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The case is Horror, Inc. v. Victor Miller, currently in Connecticut federal court, brought by the film studio against the original screenwriter, who is seeking to retain his copyright and exploit the rights on his own. Mr. Miller wants to “terminate” the transfer of the copyrights to the film studio 35 years after he granted them, as permitted under the Copyright Act. The film studio, conversely, seeks a judgment that the film was created as a “work for hire”, which would mean that the film studio owns it for the life of the copyright and Mr. Miller cannot get it back.
Several weeks ago, a District Court ruled in favor of Mr. Miller and against the movie studio. It held that Mr. Miller properly filed termination notices against the parties owning the copyrights, that his screenplay was not a “work for hire” because he wasn’t working as an employee, and that the persons supervising him were not joint authors. If the ruling stands on appeal, this will be a great victory for the screenwriter as well as many other artists who can follow his lead
In drafting the Copyright Act of 1976 (which took effect on January 1, 1978), Congress was concerned about authors who had fully assigned their rights to other parties for relatively small amounts of money, before their works became successful with little opportunity to see the fruits of their own success. So Congress created an inalienable right for authors to recapture that copyright, for up to 35 years after granting another party, where the grant was executed on or after January 1, 1978 . The right, embodied in 17 U.S.C. § 203, cannot be waived by contract. That is, a contractual provision requiring an author not to seek termination under the Copyright Act is unenforceable. With the termination right, authors can serve notice on the assignee’s and recapture the rights to exploit as they see fit, or they can use them as a valuable bargaining tool to renegotiate contracts. The latter is likely what happened when Michael Jackson’s estate bargained with Sony Corporation for a new, lucrative contract, even though a standard recording contract provides that an artist signs away his rights “in perpetuity.”
The right to terminate a transfer has a few catches. One of the most hotly contested of them is “work for hire” exception, where the assigning author does not have a right to terminate. The company for whom it was created is the statutory “author”, and the company to whom the work was assigned will own it for the life of the copyright if the contract says so.
There are two ways a creator can be a work for hire. One is an employee working within the scope of their employment. In a copyright case between a sculptor and a company that contracted him, the Supreme Court warned to interpret this exception narrowly and strictly. The other as a “specially ordered or commissioned” work, which would apply to independent contractors. This exception requires an agreement in writing designating the work as a work for hire, signed by the party giving up their rights. There are also a finite number of categories which may qualify as a specially ordered or commissioned work. These include audiovisual works and contributions to collective works, but not literary works.
That brings us to Victor Miller’s lawsuit. Or, more accurately, the lawsuit brought by Horror Inc., the successor in interest to the company Miller assigned his rights to. Miller had served the requisite termination notices against all parties who might currently have rights in the script, but Horror, Inc. and the other parties refused to accept them, and instead sued Miller seeking a “declaratory judgment” that Miller’s termination notices were invalid and that he had no rights. As would be expected, Miller cross-claimed against the parties, seeking a declaration of his ownership.
Friday the 13th is, of course, a long running series of horror films featuring psychotic goalie-masked murderer Jason Voorhees. The first film, penned by Miller, was about a group of naughty camp counselors (including a young Kevin Bacon) being murdered by a suspicious figure who, [Spoiler Alert]; was not Jason.
Miller wrote the script for Manny Company, under a short-form Writers Guild of America collective bargaining agreement. The contract didn’t mention authorship. Although the rights were assigned to Manny Company, the written agreement didn’t designate the script as a work for hire (which is common practice today). Several people took part in the creative process by encouraging ideas, but the work was written by Miller and he was credited as the sole author. The movie, of course, became a hit. Manny Company subsequently transferred rights to Horror Company, Inc.
If the written agreement had designated the script as a work for hire, it’s likely that this would have turned out the other way. In order to satisfy the “specially commissioned” definition of work for hire, there must a signed writing designating it as work for hire. This definition list has nine classifications of works that qualify, one of which is “a part of a motion picture or other audiovisual work”.
Because there was no written work for hire designation, the defendants argued that Miller was writing an employee, and the script was written within the scope of employment.
The court ruled that Miller wasn’t an employee, weighing the factors and finding that most of them turned in favor of Miller as independent contractor. The factors derive from Supreme Court precedent, which held that agency law and not labor law determines whether someone is an employee for the purpose of the work for hire definition. Horror Inc. unsuccessfully attempted to use a labor law analysis, but the court said it would have held the same way regardless.
The only factor that weighed slightly in favor of employment was the fact that Manny Company had the right to control the work, and had final authority of what was used. But otherwise, the rest of the factors weighed in favor of Miller: screenwriting is a skilled profession; the company provided no employment benefits; Miller wasn’t treated as an employee for tax purposes; the hiring party couldn’t assign additional projects under the contract; Miller worked for only two months on a project to project basis and was paid a flat fee; Miller worked from his home and used his own typewriter. The hiring company’s control over some ideas was insufficient to make the relationship an employee relationship as opposed to an independent contractor one.
Alternatively, the plaintiffs argued that their contributions to the Friday the 13th script made them joint authors of the work. If the court found that they were joint authors, then each of them would have had the right to continue using the work, subject to accounting of profits for the co-authors.
But their contributions were insufficient to show joint authorship, which requires that they made independent contributions and that they intended for the script to be a joint work. There was no intent. Miller was given sole credit for the work, and only Miller was asked to transfer rights to Manny Company. The fact that other people gave ideas to Miller – most notably, the insistence on including the lake scene at the end – wasn’t enough to show joint authorship.
I’m particularly intrigued by the court’s decision on the statute of limitations issue. Some people have argued that if a hiring company designates the work as a work for hire and registers the copyright as one, the three-year statute of limitations on ownership claims has begun and won’t toll. Under this view, by the time the creators could exercise a right to terminate the assignment, it would be too late because the statute of limitations had run when the hiring party claimed sole ownership as a work for hire.
The problem with that point of view should be immediately evident: it’s completely unfair. A party that assigned their rights to a company wouldn’t be able to bring a lawsuit to declare ownership three years after the company registered the copyright as a work for hire, because the author wouldn’t be able to get the rights back yet. Thus, if the court adopted the statute of limitations argument, the termination right would become meaningless.
Fortunately, the court rejected the argument, finding that the copyright registration couldn’t be relied on because the designation as a work for hire was false. But, surprisingly, the court went further than that and found that plaintiffs opposing the termination were outside the statute of limitations because they never challenged Miller’s sole declaration of authorship.
Miller won this round, but the plaintiffs have appealed. The case will go to the Second Circuit Court of Appeals, and it will attract a lot of attention. We’ll expect to see a lot of amicus participation. Guidance from the Second Circuit will be helpful in the larger fight for termination rights, as we’re sure to see more lawsuits like this one. For instance, the debate over authorship of sound recordings, and whether they qualify as works for hire, has still not been sufficiently addressed. The Friday the 13th dispute would have been an easy fix for the filmmaker – a written agreement designating the screenplay as a work for hire at the time of assignment. With sound recordings and some other works of authorship, many people (including myself) believe that sound recordings are not eligible to be works for hire under the independent contractor definition because they aren’t specified. Thus, even a signed writing can’t make sound recordings work for hire.
If you’re an author, or if you‘re a company relying on works of authorship, you need to keep up on this case.
Mark Jaffe is supervising partner at TorMark Law in Berkeley, California, and a partner at Tor Ekeland Law, PLLC in Brooklyn, where he represents creative professionals. His article on termination rights, Defusing the Time Bomb Once Again: Determining Authorship in a Sound Recording won the 2007 Seton Award from the Copyright Society of the U.S.A. A babysitter let Mark watch Friday the 13th when he was young, and he doesn’t like to admit that the lake scene at the end terrified him.
The USPTO is reporting hacks into trademark registrations, by third parties falsely claiming ownership. The USTPO should notify you or your attorney of any applications to change ownership, but you should review all your registrations to make sure there have been no unwanted changes.
On January 7, 2019, the second circuit appeals court will hear oral arguments on the important internet law case , Herrick v. Grindr. Tor will be arguing it alongside C. A. Goldberg Law.
The case has attracted attention on both sides, with friends of the court briefs being filed by EPIC, among others.
Read More at C.A. Goldberg Law here.
Noted Community Decency Act scholar William McGeveran tweeted that this is “A case to watch..”
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