On March 2, 2010, the Supreme Court issued its decision in Reed Elsevier v. Muchnick. In that decision, the Court clarified that Section 411(a) of the Copyright Act "does not restrict a federal court's subject-matter jurisdiction." Instead, Section 411(a) is merely a "precondition to filing a claim." Importantly, the plurality explicitly declined to address "whether Section 411(a)'s registration requirement is a mandatory precondition to suit that . . . district courts may or should enforce sua sponte by dismissing copyright infringement claims involving unregistered works." Instead, the Court left that issue unresolved.
Picking up where Reed Elsevier left off, the Ninth Circuit specifically addressed that issue in a decision on May 25, 2010, namely what it means to "register" a copyrighted work. See Cosmetic Ideas, Inc. v. IAC/InteractiveCorp, 606 F.3d 612 (9th Cir. 2010). The Cosmetic Court issued a thoughtful decision that concluded "registration" under 411(a) is accomplished upon mere "receipt by the Copyright Office of a complete application." In so holding, the Ninth Circuit adopted what many courts refer to as the "application" approach, rather than the "registration" approach.
The Cosmetic Ideas decision provides the best analysis on the issue to date. In amplifying the sound reasoning of La Resolana Architects, PA v. Clay Realtors Angel Fire, 416 F.3d 1195, 1202-04 (10th Cir. 2005), the Cosmetic Ideas opinion examined the plain language of Section 411(a), the Copyright Act as a whole, and even the purpose of the Act. It found the plain language unhelpful in defining "registration," and it found five sections of the broader Copyright Act to be instructive, but not clearly supporting either the application approach or the registration approach. In examining the purpose of the Copyright Act, the court concluded that "the application approach better fulfills Congress's purpose of providing broad copyright protection while maintaining a robust federal register."
Specifically, the Cosmetic Ideas Court noted that the application approach offers these benefits over the registration approach: (a) "avoids unnecessary delay in copyright infringement litigation . . . [g]iven that copyright owners will ultimately be allowed to proceed regardless of how the Copyright Office treats the application"; (b) "avoids delay without impairing the central goal of copyright registration"; and (c) avoids the "worst-case scenario" under the registration approach, which "could cause a party to lose its ability to sue."
One benefit of the application approach that Cosmetic Ideas missed is that it puts U.S. works on equal footing with non-U.S. works. Under the Berne Convention, foreign works may not be subject to registration formalities prior to initiating litigation. The registration approach actually treats non-U.S. works better than U.S. works, because it requires owners of U.S. works to wait for registration prior to filing an infringement action. By adopting the application approach, U.S. works are given equally favorable treatment.
Look for the Cosmetic Ideas opinion to be the new road map for courts across the country as they grapple with deciding whether to adopt the application or registration approach. More courts should follow the analysis in Cosmetic Ideas and reach the same conclusion.
Finally, many of the courts that adopted the registration approach did so while dismissing the complaint before them for lack of subject matter jurisdiction. That is, many of them held that since 411(a) required a copyright plaintiff to obtain registration prior to filing suit (i.e., the registration approach), the court lacked subject matter jurisdiction. See Specific Software Solutions, LLC v. Institute of WorkComp Advisors, LLC, 615 F. Supp. 2d 708, 716 (M.D. Tenn. 2009). As Cosmetic Ideas notes in note 4, however, many of these cases have been abrogated, in part, by Reed Elsevier. Knowing that should help lawyers and litigants who are seeking to persuade courts to abandon the registration approach and adopt the application approach instead.
Tuesday, August 3, 2010
Sunday, February 28, 2010
Artists' Rights & the Law
I had a good conversation with sculptor John T. Unger on his Internet radio show, Art Heroes, on February 25, 2010. John is a client of mine who creates artisinal firebowls. He's also a big proponent of social media and uses it to market his art and create an online community of artists. In 2009, I had the privilege of representing John in a federal court lawsuit over his copyrights and trade dress in the firebowls when unauthorized replicas of his bowls began appearing on the market.
In our conversation on Art Heroes, we talked about "Artists' Rights and the Law." John began by asking me to discuss the difference between rights under copyright, trademark, trade dress and patent law. We talked about the benefits conferred on artists who register their works (such as the right to recover statutory damages in court, the right to attorneys fees under copyright law, and the presumption of validity that accompanies registrations). We also talked about how for most artists, copyright provides the longest amount of protection (life of the artist plus 70 years), compared with trademark (10 year periods open to renewal) and design patents (14 years). Applying for copyright registration is also more affordable ($35 filing fee) than applying for trademark registration ($335 filing fee per class), both of which are significantly more affordable than applying for a patent ($5,000-$10,000 including attorney fees).
We also talked about when an artist may use, rely on, critique or "sample" other artists' work. Copyright protection confers exclusive rights on authors, but an exception to this exclusivity is the doctrine known as "fair use." For most artists, the question comes down to whether their newer work that borrows from earlier work is "transformative." I'll blog more on Fair Use in the future.
We also talked about something known as "Recapture Rights" or "Termination of Transfer Rights," which highly impacts literary authors and singers/songwriters, among other artists. Often when young or budding artists are getting established, they transfer their copyright rights to publishers or others in exchange for securing a book or record deal. Realizing the inherent inequities of this draconian step, Congress gave artists the right to "recapture" their copyright rights for five year periods. For works created Jan. 1, 1978 to present, recapture rights kick in after first 35 years for a 5 year window from year 35 to year 40 (the earliest this would apply is 2013). For most works created prior to Jan. 1, 1978, the recapture period is between 56th and 60th years, and artists get a second bite at the apple between years 75 and 79. Artists get the remainder of the copyright term if they provide notice of termination of transfer during these five-year periods. Don't forget: recapture rights are "use it or lose it" rights -- if you miss the five-year window, you're out of luck. I'll blog more on Recapture Rights in the future, too.
John asked me what I thought about Myows.com, an online service that provides a central repository for artists' online works. Myows stands for "My Original Works," and, which it is still in its infancy, looks like a great supplement to copyright registration. Myows.com provides a time-stamp on all online works, down to the minute, which could be useful in establishing priority in copyright infringement suits. To the extent Myows.com offers legal advice, I found several statements that were inaccurate and hope, instead, that Myows will delete these pages. Major upside: Myops is FREE.
John hosts different people every week to talk about art and artists' rights. Check out his next show this coming Thursday at 9pm Central. Future guests are scheduled to talk about licensing rights and becoming famous as an artist without leaving your day job.
In our conversation on Art Heroes, we talked about "Artists' Rights and the Law." John began by asking me to discuss the difference between rights under copyright, trademark, trade dress and patent law. We talked about the benefits conferred on artists who register their works (such as the right to recover statutory damages in court, the right to attorneys fees under copyright law, and the presumption of validity that accompanies registrations). We also talked about how for most artists, copyright provides the longest amount of protection (life of the artist plus 70 years), compared with trademark (10 year periods open to renewal) and design patents (14 years). Applying for copyright registration is also more affordable ($35 filing fee) than applying for trademark registration ($335 filing fee per class), both of which are significantly more affordable than applying for a patent ($5,000-$10,000 including attorney fees).
We also talked about when an artist may use, rely on, critique or "sample" other artists' work. Copyright protection confers exclusive rights on authors, but an exception to this exclusivity is the doctrine known as "fair use." For most artists, the question comes down to whether their newer work that borrows from earlier work is "transformative." I'll blog more on Fair Use in the future.
We also talked about something known as "Recapture Rights" or "Termination of Transfer Rights," which highly impacts literary authors and singers/songwriters, among other artists. Often when young or budding artists are getting established, they transfer their copyright rights to publishers or others in exchange for securing a book or record deal. Realizing the inherent inequities of this draconian step, Congress gave artists the right to "recapture" their copyright rights for five year periods. For works created Jan. 1, 1978 to present, recapture rights kick in after first 35 years for a 5 year window from year 35 to year 40 (the earliest this would apply is 2013). For most works created prior to Jan. 1, 1978, the recapture period is between 56th and 60th years, and artists get a second bite at the apple between years 75 and 79. Artists get the remainder of the copyright term if they provide notice of termination of transfer during these five-year periods. Don't forget: recapture rights are "use it or lose it" rights -- if you miss the five-year window, you're out of luck. I'll blog more on Recapture Rights in the future, too.
John asked me what I thought about Myows.com, an online service that provides a central repository for artists' online works. Myows stands for "My Original Works," and, which it is still in its infancy, looks like a great supplement to copyright registration. Myows.com provides a time-stamp on all online works, down to the minute, which could be useful in establishing priority in copyright infringement suits. To the extent Myows.com offers legal advice, I found several statements that were inaccurate and hope, instead, that Myows will delete these pages. Major upside: Myops is FREE.
John hosts different people every week to talk about art and artists' rights. Check out his next show this coming Thursday at 9pm Central. Future guests are scheduled to talk about licensing rights and becoming famous as an artist without leaving your day job.
Thursday, October 1, 2009
The More Interactive Your Website, the More Likely Your Business Can Be Forced to Defend Lawsuits in Other States
Businesses need to be intentional about how interactive they allow their websites to be, since they can be forced to defend themselves in lawsuits filed in another state if they actually make sales in other states through their websites. In a decision issued August 28, 2009, federal Judge Aleta Trauger held that the U.S. District Court for the Middle District of Tennessee had no personal jurisdiction over the Denver-based defendant that had been sued for trademark infringement and unfair competition in Nashville, despite the defendant having a fully interactive web page from which Tennessee residents could order services. Capital Confirmation, Inc. v. Auditconfirmations, LLC, No. 3:09-0412 (M.D. Tenn.). My law partner and I served as local counsel for the defendant, along with Bobbee Musgrave of Denver.
For many reasons, it is almost always preferable to defend a lawsuit in your hometown or home state. In today's environment, where almost every business has a website, many businesses would be surprised to learn they can be forced to defend themselves in a lawsuit in another state, depending in part on how interactive their website is. Fully interactive websites are those that allow customers to order goods and services from the site.
In general, the law requires plaintiffs to sue defendants where they reside or have their principal place of business, or where the acts giving rise to the lawsuit occurred. But where defendants "purposefully avail" themselves of the benefits of another state, they can be forced to defend in that other state. Before the Internet, defendants who sold their goods and services in person typically did so locally, and could not be sued in other states. The Internet, however, has allowed businesses of all sizes to expand their reach without ever physically leaving their home state. Businesses with a robust Internet presence may unwittingly be at risk for defending against out-of-state lawsuits.
In the Sixth Circuit (the appeals court that covers Tennessee, Kentucky, Ohio and Michigan), a website's interactivity is measured on a sliding scale. At one end are "passive sites that only offer information for the user to access." At the other end are "active sites that clearly transact business and/or form contracts." In the middle are "hybrid or interactive sites that allow users to exchange information with the host computer," and these middle cases must be evaluated on an individual basis. See Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 890 (6th Cir. 2002).
Following well-established Sixth Circuit precedence, Judge Trauger's decision makes clear that an interactive website by itself is insufficient to be haled into federal court in Tennessee. As she explained, suing an out-of-state defendant in Tennessee requires "something more" than merely an interactive web page.
In Capital Confirmations, the defendant's web page was fully interactive, but it had no legitimate sales into Tennessee. The plaintiff had posed as a non-existent individual named "Frank Jepson," purporting to enter into a transaction on the defendant's web page from within Tennessee. The court considered these transactions to be illegitimate. The only other interaction with Tennessee was from a request that was aborted before any payment was made by the customer, so the court considered that interaction to be incomplete and of no impact. The mere fact that a Tennessee resident could theoretically purchase goods or services over the defendant's web page is insufficient to hale the defendant into Tennessee.
The lesson to be learned from this decision is that businesses need to be intentional about the level of their web pages' interactivity. One upside of the Internet is the ability to sell and market all across the country, not to mention all over the world. The downside is that sales in other states can create jurisdiction in courts far from home. One step businesses can take to minimize the chance of being sued by their customers out of state is to include a provision in all contracts that sets the exclusive jurisdiction in the place where the business is headquartered. But such a provision will not work in suits by non-customers. Instead, businesses need to gauge their appetite for defending lawsuits in other states before selling goods and services there, whether through the Internet, over the telephone, through distributors or in person.
For many reasons, it is almost always preferable to defend a lawsuit in your hometown or home state. In today's environment, where almost every business has a website, many businesses would be surprised to learn they can be forced to defend themselves in a lawsuit in another state, depending in part on how interactive their website is. Fully interactive websites are those that allow customers to order goods and services from the site.
In general, the law requires plaintiffs to sue defendants where they reside or have their principal place of business, or where the acts giving rise to the lawsuit occurred. But where defendants "purposefully avail" themselves of the benefits of another state, they can be forced to defend in that other state. Before the Internet, defendants who sold their goods and services in person typically did so locally, and could not be sued in other states. The Internet, however, has allowed businesses of all sizes to expand their reach without ever physically leaving their home state. Businesses with a robust Internet presence may unwittingly be at risk for defending against out-of-state lawsuits.
In the Sixth Circuit (the appeals court that covers Tennessee, Kentucky, Ohio and Michigan), a website's interactivity is measured on a sliding scale. At one end are "passive sites that only offer information for the user to access." At the other end are "active sites that clearly transact business and/or form contracts." In the middle are "hybrid or interactive sites that allow users to exchange information with the host computer," and these middle cases must be evaluated on an individual basis. See Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 890 (6th Cir. 2002).
Following well-established Sixth Circuit precedence, Judge Trauger's decision makes clear that an interactive website by itself is insufficient to be haled into federal court in Tennessee. As she explained, suing an out-of-state defendant in Tennessee requires "something more" than merely an interactive web page.
In Capital Confirmations, the defendant's web page was fully interactive, but it had no legitimate sales into Tennessee. The plaintiff had posed as a non-existent individual named "Frank Jepson," purporting to enter into a transaction on the defendant's web page from within Tennessee. The court considered these transactions to be illegitimate. The only other interaction with Tennessee was from a request that was aborted before any payment was made by the customer, so the court considered that interaction to be incomplete and of no impact. The mere fact that a Tennessee resident could theoretically purchase goods or services over the defendant's web page is insufficient to hale the defendant into Tennessee.
The lesson to be learned from this decision is that businesses need to be intentional about the level of their web pages' interactivity. One upside of the Internet is the ability to sell and market all across the country, not to mention all over the world. The downside is that sales in other states can create jurisdiction in courts far from home. One step businesses can take to minimize the chance of being sued by their customers out of state is to include a provision in all contracts that sets the exclusive jurisdiction in the place where the business is headquartered. But such a provision will not work in suits by non-customers. Instead, businesses need to gauge their appetite for defending lawsuits in other states before selling goods and services there, whether through the Internet, over the telephone, through distributors or in person.
Wednesday, September 30, 2009
In Long-Awaited Move, President Obama Appoints IP Czar
In a long-awaited move, President Obama has nominated the US Intellectual Property Enforcement Coordinator, otherwise known as the "IP Czar." This position was created with the enactment of the PRO-IP Act, which former President Bush signed into law on October 3, 2008. He deferred nominating anyone for the IP Czar position until the Act received partial funding, which did not occur until 2009, and until the next president took office.
On September 25, 2009, President Obama nominated Victoria Espinel , who currently serves as a visiting assistant professor at the George Mason University School of Law. Her nomination awaits confirmation by the Senate.
Some are calling Ms. Espinel the Copyright Czar, but that title is too narrow, since her role stretches beyond mere copyright issues. She will chair the newly created IP Enforcement Coordinator advisory committee, comprised of representatives from multiple federal departments, and her primary responsibility will be to coordinate efforts across the entire federal government to protect American intellectual property in all its forms.
You can read more about the expected role of the IP Czar in the context of IP reform, in an article entitled "The PRO-IP Act: Another Weapon Against a Failing Economy," which Dylan Ruga and I wrote, and which the American Bar Association published in the January/February 2009 issue of Landslide.
On September 25, 2009, President Obama nominated Victoria Espinel , who currently serves as a visiting assistant professor at the George Mason University School of Law. Her nomination awaits confirmation by the Senate.
Some are calling Ms. Espinel the Copyright Czar, but that title is too narrow, since her role stretches beyond mere copyright issues. She will chair the newly created IP Enforcement Coordinator advisory committee, comprised of representatives from multiple federal departments, and her primary responsibility will be to coordinate efforts across the entire federal government to protect American intellectual property in all its forms.
You can read more about the expected role of the IP Czar in the context of IP reform, in an article entitled "The PRO-IP Act: Another Weapon Against a Failing Economy," which Dylan Ruga and I wrote, and which the American Bar Association published in the January/February 2009 issue of Landslide.
Saturday, September 5, 2009
Middle District of Tennessee adopts Narrow Approach to Copyright Registration -- for the Time Being
A split exists among the various federal circuits in the United States over what is required before a plaintiff may file a lawsuit asserting copyright infringement. Recently, the Middle District of Tennessee issued a reported decision that adopted the “narrow approach.” Specific Software Solutions, LLC v. Institute of Workcomp Advisors, LLC, 615 F. Supp. 2d 708 (M.D. Tenn. 2009). Thus, for the present time, copyright owners in the 32 counties comprising Middle Tennessee must actually have received a determination from the Copyright Office as to the registrability of their works before they may sue another party for infringement in this judicial district.
The question before the court in Specific Software was, “What constitutes registration?” The Copyright Act states at 17 U.S.C. Section 411(a), and the Sixth Circuit has held, that registration is a prerequisite to filing a copyright infringement suit. But the Sixth Circuit has not decided what constitutes “registration” under this provision of the Copyright Act, and courts across the country have reached different conclusions.
The “narrow approach” holds that registration is not considered complete until the Copyright Office reaches a determination on the merits of the application and either accepts it or rejects it. Some of the courts that follow the narrow approach include: the Western District of Michigan, the Central District of California and, for now, the Middle District of Tennessee.
The “broad approach” holds that registration is not dependent upon any consideration or action by the Copyright Office. Instead, courts following the broad approach generally consider the registration requirement to be satisfied upon the plaintiff’s submission of the following to the Copyright Office: an application, deposit copy of the work and required fee. These courts note that the Copyright Office’s eventual acceptance or rejection of the application has no bearing since the Copyright Act explicitly allows a plaintiff to initiate suit for infringement even when the application has been rejected. Some of the courts that follow the broad approach include the District Court for the District of Columbia, the Middle District of North Carolina, the Fifth Circuit and the 10th Circuit.
In adopting the narrow approach, the Specific Software Court noted that those courts adopting the broad approach have “correctly recognized that there is something ‘uneconomical’” about dismissing a complaint simply because a plaintiff does not yet have a certificate of registration, especially since the plaintiff is allowed to sue even if the Copyright Office ultimately rejects the application and denies registration. 615 F. Supp. 2d at 715-16. But the court was constrained by its interpretation of the Copyright Act, as currently worded, and settled on the narrow approach. Id. at 716.
Across the country, this issue is far from settled. Presently pending before the Supreme Court is the case Reed Elsevier, Inc. v. Muchnick, which, among other issues, raises the question of how “registration” should be defined under the Copyright Act in relation to initiating a suit for infringement. It is set for oral argument on October 7, 2009. Expect to see more clashes among the circuits until the Supreme Court issues a decision in that case. Depending on how the Supreme Court comes out on that issue, the holding in Specific Software may or may not be overruled.
In my own role as Vice Chair of the American Bar Association’s Copyright Litigation Committee, I am helping lead a working group that has examined this precise issue. For a number of reasons, we are recommending that the Copyright Act be amended to adopt the broad approach. Among other reasons, the broad approach is consistent with the fact that, under the Copyright Act, copyright owners enjoy protection from the moment they create their work, regardless of whether they ever register their work. Amending the Copyright Act to adopt the broad approach would also put the United States on equal footing with other Berne Convention countries, and abolish the higher burden currently placed on United States works, as compared with non-United States works.
For the present time, plaintiffs who need to sue for copyright infringement but who have not yet obtained either registration or rejection from the Copyright Office should consider suing in one of the courts that has adopted the broad approach. Many times, plaintiffs have a choice in where they file suit. They can sue either where the defendant resides or has its principal place of business. But they can also sue where the transaction giving rise to the lawsuit occurred. These are often two different states. And as I discussed in my last post, many courts will exercise personal jurisdiction over defendants who make significant and repeated sales into a specific state, even through the Internet. For now, plaintiffs who do not yet have a determination from the Copyright Office in hand should weigh all their options and bring suit in one of the states following the broad approach.
The question before the court in Specific Software was, “What constitutes registration?” The Copyright Act states at 17 U.S.C. Section 411(a), and the Sixth Circuit has held, that registration is a prerequisite to filing a copyright infringement suit. But the Sixth Circuit has not decided what constitutes “registration” under this provision of the Copyright Act, and courts across the country have reached different conclusions.
The “narrow approach” holds that registration is not considered complete until the Copyright Office reaches a determination on the merits of the application and either accepts it or rejects it. Some of the courts that follow the narrow approach include: the Western District of Michigan, the Central District of California and, for now, the Middle District of Tennessee.
The “broad approach” holds that registration is not dependent upon any consideration or action by the Copyright Office. Instead, courts following the broad approach generally consider the registration requirement to be satisfied upon the plaintiff’s submission of the following to the Copyright Office: an application, deposit copy of the work and required fee. These courts note that the Copyright Office’s eventual acceptance or rejection of the application has no bearing since the Copyright Act explicitly allows a plaintiff to initiate suit for infringement even when the application has been rejected. Some of the courts that follow the broad approach include the District Court for the District of Columbia, the Middle District of North Carolina, the Fifth Circuit and the 10th Circuit.
In adopting the narrow approach, the Specific Software Court noted that those courts adopting the broad approach have “correctly recognized that there is something ‘uneconomical’” about dismissing a complaint simply because a plaintiff does not yet have a certificate of registration, especially since the plaintiff is allowed to sue even if the Copyright Office ultimately rejects the application and denies registration. 615 F. Supp. 2d at 715-16. But the court was constrained by its interpretation of the Copyright Act, as currently worded, and settled on the narrow approach. Id. at 716.
Across the country, this issue is far from settled. Presently pending before the Supreme Court is the case Reed Elsevier, Inc. v. Muchnick, which, among other issues, raises the question of how “registration” should be defined under the Copyright Act in relation to initiating a suit for infringement. It is set for oral argument on October 7, 2009. Expect to see more clashes among the circuits until the Supreme Court issues a decision in that case. Depending on how the Supreme Court comes out on that issue, the holding in Specific Software may or may not be overruled.
In my own role as Vice Chair of the American Bar Association’s Copyright Litigation Committee, I am helping lead a working group that has examined this precise issue. For a number of reasons, we are recommending that the Copyright Act be amended to adopt the broad approach. Among other reasons, the broad approach is consistent with the fact that, under the Copyright Act, copyright owners enjoy protection from the moment they create their work, regardless of whether they ever register their work. Amending the Copyright Act to adopt the broad approach would also put the United States on equal footing with other Berne Convention countries, and abolish the higher burden currently placed on United States works, as compared with non-United States works.
For the present time, plaintiffs who need to sue for copyright infringement but who have not yet obtained either registration or rejection from the Copyright Office should consider suing in one of the courts that has adopted the broad approach. Many times, plaintiffs have a choice in where they file suit. They can sue either where the defendant resides or has its principal place of business. But they can also sue where the transaction giving rise to the lawsuit occurred. These are often two different states. And as I discussed in my last post, many courts will exercise personal jurisdiction over defendants who make significant and repeated sales into a specific state, even through the Internet. For now, plaintiffs who do not yet have a determination from the Copyright Office in hand should weigh all their options and bring suit in one of the states following the broad approach.
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