INTERNATIONAL COPYRIGHT
CLASS 9
CONFLICT-OF-LAWS ISSUES IN INTERNATIONAL COPYRIGHT
Itar-Tass Russian News Agency v. Russian Kurier, 153 F.3d 82 (2d Cir. 1998)
Jon O. Newman, Circuit Judge:
This appeal primarily presents issues concerning the choice of law in international copyright cases and the substantive meaning of Russian copyright law as to the respective rights of newspaper reporters and newspaper publishers. The conflicts issue is which country’s law applies to issues of copyright ownership and to issues of infringement. The primary substantive issue under Russian copyright law is whether a newspaper publishing company has an interest sufficient to give it standing to sue for copying the text of individual articles appearing in its newspapers, or whether complaint about such copying may be made only by the reporters who authored the articles. Defendants-appellants Russian Kurier, Inc. (“Kurier”) and Oleg Pogrebnoy (collectively “the Kurier defendants”) appeal from the March 25, 1997, judgment of the District Court for the Southern District of New York (John G. Koeltl, Judge) enjoining them from copying articles that have appeared or will appear in publications of the plaintiffs-appellees, mainly Russian newspapers and a Russian news agency, and awarding the appellees substantial damages for copyright infringement. On the conflicts issue, we conclude that, with respect to the Russian plaintiffs, Russian law determines the ownership and essential nature of the copyrights alleged to have been infringed and that United States law determines whether those copyrights have been infringed in the United States and, if so, what remedies are available. We also conclude that Russian law, which explicitly excludes newspapers from a work-for-hire doctrine, vests exclusive ownership interests in newspaper articles in the journalists who wrote the articles, not in the newspaper employers who compile their writings. We further conclude that to the extent that Russian law accords newspaper publishers an interest distinct from the copyright of the newspaper reporters, the publishers’ interest, like the usual ownership interest in a compilation, extends to the publishers’ original selection and arrangement of the articles, and does not entitle the publishers to damages for copying the texts of articles contained in a newspaper compilation. We therefore reverse the judgment to the extent that it granted the newspapers relief for copying the texts of the articles. However, because one non-newspaper plaintiff-appellee is entitled to some injunctive relief and damages and other plaintiffs-appellees may be entitled to some, perhaps considerable, relief, we also remand for further consideration of this lawsuit.
Background
The lawsuit concerns Kurier, a Russian language weekly newspaper with a circulation in the New York area of about 20,000. It is published in New York City by defendant Kurier. Defendant Pogrebnoy is president and sole shareholder of Kurier and editor-in-chief of Kurier. The plaintiffs include corporations that publish, daily or weekly, major Russian language newspapers in Russia and Russian language magazines in Russia or Israel; Itar-Tass Russian News Agency (“Itar-Tass”), formerly known as the Telegraph Agency of the Soviet Union (TASS), a wire service and news gathering company centered in Moscow, functioning similarly to the Associated Press; and the Union of Journalists of Russia (“UJR”), the professional writers union of accredited print and broadcast journalists of the Russian Federation. The Kurier defendants do not dispute that Kurier has copied about 500 articles that first appeared in the plaintiffs’ publications or were distributed by Itar-Tass. The copied material, though extensive, was a small percentage of the total number of articles published in Kurier. The Kurier defendants also do not dispute how the copying occurred: articles from the plaintiffs’ publications, sometimes containing
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headlines, pictures, bylines, and graphics, in addition to text, were cut out, pasted on layout sheets, and sent to Kurier’s printer for photographic reproduction and printing in the pages of Kurier. Most significantly, the Kurier defendants also do not dispute that, with one exception, they had not obtained permission from any of the plaintiffs to copy the articles that appeared in Kurier. Pogrebnoy claimed at trial to have received permission from the publisher of one newspaper, but his claim was rejected by the District Court at trial. Pogrebnoy also claimed that he had obtained permission from the authors of six of the copied articles. The District Court made no finding as to whether this testimony was credible, since authors’ permission was not pertinent to the District Court’s view of the legal issues. Preliminary injunction ruling. After a hearing in May 1995, the District Court issued a preliminary injunction, prohibiting the Kurier defendants from copying the “works” of four plaintiff news organizations. Since the Court’s analysis framed the key issue that would be considered at trial and is raised on appeal, the Court’s opinion and the Russian statutory provisions relied on need to be explained. Preliminarily, the Court ruled that the request for a preliminary injunction concerned articles published after March 13, 1995, the date that Russia acceded to the Berne Convention. The Court then ruled that the copied works were “Berne Convention works” and that the plaintiffs’ rights were to be determined according to Russian copyright law. The Court noted that under Russian copyright law authors of newspaper articles retain the copyright in their articles unless there has been a contractual assignment to their employer or some specific provision of law provides that the author’s rights vest in the employer. Since the defendants alleged no claim of a contractual assignment, the Court next considered the provision of the 1993 Russian Federation Law on Copyright and Neighboring Rights (“Russian Copyright Law”) (World Intellectual Property Organization (WIPO) translation) concerning what the United States Copyrights Act calls “works made for hire.” That provision gives employers the exclusive right to “exploit” the “service- related work” produced by employees in the scope of their employment, absent some contractual arrangement. However, the Court noted, Article 14(4) specifies that subsection 2 does not apply to various categories of works, including newspapers. Accepting the view of plaintiffs’ expert, Professor Vratislav Pechota, Judge Koeltl therefore ruled that the Russian version of the work-for-hire doctrine in Article 14(2), though exempting newspapers, applies to press agencies, like Itar-Tass. Turning to the rights of the newspapers, Judge Koeltl relied on Article 11, captioned “Copyright of Compiler of Collections and Other Works.” This Article contains two sub-sections. Article 11(1) specifies the rights of compilers generally: The author of a collection or any other composite work (compiler) shall enjoy copyright in the selection or arrangement of subject matter that he has made insofar as that selection or arrangement is the result of a creative effort of compilation. The compiler shall enjoy copyright subject to respect for the rights of the authors of each work included in the composite work. Each of the authors of the works included in the composite work shall have the right to exploit his own work independently of the composite work unless the author’s contract provides otherwise. . . . . Article 11(2), the interpretation of which is critical to this appeal, specifies the rights of compilers of those works that are excluded from the work-for-hire provision of Article 14(2): The exclusive right to exploit encyclopedias, encyclopedic dictionaries, collections of scientific works—published in either one or several installments— newspapers, reviews and other periodical publications shall belong to the editor thereof. The editor shall have the right to mention his name or to demand such mention whenever the said publications are exploited.
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The authors of the works included in the said publications shall retain the exclusive rights to exploit their works independently of the publication of the whole work. In another translation of the Russian Copyright Law, which was in evidence at the trial, the last phrase of Article 11(2) was rendered “independently from the publication as a whole.” Because the parties’ experts focused on the phrase “as a whole” in the Davis translation of Article 11(2), we will rely on the Davis translation for the rendering of this key phrase of Article 11(2), but all other references to the Russian Copyright Law will be to the WIPO translation. The District Court acknowledged, as the plaintiffs’ expert had stated, that considerable scholarly debate existed in Russia as to the nature of a publisher’s right “in a work as a whole.” Judge Koeltl accepted Professor Pechota’s view that the newspaper could prevent infringing activity “sufficient to interfere with the publisher’s interest in the integrity of the work.” Without endeavoring to determine what extent of copying would “interfere with” the “integrity of the work,” Judge Koeltl concluded that a preliminary injunction was warranted because what Kurier had copied was “the creative effort of the newspapers in the compilation of articles including numerous articles for the same issues, together with headlines and photographs.” The Court’s preliminary injunction opinion left it unclear whether at trial the plaintiffs could obtain damages only for copying the newspapers’ creative efforts as a compiler, such as the selection and arrangement of articles, the creation of headlines, and the layout of text and graphics, or also for copying the text of individual articles. Expert testimony at trial. At trial, this unresolved issue was the focus of conflicting expert testimony. The plaintiffs’ expert witness at trial was Michael Newcity, coordinator for the Center for Slavic, Eurasian and East European Studies at Duke University and an adjunct member of the faculty at the Duke University Law School. He opined that Article 11(2) gave the newspapers rights to redress copying not only of the publication “as a whole,” but also of individual articles. He acknowledged that the reporters retained copyrights in the articles that they authored, but stated that Article 11(2) created a regime of parallel exclusive rights in both the newspaper publisher and the reporter. He rejected the contention that exclusive rights could not exist in two parties, pointing out that co-authors shared exclusive rights to their joint work. Newcity offered two considerations in support of his position. First, he cited the predecessor of Article 11(2), Article 485 of the Russian Civil Code of 1964. That provision was similar to Article 11(2), with one change that became the subject of major disagreement among the expert witnesses. Article 485 had given compilers, including newspaper publishers, the right to exploit their works “as a whole.” The 1993 revision deleted “as a whole” from the first paragraph of the predecessor of Article 11(2), where it had modified the scope of the compiler’s right, and moved the phrase to the second paragraph of revised Article 11(2), where it modifies the reserved right of the authors of articles within a compilation to exploit their works “independently of the publication as a whole.” Though Newcity opined that even under Article 485, reprinting of “one or two or three, at most,” articles from a newspaper would have constituted infringement of the copyright “as a whole,” he rested his reading of Article 11(2) significantly on the fact that the 1993 revision dropped the phrase “as a whole” from the paragraph that specified the publisher’s right. This deletion, he contended, eliminated whatever ambiguity might have existed in the first paragraph of Article 485. Second, Newcity referred to an opinion of the Judicial Chamber for Informational Disputes of the President of the Russian Federation (“Informational Disputes Chamber”), issued on June 8, 1995. That opinion had been sought by the editor-in-chief of one of the plaintiffs in this litigation, Moskovskie Novosti (Moscow News), who specifically called the tribunal’s attention to the pending litigation between Russian media organizations and the publisher of Kurier. The Informational Disputes Chamber stated, in response to one of the questions put to it, “In the event of a violation of its rights, including the improper printing of one or two articles, the publisher [of a newspaper] has the right to petition a court for defense of its rights.”
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Defendants’ experts presented a very different view of the rights of newspapers. Professor Peter B. Maggs of the University of Illinois, Urbana-Champaign, College of Law, testifying by deposition, pointed out that Article 11(2) gives authors the exclusive rights to their articles and accords newspaper publishers only the “exclusive rights to the publication as a whole, because that’s the only thing not reserved to the authors.” He opined that a newspaper’s right to use of the compiled work “as a whole” would be infringed by the copying of an entire issue of a newspaper and probably by copying a substantial part of one issue, but not by the copying of a few articles, since the copyright in the articles belongs to the reporters. He also disagreed with Newcity’s contention that exclusive rights to individual articles belonged simultaneously to both the newspaper and the reporter. Exclusive rights, he maintained, cannot be held by two people, except in the case of co-authors, who have jointly held rights against the world. The defendants’ first expert witness at trial was Michael Solton, who has worked in Moscow and Washington as an associate of the Steptoe & Johnson law firm. Under Article 11, he testified, authors retain exclusive rights to their articles in compilations, the compiler acquires a copyright in the selection and creative arrangement of materials in the compilation, and a newspaper publisher typically acquires the limited rights of the compiler by assignment from the compiler. The publisher, he said, does not acquire any rights to the individual articles. Solton declined to attach any significance to the decision issued by the Informational Disputes Chamber because, he explained, the bylaws of that body accord it authority only over limited matters concerning the mass media and explicitly preclude it from adjudicating matters that Russian law refers to courts of the Russian Federation, such as copyright law. The defendants’ second expert trial witness was Svetlana Rozina, a partner of the Lex International law firm, who has consulted for the Russian government. She wrote the first draft of what became the 1993 revision of the Russian Copyright Law. She also testified that authors of works in compilations retain the exclusive right to their works, and that publishers of compilations do not have any rights to individual articles. Turning to the change in the placement of the phrase “as a whole” from Article 11(1) to Article 11(2), she explained that no substantive change was intended; the shift was made “for the purpose of Russian grammar.” She also agreed with Solton that the Informational Disputes Chamber renders advice on matters concerning freedom of mass information and lacks the competence to adjudicate issues of copyright law. Trial ruling. The District Court resolved the dispute among the experts by accepting Newcity’s interpretation of Russian copyright law. As he had previously ruled in granting the preliminary injunction, Judge Koeltl recognized that newspapers acquire no rights to individual articles by virtue of Article 14 since the Russian version of the work-for-hire doctrine is inapplicable to newspapers. Nevertheless, Judge Koeltl accepted Newcity’s view of Article 11, relying on both the movement of the phrase “as a whole” from the first paragraph of Article 11(2) to the second paragraph of Article 11(2), and the opinion of the Informational Disputes Chamber. He also reasoned that publishers have “the real economic incentive to prevent wholesale unauthorized copying,” and that, in the absence of assignments of rights to individual articles, widespread copying would occur if publishers could not prevent Kurier’s infringements. The District Court estimated Kurier’s profits during the relevant years at $2 million and found that 25 percent of these profits were attributable to the copied articles. The Court therefore awarded the plaintiffs $500,000 in actual damages against Kurier and Pogrebnoy. The Court also ruled that the plaintiffs were entitled to statutory damages with respect to 28 articles for which the plaintiffs had obtained United States copyright registrations. The Court found that the registered articles had originally appeared in 15 different publications and concluded that the plaintiffs were entitled to 15 awards of statutory damages. The Court found the violations willful and set each statutory award at $2,700. However, to avoid duplicative recovery, the Court ruled that the actual and statutory damages could not be aggregated and afforded the plaintiffs their choice of whether to receive statutory damages (offsetting the statutory award from the actual damages award) or actual damages. The Court awarded $3,934 in total damages against defendant Linco Printing, which prints Kurier; this sum comprised actual damages
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of $1,017, reduced to $934 to avoid partial duplication with statutory damages, plus $3,000 in statutory damages.
Discussion
I. Choice of Law
The threshold issue concerns the choice of law for resolution of this dispute. That issue was not initially considered by the parties, all of whom turned directly to Russian law for resolution of the case. Believing that the conflicts issue merited consideration, we requested supplemental briefs from the parties and appointed Professor William F. Patry as Amicus Curiae. Prof. Patry has submitted an extremely helpful brief on the choice of law issue. Choice of law issues in international copyright cases have been largely ignored in the reported decisions and dealt with rather cursorily by most commentators. Examples pertinent to the pending appeal are those decisions involving a work created by the employee of a foreign corporation. Several courts have applied the United States work-for-hire doctrine without explicit consideration of the conflicts issue. Other courts have applied foreign law. In none of these cases, however, was the issue of choice of law explicitly adjudicated. The conflicts issue was identified but ruled not necessary to be resolved in Greenwich Film Productions S.A. v. D.R.G. Records, Inc. The Nimmer treatise briefly (and perhaps optimistically) suggests that conflicts issues “have rarely proved troublesome in the law of copyright.” Relying on the “national treatment” principle of the Berne Convention and the Universal Copyright Convention (“U.C.C.”), Nimmer asserts, correctly in our view, that “an author who is a national of one of the member states of either Berne or the U.C.C., or one who first publishes his work in any such member state, is entitled to the same copyright protection in each other member state as such other state accords to its own nationals.” Nimmer then somewhat overstates the national treatment principle: “The applicable law is the copyright law of the state in which the infringement occurred, not that of the state of which the author is a national, or in which the work is first published.” The difficulty with this broad statement is that it subsumes under the phrase “applicable law” the law concerning two distinct issues—ownership and substantive rights, i.e., scope of protection. Another commentator has also broadly stated the principle of national treatment, but described its application in a way that does not necessarily cover issues of ownership. “The principle of national treatment also means that both the question of whether the right exists and the question of the scope of the right are to be answered in accordance with the law of the country where the protection is claimed.” We agree with the view of the Amicus that the Convention’s principle of national treatment simply assures that if the law of the country of infringement applies to the scope of substantive copyright protection, that law will be applied uniformly to foreign and domestic authors. Source of conflicts rules. Our analysis of the conflicts issue begins with consideration of the source of law for selecting a conflicts rule. Though Nimmer turns directly to the Berne Convention and the U.C.C., we think that step moves too quickly past the Berne Convention Implementation Act of 1988. Section 4(a)(3) of the Act amends Title 17 to provide: “No right or interest in a work eligible for protection under this title may be claimed by virtue of . . . the provisions of the Berne Convention . . . . Any rights in a work eligible for protection under this title that derive from this title . . . shall not be expanded or reduced by virtue of . . . the provisions of the Berne Convention.” We start our analysis with the Copyrights Act itself, which contains no provision relevant to the pending case concerning conflicts issues. We therefore fill the interstices of the Act by developing federal common law on the conflicts issue. In doing so, we are entitled to consider and apply principles of private international law, which are “‘part of our law.’” The choice of law applicable to the pending case is not necessarily the same for all issues. We consider first the law applicable to the issue of copyright ownership.
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Conflicts rule for issues of ownership. Copyright is a form of property, and the usual rule is that the interests of the parties in property are determined by the law of the state with “the most significant relationship” to the property and the parties. The Restatement recognizes the applicability of this principle to intangibles such as “a literary idea.” Since the works at issue were created by Russian nationals and first published in Russia, Russian law is the appropriate source of law to determine issues of ownership of rights. That is the well-reasoned conclusion of the Amicus Curiae, Prof. Patry, and the parties in their supplemental briefs are in agreement on this point. In terms of the United States Copyrights Act and its reference to the Berne Convention, Russia is the “country of origin” of these works, although “country of origin” might not always be the appropriate country for purposes of choice of law concerning ownership. To whatever extent we look to the Berne Convention itself as guidance in the development of federal common law on the conflicts issue, we find nothing to alter our conclusion. The Convention does not purport to settle issues of ownership, with one exception not relevant to this case. Selection of Russian law to determine copyright ownership is, however, subject to one procedural qualification. Under United States law, an owner (including one determined according to foreign law) may sue for infringement in a United States court only if it meets the standing test of 17 U.S.C. § 501(b), which accords standing only to the legal or beneficial owner of an “exclusive right.” Conflicts rule for infringement issues. On infringement issues, the governing conflicts principle is usually lex loci delicti, the doctrine generally applicable to torts. We have implicitly adopted that approach to infringement claims, applying United States copyright law to a work that was unprotected in its country of origin. In the pending case, the place of the tort is plainly the United States. To whatever extent lex loci delicti is to be considered only one part of a broader “interest” approach, United States law would still apply to infringement issues, since not only is this country the place of the tort, but also the defendant is a United States corporation. The division of issues, for conflicts purposes, between ownership and infringement issues will not always be as easily made as the above discussion implies. If the issue is the relatively straightforward one of which of two contending parties owns a copyright, the issue is unquestionably an ownership issue, and the law of the country with the closest relationship to the work will apply to settle the ownership dispute. But in some cases, including the pending one, the issue is not simply who owns the copyright but also what is the nature of the ownership interest. Yet as a court considers the nature of an ownership interest, there is some risk that it will too readily shift the inquiry over to the issue of whether an alleged copy has infringed the asserted copyright. Whether a copy infringes depends in part on the scope of the interest of the copyright owner. Nevertheless, though the issues are related, the nature of a copyright interest is an issue distinct from the issue of whether the copyright has been infringed. The pending case is one that requires consideration not simply of who owns an interest, but, as to the newspapers, the nature of the interest that is owned.
II. Determination of Ownership Rights Under Russian Law
Since United States law permits suit only by owners of “an exclusive right under a copyright,” we must first determine whether any of the plaintiffs own an exclusive right. That issue of ownership, as we have indicated, is to be determined by Russian law. Determination of a foreign country’s law is an issue of law. Even though the District Court heard live testimony from experts from both sides, that Court’s opportunity to assess the witness’s demeanor provides no basis for a reviewing court to defer to the trier’s ruling on the content of foreign law. In cases of this sort, it is not the credibility of the experts that is at issue, it is the persuasive force of the opinions they expressed. Under Article 14 of the Russian Copyright Law, Itar-Tass is the owner of the copyright interests in the articles written by its employees. However, Article 14(4) excludes newspapers from the Russian
6 INTERNATIONAL COPYRIGHT version of the work-for-hire doctrine. The newspaper plaintiffs, therefore, must locate their ownership rights, if any, in some other source of law. They rely on Article 11. The District Court upheld their position, apparently recognizing in the newspaper publishers “exclusive” rights to the articles, even though, by virtue of Article 11(2), the reporters also retained “exclusive” rights to these articles. Having considered all of the views presented by the expert witnesses, we conclude that the defendants’ experts are far more persuasive as to the meaning of Article 11. In the first place, once Article 14 of the Russian Copyright Law explicitly denies newspapers the benefit of a work-for-hire doctrine, which, if available, would accord them rights to individual articles written by their employees, it is highly unlikely that Article 11 would confer on newspapers the very right that Article 14 has denied them. Moreover, Article 11 has an entirely reasonable scope if confined, as its caption suggests, to defining the “Copyright of Compilers of Collections and Other Works.” That article accords compilers copyright “in the selection and arrangement of subject matter that he has made insofar as that selection or arrangement is the result of a creative effort of compilation.” Article 11(2) accords publishers of compilations the right to exploit such works, including the right to insist on having its name mentioned, while expressly reserving to “authors of the works included” in compilations the “exclusive rights to exploit their works independently of the publication of the whole work.” As the defendants’ experts testified, Article 11 lets authors of newspaper articles sue for infringement of their rights in the text of their articles, and lets newspaper publishers sue for wholesale copying of all of the newspaper or for copying any portions of the newspaper that embody their selection, arrangement, and presentation of articles (including headlines)—copying that infringes their ownership interest in the compilation. Newcity’s contrary interpretation, according publishers (and reporters) exclusive rights to the text of articles, draws entirely unwarranted significance from the shift of the phrase “as a whole” from the first to the second paragraph of Article 11(2). One would not expect drafters of the revised Article 11(2) to accomplish a major broadening of the rights of newspaper publishers simply by shifting the placement of this phrase. Moreover, the drafter of the revision testified that the shift was a matter of grammar, and not of any substance. Furthermore, Newcity’s interpretation rests on the untenable premise that both the publisher of a newspaper and the author of an article have exclusive rights to the same article. Under his interpretation, as he acknowledged, the publisher could grant a license to a third party to publish an article, the “exclusive” rights to which are held by the author. That unlikely result cannot be accepted in the absence of clear statutory language authorizing it. The opinion of the Informational Disputes Chamber is not a sufficient basis for upholding the plaintiffs’ interpretation. As the defendants’ experts pointed out, the bylaws of that body confine its authority to matters affecting free press issues, and explicitly preclude it from adjudicating issues arising under copyright law. Moreover, the opinion that the Chamber rendered does not necessarily support the plaintiffs’ position. In asserting that a newspaper may petition for redress “in defense of its rights,” the Chamber might have meant only that a newspaper can protect its limited compilation rights in the selection and arrangement of articles even when only a small number of articles are copied. The opinion of the Chamber does not state that the newspaper has a protectable copyright interest in the text of each article. Nor can the District Court’s conclusion be supported by its observation that extensive copying of newspapers will ensue unless newspapers are permitted to secure redress for the copying of individual articles. In the first place, copying of articles may always be prevented at the behest of the authors of the articles or their assignees. Second, the newspapers may well be entitled to prevent copying of the protectable elements of their compilations. Lastly, even if authors lack sufficient economic incentive to bring individual suits, as the District Court apprehended, Russian copyright law authorizes the creation of organizations “for the collective administration of the economic rights of authors . . . in cases where the individual exercise thereof is hampered by difficulties of a practical nature.” Indeed, UJR, the reporters’ organization, may well be able in this litigation to protect the rights of the reporters whose articles were copied by Kurier.
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Relief. Our disagreement with the District Court’s interpretation of Article 11 does not mean, however, that the defendants may continue copying with impunity. In the first place, Itar-Tass, as a press agency, is within the scope of Article 14, and, unlike the excluded newspapers, enjoys the benefit of the Russian version of the work-for-hire doctrine. Itar-Tass is therefore entitled to injunctive relief to prevent unauthorized copying of its articles and to damages for such copying, and the judgment is affirmed as to this plaintiff. Furthermore, the newspaper plaintiffs, though not entitled to relief for the copying of the text of the articles they published, may well be entitled to injunctive relief and damages if they can show that Kurier infringed the publishers’ ownership interests in the newspaper compilations. Because the District Court upheld the newspapers’ right to relief for copying the text of the articles, it had no occasion to consider what relief the newspapers might be entitled to by reason of Kurier’s copying of the newspapers’ creative efforts in the selection, arrangement, or display of the articles. Since Kurier’s photocopying reproduced not only the text of articles but also headlines and graphic materials as they originally appeared in the plaintiffs’ publication, it is likely that on remand the newspaper plaintiffs will be able to obtain some form of injunctive relief and some damages. On these infringement issues, as we have indicated, United States law will apply. Finally, there remains for consideration what relief, if any, might be awarded to UJR, acting on behalf of any of its members whose articles have been copied. In its opinion granting the newspapers a preliminary injunction, the District Court noted that the plaintiffs had not “established the union’s organizational standing to sue to enforce the rights of its members,” an issue the Court expected would be considered later in the lawsuit. In its ruling on the merits, the District Court ruled that the UJR had standing to sue on behalf of its members. However, the Court noted that UJR sought only injunctive relief and then ruled that since UJR declined to furnish a list of its members, the Court was unable to frame an injunction that would be narrowly tailored and sufficient to give the defendants notice of its scope. In view of our conclusion that the newspaper plaintiffs may not secure relief for the copying of the text of any articles as such, it will now become appropriate for the District Court on remand to revisit the issue of whether relief might be fashioned in favor of UJR on behalf of the authors. Despite UJR’s unwillingness to disclose its entire membership list, it might be possible to frame some form of injunctive relief that affords protection for those author-members that UJR is willing to identify. And UJR should now be given an opportunity to amend its prayer for relief to state whatever claim it might have to collect damages for the benefit of its member-authors whose rights have been infringed. Finally, the District Court should consider the appropriateness and feasibility of giving some form of notice (perhaps at the defendants’ expense) that is calculated to alert the authors of the infringed articles to their right to intervene in this lawsuit. Such notice might, for example, be addressed generally to the group of reporters currently employed at each of the plaintiff newspapers. In view of the reckless conduct of the defendants in the flagrant copying that infringed the rights of Itar-Tass, the rights of the authors, and very likely some aspects of the limited protectable rights of the newspapers, we will leave the injunction in force until such time as the District Court has had an opportunity, on remand, to modify the injunction consistent with this opinion and with such further rulings as the District Court may make in light of this opinion.
Conclusion
Accordingly, we affirm the judgment to the extent that it granted relief to Itar-Tass, we reverse to the extent that the judgment granted relief to the other plaintiffs, and we remand for further proceedings. No costs.
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Bridgeman Art Library Ltd. v. Corel Corp., 25 F. Supp. 2d 421 (S.D.N.Y. 1998), aff’d on reconsideration, 36 F. Supp. 2d 191 (S.D.N.Y. 1999)
Lewis A. Kaplan, District Judge.
On November 13, 1998, this Court granted defendant’s motion for summary judgment dismissing plaintiff’s copyright infringement claim on the alternative grounds that the allegedly infringed works— color transparencies of paintings which themselves are in the public domain—were not original and therefore not permissible subjects of valid copyright and, in any case, were not infringed. It applied United Kingdom law in determining whether plaintiff’s transparencies were copyrightable. The Court noted, however, that it would have reached the same result under United States law. Following the entry of final judgment, the Court was bombarded with additional submissions. On November 23, 1998, plaintiff moved for reargument and reconsideration, arguing that the Court erred on the issue of originality. It asserted that the Court had ignored the Register of Copyright’s issuance of a certificate of registration for one of plaintiff’s transparencies, which it takes as establishing copyrightability, and that the Court had misconstrued British copyright law in that it failed to follow Graves’ Case, which was decided in the Court of Queens Bench in 1869. At about the same time, the Court received an unsolicited letter from Professor William Patry, author of a copyright law treatise, which argued that the Court erred in applying the law of the United Kingdom to the issue of copyrightability. Plaintiff then moved for an order permitting the filing of an amicus brief by one of its associates, The Wallace Collection, to address the United Kingdom law issue. The Court granted leave for the submission of the amicus brief and invited the parties to respond to Professor Patry’s letter. The matter now is ripe for decision. At the outset, it is worth noting that the post-judgment flurry was occasioned chiefly by the fact that the plaintiff failed competently to address most of the issues raised by this interesting case prior to the entry of final judgment. In particular, while plaintiff urged the application of U.K. law, it made no serious effort to address the choice of law issue and no effort at all (apart from citing the British copyright act) to bring pertinent U.K. authority to the Court’s attention before plaintiff lost the case. Indeed, it did not even cite Graves’ Case, the supposedly controlling authority that the Court is said to have overlooked. Everything plaintiff has submitted on this motion should have been before the Court earlier, which is more than sufficient reason to deny its motion as an unwarranted imposition on the Court and, indeed, its adversary. The issues, however, are significant beyond the immediate interests of the parties. Accordingly, the Court will address them on the merits.
Choice of Law
Professor Patry argues principally that there can be no choice of law issue with respect to copyrightability because the Copyright Clause of the Constitution permits Congress to enact legislation protecting only original works of authorship. In consequence, he contends, only original works, with originality determined in accordance with the meaning of the Copyright Clause, are susceptible of protection in United States courts. Of course, the ability of Congress to extend the protection of copyright is limited by the Copyright Clause. Nevertheless, the constitutional issue is not as straightforward as Professor Patry suggests. Bridgeman claims that the infringed works are protected by United Kingdom copyrights and that the United States, by acceding to the Convention for the Protection of Literary and Artistic Works, popularly known as the Berne Convention and the Universal Copyright Convention and by enacting the Berne Convention Implementation Act of 1988 (the “BCIA”), agreed to give effect to its United Kingdom copyrights.
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The fact that plaintiff’s rights allegedly derive from its claimed British copyrights arguably is material. Granting Professor Patry’s point that Congress, in light of the originality requirement of the Copyright Clause, in ordinary circumstances may not extend copyright protection to works that are not original, the questions remain whether (1) the United States constitutionally may obligate itself by treaty to permit enforcement of a foreign copyright where that copyright originates under the law of a signatory nation which does not limit copyright protection to works that are original in the sense required by the United States Constitution and, if so, (2) the United States in fact has done so. Thus, Professor Patry’s contention that the United States may not apply foreign law less restrictive than its own with respect to originality may be too narrow because it rests exclusively on the Copyright Clause. The legal effect and constitutionality of treaties also is implicated. Article II, Section 2, of the Constitution provides that the President “shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur.” Treaties, by virtue of the Supremacy Clause, join the Constitution and federal statutes as “supreme law of the land.” As the Supreme Court wrote in Geofroy v. Riggs: The treaty power, as expressed in the Constitution, is in terms unlimited except by those restraints which are found in that instrument against the action of the government . . . , and those arising from the nature of the government itself and the States. It would not be contended that it extends so far as to authorize what the Constitution forbids, or a change in the character of the government or in that of one of the States, or a cession of any portion of the territory of the latter, without its consent . . . But with these exceptions, it is not perceived that there is any limit to the questions which can be adjusted touching any matter which is properly the subject of negotiation with a foreign country. And while it now is clear that the treaty power is “subject to the constitutional limitations that apply to all exercises of federal power, principally the prohibitions of the Bill of Rights,” the treaty power retains considerable scope. The Copyright Clause and the Copyright Act both recognize that the United States has an important interest in protecting the intellectual property of its citizens and of those whose creative efforts enrich our lives. In this increasingly interconnected world, securing appropriate protection abroad also is important. Hence, it cannot seriously be denied that international copyright protection is “properly the subject of negotiation with” foreign countries. Decades ago, the Supreme Court held in Missouri v. Holland that Congress could enact legislation necessary and proper to the implementation of a treaty which, absent the treaty, would have been beyond its powers. Although the case arose in a different context, it suggests that the Conventions, if their purported effect actually is to permit enforcement in the United States of foreign copyrights which do not meet U.S. standards of originality—in other words, if they require enforcement here of any copyright valid under the law of the signatory nation in which copyright attached, even if that copyright does not meet U.S. standards of validity—would not be obviously invalid. In view of these considerations, the proposition advanced by Professor Patry—that the Copyright Clause forecloses any choice of law issue with respect to the validity of a foreign Berne Convention work, is not free from doubt. It is necessary to decide that question, however, only if the Conventions require application of foreign law in determining the existence of copyright and, if so, whether there is any true conflict of law in this case on that point. In most circumstances, choice of law issues do not arise under the Berne and Universal Copyright Conventions. Each adopts a rule of national treatment. Article 5 of the Berne Convention, for example, provides that “authors shall enjoy, in respect of works for which they are protected under this Convention, in countries of the Union other than the country of origin, the rights which their respective laws do now or may hereafter grant to their nationals, as well as the rights specially granted by this convention” and that “the extent of protection, as well as the means of redress afforded to the author to protect his rights, shall be governed exclusively by the laws of the country where protection is claimed.” Hence, the Conventions
10 INTERNATIONAL COPYRIGHT make clear that the holder of, for example, a British copyright who sues for infringement in a United States court is entitled to the same remedies as holders of United States copyrights and, as this Court previously held, to the determination of infringement under the same rule of law. While the nature of the protection accorded to foreign copyrights in signatory countries thus is spelled out in the Conventions, the position of the subject matter of copyright thereunder is less certain. Do the Conventions purport to require signatory nations to extend national treatment with respect to such enforcement-related subjects as remedies for infringement only where the copyright for which protection is sought would be valid under the law of the nation in which enforcement is sought? Or do they purport to require also that a signatory nation in which enforcement is sought enforce a foreign copyright even if that copyright would not be valid under its own law? But there is an even more fundamental issue, viz. whether United States courts may give effect to any provisions of the Conventions which might require or suggest that the existence of copyright be determined under the law of another nation. Although the Supreme Court has not yet decided the point, it seems quite clear at this point that the Berne Convention is not self-executing. Section 3(a) of the BCIA confirms this view, stating that: The provisions of the Berne Convention— (1) shall be given effect under title 17, as amended by this Act, and any other relevant provision of Federal or State law, including the common law, and (2) shall not be enforceable in any action brought pursuant to the provisions of the Berne Convention itself. Section 4(c), now codified at 17 U.S.C. § 104(c), states in relevant part that “no right or interest in a work eligible for protection under this title may be claimed by virtue of, or in reliance upon, the provisions of the Berne Convention or the adherence of the United States thereto.” Thus, while the Copyright Act, as amended by the BCIA, extends certain protection to the holders of copyright in Berne Convention works as there defined, the Copyright Act is the exclusive source of that protection. The statutory basis of the protection of published Berne Convention works such as the photographs here at issue is Section 104(b), which states in relevant part that: The works specified by sections 102 and 103, when published, are subject to protection under this title if— (4) the work is a Berne Convention work . . . Section 102(a) limits copyright protection in relevant part to “original works of authorship . . . .” Accordingly, there is no need to decide whether the Berne Convention adopts any rule regarding the law governing copyrightability or whether the treaty power constitutionally might be used to extend copyright protection to foreign works which are not “original” within the meaning of the Copyright Clause. Congress has made it quite clear that the United States’ adherence to the Berne Convention has no such effect in the courts of this country. And while there is no comparable legislation with respect to the Universal Copyright Convention, the question whether that treaty is self-executing is of no real significance here because the substantive provisions of the UCC are “of very limited practical import.”
Originality and Copyrightability
United States Law The Court’s prior opinion indicated that plaintiff’s exact photographic copies of public domain works of art would not be copyrightable under United States law because they are not original. In view of the Court’s conclusion here that U.S. law governs on this issue, it is appropriate to give a somewhat fuller statement of the Court’s reasoning. In Burrow-Giles Lithographic Co v. Sarony, the Supreme Court held that photographs are “writings” within the meaning of the Copyright Clause and that the particular portrait at issue in that case was sufficiently original—by virtue of its pose, arrangement of accessories in the photograph, and
11 INTERNATIONAL COPYRIGHT lighting and the expression the photographer evoked—to be subject to copyright. The Court, however, declined to decide whether “the ordinary production of a photograph” invariably satisfies the originality requirement. While Judge Learned Hand later suggested that the 1909 Copyright Act protected photographs independent of their originality, his view ultimately was rejected by the Supreme Court. Nevertheless, there is broad scope for copyright in photographs because “a very modest expression of personality will constitute sufficient originality.” As the Nimmers have written, there “appear to be at least two situations in which a photograph should be denied copyright for lack of originality,” one of which is directly relevant here: “where a photograph of a photograph or other printed matter is made that amounts to nothing more than slavish copying.” The authors thus conclude that a slavish photographic copy of a painting would lack originality, although they suggest the possibility that protection in such a case might be claimed as a “reproduction of a work of art.” But they immediately go on to point out that this suggestion is at odds with the Second Circuit’s in banc decision in L. Batlin & Son, Inc. v. Snyder. Batlin involved the defendants’ claim to copyright in a plastic reproduction, with minor variations, of a mechanical cast-iron coin bank that had been sold in the United States for many years and that had passed into the public domain. The Court of Appeals affirmed a district court order compelling the defendants to cancel a recordation of copyright in the plastic reproduction on the ground that the reproduction was not “original” within the meaning of the 1909 Copyright Act, holding that the requirement of originality applies to reproductions of works of art. Only “a distinguishable variation”— something beyond technical skill—will render the reproduction original. In consequence: Absent a genuine difference between the underlying work of art and the copy of it for which protection is sought, the public interest in promoting progress in the arts—indeed, the constitutional demand [citation omitted]—could hardly be served. To extend copyrightability to minuscule variations would simply put a weapon for harassment in the hands of mischievous copiers intent on appropriating and monopolizing public domain work. Even in Mazer v. Stein, which held that the statutory terms ‘works of art’ and ‘reproduction of works of art’ . . . permit copyright of quite ordinary mass-produced items, the Court expressly held that the objects to be copyrightable, ‘must be original, that is, the author’s tangible expression of his ideas. No such originality, no such expression, no such ideas here appear. The requisite “distinguishable variation,” moreover, is not supplied by a change of medium, as “production of a work of art in a different medium cannot by itself constitute the originality required for copyright protection.” There is little doubt that many photographs, probably the overwhelming majority, reflect at least the modest amount of originality required for copyright protection. “Elements of originality . . . may include posing the subjects, lighting, angle, selection of film and camera, evoking the desired expression, and almost any other variant involved.” But “slavish copying,” although doubtless requiring technical skill and effort, does not qualify. As the Supreme Court indicated in Feist, “sweat of the brow” alone is not the “creative spark” which is the sine qua non of originality. It therefore is not entirely surprising that an attorney for the Museum of Modern Art, an entity with interests comparable to plaintiff’s and its clients, not long ago presented a paper acknowledging that a photograph of a two-dimensional public domain work of art “might not have enough originality to be eligible for its own copyright.” In this case, plaintiff by its own admission has labored to create “slavish copies” of public domain works of art. While it may be assumed that this required both skill and effort, there was no spark of originality—indeed, the point of the exercise was to reproduce the underlying works with absolute fidelity. Copyright is not available in these circumstances. United Kingdom Law
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While the Court’s conclusion as to the law governing copyrightability renders the point moot, the Court is persuaded that plaintiff’s copyright claim would fail even if the governing law were that of the United Kingdom. Plaintiff’s attack on the Court’s previous conclusion that its color transparencies are not original and therefore not copyrightable under British law depends primarily on its claim that the Court failed to apply Graves’ Case, a nisi prius decision and the supposedly controlling authority that plaintiff did not even cite in its opposition to defendant’s motion for summary judgment. Graves’ Case in relevant part involved an application to cancel entries on the no longer extant Register of Proprietors of Copyright in Paintings, Drawings and Photographs for three photographs of engravings. In rejecting the contention that the photographs were not copyrightable because they were copies of the engravings, Justice Blackburn wrote: The distinction between an original painting and its copy is well understood, but it is difficult to say what can be meant by an original photograph. All photographs are copies of some object, such as a painting or statue. And it seems to me that a photograph taken from a picture is an original photograph, in so far that to copy it is an infringement of the statute. Plaintiff and the amicus therefore argue that plaintiff’s photographs of public domain paintings are copyrightable under British law. But they overlook the antiquity of Graves’ Case and the subsequent development of the law of originality in the United Kingdom. Laddie, a modern British copyright treatise the author of which now is a distinguished British judge, discusses the issue at Bar in a helpful manner: It is obvious that although a man may get a copyright by taking a photograph of some well-known object like Westminster Abbey, he does not get a monopoly in representing Westminister Abbey as such, any more than an artist would who painted or drew that building. What, then, is the scope of photographic copyright? As always with artistic works, this depends on what makes his photograph original. Under the 1988 Act the author is the person who made the original contribution and it will be evident that this person need not be he who pressed the trigger, who might be a mere assistant. Originality presupposes the exercise of substantial independent skill, labour, judgment and so forth. For this reason it is submitted that a person who makes a photograph merely by placing a drawing or painting on the glass of a photocopying machine and pressing the button gets no copyright at all; but he might get a copyright if he employed skill and labour in assembling the thing to be photocopied, as where he made a montage. It will be evident that in photography there is room for originality in three respects. First, there may be originality which does not depend on creation of the scene or object to be photographed or anything remarkable about its capture, and which resides in such specialties as angle of shot, light and shade, exposure, effects achieved by means of filters, developing techniques etc: in such manner does one photograph of Westminster Abbey differ from another, at least potentially. Secondly, there may be creation of the scene or subject to be photographed. We have already mentioned photo-montage, but a more common instance would be arrangement or posing of a group . . . . Thirdly, a person may create a worthwhile photograph by being at the right place at the right time. Here his merit consists of capturing and recording a scene unlikely to recur, e.g., a battle between an elephant and a tiger . . . . Moreover, the authors go on to question the continued authority of Graves’ Case under just this analysis: It is submitted that Graves’ Case (1869) LR 4 QB 715 (photograph of an engraving), a case under the Fine Arts Copyright Act 1862, does not decide the contrary, since there may have been special skill or labour in setting up the equipment to get a good photograph, especially with the rather primitive materials
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available in those days. Although the judgments do not discuss this aspect it may have been self-evident to any contemporary so as not to require any discussion. If this is wrong it is submitted that Graves’ Case is no longer good law and in that case is to be explained as a decision made before the subject of originality had been fully developed by the courts. This analysis is quite pertinent in this case. Most photographs are “original” in one if not more of the three respects set out in the treatise and therefore are copyrightable. Plaintiff’s problem here is that it seeks protection for the exception that proves the rule: photographs of existing two-dimensional articles (in this case works of art), each of which reproduces the article in the photographic medium as precisely as technology permits. Its transparencies stand in the same relation to the original works of art as a photocopy stands to a page of typescript, a doodle, or a Michelangelo drawing. Plaintiff nevertheless argues that the photocopier analogy is inapt because taking a photograph requires greater skill than making a photocopy and because these transparencies involved a change in medium. But the argument is as unpersuasive under British as under U.S. law. The allegedly greater skill required to make an exact photographic, as opposed to Xerographic or comparable, copy is immaterial. As the Privy Council wrote in Interlego AG v. Tyco Industries, Inc., “skill, labor or judgment merely in the process of copying cannot confer originality . . . .” The point is exactly the same as the unprotectibility under U.S. law of a “slavish copy.” Nor is the change in medium, standing alone, significant. The treatise relied upon by plaintiff for the contrary proposition does not support it. It states that “a change of medium will often entitle a reproduction of an existing artistic work to independent protection.” And it goes on to explain: Again, an engraver is almost invariably a copyist, but his work may still be original in the sense that he has employed skill and judgment in its production. An engraver produces the resemblance he wishes by means which are very different from those employed by the painter or draughtsman from whom he copies; means which require a high degree of skill and labour. The engraver produces his effect by the management of light and shade, or, as the term of his art expresses it, the chiaroscuro. The required degree of light and shade are produced by different lines and dots; the engraver must decide on the choice of the different lines or dots for himself, and on his choice depends the success of his print. Thus, the authors implicitly recognize that a change of medium alone is not sufficient to render the product original and copyrightable. Rather, a copy in a new medium is copyrightable only where, as often but not always is the case, the copier makes some identifiable original contribution. In the words of the Privy Council in Interlogo AG, “there must . . . be some element of material alteration or embellishment which suffices to make the totality of the work an original work.” Indeed, plaintiff’s expert effectively concedes the same point, noting that copyright “may” subsist in a photograph of a work of art because “change of medium is likely to amount to a material alteration from the original work, unless the change of medium is so insignificant as not to confer originality . . . .” Here, as the Court noted in its earlier opinion, “it is uncontested that Bridgeman’s images are substantially exact reproductions of public domain works, albeit in a different medium.” There has been no suggestion that they vary significantly from the underlying works. In consequence, the change of medium is immaterial. Finally, the amicus argues that this result is contraindicated because public art collections in the United Kingdom charge fees for reproductions of photographic images of works in their collections, thus evidencing their view that the images are protected by copyright. But the issue here is not the position of an economically interested constituency on an issue that has not been litigated, at least in this century, but the content of the originality requirement of the British Copyright Act. Moreover, it is far from clear what the understanding of British art collections, if any, actually is. Certainly, for example, there are original works of art in British public art collections in which copyright subsists and is owned by the collections, in which case reproduction rights no doubt are a fit subject for exploitation.
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For all of the foregoing reasons, the Court is persuaded that its original conclusion that Bridgeman’s transparencies are not copyrightable under British law was correct.
The Certificate of Registration for The Laughing Cavalier
As indicated above, plaintiff argues also that the fact that the Register of Copyright issued a certificate of registration for one of plaintiff’s transparencies demonstrates that its photographs are copyrightable under U.S. law. The argument is misguided. No one disputes that most photographs are copyrightable. In consequence, the issuance of a certificate of registration for a photograph proves nothing. And while the certificate is prima facie evidence of the validity of the copyright, including the originality of the work, the presumption is not irrebuttable. Here, the facts pertinent to the issue of originality are undisputed. The Court has held as a matter of law, and reiterates, that plaintiff’s works are not original under either British or United States law.
Conclusion
Plaintiff’s motion for reargument and reconsideration of this Court’s order granting summary judgment dismissing the complaint is granted. Nevertheless, on reargument and reconsideration, defendant Corel Corporation’s motion for summary judgment dismissing the complaint is granted. SO ORDERED.
Subafilms, Ltd. v. MGM-Pathe Communications Co., 24 F.3d 1088 (9th Cir. 1994) (en banc)
D.W. Nelson, Circuit Judge
In this case, we consider the “vexing question” of whether a claim for infringement can be brought under the Copyright Act when the assertedly infringing conduct consists solely of the authorization within the territorial boundaries of the United States of acts that occur entirely abroad. We hold that such allegations do not state a claim for relief under the copyright laws of the United States.
Factual and Procedural Background
In 1966, the musical group The Beatles, through Subafilms, Ltd., entered into a joint venture with the Hearst Corporation to produce the animated motion picture entitled “Yellow Submarine” (the “Picture”). Over the next year, Hearst, acting on behalf of the joint venture (the “Producer”), negotiated an agreement with United Artists Corporation (“UA”) to distribute and finance the film. Separate distribution and financing agreements were entered into in May, 1967. Pursuant to these agreements, UA distributed the Picture in theaters beginning in 1968 and later on television. In the early 1980s, with the advent of the home video market, UA entered into several licensing agreements to distribute a number of its films on videocassette. Although one company expressed interest in the Picture, UA refused to license “Yellow Submarine” because of uncertainty over whether home video rights had been granted by the 1967 agreements. Subsequently, in 1987, UA’s successor company, MGM/UA Communications Co. (“MGM/UA”), over the Producer’s objections, authorized its subsidiary MGM/UA Home Video, Inc. to distribute the Picture for the domestic home video market, and, pursuant to an earlier licensing agreement, notified Warner Bros., Inc. (“Warner”) that the Picture had been cleared for international videocassette distribution. Warner, through its wholly owned subsidiary, Warner Home Video, Inc., in turn entered into agreements with third parties for distribution of the Picture on videocassette around the world.
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In 1988, Subafilms and Hearst (“Appellees”) brought suit against MGM/UA, Warner, and their respective subsidiaries (collectively the “Distributors” or “Appellants”), contending that the videocassette distribution of the Picture, both foreign and domestic, constituted copyright infringement and a breach of the 1967 agreements. The case was tried before a retired California Superior Court Judge acting as a special master. The special master found for Appellees on both claims, and against the Distributors on their counterclaim for fraud and reformation. Except for the award of prejudgment interest, which it reversed, the district court adopted all of the special master’s factual findings and legal conclusions. Appellees were awarded $ 2,228,000.00 in compensatory damages, split evenly between the foreign and domestic home video distributions. In addition, Appellees received attorneys’ fees and a permanent injunction that prohibited the Distributors from engaging in, or authorizing, any home video use of the Picture. A panel of this circuit, in an unpublished disposition, affirmed the district court’s judgment on the ground that both the domestic and foreign distribution of the Picture constituted infringement under the Copyright Act. With respect to the foreign distribution of the Picture, the panel concluded that it was bound by this court’s prior decision in Peter Starr Prod. Co. v. Twin Continental Films, Inc., which it held to stand for the proposition that, although “‘infringing actions that take place entirely outside the United States are not actionable’ [under the Copyright Act, an] ‘act of infringement within the United States’ [properly is] alleged where the illegal authorization of international exhibitions takes place in the United States.” Because the Distributors had admitted that the initial authorization to distribute the Picture internationally occurred within the United States, the panel affirmed the district court’s holding with respect to liability for extraterritorial home video distribution of the Picture. We granted Appellants’ petition for rehearing en banc to consider whether the panel’s interpretation of Peter Starr conflicted with our subsequent decision in Lewis Galoob Toys, Inc. v. Nintendo of Am., Inc., which held that there could be no liability for authorizing a party to engage in an infringing act when the authorized “party’s use of the work would not violate the Copyright Act.” Because we conclude that there can be no liability under the United States copyright laws for authorizing an act that itself could not constitute infringement of rights secured by those laws, and that wholly extraterritorial acts of infringement are not cognizable under the Copyright Act, we overrule Peter Starr insofar as it held that allegations of an authorization within the United States of infringing acts that take place entirely abroad state a claim for infringement under the Act. Accordingly, we vacate the panel’s decision in part and return the case to the panel for further proceedings.
Discussion
I. The Mere Authorization of Extraterritorial Acts of Infringement does not State a Claim under the
Copyright Act As the panel in this case correctly concluded, Peter Starr held that the authorization within the United States of entirely extraterritorial acts stated a cause of action under the “plain language” of the Copyright Act. Observing that the Copyright Act grants a copyright owner “the exclusive rights to do and to authorize” any of the activities listed in 17 U.S.C. § 106(1)-(5) (emphasis in original), and that a violation of the “authorization” right constitutes infringement under section 501 of the Act, the Peter Starr court reasoned that allegations of an authorization within the United States of extraterritorial conduct that corresponded to the activities listed in section 106 “alleged an act of infringement within the United States.” Accordingly, the court determined that the district court erred “in concluding that ‘Plaintiff alleged only infringing acts which took place outside of the United States,’” and reversed the district court’s dismissal for lack of subject matter jurisdiction. The Peter Starr court accepted, as does this court, that the acts authorized from within the United States themselves could not have constituted infringement under the Copyright Act because “in general,
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United States copyright laws do not have extraterritorial effect,” and therefore, “infringing actions that take place entirely outside the United States are not actionable.” The central premise of the Peter Starr court, then, was that a party could be held liable as an “infringer” under section 501 of the Act merely for authorizing a third party to engage in acts that, had they been committed within the United States, would have violated the exclusive rights granted to a copyright holder by section 106. Since Peter Starr, however, we have recognized that, when a party authorizes an activity not proscribed by one of the five section 106 clauses, the authorizing party cannot be held liable as an infringer. In Lewis Galoob, we rejected the argument that “a party can unlawfully authorize another party to use a copyrighted work even if that party’s use of the work would not violate the Copyright Act” and approved of Professor Nimmer’s statement that “‘to the extent that an activity does not violate one of the five enumerated rights [found in 17 U.S.C. § 106], authorizing such activity does not constitute copyright infringement,’” Similarly, in Columbia Pictures, we held that no liability attached under the Copyright Act for providing videodisc players to hotel guests when the use of that equipment did not constitute a “public” performance within the meaning of section 106 of the Act. The apparent premise of Lewis Galoob was that the addition of the words “to authorize” in the Copyright Act was not meant to create a new form of liability for “authorization” that was divorced completely from the legal consequences of authorized conduct, but was intended to invoke the preexisting doctrine of contributory infringement. We agree. Contributory infringement under the 1909 Act developed as a form of third party liability. Accordingly, there could be no liability for contributory infringement unless the authorized or otherwise encouraged activity itself could amount to infringement. Indeed, the Supreme Court in Sony Corp. of Am. v. Universal City Studios, Inc., although expressly noting that it addressed an extraordinary claim of vicarious or contributory infringement under the 1976 Act for which there was “no precedent in the law of copyright” inquired whether the machines sold by Sony ultimately were capable of a “substantial noninfringing use[].” As the Supreme Court noted in Sony, and this circuit acknowledged in Peter Starr, under the 1909 Act courts differed over the degree of involvement required to render a party liable as a contributory infringer. Viewed with this background in mind, the addition of the words “to authorize” in the 1976 Act appears best understood as merely clarifying that the Act contemplates liability for contributory infringement, and that the bare act of “authorization” can suffice. This view is supported by the legislative history of the Act: The exclusive rights accorded to a copyright owner under section 106 are “to do and to authorize” any of the activities specified in the five numbered clauses. Use of the phrase “to authorize” is intended to avoid any questions as to the liability of contributory infringers. For example, a person who lawfully acquires an authorized copy of a motion picture would be an infringer if he or she engages in the business of renting it to others for purposes of unauthorized public performance. Consequently, we believe that “‘to authorize’ was simply a convenient peg on which Congress chose to hang the antecedent jurisprudence of third party liability.” Although the Peter Starr court recognized that the addition of the authorization right in the 1976 Act “was intended to remove the confusion surrounding contributory . . . infringement,” it did not consider the applicability of an essential attribute of the doctrine identified above: that contributory infringement, even when triggered solely by an “authorization,” is a form of third party liability that requires the authorized acts to constitute infringing ones. We believe that the Peter Starr court erred in not applying this principle to the authorization of acts that cannot themselves be infringing because they take place entirely abroad. As Professor Nimmer has observed: Accepting the proposition that a direct infringement is a prerequisite to third party liability, the further question arises whether the direct infringement on which liability is premised must take place within the United States. Given the undisputed axiom that
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United States copyright law has no extraterritorial application, it would seem to follow necessarily that a primary activity outside the boundaries of the United States, not constituting an infringement cognizable under the Copyright Act, cannot serve as the basis for holding liable under the Copyright Act one who is merely related to that activity within the United States. Appellees resist the force of this logic, and argue that liability in this case is appropriate because, unlike in Lewis Galoob and Columbia Pictures, in which the alleged primary infringement consisted of acts that were entirely outside the purview of 17 U.S.C. § 106(1)-(5) (and presumably lawful), the conduct authorized in this case was precisely that prohibited by section 106, and is only uncognizable because it occurred outside the United States. Moreover, they contend that the conduct authorized in this case would have been prohibited under the copyright laws of virtually every nation. Even assuming arguendo that the acts authorized in this case would have been illegal abroad, we do not believe the distinction offered by Appellees is a relevant one. Because the copyright laws do not apply extraterritorially, each of the rights conferred under the five section 106 categories must be read as extending “no farther than the [United States’] borders.” In light of our above conclusion that the “authorization” right refers to the doctrine of contributory infringement, which requires that the authorized act itself could violate one of the exclusive rights listed in section 106(1)-(5), we believe that “it is simply not possible to draw a principled distinction” between an act that does not violate a copyright because it is not the type of conduct proscribed by section 106, and one that does not violate section 106 because the illicit act occurs overseas. In both cases, the authorized conduct could not violate the exclusive rights guaranteed by section 106. In both cases, therefore, there can be no liability for “authorizing” such conduct. To hold otherwise would produce the untenable anomaly, inconsistent with the general principles of third party liability, that a party could be held liable as an infringer for violating the “authorization” right when the party that it authorized could not be considered an infringer under the Copyright Act. Put otherwise, we do not think Congress intended to hold a party liable for merely “authorizing” conduct that, had the authorizing party chosen to engage in itself, would have resulted in no liability under the Act. Appellees rely heavily on the Second Circuit’s doctrine that extraterritorial application of the copyright laws is permissible “when the type of infringement permits further reproduction abroad.” Whatever the merits of the Second Circuit’s rule, and we express no opinion on its validity in this circuit, it is premised on the theory that the copyright holder may recover damages that stem from a direct infringement of its exclusive rights that occurs within the United States. In these cases, liability is not based on contributory infringement, but on the theory that the infringing use would have been actionable even if the subsequent foreign distribution that stemmed from that use never took place. These cases, therefore, simply are inapplicable to a theory of liability based merely on the authorization of noninfringing acts. Accordingly, accepting that wholly extraterritorial acts of infringement cannot support a claim under the Copyright Act, we believe that the Peter Starr court, and thus the panel in this case, erred in concluding that the mere authorization of such acts supports a claim for infringement under the Act.
II. The Extraterritoriality of the Copyright Act
Appellees additionally contend that, if liability for “authorizing” acts of infringement depends on finding that the authorized acts themselves are cognizable under the Copyright Act, this court should find that the United States copyright laws do extend to extraterritorial acts of infringement when such acts “result in adverse effects within the United States.” Appellees buttress this argument with the contention that failure to apply the copyright laws extraterritorially in this case will have a disastrous effect on the American film industry, and that other remedies, such as suits in foreign jurisdictions or the application of foreign copyright laws by American courts, are not realistic alternatives.
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We are not persuaded by Appellees’ parade of horribles. More fundamentally, however, we are unwilling to overturn over eighty years of consistent jurisprudence on the extraterritorial reach of the copyright laws without further guidance from Congress. The Supreme Court recently reminded us that “it is a long-standing principle of American law ‘that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States.’” Because courts must “assume that Congress legislates against the backdrop of the presumption against extraterritoriality,” unless “there is ‘the affirmative intention of the Congress clearly expressed’” congressional enactments must be presumed to be “‘primarily concerned with domestic conditions.’” The “undisputed axiom” that the United States’ copyright laws have no application to extraterritorial infringement predates the 1909 Act, and, as discussed above, the principle of territoriality consistently has been reaffirmed. There is no clear expression of congressional intent in either the 1976 Act or other relevant enactments to alter the preexisting extraterritoriality doctrine. Indeed, the Peter Starr court itself recognized the continuing application of the principle that “infringing actions that take place entirely outside the United States are not actionable in United States federal courts.” Furthermore, we note that Congress chose in 1976 to expand one specific “extraterritorial” application of the Act by declaring that the unauthorized importation of copyrighted works constitutes infringement even when the copies lawfully were made abroad. Had Congress been inclined to overturn the preexisting doctrine that infringing acts that take place wholly outside the United States are not actionable under the Copyright Act, it knew how to do so. Accordingly, the presumption against extraterritoriality, “far from being overcome here, is doubly fortified by the language of [the] statute,” as set against its consistent historical interpretation. Appellees, however, rely on dicta in a recent decision of the District of Columbia Circuit for the proposition that the presumption against extraterritorial application of U.S. laws may be “overcome” when denying such application would “result in adverse effects within the United States.” However, the Massey court did not state that extraterritoriality would be demanded in such circumstances, but that “the presumption is generally not applied where the failure to extend the scope of the statute to a foreign setting will result in adverse [domestic] effects.” In each of the statutory schemes discussed by the Massey court, the ultimate touchstone of extraterritoriality consisted of an ascertainment of congressional intent; courts did not rest solely on the consequences of a failure to give a statutory scheme extraterritorial application. More importantly, as the Massey court conceded, application of the presumption is particularly appropriate when “it serves to protect against unintended clashes between our laws and those of other nations which could result in international discord.” We believe this latter factor is decisive in the case of the Copyright Act, and fully justifies application of the Aramco presumption even assuming arguendo that “adverse effects” within the United States “generally” would require a plenary inquiry into congressional intent. At the time that the international distribution of the videocassettes in this case took place, the United States was a member of the Universal Copyright Convention (“UCC”), and, in 1988, the United States acceded to the Berne Convention for the Protection of Literary and Artistic Works (“Berne Conv.”). The central thrust of these multilateral treaties is the principle of “national treatment.” A work of an American national first generated in America will receive the same protection in a foreign nation as that country accords to the works of its own nationals. Although the treaties do not expressly discuss choice-of-law rules, it is commonly acknowledged that the national treatment principle implicates a rule of territoriality. Indeed, a recognition of this principle appears implicit in Congress’s statements in acceding to Berne that “the primary mechanism for discouraging discriminatory treatment of foreign copyright claimants is the principle of national treatment,” and that adherence to Berne will require “careful due regard for the[] values” of other member nations. In light of the Aramco Court’s concern with preventing international discord, we think it inappropriate for the courts to act in a manner that might disrupt Congress’s efforts to secure a more
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stable international intellectual property regime unless Congress otherwise clearly has expressed its intent. The application of American copyright law to acts of infringement that occur entirely overseas clearly could have this effect. Extraterritorial application of American law would be contrary to the spirit of the Berne Convention, and might offend other member nations by effectively displacing their law in circumstances in which previously it was assumed to govern. Consequently, an extension of extraterritoriality might undermine Congress’s objective of achieving “‘effective and harmonious’ copyright laws among all nations.’” Indeed, it might well send the signal that the United States does not believe that the protection accorded by the laws of other member nations is adequate, which would undermine two other objectives of Congress in joining the convention: “strengthening the credibility of the U.S. position in trade negotiations with countries where piracy is not uncommon” and “raising the likelihood that other nations will enter the Convention.” Moreover, although Appellees contend otherwise, we note that their theory might permit the application of American law to the distribution of protected materials in a foreign country conducted exclusively by citizens of that nation. A similar possibility was deemed sufficient in Aramco to find a provision that, on its face, appeared to contemplate that Title VII would be applied overseas, insufficient to rebut the presumption against extraterritoriality. Of course, under the Berne Convention, all states must guarantee minimum rights, and it is plausible that the application of American law would yield outcomes roughly equivalent to those called for by the application of foreign law in a number of instances. Nonetheless, extending the reach of American copyright law likely would produce difficult choice-of-law problems, dilemmas that the federal courts’ general adherence to the territoriality principle largely has obviated. Even if courts, as a matter of comity, would assert extraterritorial jurisdiction only when the effects in the United States and the contacts of the offending party with this country are particularly strong, that the assertion of such jurisdiction would engender new and troublesome choice-of- law questions provides a compelling reason for applying the Aramco presumption. Accordingly, because an extension of the extraterritorial reach of the Copyright Act by the courts would in all likelihood disrupt the international regime for protecting intellectual property that Congress so recently described as essential to furthering the goal of protecting the works of American authors abroad, we conclude that the Aramco presumption must be applied. Because the presumption has not been overcome, we reaffirm that the United States copyright laws do not reach acts of infringement that take place entirely abroad. It is for Congress, and not the courts, to take the initiative in this field.
III. Other Arguments
Appellees raise a number of additional arguments for why the district court’s judgment should be affirmed. Relying upon the Second Circuit’s doctrine described above, Appellees maintain that they may recover damages for international distribution of the Picture based on the theory that an act of direct infringement, in the form of a reproduction of the negatives for the Picture, took place in the United States. Appellees also suggest that they may recover, under United States law, damages stemming from the international distribution on the theory that the distribution was part of a larger conspiracy to violate their copyright that included actionable infringement within the United States. In addition, they maintain that Appellants are liable for the international distribution under foreign copyright laws. Finally, Appellees argue that the district court’s damage award can be sustained under the breach of contract theory not reached by the panel. We resolve none of these questions, but leave them for the panel, in its best judgment, to consider. A remand to the district court might well be necessary to permit further factual development in light of our decision to overrule aspects of Peter Starr. The panel, however, is free to take whatever action it views as appropriate that is consistent with our mandate.
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Conclusion
We hold that the mere authorization of acts of infringement that are not cognizable under the United States copyright laws because they occur entirely outside of the United States does not state a claim for infringement under the Copyright Act. Peter Starr is overruled insofar as it held to the contrary. Accordingly, we vacate Part III of the panel’s disposition, in which it concluded that the international distribution of the film constituted a violation of the United States copyright laws. We also vacate that portion of the disposition that affirmed the damage award based on foreign distribution of the film and the panel’s affirmance of the award of attorneys’ fees. Finally, we vacate the district court’s grant of injunctive relief insofar as it was based on the premise that the Distributors had violated the United States copyright laws through authorization of the foreign distribution of the Picture on videocassettes. The cause is remanded to the panel for further proceedings consistent with the mandate of this court. Vacated in Part and Remanded.
Boosey & Hawkes Music Pubs. v. The Walt Disney Co. 145 F.3d 481 (2d Cir. 1998)
Leval, Circuit Judge:
Boosey & Hawkes Music Publishers Ltd., an English corporation and the assignee of Igor Stravinsky’s copyrights for “The Rite of Spring,” brought this action alleging that the Walt Disney Company’s foreign distribution in video cassette and laser disc format (“video format”) of the film “Fantasia,” featuring Stravinsky’s work, infringed Boosey’s rights. In 1939 Stravinsky licensed Disney’s distribution of The Rite of Spring in the motion picture. Boosey, which acquired Stravinsky’s copyright in 1947, contends that the license does not authorize distribution in video format. The district court (Duffy, J.) granted partial summary judgment to Boosey, declaring that Disney’s video format release was not authorized by the license agreement. Disney appeals from that ruling. The court granted partial summary judgment to Disney, dismissing Boosey’s claims for breach of contract and violation of § 43(a) of the Lanham Act; the court also dismissed Boosey’s foreign copyright claims under the doctrine of forum non conveniens. Boosey appeals from these rulings. We hold that summary judgment was properly granted to Disney with respect to Boosey’s Lanham Act claims, but that material issues of fact barred the other grants of summary judgment. We also reverse the order dismissing for forum non conveniens. Accordingly, we remand all but the Lanham Act claim for trial.
I. BACKGROUND
During 1938, Disney sought Stravinsky’s authorization to use The Rite of Spring (sometimes referred to as the “work” or the “composition”) throughout the world in a motion picture. Because under United States law the work was in the public domain, Disney needed no authorization to record or distribute it in this country, but permission was required for distribution in countries where Stravinsky enjoyed copyright protection. In January 1939 the parties executed an agreement (the “1939 Agreement”) giving Disney rights to use the work in a motion picture in consideration of a fee to Stravinsky of $6000. The 1939 Agreement provided that In consideration of the sum of Six Thousand ($6,000.) Dollars, receipt of which is hereby acknowledged, [Stravinsky] does hereby give and grant unto Walt Disney Enterprises, a California corporation . . . the nonexclusive, irrevocable right, license,
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privilege and authority to record in any manner, medium or form, and to license the performance of, the musical composition hereinbelow set out . . . . Under “type of use” in P 3, the Agreement specified that The music of said musical composition may be used in one motion picture throughout the length thereof or through such portion or portions thereof as the Purchaser shall desire. The said music may be used in whole or in part and may be adapted, changed, added to or subtracted from, all as shall appear desirable to the Purchaser in its uncontrolled discretion. . . . The title “Rites of Spring” or “Le Sacre de Printemps”, or any other title, may be used as the title of said motion picture and the name of [Stravinsky] may be announced in or in connection with said motion picture. The Agreement went on to specify in P 4 that Disney’s license to the work “is limited to the use of the musical composition in synchronism or timed-relation with the motion picture.” Paragraph Five of the Agreement provided that The right to record the musical composition as covered by this agreement is conditioned upon the performance of the musical work in theatres having valid licenses from the American Society of Composers, Authors and Publishers, or any other performing rights society having jurisdiction in the territory in which the said musical composition is performed. We refer to this clause, which is of importance to the litigation, as “the ASCAP Condition.” Finally, P 7 of the Agreement provided that “the licensor reserves to himself all rights and uses in and to the said musical composition not herein specifically granted” (the “reservation clause”). Disney released Fantasia, starring Mickey Mouse, in 1940. The film contains no dialogue. It matches a pantomime of animated beasts and fantastic creatures to passages of great classical music, creating what critics celebrated as a “partnership between fine music and animated film.” The soundtrack uses compositions of Bach, Beethoven, Dukas, Schubert, Tchaikovsky, and Stravinsky, all performed by the Philadelphia Orchestra under the direction of Leopold Stokowski. As it appears in the film soundtrack, The Rite of Spring was shortened from its original 34 minutes to about 22.5; sections of the score were cut, while other sections were reordered. For more than five decades Disney exhibited The Rite of Spring in Fantasia under the 1939 license. The film has been re-released for theatrical distribution at least seven times since 1940, and although Fantasia has never appeared on television in its entirety, excerpts including portions of The Rite of Spring have been televised occasionally over the years. Neither Stravinsky nor Boosey has ever previously objected to any of the distributions. In 1991 Disney first released Fantasia in video format. The video has been sold in foreign countries, as well as in the United States. To date, the Fantasia video release has generated more than $360 million in gross revenue for Disney. Boosey brought this action in February 1993. The complaint sought (1) a declaration that the 1939 Agreement did not include a grant of rights to Disney to use the Stravinsky work in video format; (2) damages for copyright infringement in at least 18 foreign countries; (3) damages under the Lanham Act for false designation of origin and misrepresentation by reason of Disney’s alteration of Stravinsky’s work; (4) damages for breach of contract, alleging that the video format release breached the 1939 Agreement; and (5) damages for unjust enrichment. On cross-motions for summary judgment the district court made the rulings described above. In determining that the license did not cover the distribution of a video format, the district court found that while the broad language of the license gave Disney “the right to record [the work] on video tape and laser disc,” the ASCAP Condition “prevents Disney from distributing video tapes or laser discs directly to consumers.” The court therefore concluded that Disney’s video format sales exceeded the scope of the license. However, as noted, the district court invoked forum non conveniens to dismiss all of Boosey’s claims of copyright infringement because they involved the application of foreign law. The court
22 INTERNATIONAL COPYRIGHT dismissed Boosey’s claim for damages under the Lanham Act because of plaintiff’s failure to introduce evidence of actual consumer confusion and dismissed Boosey’s breach of contract claim, finding that Disney had discharged its only contracted obligation, which was to pay Stravinsky $6000. The decision below thus declared Disney an infringer, but granted Boosey no relief, leaving it to sue in the various countries under whose copyright laws it claims infringement. This appeal followed.
II. Discussion
We confront four questions on appeal. Disney challenges the summary judgment which declared that the 1939 Agreement does not authorize video distribution of The Rite of Spring. Boosey appeals three other rulings: the dismissal for forum non conveniens, and the grants of summary judgment on the claims for damages for violation of the Lanham Act and breach of contract.
A. Declaratory Judgment on the Scope of the License.
Boosey’s request for declaratory judgment raises two issues of contract interpretation: whether the general grant of permission under the 1939 Agreement licensed Disney to use The Rite of Spring in the video format version of Fantasia (on which the district court found in Disney’s favor); and, if so, whether the ASCAP Condition barred Disney from exploiting the work through video format (on which the district court found for Boosey). 1. Whether the “motion picture” license covers video format. Boosey contends that the license to use Stravinsky’s work in a “motion picture” did not authorize distribution of the motion picture in video format, especially in view of the absence of an express provision for “future technologies” and Stravinsky’s reservation of all rights not granted in the Agreement. Disputes about whether licensees may exploit licensed works through new marketing channels made possible by technologies developed after the licensing contract—often called “new-use” problems—have vexed courts since at least the advent of the motion picture. In Bartsch v. Metro-Goldwyn-Mayer, Inc., we held that “licensees may properly pursue any uses which may reasonably be said to fall within the medium as described in the license.” We held in Bartsch that a license of motion picture rights to a play included the right to telecast the motion picture. We observed that “if the words are broad enough to cover the new use, it seems fairer that the burden of framing and negotiating an exception should fall on the grantor,” at least when the new medium is not completely unknown at the time of contracting. The 1939 Agreement conveys the right “to record [the composition] in any manner, medium or form” for use “in [a] motion picture.” We believe this language is broad enough to include distribution of the motion picture in video format. At a minimum, Bartsch holds that when a license includes a grant of rights that is reasonably read to cover a new use (at least where the new use was foreseeable at the time of contracting), the burden of excluding the right to the new use will rest on the grantor. The license “to record in any manner, medium or form” doubtless extends to videocassette recording and we can see no reason why the grant of “motion picture” reproduction rights should not include the video format, absent any indication in the Agreement to the contrary. If a new-use license hinges on the foreseeability of the new channels of distribution at the time of contracting—a question left open in Bartsch—Disney has proffered unrefuted evidence that a nascent market for home viewing of feature films existed by 1939. The Bartsch analysis thus compels the conclusion that the license for motion picture rights extends to video format distribution. We recognize that courts and scholars are not in complete accord on the capacity of a broad license to cover future developed markets resulting from new technologies. The Nimmer treatise describes two principal approaches to the problem. According to the first view, advocated here by Boosey, “a license of rights in a given medium (e.g., ‘motion picture rights’) includes only such uses as fall within the unambiguous core meaning of the term (e.g., exhibition of motion picture film in motion
23 INTERNATIONAL COPYRIGHT picture theaters) and exclude any uses that lie within the ambiguous penumbra (e.g., exhibition of motion picture on television).” Under this approach, a license given in 1939 to “motion picture” rights would include only the core uses of “motion picture” as understood in 1939—presumably theatrical distribution—and would not include subsequently developed methods of distribution of a motion picture such as television videocassettes or laser discs. The second position described by Nimmer is “that the licensee may properly pursue any uses that may reasonably be said to fall within the medium as described in the license.” Nimmer expresses clear preferences for the latter approach on the ground that it is “less likely to prove unjust.” As Judge Friendly noted in Bartsch, “So do we.” We acknowledge that a result which deprives the author-licensor of participation in the profits of new unforeseen channels of distribution is not an altogether happy solution. Nonetheless, we think it more fair and sensible than a result that would deprive a contracting party of the rights reasonably found in the terms of the contract it negotiates. This issue is too often, and improperly, framed as one of favoritism as between licensors and licensees. Because licensors are often authors—whose creativity the copyright laws intend to nurture—and are often impecunious, while licensees are often large business organizations, there is sometimes a tendency in copyright scholarship and adjudication to seek solutions that favor licensors over licensees. Thus in Cohen, the Ninth Circuit wrote that a “license must be construed in accordance with the purpose underlying federal copyright law,” which the court construed as the granting of valuable, enforceable rights to authors and the encouragement of the production of literary works. Asserting that copyright law “is enacted for the benefit of the composer,” the court concluded that it would “frustrate the purposes of the [copyright] Act” to construe the license as encompassing video technology, which did not exist when the license was granted. In our view, new-use analysis should rely on neutral principles of contract interpretation rather than solicitude for either party. Although Bartsch speaks of placing the “burden of framing and negotiating an exception . . . on the grantor,” it should not be understood to adopt a default rule in favor of copyright licensees or any default rule whatsoever. What governs under Bartsch is the language of the contract. If the contract is more reasonably read to convey one meaning, the party benefitted by that reading should be able to rely on it; the party seeking exception or deviation from the meaning reasonably conveyed by the words of the contract should bear the burden of negotiating for language that would express the limitation or deviation. This principle favors neither licensors nor licensees. It follows simply from the words of the contract. The words of Disney’s license are more reasonably read to include than to exclude a motion picture distributed in video format. Thus, we conclude that the burden fell on Stravinsky, if he wished to exclude new markets arising from subsequently developed motion picture technology, to insert such language of limitation in the license, rather than on Disney to add language that reiterated what the license already stated. Other significant jurisprudential and policy considerations confirm our approach to new-use problems. We think that our view is more consistent with the law of contract than the view that would exclude new technologies even when they reasonably fall within the description of what is licensed. Although contract interpretation normally requires inquiry into the intent of the contracting parties, intent is not likely to be helpful when the subject of the inquiry is something the parties were not thinking about. Nor is extrinsic evidence such as past dealings or industry custom likely to illuminate the intent of the parties, because the use in question was, by hypothesis, new, and could not have been the subject of prior negotiations or established practice. Moreover, many years after formation of the contract, it may well be impossible to consult the principals or retrieve documentary evidence to ascertain the parties’ intent, if any, with respect to new uses. On the other hand, the parties or assignees of the contract should be entitled to rely on the words of the contract. Especially where, as here, evidence probative of intent is likely to be both scant and unreliable, the burden of justifying a departure from the most reasonable reading of the contract should fall on the party advocating the departure.
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Neither the absence of a future technologies clause in the Agreement nor the presence of the reservation clause alters that analysis. The reservation clause stands for no more than the truism that Stravinsky retained whatever he had not granted. It contributes nothing to the definition of the boundaries of the license. And irrespective of the presence or absence of a clause expressly confirming a license over future technologies, the burden still falls on the party advancing a deviation from the most reasonable reading of the license to insure that the desired deviation is reflected in the final terms of the contract. As we have already stated, if the broad terms of the license are more reasonably read to include the particular future technology in question, then the licensee may rely on that language. Bartsch therefore continues to articulate our “preferred” approach to new-use questions, and we hold that the district court properly applied it to find that the basic terms of Disney’s license included the right to record and distribute Fantasia in video format. 2. The ASCAP Condition. Boosey further contends that distribution of Fantasia in video format violated the ASCAP Condition. The district court agreed. It granted summary judgment to Boosey declaring that the ASCAP Condition “prevents Disney from distributing video tapes and laser discs directly to consumers.” We disagree with the district court’s analysis. The ASCAP Condition provides that The right to record the musical composition as covered by this agreement is conditioned upon the performance of the musical work in theaters having valid licenses from the American Society of Composers, Authors and Publishers, or any other performing rights society having jurisdiction in the territory in which the said musical composition is performed. The court apparently believed, as Boosey argues, that the ASCAP Condition unambiguously limited Disney’s exploitation of its motion picture to theaters operating under a license from ASCAP or similar performing rights society. This interpretation treats the clause as if it stated explicitly either that the license extends only to performances in theaters licensed by ASCAP, or that Disney commits itself to exploit the license only in such theaters. But that is not what the clause says. The terms of the provision condition Disney’s right to record the work only “upon the performance of the . . . work in theaters” having ASCAP (or similar) licenses. Read literally, this language requires no more of Disney than that it expose the motion picture in two or more ASCAP- certified theaters, a condition surely long ago satisfied. Whatever may have been the intention, the ASCAP Condition does not unambiguously prohibit Disney from exhibiting the composition in non- ASCAP theaters, or from distributing the film directly to consumers. Apart from the fact that the language of the Condition does not compel Boosey’s interpretation, there is also good reason to regard that construction as improbable. Because the work was in the public domain in the United States, the license pertained only to foreign rights, which the contract described as world wide. Construing the Condition as Boosey argues would mean that the film could not be shown at all in any country where the work was protected and theaters did not employ ASCAP-type licenses. Furthermore, we learn from a leading treatise on music licensing that this very clause was industry boilerplate that appeared in “countless synchronization licenses” for U.S. films. If the clause meant what Boosey contends, studios whose films included copyrighted works licensed with this boilerplate provision would be completely prohibited from showing their films at all in the United States in the event that U.S. movie theaters ceased to employ ASCAP licenses. It seems highly unlikely that the film industry entered into contracts that would place it at the mercy of its licensors, in the event that ASCAP licensing was for whatever reason abandoned. Indeed, ASCAP licenses did disappear from U.S. theaters as a result of an antitrust ruling in 1948. Under Boosey’s reading, “countless” movies containing copyrighted works licensed with the ASCAP Condition were thereafter barred from U.S. theatrical release. If Boosey’s interpretation of the Condition was widely shared, frequent litigation to sort out the rights of licensors and licensees after the demise of ASCAP theater licensing would have been inevitable. That Boosey has not cited a single court decision
25 INTERNATIONAL COPYRIGHT confirming its view of the ASCAP Condition strongly suggests that its view of the provision was not, in fact, widely held. Kohn appears to indicate, moreover, that the ASCAP Condition remained industry boilerplate until sometime in the 1950s. If this is true, Boosey’s view of the Condition requires us to believe that studios agreed to limit distribution of movies containing licensed works to ASCAP-licensed theaters even after ASCAP licensing of theaters had been declared unlawful. Not only would it would be nonsensical for moviemakers to predicate their license to copyrighted works on a condition that could not lawfully be satisfied, but it is unimaginable that they would produce films whose distribution to the domestic market hinged on subsequent permission, or quiescence, of licensors. We find that neither party’s interpretation is compelled by the plain terms of the provision. The Condition is sufficiently unclear on its face to justify consideration of extrinsic evidence. Boosey argues that any ambiguity regarding the meaning of the ASCAP Provision is dissipated by extrinsic evidence showing Disney knew that the 1939 Agreement permitted use of the composition only in ASCAP-licensed motion picture theaters. We do not find this evidence persuasive. Boosey first points to the parties’ limited post-contract course of dealing. In 1941, Boosey notes, Disney acknowledged that the Agreement did not license use of The Rite of Spring on radio. In 1969, Disney negotiated and paid for the right to release the soundtrack recording of “The Rite of Spring” as part of a complete Fantasia album. And in 1990, Disney unsuccessfully sought Boosey’s permission to use sections of the composition “in a new performance by . . . Pink Floyd to be filmed at the Great Pyramid of Giza, while imagery from ‘Fantasia’ is projected across the entire face of the Pyramid.” Boosey would have us infer that these requests for permission demonstrate Disney’s awareness that its right to the composition was limited to exploitation in licensed motion picture theaters. However, those exploitations of the composition seem clearly beyond the scope of the 1939 Agreement. None of the proposed uses involved “the use of the musical composition in synchronism or timed-relation” with Fantasia, as required by P 4 of the Agreement; the 1941 and 1969 requests did not even envision use of the composition in a motion picture, as required by P 3 of the Agreement. Because the Agreement could not reasonably be interpreted to cover these uses, Disney’s decision to seek supplemental permission for them reveals nothing regarding its view as to whether it was authorized to license Fantasia otherwise than in theaters with ASCAP licenses. Indeed, there is course of dealing evidence that supports the opposite conclusion—that Disney did not view the license as restricted to performance in ASCAP-licensed theaters. Without seeking Boosey’s permission, Disney appears to have sold Fantasia directly to consumers in at least two foreign markets and telecast the composition in excerpts from “Fantasia” several times. That Disney sought permission for uses of the composition not involving the motion picture Fantasia, but did not seek permission for direct distribution of Fantasia in alternative motion picture formats, arguably rebuts Boosey’s argument that Disney’s conduct shows it agreed with Boosey’s interpretation. Boosey’s other extrinsic evidence is no more compelling. Boosey points out that in contracts for other compositions used in Fantasia, negotiated at about the same time as the 1939 Agreement, it was Disney’s “right to license the performance” that was conditioned on ASCAP performance (emphasis added). In Stravinsky’s contract it was the right “to record” that was so conditioned. Because a condition on the “right to record” is more drastic than a limitation on the right to license, Boosey argues that Stravinsky bargained for an enhanced interest in Fantasia’s continuing revenue stream. We find the argument unpersuasive. Even if Disney did agree to a more drastic restriction resulting from its failure to comply with the ASCAP Condition, that sheds no light on what conduct was needed to satisfy the Condition. Furthermore, Boosey’s point is illusory. Because The Rite of Spring was in the public domain in the United States—where Disney was making its motion picture—Disney did not need a license from Stravinsky “to record” the composition. It needed Stravinsky’s permission only to license performances in countries where Stravinsky’s copyright interest was recognized. As a practical matter, therefore, Disney did not place more at stake in agreeing to a condition on its right “to record”
26 INTERNATIONAL COPYRIGHT than in other contracts where the condition applied to its right “to license.” Indeed, it is arguable that because the condition applied only to something Disney had the right to do without Stravinsky’s permission, the ASCAP Condition had no functional significance at all. Neither the plain terms of the 1939 Agreement nor the sparse and contradictory extrinsic evidence require the conclusion that Disney’s license is limited to theatrical performance of the composition. Summary judgment is therefore inappropriate. We vacate the summary grant of declaratory judgment in Boosey’s favor and remand for a trial to determine whether Disney’s video format release violated the ASCAP Condition.
B. Foreign Copyright Claims.
Invoking the doctrine of forum non conveniens, the district court dismissed Boosey’s second cause of action, which sought damages for copyright infringement deriving from Disney’s sales of videocassettes of Fantasia in at least eighteen foreign countries. The court below concluded that these claims should be tried “in each of the nations whose copyright laws are invoked.” Boosey appeals, seeking remand to the district court for trial. District courts enjoy broad discretion to decide whether to dismiss an action under the doctrine of forum non conveniens. Nevertheless, this discretion is subject to “meaningful appellate review.” A dismissal for forum non conveniens will be upset on appeal where a defendant has failed to demonstrate that “an adequate alternative forum exists” and that “the balance of convenience tilts strongly in favor of trial in the foreign forum.” We recently explained that a motion to dismiss under forum non conveniens is decided in two steps. The district court first must determine whether there exists an alternative forum with jurisdiction to hear the case. If so, the court then weighs the factors set out in Gilbert to decide which “forum . . . will be most convenient and will best serve the ends of justice.” The district court failed to consider whether there were alternative fora capable of adjudicating Boosey’s copyright claims. It made no determination whether Disney was subject to jurisdiction in the various countries where the court anticipated that trial would occur and did not condition dismissal on Disney’s consent to jurisdiction in those nations. Furthermore, consideration of the Gilbert factors makes plain that forum non conveniens is inappropriate here. The district court must carefully weigh the private and public interests set forth in Gilbert and may grant the forum non conveniens motion only if these considerations strongly support dismissal. Relevant private interests of the litigants include access to proof, availability of witnesses and “all other practical problems that make trial of a case easy, expeditious and inexpensive.” The private interests of the litigants favor conducting the litigation in New York where the plaintiff brought suit. Disney does not allege that a New York forum is inconvenient. The necessary evidence and witnesses are available and ready for presentation. A trial here promises to begin and end sooner than elsewhere, and would allow the parties to sort out their rights and obligations in a single proceeding. This is not a circumstance where the plaintiff’s choice of forum is motivated by harassment. Indeed, it seems rather more likely that Disney’s motion seeks to split the suit into 18 parts in 18 nations, complicate the suit, delay it, and render it more expensive. In dismissing the cases, the court relied on the “public interests” identified in Gilbert. It reasoned that the trial would require extensive application of foreign copyright and antitrust jurisprudence, bodies of law involving strong national interests best litigated “in their respective countries.” The court concluded as well that these necessary inquiries into foreign law would place an undue burden on our judicial system.” While reluctance to apply foreign law is a valid factor favoring dismissal under Gilbert, standing alone it does not justify dismissal. District courts must weigh this factor along with the other relevant considerations. Numerous countervailing considerations suggest that New York venue is proper:
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defendant is a U.S. corporation, the 1939 agreement was substantially negotiated and signed in New York, and the agreement is governed by New York law. The plaintiff has chosen New York and the trial is ready to proceed here. Everything before us suggests that trial would be more “easy, expeditious and inexpensive” in the district court than dispersed to 18 foreign nations. We therefore vacate the dismissal of the foreign copyright claims and remand for trial. . . . .
Conclusion
The grants of summary judgment in Boosey’s favor declaring that Disney’s foreign video format marketing exceeded the terms of the license, and in Disney’s favor dismissing Boosey’s claim for breach of contract are vacated. The dismissal of the action by reason of forum non conveniens is reversed. The dismissal of Boosey’s claim under the Lanham Act is affirmed.
Peter K. Yu, Conflict of Laws Issues in International Copyright Cases, Gigalaw.com (Apr. 2001)
Introduction
Today, one can easily subscribe to a German newspaper, order a Swedish magazine, listen to a Russian radio broadcast over the Internet or purchase a French movie video from a Canadian retail store. However, when asked which law would govern those transactions, most people, including even experienced lawyers, would have a very difficult time answering this question. Due to the varying levels of wealth, economic structures, technological capabilities, political systems and cultural traditions, different countries have different copyright laws. What is protected under U.S. law may not be protected under Brazilian law. What is legal within the United States may be illegal in China. The Berne Convention and the TRIPs (Trade-Related Aspects of Intellectual Property Rights) Agreement attempt to harmonize copyright laws around the world. However, these multilateral conventions have yet to create a uniform intellectual property regime under which all member countries have identical copyright laws. In fact, there remains wide disagreement among countries regarding issues such as “moral rights,” “fair use,” duration of copyright, protection in data, rights in sound recordings, exhaustion of rights, work-for-hire arrangement and, most recently, circumvention of encryption technologies and Internet service provider liability.
Extraterritorial Application of U.S. Copyright Law
In Equal Employment Opportunity Commission v. Arabian American Oil Co., the United States Supreme Court, in 1991, held that federal statutes are not to be construed to apply to conduct abroad absent clear congressional intent to that effect. Thus, courts are generally reluctant to apply copyright laws to infringing activities abroad unless there is direct infringement within the United States. Commentators have attributed this reluctance to the territorial nature of copyright laws, the principle of national sovereignty, concerns about international comity, and considerations for separation of powers. A case in point is the 1994 case of Subafilms, Ltd. v. MGM-Pathe Communications Co. In this case, Subafilms and Hearst Corporation sued MGM/UA for unauthorized distribution abroad of The Beatles’s “Yellow Submarine.” Interpreting the U.S. Copyright Act as conferring rights no further than the national border, the U.S. Court of Appeals for the Ninth Circuit held that merely authorizing infringing acts within the United States did not violate domestic copyright law.
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After Subafilms, however, several courts declined to follow the Ninth Circuit’s decision, maintaining that the court had ignored economic reality and the incentive scheme created by the copyright clause of the U.S. Constitution. On the one hand, extraterritorial application of domestic copyright law could create more incentives by effectively protecting U.S. copyrighted works abroad. On the other hand, such application would enable courts to remove loopholes in the U.S. Copyright Act. In light of the global transformation that has occurred in the New Economy, more courts likely would decline to follow the Ninth Circuit’s ruling. Instead, they may attempt to find some connection between the infringing activities and the United States so that application of U.S. law would be justified.
Two Interpretations of the National Treatment Principle
As a member of the Berne Convention for the Protection of Literary and Artistic Works, the United States abides by the principle of national treatment. Under this principle, a member state must protect the work of foreign authors the same way as it protects the work of its own authors. Thus, whatever law applies to a domestic work will also apply to a foreign work. When Congress enacted the Berne Convention Implementation Act of 1988, it stated explicitly that the Berne Convention is not self-executing. Thus, in resolving a conflict-of-laws question in an international copyright case, courts must look to the U.S. Copyright Act. Because the Act does not contain any choice-of-law provision, courts must look elsewhere to resolve the conflict-of-laws question. There are generally two different views regarding the meaning of national treatment in the conflict-of-laws context. The late Professor Melville Nimmer, author of the leading treatise on U.S. copyright law, maintained that national treatment is a choice-of-law provision. Under his interpretation, national treatment dictates that the applicable law is the law of the state in which the infringement occurred. This applicable law governs all elements of the infringement action, regardless of the nationality of the author, the country of origin of the copyrighted work or the place of first publication. While Professor Nimmer was undoubtedly the leading authority in copyright law, such an interpretation is unconvincing, for it would result in multiple ownership laws and a change of ownership every time the work crosses a country’s border. Thus, some commentators and courts have rejected his interpretation. Instead, they consider national treatment as a non-discrimination device, restricting a country’s ability to enact laws that treat domestic authors more favorably than foreign authors.
Resolving Choice-of-Law Questions
Under the alternative interpretation, different laws may apply to different elements of the infringement action: Originality. In Feist Publications, Inc. v. Rural Telephone Service Co., the United States Supreme Court, in 1991, made it clear that originality is a constitutional requirement, thus implying that U.S. courts will not be able to apply the more lenient originality standard of a foreign country in any copyright case. This implication was well-illustrated by the interesting development in the 1998 case of Bridgeman Art Library, Ltd. v. Corel Corp. in the Southern District of New York. In that case, the court initially misapplied British law to determine whether the subject matter met the originality requirement for copyright protection. Upon reconsideration, the court “corrected” itself by conceding that U.S. law governed the originality issue. Subject Matter. There is virtually no case law on this issue. However, section 104 of the U.S. Copyright Act, which lists the various conditions under which a foreign work attains copyright protection in the United States, seems to suggest that copyright in a work is initially vested in the country of origin and is subsequently recognized by other countries through treaty obligations. Thus, courts must consider both domestic copyright law and the relevant treaty provisions to determine the substantive law governing the subject matter issue.
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Ownership. The ownership issue was addressed in the 1998 case of Itar-Tass Russian News Agency v. Russian Kurier, Inc. In this case, several Russian journalists sued a New York-based Russian newspaper for allegedly infringing upon the copyright in their newspaper and magazine articles which were originally published in Russia. After examining the two different interpretations of national treatment, the U.S. Court of Appeals for the Second Circuit held that national treatment is not a choice-of- law provision. Adopting the alternative interpretation (which considers national treatment as a non- discrimination device), the court developed federal common law to fill in the gaps left by the U.S. Copyright Act. According to the Second Circuit, the applicable law is the law of the state that has the most significant relationship to the copyrighted work and the parties involved—and in this case, Russian law. Infringement. To determine the substantive law governing the infringement issue, courts in general apply the torts conflict of laws principle of lex loci deliciti (“lex loci delicti” means “place of the wrong”). Under this principle, the court applies the law of the country in which the infringement occurred.
Recent Choice-of-Law Proposals
With the advent of the Internet and increased globalization, commentators have argued that new solutions (including new choice-of-law rules) may be needed to provide more effective international copyright protection. These solutions include: • Professors David Johnson and David Post’s cyberlaw approach, under which territorial copyright laws will be replaced by customary law that aims to balance the interests of rights holders and users. • Professor Paul Geller’s proposal of applying the law of the country that affords the greatest protection among all countries having access to the network disseminating the infringing materials. (He has since refined his proposal by advocating the use of different approaches with respect to injunction and damages.) • Professor Jane Ginsburg’s approach, under which U.S. law will apply whenever the work is infringed in the United States or when the infringer is an American national, resides in the United States or has an effective business establishment in the country. • There are also proposals calling for the application by analogy of satellite broadcasting theories, under which the court will apply the law of the country in which broadcasting signals are sent or are received. However, each of these proposals has its own problems and weaknesses. Even the proponents themselves have conceded the limitations of their proposals. For example, the cyberlaw approach would result in inconsistencies between laws in cyberspace and those in the physical world. The maximum protection proposal would have limited effectiveness in cases where the conflicting laws address radically different interests or when the conflict involves an area that is not covered by copyright. The lex fori approach would allow the defendants to manipulate the choice-of-law rules by locating themselves and their activities in countries with the lowest levels of copyright protection and enforcement. The satellite broadcasting theories are unclear as to whether the applicable law is that of the uplinking state (as required under the 1993 EU Directive on Satellite Broadcasting and Cable Retransmission), the downlinking state, or all the states that have access to the network disseminating the infringing materials. So far, there has not been a grand unified conflict-of-laws theory, and courts have yet to agree on a set of choice-of-law rules that apply to all international copyright cases. As a result, courts have to consider choice-of-law questions on a case-by-case basis. Among the factors considered are those stated in the Second Restatement of Conflict of Laws:
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• the needs of the interstate and international systems • the relevant policies of the forum • the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue • the protection of justified expectations • the basic policies underlying the particular field of law • certainty, predictability and uniformity of result • ease in the determination and application of the law to be applied
Conclusion
As intellectual property becomes an increasingly valuable commodity in international transactions, the choice-of-law rules that determine the substantive law governing the transactions will become very important. Uncertainty in this area will lead not only to unnecessary costs and uncertainty whenever worldwide rights and transactions are involved, but also to unjust results that would be contrary to the expectations of the interested parties. Nevertheless, unless Congress introduces a choice-of-law provision in the U.S. Copyright Act or unless there is a consensus on choice-of-law rules among federal courts, there will be great uncertainty as to which law would govern a particular issue in an international copyright case. Likewise, in the international context, due to the yet-to-harmonize international copyright regime and the lack of choice-of-law provisions in multilateral copyright conventions, there will continue to be disagreement among countries over which substantive law will govern a particular issue in an international copyright case.
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