer’s profits to Subafilms’ general rule against extraterritorial application. Under the circumstances of this case, the Copyright Act does not permit LANS to recover actual damages that resulted from Reuters’ and Visnews’ foreign infringements.
Citation: Los Angeles News Service v. Reuters Television Int’l Ltd., 340 F.3d 926 (9th Cir. 2003).
Filed in: 2003 International Law Update, Issue9
By admin
In dispute over copyrights to Mexican movies under Uruguay Round Agreement Act provisions on copyright restoration, Fifth Circuit holds that, pursuant to Mexican copyright law, juridical persons can be “authors” and that works already in Mexican public domain can no longer obtain copyright protection in U.S.
The U.S. passed the Uruguay Round Agreement Act (URAA) [Pub.L. 103-465, 108 Stat. 4809 (1994)] and thereby amended the 1976 Copyright Act (see 17 U.S.C. Section 104A). Effective January 1, 1996, the URAA streamlined the obtaining of copyright protection for foreign works in the U.S. It also allowed for automatic restoration of copyrights that had fallen into the public domain in the U.S. for noncompliance with copyright procedures. [See 1996 International Law Update 59, reporting on publication of list by U.S. Copyright Office for restoration of copyrights, including Alameda Films SA movies, at 61 Federal Register 19372.]
Thereafter, the Authors Rights Restoration Corporation, Inc. and others (defendants) obtained assignments of “rights” to the films from individual contributors, such as screen writers and music composers. They failed to obtain assignments or licenses from 24 Mexican film production companies (plaintiffs), however, and kept on distributing the films after January 1, 1996.
Defendants distributed a variety of Mexican films in the U.S., including 88 films which plaintiffs had produced and released in Mexico during Mexico’s “golden age” of cinema from the late 1930s to the mid-1950s. Of those films, 69 had lost their copyright protection in the U.S. since the authors had failed to comply with U.S. copyright formalities.
In 1998, plaintiffs brought an action against defendants claiming that defendants have been violating the restored U.S. copyrights in the 88 films. In response, defendants made two points.
First, they alleged that, under Mexican law, the term “author” included only natural persons such as the individual contributors, and not juridical persons such as film production companies. Second, they contended that seven of the films had entered the public domain in Mexico and were thus ineligible for U.S. copyright protection.
The district court eventually took seven of the 88 alleged infringed films off the list because they were supposedly in the Mexican public domain. It then held a jury trial on the plaintiffs’ claims as to the remaining 81 films. The jury came back with a plaintiffs’ verdict, awarding damages and attorneys fees totaling almost $3 million. Defendants noted their appeal. The U.S. Court of Appeals for the Fifth Circuit affirms on the merits.
The defendants’ main appellate arguments challenged not only the district court’s finding that production companies, such as the plaintiffs, can hold copyrights under Mexican law (called “derecho de autor” in Spanish), but also the court’s allowing the plaintiffs to recover damages for both copyright infringement and unfair competition.
The Court first decides that juridical persons can be “authors” under Mexican law. The URAA sets up two types of foreign copyright owners who can have their U.S. copyrights restored. First are the “authors,” that is, the creators of works originally copyrighted in foreign jurisdictions. Second are the initial rightholders which includes only the owners of a copyright in a “sound recording.” Plaintiffs can claim restored copyrights under the URAA only if the law of the work’s source country — here, Mexico — treats them as “authors.”
“[T]he Plaintiffs – and the Government of Mexico, as amicus curiae – urge that the Defendants’ failure to even mention the Collaboration Doctrine of the Mexican Civil Code is telling. They note that in Mexican law, the Collaboration Doctrine covers various provisions regarding copyrights claimed by corporations, which necessarily create copyrighted works only through the collaboration of individuals, viz., their agents and employees. Thus, Article 1,198 of the 1928 Mexican Civil Code provides: ‘The person or corporation that imprints or publishes a work made by various individuals … will have the property in the entire work …’” [Slip op. 10-11]
Later amendments clarified that physical persons and legal entities who create a work in “remunerated collaboration” may have author’s rights. See Ley Federal de Derecho de Autor, art. 59 (1963). Thus, defendants are mistaken in claiming that Mexican law vests the “author’s right” only in natural persons. Therefore, plaintiffs can be, and are in fact, “authors” under Mexican law and can hold Mexican copyrights.
The Court then turns to the seven films which the district court had delisted. The plaintiffs had produced and released these films between 1938 and 1946. At that time, the Mexican Civil Code, Article 1,189, required that, to gain copyright protection, an author had to register the work within three years of its release. (Editorial Note: Mexico repealed this requirement in 1947.) Since plaintiffs indisputably had not timely registered the seven films under the then applicable demands of Mexican law, they are not eligible for U.S. copyright restoration under the URAA.
Citation: Alameda Films SA de CV v. Authors Rights Restoration Corp. Inc., 2003 WL 21142955 (5th Cir. May 19, 2003).
Filed in: 2003 International Law Update, Issue6
By admin
Canadian Supreme Court, citing U.S. cases, holds that complete transfer of plaintiff’s original designs from paper to canvas did not constitute copying or reproduction of original under Canadian copyright law
Claude Theberge is a Canadian painter with a well established international reputation who agreed to assign to a publisher the right to publish reproductions, cards and other stationery products representing some of his works. The Galerie d’Art du Petit Champlain Inc., Galerie d’Art Yves Laroche Inc., Editions Multi Graph Ltee, Galerie d’Art and Laroche, Denis Inc. later bought cards, photolithographs and posters of some of the artist’s works from the publisher. They would then move the images to canvas by lifting the ink that was used in printing a paper poster and moving it onto a canvas surface. Since this process leaves the poster blank, it does not increase the total number of reproductions.
Theberge applied for an injunction, accounting, and damages against the galleries in the Quebec Superior Court. He also had the court issue a writ of seizure before judgment which included all of the canvas backed reproductions embodying his works. He claimed to have a deemed right of ownership in those items under the Copyright Act. Section 38(1) of the Act provided that the owner of the copyright in a work may recover possession of all infringing copies of that work. The Act defines an “infringing” work as “any copy, including any colourable copy, made or dealt with in contravention of this Act.”
The galleries moved to quash the seizure. The Quebec Superior Court concluded that transferring an authorized paper reproduction onto canvas did not amount to infringement under the Act and ordered that the seizure be quashed. The Court of Appeal, on the other hand, ruled that there had been infringement, upholding the seizure with respect to the canvas backed reproductions. On further appeal, the Supreme Court allows the appeal in a 4 to 3 vote.
The Canadian Copyright Act grants an artist both “economic” and “moral” rights to his work. The underlying theory of economic rights basically looks upon artistic and literary works as articles of commerce. An artist can assign these rights, leaving him or her a statutory right to claim only those rights he or she has reserved.
Moral rights, on the other hand, are not assignable; they look upon the oeuvre as a projection of the artist’s personality, with a dignity worthy of legal protection. A party violates the integrity of the work only by altering it in such a manner as to prejudice the artist’s honor or reputation. Moral rights, as limited by the Act, continue to restrict what buyers can do with a work. The Courts should not read economic rights so broadly that they occupy the same sphere as moral rights, thus neutralizing the statutory strictures on the latter. The majority spurns plaintiff’s attempt to claim a moral right in the guise of an economic right.
The majority notes how important it is to keep in mind the historical scope of the concept of “reproduction” under the Copyright Act. It has typically been considered as the act of producing additional or new copies of the work in any material form. While the Act recognizes that technologies do exist to reproduce expression in new ways, the facts here do not involve the important evolution of legal concepts in the field of copyright. This is a case of literal physical, mechanical transfer in which no multiplication takes place.
Several U.S. rulings on comparable copyright issues are cited to support the majority’s view. In C. M. Paula Co. v. Logan, 355 F.Supp. 189 (N.D. Tex. 1973), for example, the plaintiff based its claim of infringement on the defendant’s transfer of various copyrighted designs from Paula Company greeting cards and note pads to ceramic plaques which defendant produced and sold. Since each plaque or decal required transfer of the image from one Paula print, however, the U. S. Court held that this activity did not amount to copying or reproducing the copyrighted work. To make one hundred ceramic plaques would require buying one hundred prints from plaintiff. The process is analogous to framing or laminating a copyrighted picture.
The separate structures in the Canadian Act to cover economic rights and moral rights show that the drafters intended to make a clear distinction between them. In terms of remedies, Parliament intended to classify modification without reproduction under the provisions dealing with moral rights rather than economic rights. Otherwise, an artist who objected to a “modification” of an authorized reproduction could evade the important requirement of having to show prejudice to honor or reputation in order to establish an infringement of moral rights.
Since moral rights are involved here, the Act did not authorize plaintiff to have defendants’ copies seized before judgment. A fuller trial record may or may not show whether there’s been a breach of economic or moral rights. In any event, the present interlocutory record fails to justify the pre-judgment seizure.
In the dissenters’ view, defendants did unlawfully copy plaintiff’s works in a material form in violation of the Act. A plaintiff in a case like this does not have to show that defendants’ processes increased the total number of copies of the work. The Act protects the right to reproduce a “substantial part” of the work. This brings in not only the quantitative, but also the qualitative aspect.
Fixation of the work in a particular medium is essential to turning out the original work. Fixation of the work in a new medium is, therefore, the basic element of the act of “reproduc[ing] … in any material form whatever” which differs from that which already existed. This constitutes plagiarism and copyright infringement. The plaintiff’s license to defendants clearly contemplated granting them authority only to make specified paper reproductions.
Citation: Theberge v. Galerie d’Art du Petit Champlain, Inc., 2002 Can. Sup. Ct. LEXIS 36; 2002 S.C.C. 34 (Sup. Ct. Can. March 28).
Filed in: 2002 International Law Update, Issue 4
By admin
In copyright litigation brought by U.S. company, English Court of Appeal upholds lower court findings that individual director of corporation was personally liable as joint tortfeasor with corporation for flagrant breaches of copyright law
In an action brought by MCA Records, Inc. and MCA Records Ltd. an English court of first instance, found that Mr. Jean Luc Young was liable for infringement by the copying and public issuance of Chess sound recordings by Charly Records Ltd. There is no dispute about the claimants title to the copyright.
MCA Records, Inc. is a California corporation while MCA Records Ltd. is its United Kingdom subsidiary (collectively MCA). The Chess Labels Discography was compiled by Michel Ruppli and published by Greenwood Press in 1983. The recordings were originally made over a period from 1947 to 1975 and featured many jazz greats.
Mr. Young had set up a Liechtenstein company, from 1980 on known as Charly Holdings Aktiengesellschaft (CHA), whose function it was to hold master sound recordings. He also founded Charly Music Ltd (CML) in the U.K. to exploit the rights held by CHA by turning out re-issues of sound recordings in the fields of blues, jazz, rhythm and blues and rock and roll. Charly Holdings Inc. (Holdings) is a Panamanian company administered from Zurich by M. Raymond-Claude Foex but whose directors are Panamanian lawyers.
Mr. Young claims ignorance of Holdings’ shareholders and Mr. Foex contends that Swiss law prevents him from revealing their identities. In 1981, Mr. Young sold much of CHA’s catalogue to Holdings while Holdings then proceeded to set up two wholly owned subs, Charly Records, Ltd. (CRL) in the U.K. and Charly International APS (International) in Denmark. Young served as a director of Holdings until 1982 and continued as an employee of CRL until 1996.
In 1987, Holdings obtained an 11.5 year license from Red Dog Express, Inc., a company controlled by Marshall Sehorn, purporting to grant it a non-exclusive world wide license to exploit the Chess master recordings. Mr. Young signed the license on behalf of Holdings and CRL as guarantor.
Since August 1988, CRL made and distributed Chess records using masters from Red Dog. This activity gave rise to the present law suit.
In 1992, MCA sued Sehorn and Red Dog in California court and won, an appeal having been dismissed in 1994. The court ruled that Sehorn had failed to prove the 1976 license and that he and Red Dog did not have, and never did have, any title to the Chess master recordings.
Upon learning that CRL was exploiting the Chess material in the U.K., MCA sued CRL, Holdings and International in California in January 1992 for unfair competition which the court treated as in essence a breach of copyright claim. Two years later, the court held that Holdings and International had never had any rights to the Chess catalogue. The rationale was that, as privies of Sehorn, the prior judgment stopped them from disputing its findings. Although the court approved a total of about fourteen million dollars in damages, apparently only about $100,000 has actually been collected. The state appellate court rejected appeals based on lack of jurisdiction in October 1997.
In an apparent test case, MCA sued CRL in an English court in February 1993 and the court, citing the defendant’s dishonest disregard of the California judgments, entered flagrancy damages.
In February 1994, MCA started out by suing CRL alone abut after the judgment in the test action, plaintiff joined the other defendants listed above. The court entered default judgments against CRL, International and Holdings leaving only Mr. Young to go to trial.
Plaintiffs contended that Young was the moving spirit and directing mind of the corporate defendants and hence was personally liable for their unlawful actions. The main relief sought was an injunction and turnover order involving over 2,000 titles.
While unable to find sufficient evidence that Young authorized, directed or procured Holdings’ activities, the court did not hesitate to find enough proof that, despite his denials, Young negotiated both of the licenses on behalf of CRL. and International.
Based on the evidence at the hearing, the trial judge found it clear that Mr Young must be taken at least to have impliedly directed or procured the tortious acts of infringement by CRL of which MCA complains.
In the Court of Appeal, Young challenged both the lower court’s legal standard for the personal liability of a corporate director as well as that court’s application of the test to the facts. After a careful analysis of the authorities, the lead opinion in the Court of Appeal comes to the following conclusions on the legal principles.
“First, a director will not be treated as liable with the company as a joint tortfeasor if he does no more than carry out his constitutional role in the governance of the company that is to say, by voting at board meetings. That, I think, is what policy requires if a proper recognition is to be given to the identity of the company as a separate legal person. Nor, as it seems to me, will it be right to hold a controlling shareholder liable as a joint tortfeasor if he does no more than exercise his power of control through the constitutional organs of the company for example by voting at general meetings and by exercising the powers to appoint directors.” [para. 49]
“Second, there is no reason why a person who happens to be a director or controlling shareholder of a company should not be liable with the company as a joint tortfeasor if he is not exercising control through the constitutional organs of the company and the circumstances are such that he would be so liable if he were not a director or controlling shareholder. In other words, if, in relation to the wrongful acts which are the subject of complaint, the liability of the individual as a joint tortfeasor with the company arises from his participation or involvement in ways which go beyond the exercise of constitutional control, then there is no reason why the individual should escape liability because he could have procured those same acts through the exercise of constitutional control.” [para. 50]
“Third [in the field of intellectual property] liability as a joint tortfeasor may arise where, …the individual intends and procures and shares a common design that the infringement take place.” [para. 51]
“Fourth, whether or not there is a separate tort of procuring an infringement of a statutory right, actionable at common law, an individual who does intend, procure and share a common design that the infringement should take place may be liable as a joint tortfeasor.” [para. 52]
Applying these standards to the evidence put before the judge below, the Court of Appeal upholds his factual findings. “Viewed in the light of the test which I have set out there was abundant evidence to support the conclusion that Mr Young was liable with CRL as a joint tortfeasor. It is plain from the judges’ findings of fact that Mr Young induced CRL to copy the Chess recordings and to issue copies to the public. It is plain that he and CRL joined together in concerted action to ensure that those acts were done. That was the whole purpose of obtaining the licences (or purported licences) for CRL. There was never any question but that CRL would exploit the licences in respect of the Chess recordings which Mr Young had negotiated on its behalf. If evidence of that be required it is found in Mr Young’s witness statement in the 1993 test proceedings: I was involved in the planning of all [CRL] product releases which reproduced the Chess masters. Further confirmation of the inducement to infringe can be found in the December 1992 advertisement Business as usual to which the judge referred in paragraph 83 of his judgment.” [para. 61]
With respect to the lower court’s findings of “flagrancy,” the Court of Appeal is satisfied. “It seems to me that the judge was entitled to reach the conclusion that, after Mr Young had knowledge of the judgment in the action brought by MCA against Mr Sehorn in California, the continued infringement of MCA’s copyright in the Chess recordings was, indeed, about as flagrant as it could be. I do not find it necessary to add to the reasons which the judge gave for that conclusion.” [para. 67]
Two members of the Court concur with the lead opinion that the appeal is to be dismissed.
Citation: MCA Records Inc. v. Charly Records Ltd., 2001 WL 1135084, [2001] E.W.C.A. Civ. 1441 (Ct. App. (Civ. Div.), 5 October 2001) (Smith Bernal Trans.).
Filed in: 2001 International Law Update, Issue10
By admin
EU issues directive to have Member States harmonize their copyright law for information technology
With Directive 2001/29/EC “on the harmonization of certain aspects of copyright and related rights in the information society,” the European Union is harmonizing its rules for copyright. The Preamble notes that this Directive implements several of the new international obligations arising from the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty (Preamble (15)). The Directive is related to the new Directive on electronic commerce (2000 O.J. (L 178) 1, 17 July 2000), and should be implemented within the same time frame (Preamble (16)). The new Directive specifies certain aspects of copyright, especially as it applies to information technology (Article 1).
Expressly excluded from the scope of the new Directive are existing EU protections for computer programs and databases, for broadcasting programs, usage rights in intellectual property, and the term of copyright protection (Article 1). The Directive orders the EU Member States to provide authors, performers, and producers the exclusive right to authorize and prohibit the reproduction of their work, and the right to distribute their work as they deem fit (Articles 2-4). On the other hand, if a party is using such works for teaching, for the benefit of handicapped people, for reviews and critique, as well as for incidental use in other works, the directive does not apply (Article 5).
The Directive gives Member States until December 22, 2002 to transpose its provisions into domestic law. The Directive will apply to all works and other subject-matter that EU Member States legislation protects as of that date.
Citation: Directive 2001/29/EC … of 22 May 2001 on harmonization of certain aspects of copyright and related rights in information society, 2001 O.J. of European Communities (L 167) 10, 22 June 2001.
Filed in: 2001 International Law Update, Issue7
By admin
In infringement action by Bruce Springsteen against an English company, English Court of Appeal dismisses losing company’s appeal and sounds death knell for traditional form of “best evidence” rule by approving reliance on oral secondary evidence as to contents of lost assignment in Springsteen’s chain of title based on showing of reasonable search
In 1971, Bruce Springsteen, then 21, met Mssrs. Appel and Cretecos, songwriters. The following year, Springsteen, Appel and Cretecos agreed that the latter two would promote Springsteen’s interests. The two men initially set up three partnerships, Laurel Canyon Management (LCM) to serve as Springsteen’s manager, Sioux City Music, Inc.(SCM) to handle his songwriting activities and Laurel Canyon Productions (LCP) to deal with his recordings.
From the beginning, the parties intended that Jules Kurz, Esq., a New York attorney with experience in the music industry, would form corporations to take over from the partnerships when the parties could afford the required fees. Springsteen signed contracts with the three partnerships to perform the above functions on his behalf. Apparently the successor corporations came into being between June 1972 and June 1973.
Soon afterwards, LCP, Inc. entered into a recording contract with CBS, a major record and master tape producer, since taken over by Sony. Over the following year, Appel and Cretecos had Kurz incorporate several companies in New York. Laurel Canyon, Ltd. took over LCP’s business, SCM eventually became Laurel Canyon Music Ltd., and LCM became Laurel Canyon Management, Ltd. According to Kurz, the minutes of the first directors’ meeting would have included a signed standard form to transfer all partnership assets to the corporations (including copyrights).
Masquerade Music Ltd. was an English company which imported over a dozen Springsteen songs and CDS, claiming it was completely unaware that the recordings were copyrighted. In the ensuing litigation brought by Springsteen in the English Chancery Court, Masquerade denied that the minutes recording the transfer of assets from the partnerships to the corporations contained an assignment of partnership copyrights. In 1975, one of Springsteen’s records sold more than one million copies.
U.S. litigation soon broke out between Springsteen and Appel. After some discovery, the parties settled the suit in May 1977 in the “basic agreement.” The parties included Springsteen, the three corporations and Appel. After becoming assignee of all copyrights, Springsteen assigned to Laurel Canyon Music, Ltd., inter alia, a half share in three of the copyrights disputed before the English courts. In May 1983, Laurel Canyon reassigned these copyrights to Springsteen.
In April 1979, Cretecos sued Appel and others in the U.S. claiming that Appel had misled Cretecos into selling his company shares at a bargain price. At every point in that case, Cretecos acted on the assumption that the copyrights at issue here were assets of the three corporations.
After ruling that defendants had infringed plaintiff’s copyrights, the English court raised a “best evidence” issue by first quoting Section 36(3) of The Copyright Act of 1956 as follows: “[n]o assignment of copyright (whether total or partial) shall have effect unless it is in writing signed by or on behalf of the assignor.” Despite a search of (disputed) diligence, Springsteen was unable to produce either the original or copies of the alleged written copyright assignments but had to rely on “secondary” oral evidence. Objecting to Springsteen’s testimonial “secondary evidence,” defendants contended, inter alia, that the alleged search was not diligent enough. In their view, the more crucial the writing was, the more thorough must be the search. The Chancery Court ruled for Springsteen and defendants filed an appeal. The Court of Appeal (Civil Division), however, unanimously dismisses defendants’ appeal.
The Court’s lead opinion preliminarily points out that, in this case, the only critical documents were the corporate minutes and that defendants do not dispute their existence. The key question here deals with the contents of those minutes, i.e., whether they contained language validly assigning the copyrights to the new corporations. Referring to the exception for lost writings under the “best evidence” rule, defendants contended (1) that plaintiff’s search for the documents had been minimal and (2) that the trial judge had erred in using a balance-of-probabilities test to determine the contents of the minutes.
The following testimony by Attorney Kurz is, in the Court’s view, the “only cogent evidence” about the fate of the corporate minutes. “My normal procedure would have been to include such an assignment in the corporate books as part of the minutes of the first meeting of directors and I believe I would have done so in this case. I no longer have copies of these documents which were destroyed along with all the documents I had relating to Springsteen when I moved my offices to White Plains, New York, a few years ago.” [para. 48]
The closest thing to a “best evidence” exclusionary rule, the Court explains, turns out to be an “original writings rule.” The older common law preferred that a party seeking to prove the contents of a writing produce the original. If a proponent showed that the original writing was lost or destroyed in good faith, however, the law compromised by allowing for various types of “secondary evidence” of its contents. Failure to bring oneself within the recognized exceptions might sometimes rule out “secondary” proof of an alleged writing’s contents altogether. More often, it would generate an inference adverse to the party relying on the content of a writing.
After a thorough canvas of the English authorities, the Court declares that: “[i]n my judgment the authorities to which I have referred establish that by the mid nineteenth century, if not earlier, the so called best evidence rule was recognised by the courts as no more than a rule of practice to the effect that the court would attach no weight to secondary evidence of the contents of a document unless the party seeking to adduce such evidence had first accounted to the satisfaction of the court for the non production of the document itself. But even if that conclusion be open to doubt, there can in my judgment be no room for doubt that as the law stands today, some 150 years later, that is the position.” [para. 77]
Finally, the Court writes a quasi-obituary. “In my judgment, … the best evidence rule, long on its deathbed, has finally expired. In every case where a party seeks to adduce secondary evidence of the contents of a document, it is a matter for the court to decide, in the light of all the circumstances of the case, what (if any) weight to attach to that evidence. Where the party seeking to adduce the secondary evidence could readily produce the document, it may be expected that (absent some special circumstances) the court will decline to admit the secondary evidence on the ground that it is worthless.”
“At the other extreme, where the party seeking to adduce the secondary evidence genuinely cannot produce the document, it may be expected that (absent some special circumstances) the court will admit the secondary evidence and attach such weight to it as it considers appropriate in all the circumstances. In cases falling between those two extremes, it is for the court to make a judgment as to whether in all the circumstances any weight should be attached to the secondary evidence.” [para. 85]
In the Court’s view, plaintiff met his burden of giving a reasonable explanation for his failure to produce the minutes. There is no allegation that plaintiff was in bad faith nor is there evidence that the searches were other than genuine — though perhaps not exhaustive. The court below, therefore, did not err in considering plaintiff’s secondary evidence as to the contents of the corporate minutes.
Defendants next argued that, because of the importance of the minutes as a link in the chain of plaintiff’s title to the copyrights in question, the lower court had erred in using a balance-of-probabilities test rather than a higher standard. The Court disagrees, quoting precedent that explains how the proper standard works.
“The balance of probability standard means that a court is satisfied an event occurred if the court considers that, on the evidence, the occurrence of the event, was more likely than not. When assessing the probabilities, the court will have in mind as a factor, … that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. Fraud is usually less likely than negligence. Deliberate physical injury is usually less likely than accidental physical injury.”
“Although the result is much the same, this does not mean that where a serious allegation is in issue the standard of proof required is higher. It means only that the inherent probability or improbability of an event is itself a matter to be taken into account when weighing the probabilities and deciding whether, on balance, the event occurred.” [para. 89]
The Court approves the lower court’s application of the probabilities to the facts of record. “Thus, it was from the outset the intention of Mr Appel and Mr Cretecos … that the partnerships should be succeeded by limited companies; Mr Kurz, a lawyer with experience of the popular music industry, was instructed to ensure that the necessary formalities were completed to achieve that result; limited companies were duly incorporated which de facto carried on the businesses of the former partnerships; thenceforth, all concerned (including Mr Cretecos) proceeded on the basis that all the assets of the former partnerships were vested in the companies and that the partnerships were at an end; and when the basic agreement was signed in 1977 no suggestion was made that any assets (let alone the copyrights, which represented the core of the entire operation) remained outstanding in the former partnerships.” [para. 93].
Citation: Masquerade Music Ltd. v. Springsteen, 2001 WL 271986 (CA), [2001] E.W.C.A. Civ. 563 (Eng. Ct. App. (Civ. Div.), April 10).
Filed in: 2001 International Law Update, Issue6
By admin
German district court holds America On Line (Germany) liable for distributing illegal copies of copyrighted music productions through its online service
AOL Germany formed an online forum for AOL members only where they could store, copy, and swap digital recordings of music productions. AOL maintained and organized the data files, and had so-called “scouts” review them for viruses and copyright notices.
The largest German distributor of music data files, Hit Box Software GmbH (HBS), located in Karlsruhe, Germany, brought a 1998 action against AOL in a Munich court. For prices ranging from $9-$19, HBS distributes so-called “MIDI files” of instrumental music that one can play only on diskettes. The buyers are mostly amateur musicians and performers. They use them as the bases for their own performances, similar to “karaoke” productions. Plaintiff claimed that AOL should pay HBS the profits that it would have received had it sold the data file as many times as people downloaded it from AOL, that is, approximately $50,000.
At issue were three instrumental versions of pop hits (including “Get Down” by the Backstreet Boys) which many people use as “karaoke” tracks. HBS claimed that AOL’s service facilitated the illegal copying of the files and the resulting copyright infringements. AOL countered that such activities are impossible to control on the internet. Thus, if AOL tried to block a certain website, e.g., www.xyz.com, it would appear the very next day as “www.xyz1.com.”
According to AOL, anybody can copy data files such as the music productions at issue and distribute them via the internet. Therefore, German law should treat such data files as “shareware” or “public domain” software.
The German district court, however, essentially agrees with the plaintiff, holding that AOL’s purveying of approximately 800 recordings amounted to unlawful distribution under Section 15, paragraph 2, of the Copyright Law (Urhebergesetz, UrhG). The court, however, finds that the plaintiff’s claim for damages was inappropriate because it was calculated as if every download of the software had been an actual sale of the product. [Editors' Note: The Court seems to assume that the product would not have sold that many times if there had been a charge for it].
[Editors Note: In the U.S., the Recording Industry Association of America (RIAA) has similar cases currently pending against the website "MP3.com" and the producers of the software "Napster" (www.napster.com). This litigation has only just begun. On May 5, 2000, a federal court refused to grant Napster summary judgment. See A&M Records, Inc. v. Napster, Inc., No. C 99-05183 MHP (N.D. Cal. May 5, 2000)].
Citation: Landgericht Muenchen, Urteil vom 30. Maerz 2000, 7 O 3625/98 – midi files. [German court opinion is available on website "www.netlaw.de"; see also The Independent (London), April 13, 2000, page 5.]
Filed in: 2000 International Law Update, Issue 5
By admin
Argentina amends Intellectual Property Law to permit licensee to copy programs for personal use
With a law promulgated on November 11, 1998, the Argentine Congress has modified the Argentine Intellectual Property Law (Ley No. 11.723 sobre Propiedad Intelectual) to permit software licensees to make copies of computer programs for personal use.
It provides that someone who has properly acquired certain software may make copies of the original software without the express consent of the licensor. These copies may only be used to replace the original in case of loss or inability to function (Article 9). The amendment also adds computer software and databases to the definition of protected works in the Intellectual Property Law (Article 1).
Citation: Ley No. 25036, Modificacion de la Ley No. 11.723 (Approved October 14, 1998, promulgated November 11, 1998).
Filed in: 1999 International Law Update, Issue 1
Next Page »