Second Circuit: retroactive assignment cannot cure past infringement claim by co-authorOctober 8, 2007

The Second Circuit yesterday issued a decision regarding whether an action for infringement brought by one co-author of a song can be defeated by the grant of a "retroactive" transfer of ownership to the infringer from a co-author who is not party to the infringement action. The case involved licensing and litigation regarding authorship of two tracks on Mary J. Blige's 2001 album, ironically named "No More Drama."

In this issue of first impression, the court held that the "retroactive" transfer of ownership does not defeat any infringement causes of action that had already accrued at the time that the transfer occurred. This was because the retroactive assignment amounted to a transfer of rights that had already vested in the other co-authors, namely the right to sue for infringement.

More on Davis v. Blige after the jump.

The case involved the authorship of Tracks 1 ("Love") and 2 ("Keep it moving") on the album "No More Drama." The plaintiff alleges that the songs were written by her and another individual, Chambliss, in 1998. In 2001 both songs were registered with the U.S. Copyright Office by a number of entities, including a recording company owned by Miller (Chambliss's son). Davis received no credit for authorship on the album, registered a copyright for the two songs in 2002, and then brought this action for infringement.

The district court granted summary judgment to the defendants on the grounds that Miller received the right to exploit the songs by way of a retroactive written agreement executed in 2004 one day before Chambliss was to be deposed. The court held that the agreement transferred all of Chambliss's rights beginning from the time of the authorship of the song. This resulted in the defendants being either owners or licensees of the copyright rights in the songs, and therefore eliminated the plaintiff's infringement claim.

The Second Circuit reversed. In a lengthy review of copyright, tort, and contract principles, the court determined that the retrospective assignment could not defeat the current causes of action by reasoning that the causes of action are themselves a property interest, that the accrued causes of action were not owned by Chambliss at the time of the assignment, and a property owner can not convey their co-owner's interests without written consent. Based on this reasoning, the court determined that a "retroactive assignment or license that extinguishes accrued infringement claims of a non-consenting owner … destroys the co-owner's valuable and vested right to enforce her claim."

The court also stated that holding otherwise would "violate[] the fundamental principle of contract law prohibiting the parties to a contract from binding nonparties." And finally, the court turned to underlying policy considerations in copyright law, stating that the holding met the "need for predictability and certainty" as well as the "discouragement of infringement." The need for predictability called for invalidation of the transfer because "if retroactive transfers and licenses were permissible, one could never reliably and definitively determine if and when an infringement occurred, because an infringement could be 'undone'." And discouragement of infringement also required the invalidation of the agreement otherwise "[a]n infringer could 'buy' his way out of an infringement suit."

For similar reasons, the court also noted that one co-owner may not grant an exclusive license to a copyright without the consent of the other co-authors. This is because such a grant conveys to the licensee both the rights of the co-author granting the exclusive license and the rights of the other co-authors. The court did take care to state that this holding did not invalidate settlement agreements as "[a]n owner who wishes to release unilaterally his own accrued claims may do so using whatever language he chooses . . . but such an agreement cannot have the effect of eviscerating a co-owner's claims."

Based on this decision, a co-author in the second circuit may grant retrospective licenses that extinguish that co-author's right to sue for past infringement, may grant a current/future license that would preclude other co-authors from bringing suits for infringement that happens after the agreement, but may not grant a retrospective license to extinguish the other co-authors' right to sue for past infringement. As a result, the only way to obviate past infringement in the Second Circuit is to negotiate a release of liability with each co-author.

To read the full decision in Davis v. Blige, click here.

Copyright guru William Patry criticizes the opinion on his blog here.

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