Second Circuit gets it wrong in Cartoon Network v. Cablevision

On August 4, 2008, the Second Circuit court of appeals overturned a lower courts opinion that Cablevision's Remote Storage” Digital Video Recorder ("RS-DVR") system violated the Copyright Act by infringing plaintiffs’ exclusive rights of reproduction and public perf ormance.  The full 44-page opinion is available at Cartoon Network, LLP, et al. v. Cablevision.  In my humble yet fully animated opinion, the Second Circuit's opinion was not at all well reasoned nor, for that matter, even common sense -- I believe it misinterprets at three very important areas of the Copyright Act and interpretation thereof:

When is a work "Fixed" According to Section 101

Through a system of buffers, Cablevision's RS-DVR will allow customers who do not own stand alone DVR's to record programming, which resides on Cablevision's servers, and "time-shift" it to view it at a later date.  Certainly a great concept, but one which, in my opinion, should require authorization from the owners of the copyrights. 

In arriving at its conclusion, the court determined that the buffer used to process the steam of data only "copies" the data for a duration of 1.2 seconds, before transferring it to another buffer used to reconstruct a copy of the program for any customer who has asked to view it at a later time.  The court concluded that this "embodiment," i.e. the copy, was transitory in duration and therefore not "fixed" pursuant to Section 101 of the Copyright Act.  Therefore, the copyright owners' right of reproduction was not violated.  This is clearly erroneous reasoning:

The definition of "fixed" in Section 101 of the Copyright Act states, in its entirety:

A work is “fixed” in a tangible medium of expression when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration. A work consisting of sounds, images, or both, that are being transmitted, is “fixed” for purposes of this title if a fixation of the work is being made simultaneously with its transmission.

In arriving at its determination, the Second Circuit focused on its condensed version of the definition, i.e. a work is “fixed” when its embodiment “. . . sufficiently permanent or stable to permit it to be . . . reproduced . . . for a period of more than transitory duration.”  The court concluded, based on this shortened version of the definition, that the "language plainly imposes two distinct but related requirements, i.e. an "embodiment requirement" and a "duration requirement."

The Second Circuit's error is grammatical in nature:  it misinterprets the language of the definition of "fixed" by assuming that the phrase "for a period of more than transitory duration" modifies the words "permanent or stable" when in fact it actually modifies the antecedent phrase "permit it to be perceived, reproduced or otherwise communicated."  This is certainly the case with regard to the RS-DVR - it fixes the copies for in sufficiently permanent state in one buffer (i.e. the 1.2 seconds) to permit them to be reproduced in another buffer for a period of more than transitory duration.  Thus, the court got it wrong.

Without getting into too much detail, the court also incorrectly analyzes a 9th Circuit cases, MAI Systems and its progeny which correctly apply the definition of fixed to a copy of a work created in RAM memory for a period of minutes.  The effect of this misinterpretation is to put legal practitioners in the precarious position of trying to determine at what point between 1.2 seconds and 2 minutes does a reproduction arrive at a "more than transitory" state.

Ironically, the Second Circuit ignores the U.S. Copyright Office's analysis of this precise issue in its 2001 report on the Digital Millennium Copyright Act which elaborated that a work was fixed "unless a reproduction manifests itself so fleetingly that it cannot be copied, perceived or communicated."  This clarification is in line with my earlier interpretation that the phrase "more than transitory in duration" modifies the communication or perception, not the embodiment itself.  The Second Circuit stated that, in its mind, the U.S. Copyright Office's interpretation "reads the 'transitory duration' language out of the statute."  To the contrary, however, it is the correct interpretation in that it incorporates the transitory duration requirement into the appropriate section of the definition.

Finally, the Second Circuit completely ignores the last sentence of the definition, to wit:  A work . . . is “fixed” for purposes of this title if a fixation of the work is being made simultaneously with its transmission."  In this instance, the court readily admitted that an unauthorized copy of the work was stored, i.e. "fixed" on Cablevision's servers simultaneously with its transmission.

When is an infringer not an infringer?

In extending recent trends by some circuits to weaken the strict liability component of the Copyright Act, the Second Court refused to find that Cablevision was a direct infringer.  Instead, it rules that the customer is the direct infringer in this instance of digital recording, showing his or her intent to make a copy when he or she presses the record button on the remote.  The court reasons as follows:

In this case . . . the core of the dispute is over the authorship of the infringing conduct.  After an RS-DVR subscriber selects a program to record, and that program airs, a copy of the program–a copyrighted work–resides on
the hard disks of Cablevision’s Arroyo Server, its creation unauthorized by the copyright holder. The question is who made  this copy. If it is Cablevision, plaintiffs’ theory of direct infringement succeeds; if it is the customer, plaintiffs’ theory fails because Cablevision would then face, at most, secondary liability, a theory of liability expressly disavowed by plaintiffs.

Emphasis mine.  The first thing to note about the court's conclusion is that it realizes, right off the bat, that the copy created on the servers of Cablevision is an infringement.  In its mind, however, the only question is who made the copy.  Now, that, of course, flies directly in the face of a host of copyright concepts which I will not address here, but suffice it to say that this is problematic.

But, for the moment, let's just examine how the court ultimately determines who had the "volition" to infringe in this specific case:

There are only two instances of volitional conduct in this case: Cablevision’s conduct in designing, housing, and maintaining a system that exists only to produce a copy, and a customer’s conduct in ordering that system to produce a copy of a specific program. In the case of a VCR, it seems  clear–and we know of no case holding otherwise–that the operator of the VCR, the person who actually presses the button to make the recording, supplies the necessary element of volition, not the person who manufactures, maintains, or, if distinct from the operator, owns the machine. We do not believe that an RS-DVR customer is sufficiently distinguishable from a VCR user to impose liability as a direct infringer on a different party for copies that are made automatically upon that customer’s command.

The court then continues its analysis by example, offering the examples of a retailer who owns a photocopier and rents it out to the public as reinforcement of its conclusion, finding that because the retailer would not be liable for infringement, neither should Cablevision.   Despite the fact that there is case law holding that such a retailer WOULD, in fact, be liable for infringement, the Second Circuit errs in failing to see the difference between a VCR in the analog world, a single, stand-alone device used express by the customer, and a process devised by a company which makes infringement as simple as pressing my record button on my remote.  The court does not find this a "sufficient" distinction.  The court's error in logic is apparent in this prose when it examines a 6th Circuit case on the issue:

In determining who actually “makes” a copy, a significant difference
exists between making a request to a human employee, who then volitionally operates the copying system to make the copy, and issuing a command directly to a system, which automatically obeys commands and engages in no volitional conduct.

Is this 2001 Space Odyssey?  Did H.A.L. take over when I wasn't looking?  Who programmed the system?  

If this were not enough, the Second Circuit then performs a great deal of legal gymnastics to support its finding:  First, it examines the video on demand process to illustrate that Cablevision does not have control over the transmissions being recorded by the subscribers in the RS-VCR system.  Are they for real?  Ever heard of apples and oranges.  The VOD system is a fully licensed process which is, dare we say it, nothing like the RS-VCR system.  Secondly, the Second Circuit uses the distinction between "active" and "passive" infringement under the Patent Act to jump to the almost humorous, if it weren't so wrong, conclusion that:

If Congress had meant to assign direct liability to both the person who actually commits a copyright-infringing act and any person who actively induces that infringement, the Patent Act tells us that it knew how to draft a statute that would have this effect.

Every intellectual property attorney worth his or her salt knows that the Copyright Act and the Patent Act are very limited in their usefulness for purposes of using one to interpret the other.  That's why it's said that the Copyright Act is a strict liability statute, whereas, the Patent Act is not so much.

When is work "publicly performed"?

The final error committed by the court is in its analysis of whether the buffered copy delivered to individual customers was "publicly performed." In this regard, the Second Circuit concluded:

under the transmit clause, we must examine the potential audience of a given transmission by an alleged infringer to determine whether that transmission is “to the public.” And because the RS-DVR system, as designed, only makes transmissions to one subscriber using a copy made by that subscriber, we believe that the universe of people capable of receiving an RS-DVR transmission is the single subscriber whose self-made copy is used to create that transmission.

Again, the Second Circuit has to do a hatchet job on the definition of "public performance" in order to arrive at this convoluted conclusion.  The definition of "public performance" in the Copyright Act is actually found in the "publication" definition of Section 101.  It states, in its entirety:

To perform or display a work “publicly” means — 

(1) to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or

(2) to transmit or otherwise communicate a performance or display of the work to a place specified by clause (1) or to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.

Emphasis mine.  Whereas the Second Circuit zeroed in on the phrase "to the public" in making its determination, the definition clearly intends to define public performance as any process that allows the public, in general, the ability to receive the transmission, whether or not it is in the same place or the same time.  Its not very difficult to see the fallacy of the Second Circuit's reasoning.   The Cablevision RS-DVR clearly does precisely what the definition anticipates, it creates multiple copies stored in the buffers for individual subscribers in multiple places, who then view the (buffered) transmissions at different times. 

While this seems simple, the Second Circuit jumps through numerous irrational hoops to arrive at the idea that:

the transmit clause directs us to identify the potential audience of a given transmission, i.e., the persons “capable of receiving” it, to determine whether that transmission is made “to the public.”

Nothing in the statute dictates this conclusion, to the contrary, the legislators probably thought that the word "public" was generic enough to not need interpretation. 

The effect of this ruling, at least for now, is that anyone can make digital copies of any copyrighted work on their servers for purposes of transmitting to an individual customer, so long as that individual customer makes a request for it, and there is no implication of the performance rights.

This is a fine example of a court "reasoning" the meaning completely out of a statute. 

Conclusion

If it is not obvious by now, I think this is one of the most poorly reasoned and drafted opinions by a Circuit Court that I have read in a long time.  If there is a bright side, it is that the effect of this decision is primarily that it overturns the grant of a summary judgement by the lower court.  From a broader perspective, however, and the more unfortunate result is that, because of the concept of stare decisis, this reasoning can now be cited in other cases in other jurisdictions across the country as good law.  So, unfortunately, we entertainment attorneys will be dealing with the negative impact of this decision for some time to come, until perhaps some higher court, in this case the Supremes, decides to rectify it.

Technorati Tags: Copyright Infringement,Direct Infringement,Contributory Infringement,Fixation,Public Performance,Performance Royalties,Digital Downloads,Intellectual Property,Internet Law,Computer Law

CRB Announces Addition of New Board Members

Effective immediately, the Country Radio Broadcasters, Inc.® has announced the addition of three new executives to its Board of Directors:

Clay Hunnicutt, Senior Vice-President of Programming, Clear Channel, Atlanta.  Clear Channel is the largest operator of radio stations in the country.   As the person in charge of programming for Clear Channel's 200 plus country radio stations, Hunnicutt must have an inside track on what's going on in country music.  In an article for the American Chronicle, Hunnicutt says of his job "I love what I do because it affords me the flexibility to not only focus on the Country format but also to be able to look at and understand all formats."  See, Clay Hunnicutt:  Clear Channel's Country Connoisseur. 

Renee' Leymon, Senior Director of National Promotions at Lyric Street Records in Nashville.  Leymon has been part of promotions at Lyric Street Records since 1998, when she landed there after a stint with Arista Nashville; and

Keith Kaufman, has been Program Director at WSIX-FM Nashville since 2004, when he was responsible for making dramatic changes to WSIX's slogan, positioning and airstaff in order to rebuild its "big" position in the country music market.  WSIX is, of course, the mother ship of country radio as the first successful country music formatted station on the FM dial in the US.

The current list of directors to which the trio will be added are identified on CRB's web site (Click here to view).  Hunnicutt fills the void left as a result of Gregg Swedburg's recent resignation.  Kaufman and Leymon fill two newly created at-large positions, which expire in March 2009 and March 2010, respectively. 

The CRB is a non-profit organization founded in 1969 to support the country radio format.  The organization has done a great job at this task over the years by organizing various industry events and seminars across the country, one of which is the well known Country Radio Seminar which is held annually in Nashville.  CRB is also the trustee for the Country Music DJ Hall of Fame, founded in 1974.  Ed Salamon is CRB's current director.

Kaufman and Leymon are also serving on this year's Agenda Committee for the 40th annual Country Radio Seminar.

When asked to comment about the new Board appointments, CRB president and board member Becky Brenner stated "it is always a tough vote because we have so many deserving individuals who apply to serve on the board. These three individuals have been long time supporters of the Country Radio Broadcasters and the Country Radio Seminar. Their individual talents and passion will help to lead us into our next 40 years."

General information about Country Radio Broadcasters, Inc. may be obtained at their website www.crb.org or by calling the CRB office at 615-327-4487.

Technorati Tags: Country Music,Country Radio Format,Country Radio Broadcasters,Nashville,Music Industry

All that glitters is not gold - tips on analyzing a songwriting/band contest

When is the last time you heard of someone getting a really "big break" in the music industry through any contest, other than perhaps American Idol?  That's because most artists and songwriters are not discovered through contests, they are discovered through relationships in the industry. 

Yet, there are literally hundreds of such contests out there promising thousands of dollars in prizes or a opening slot for a well-known band, or a recording label or songwriting deal -- everything but the kitchen sink! 

I don not, by any means, mean to say that all contests are rip-offs.  There are, in fact, many legitimate contests in which songwriters and entertainers may participate.  I do mean to recommend, however, that you do a bit of research and exercise some good judgment prior to sending your submission off into the digital divide.

First, there are some very simple questions to ask yourself initially as you examine these "one in a lifetime opportunities.  Look at the source or sponsor of the contest.  Often times, their reputation proceeds them.  Have you ever personally heard of the contest sponsor?  What are the credentials of the sponsoring entity?  Have you read about them in any public forum such as a magazine, news article, or online resource?  What successes have they achieved in songwriting and/or the music industry, if any?  Who are the judges?  What are their credentials.  Are there any major advertising sponsorships associated with the contests?   What are the prizes?  Are they substantial?  Answers to most, if not all, of these questions can be derived through a simple online search.

Let's say you've done all of the above research and determined that the contest is sponsored by none other than MTV?  To most songwriters and artists, there could be no greater sponsor than MTV, correct?  But before acting too hastily, let's move into the second phase of analysis, i.e., taking a look at the RULES.

Now, assume that you determined that since MTV was the sponsor, it must be a great opportunity, so you jump right in with both feet, or in this case, your best demo tape!  A chance to open for a great headline act is waiting for the lucky winner!  Unfortunately, if you did not read the fine print, you just agreed to the following:

release and hold harmless Sponsor Entities against any and all claims, injury or damage arising out of or relating to participation in this Contest and/or the use or misuse or redemption of a Grand Prize and for any claims based on publicity rights, defamation, invasion of privacy, copyright infringement, trademark infringement or any other intellectual property related cause of action. . . . (emphasis added)

This language comes straight from the rules and regulations in a ongoing "Rock the Revolution" contest sponsored by mtv2.com.  See the Rules and Regulation page.  This is typical hold harmless clause, which effectively negates any rights or claims you may have otherwise had to bring a civil action against MTV in the event that you are injured as a result of the contest.

In addition, MTV also states in their terms of agreement that:

The approximate retail value (the “ARV”) of the Grand Prize is $150.00. Any difference between the ARV and the actual value, if any, will not be rewarded. If, for any reason, the Grand Prize related event is delayed, cancelled or postponed, MTV reserves the right, but is not obligated, to cancel or modify the Contest in its discretion and may award a substitute prize of equal or greater value.

This effectively means that you could end up getting only $150 as the "grand prize winner" if the concert is canceled for any reason by the headlining act.  A corollary effect  net effect is that, at most, your damages in a civil lawsuit probably would be limited to $150, the agreed retail value (i.e., by agreeing to their terms, you and MTV agreed to this amount).

Finally, by simply clicking the "I Agree" button on your web browser without first reading the fine print, you also agreed to grant MTV a non-exclusive right, among other things, to record your submission by virtue of the fact that you are a finalist?  See this clause from a real contest:

Finalists and Winner agree that by entering into this Contest they are granting  MTVN. . . the non-exclusive, irrevocable right and license to exhibit, broadcast, copy, reproduce, encode, compress, encrypt, incorporate data into, edit, rebroadcast, transmit, record, publicly perform, create derivative works of, and distribute and synchronize in timed relation to visual elements, the Submission Materials and/or any portions or excerpts thereof, in any manner, an unlimited number of times, in any and all media, now known or hereafter devised, throughout the world, in perpetuity. . . .

While this is non-exclusive license, meaning that you can issue other non-exclusive licenses to third parties, it does give MTV pretty broad rights to use your submission in almost any form they want.  This doesn't necessarily mean that you shouldn't participate in this contest, it is just something you should certainly understand and use in weighing your decision.

Believe it or not, this grant is pretty tame compared to the language of other contests I have reviewed for clients.  I've seen situations where a contestant ostensibly assigns the copyright in a song submitted for a contest to the sponsor.  So beware.  Make sure there is something in the rules that indicates that you are not transferring any rights or licenses in the submission.

These are just few examples of some of the lawyerly devices that can be utilized in the rules and regulations of a contest, particularly an online contest which a "click agreement" in place.  Before you submit your intellectual property, it is probably worth the money to pay a few hundred dollars to an entertainment attorney to advise you as to what the legal ramification are for you and/or your band.

 

Technorati Tags: Songwriting,Music Lawyer,Entertainment Lawyer,Entertainment Law,Bands,Songwriting Contests,Band Contests,Music Law,Copyright,Entertainment Contracts,Click Agreements

Does Harvard have Chris Anderson by his long-tail?

A major debate is being spawned by a recent article entitled "Should You Invest in the Long Tail,"  written by Anita Elberse, an Associate Professor of Business Administration at Harvard Business School.  The debate concerns the accuracy of Chris Anderson's long tail theory, set out in great detail in his 2006 book, The Long Tail:  Why the Future of Business is Selling Less of More.  

A summary of the debate is given in this analysis by Glenn Peoples of Coolfer.com.  Mr. Anderson's initial response to Elberse's criticism's can be found here and then her subsequent response here.

The long tail theory is an idea that contrasts with the "blockbuster strategy" of marketing, which Elberse accurately describes as "age-old," i.e. that the limited retail shelf space for media and entertainment product dictates that retailers should maximize their profits by focusing their marketing efforts on the relatively small number of "best sellers."  This is, of course, best exemplified in today's economy by the Wal-Mart approach.   It is, of course, the marketing philosophy that has been used by the major entertainment conglomerates for their entire history of existence.  The "blockbuster" product is at the peak of a bell curve, where the demand exists, the trailing end of which has long been described by the economic phrase "long-tail."  See Elberse's illustration below:

 

The basic idea behind Anderson's long tail theory is that the Internet has changed the way consumers look for media and entertainment product.  Now that a music consumer can find and afford products more closely tailored to their individual "niche" tastes, i.e., further down the long tail, they will migrate away from the homogenized "blockbuster" hits. Anderson argues that the future of online retail demands a focus that shifts away from blockbusters centers on the long tail—niche offerings that cannot profitably be provided through brick-and-mortar channels. (See Elberse's sidebar “The Long-Tail Theory in Short.”).  Elberse seeks to refute the idea that the long tail is being "fattened" by the online availability of more obscure and less marketed products.

If you are in the music industry, it is well worth following this debate.  While I will not attempt an in-depth analysis of Elberse's criticisms here - I'll leave that to the capable Mr. Anderson -- I do desire to point out what I believe is a very obvious weakness in Elberse's comments:

To support her conclusion that the long tail is "long but extremely flat—and, as online retailers expand their assortments, increasingly so," Elberse states that she relies on Nielson SoundScan data.  She concludes: 

The Nielsen data cover multiple retailers, multiple channels, and multiple years, offering a wealth of material to test aspects of Anderson’s long-tail theory. What emerges is not a rosy picture of the fate of long-tail products: the tail increasingly consists of titles that rarely sell and that are produced by smaller-scale players.

See The Long Tail Debate: A Response to Chris Anderson.

These assumptions about the SoundScan are flawed, I believe.  While Elberse is correct in her assessment that the "data cover multiple retailers, multiple channels and multiple years," I believe it overlooks the fact that SoundScan data is ONLY collected via POS, i.e. "point of sale" collection points.  This means cash registers and/or UPC bar code scanners.  The UPC code is the series of black and white lines appearing over a numeric code, which appears on virtually everything on the market today. 

That is how the "Scan" portion of the name "SoundScan" is derived.  When a UPC code on a product is scanned for sale, that UPC data is collected and a stored in a text file, which is delivered to Nielson on a weekly basis.  Nielson then collates and formats the data into what we know as the Billboard charts.  While the data may include some online retailers, its predominant focus is still on the physical product that sits on the shelves in retail outlets and warehouse all across America.  In other words, SoundScan's predominant purpose - the reason it was created - is to track physical sales which, it turns out, is only the product that falls into the "head" of the long tail.  SoundScan's focus is indubitably not on digital downloads, even though it has obviously made attempts to incorporate the trend in its charting scheme.

Naturally, if a person focuses primarily on the product that exists in the head of the tail, the conclusions reached by that person about what exists in the long tail are going to be slightly skewed. 

Elberse might counter this assertion by claiming that she also relied on the Rhapsody data to determine what obscure music was selling in the long tail.  Her use of this data is understandable, since Mr. Anderson also relied heavily on the Rhapsody data in drawing many of his conclusions in The Long Tail.  I think this reliance on Rhapsody data falsely assumes that what Rhapsody is selling is indicative of what is selling across the entire spectrum of the Internet.  Last time I checked, however, Rhapsody had about a 3-4% share of the entire music download market! 

This, I believe, is a fatal foundation for many analyses of the digital music revolution and, consequently, of the validity of the long tail.  I'm not aware of any comprehensive analysis that includes data from not only the mega online powerhouse, such as iTunes of course, which has about a 70% share of the digital download market, but also retailers of independent, less market-driven music, such as eMusic -- which, by the way, has a respectable 10% of the market share of digital downloads.  It is the success of the later that, in my humble opinion, deserves more consideration in any analysis of the viability of the long tail approach to today's digital market.  I can only speak for myself - I buy more music from eMusic than I do from iTunes, Zune, Amazon and Rhapsody combined.  So, to all of you researchers out there, please incorporate some serious data from the long tail!  Until that type of analysis is done, the conclusions drawn by Elberse must be viewed as somewhat suspect or, at the very least, only applicable to the specific subset of data she analyzed, i.e., not extrapolated to the entire music download market as a whole, but limited to SoundScan and Rhapsody.

 

Technorati Tags: Digital Downloads,Chris Anderson,The Long Tail,Music Industry,MP3,Music Law,Music Lawyer

Barry Shrum's interview with DigiMusicTV.com

I was surfing around yesterday and discovered that my interview with DigiMusicTV.com, recorded in 2007, was recently posted on brightcove.  Here it is in all it's glory:

Kristi Lee Cook signs with Nashville Label

According to news reports that broke first on Fox yesterday, then appeared on CMT and Billboard, Kristi Lee Cook, who took seventh place in this year's seventh season of American Idol, signed a recording agreement with 19 Recordings/Arista Nashville, a Sony BMG label.  This is Kristi's second attempt at success on the Arista Nashville brand, as she had a prior deal with the label signed in 1999 at the age of seventeen.  She was dropped from the label before producing any product, despite a commitment from Brittany Spears to appear with her in her first video.

The lawyer in me wonders whether this is actually a new deal, or whether Arista Nashville simply called in its rights under the prior agreement, as most recording contracts are not based on a strict term of years, but rather a length of term that involves delivery requirement.

Arista Nashville is, of course, home to two other American Idol favorites, Kellie Pickler and superstar Carrie Underwood.  In fact, Cook's new master will be produced by the co-writer of Carrie's smash, Jesus Take the Wheel, none other than longtime Nashville songwriter Brett James.

The first song out of the gate, 15 Minutes of Shame, will hit the airwaves on August 11.  The entire album is expected to be on store shelves in the fall.

Past American Idol contestants seem to fair well in the country music  arena, as witnessed by not only the successful careers of the aforementioned Underwood and Pickler, but in top selling product from rocker turned country rock, Bo Bice, Bucky Covington and Josh Gracin, whose albums have topped Billboard's country charts.

Technorati Tags: Country Music,Kristi Lee Cook,American Idol,Arista Nashville,Music Row

Hey, what's the big idea? Protecting your ideas when submitting them to a third party.

One question clients often asked me is whether an idea can be protected. The question frequently arises when a client has an idea for a screenplay, or an outline for a story, or a unique title for a song or book, and wishes to submit or “pitching” that idea to a major movie house, publisher or record company. While it is fairly common knowledge that an “idea” cannot be copyrighted, it is important to know that there may be certain types of protection be available for the intellectual properties contained in such a proposal pursuant to current laws, specifically trademark and copyright laws. This article analyzes and summarizes your rights under each of these two areas of law and offers suggestions for protecting your legal rights when “pitching” ideas.

Protection Under Trademark Law

Titles and names may be entitled to trademark protection at both the state and federal levels by anyone claiming a right to use such a title or name in connection with certain specified trades or services. These types of marks are commonly designated by use of the “™” and “®” symbols, indicating respectively that registration of the mark has been applied for and registered on the Primary Register. To be entitled to use these symbols in respect to a mark, a person must apply for and receive a federal or state trademark.

In most states, a state trademark can be applied for in the Secretary of State’s office. The application is a simple form and payment of a nominal fee is required. Protection at the state level is, however, somewhat more geographically limited than that of a federal mark. The application process for a federal mark is much more tedious, complicated and costly than that of the state trademark process. In addition to legal fees which will, most likely, be incurred, the application fee for each international classification of goods and services is $325.

Protection Under Copyright

As stated earlier, with regard to copyright law, and speaking very generally, an idea, in and of itself, is not entitled to copyright protection. Rather, it is the expression of an idea that can be copyrighted.[1]

It is not always clear from the case precedents, however, when an idea becomes developed enough to rise to the level of an “expression.” Some examples of expressions of ideas that have been protected are a screenplay similar to the old television series A-Team,[2] an employee survey regarding employee satisfaction,[3] and a particular section of categories appearing on a form for collecting baseball pitcher statistics.[4] On the other end of the spectrum, courts found that (1) a manual of operation for patented leaching system. [5] and (2) the addition and arrangement of facts to legal opinions [6] were not protectible expressions of ideas. The only general rule that can seemingly be extracted from this convoluted line of cases is that the more an expression diverges from the mere recitation of raw facts, the closer it gets to expression, as that the courts legally recognize that term.

Is your Idea Literary or Business in Nature

There is another, albeit tangential issue which is relevant and should be briefly discussed here, i.e., whether an idea is literary or business in nature:

Literary ideas are those that, upon development, would become literary property and hence clearly eligible for copyright protection. Literary ideas include ideas for motion pictures,[7] radio programs,[8] and television programs.,[9]

Business ideas, on the other hand, even when fully developed, may not be copyrightable. ,[10] Business ideas are those that relate to methods of conducting businesses, such as bank night in theaters,[11]contests, [12]and credit rating systems.[13] Here again, however, the more an idea, even a business idea, departs from mere factual recitation, the more it is likely to be considered literary, and therefore entitled to protection under copyright law.

When does an idea rise to the level of expression?

So, let’s now return to the primary issue of when an idea rises to the level of an expression entitled to copyright protection?

In their attempts to deal with the dilemma, courts have created a body of case law which attempts to strike a middle ground between the comprehensive protection of copyright on the one hand, and the complete denial of any legal protection for ideas on the other. I will attempt to delineate and evaluate some of the legal theories on which a person may be able to rely to render an idea legally protectible, the underlying tort theory of which is known in legal circles as “idea misappropriation.”

In brief, the elements for a claim of idea misappropriation are, first, the idea must be novel and concrete, and, second, there must be a legal relationship between the parties, whether by an express contract, a contract implied-in-fact, a quasi-contract, or a fiduciary relationship.[14]

Novel & Concrete Element

In instances where they have dealt with the protectibility of an idea, the courts hold the plaintiff to a greater burden of proving not merely that the idea is original (as in copyright protection) but that it is actually novel,[15] i.e., “not formerly known; of a new kind.”[16] This standard is, for most courts, a great standard to meet than that required by copyright, i.e., that a work be original – although some courts do confusingly use the terms interchangably.

The second component of the first prong, “concreteness,” in essence requires that an idea be sufficiently developed so as to constitute “property.” By its very nature, this requirement is intentionally vague, allowing the courts great flexability in applying it. One court described the concept as follows

while we recognize that an abstract idea as such may not be the subject of a property right, yet when it takes upon itself the concrete form which we find in the instant case, it is our opinion that it then becomes a property right subject to sale.[17]

This is, as pointed out, a rather vague element. This is sort of like how U.S. Justice Stewart Potter described hard-core pornography in Jacobellis v. Ohio, i.e., it’s difficult to define, but “I know it when I see it.” So, in short, the more developed an idea becomes, the further it goes toward dispelling any doubt as to whether the idea is “concrete.”

Legal Relationship Requirement

The second prong of the test, i.e., the legal relations prong, can complicate matters when it comes to submitting an idea to a third party. Whether a legal relationship exists between the parties depends, as does everything in law, on countless fact scenarios to the degree that one small change in a fact pattern can affect the outcome of interpretation.

Most often, clients “pitch” their ideas to a third parties for consideration in hopes that they will take the idea and “run with it.” But in such instances, it is important to be aware that the method by which an idea is submitted can directly impact whether or not there is a legal relationship.

A non-disclosure and confidentiality agreement with a publisher, for example, would create such a relationship beyond any doubt. This is one end of the spectrum. This method can easily be dispensed with since it is difficult enough to get a publisher’s attention, for example, much less without the added complexity of having to get their legal department involved. Most people will likely submit the idea directly to a publisher, either with or without permission, without any such NDA, or they will submit the idea through an agent of some sort. Each of these variations result in different treatment.

For example, courts have held that if an idea is submitted without solicitation and without advance warning, the idea is not protectible, even if it later turns out to be valuable.[18] There is one variation of this fact pattern, however, where one might successfully argue that an implied contract results because of an implied solicitation by the idea recipient. This occurs where the recipient is engaged in a trade or industry (such as the entertainment or publishing industry) that, by custom, purchases ideas of the type submitted. A book or music publisher, as an idea recipient, makes a continuing offer to pay for any submitted ideas that it elects to use. Thus, an unsolicited submission is not an offer that necessarily requires further conduct by the publisher to establish an acceptance, but rather can be viewed as an acceptance of the publisher’s implied continuing offer. Although no court has expressly recognized this theory, courts have implicitly adopted it by recognizing an implied agreement based upon custom where such a factual pattern can be established.[20] I caution in advance, however, that this is a minority opinion, not expressed by the majority of courts.

Some courts, particularly but not exclusively those in California, imply an affirmative duty on the part of a publisher to reject an unsolicited submission or else the legal relationship is created – hence the practice of most publishers to advertise “no unsolicited submissions.” Under this so-called “failure to reject” theory, any means of notice that gives the publisher some sort of advance warning of, and an opportunity to prevent, a proposed idea submission is sufficient to establish an implied contract if the recipient then permits the submission to be made.

Thus, the following examples may create such an affirmative obligation on the part of the publisher: (1) enclosing the proposed idea in a sealed envelope accompanying an unsolicited transmittal letter that explains that the contents of the sealed envelope contains such a submission, or (2) a series of two unsolicited letters, the first explaining the intended submission and the second in fact containing the idea to be submitted. [20]

If a publisher specifically requests the submission of an idea, a legal relationship is clearly established creating an obligation to pay the creator if the idea submitted is used. [21] So finding a creative way to solicit a request from a publisher is also a very good means of securing protection for you idea.

Finally, it may come as no surprise that utilizing the services of a agent will help protect your ideas. It may be inferred that the recipient of an idea submission has knowledge of an expectation of payment for the idea when the submission is arranged by a person whose known occupation is that of representing idea purveyors, such as a book or movie agent. “This fact alone must have indicated to [the recipient of an idea submission] that the persons whom the agent brought together with him were not social callers.'' Donahue v. Ziv Television Programs, Inc. 54 Cal. Rptr. 130, 138 (Cal. App. 1966).

Conclusion

As you can clearly see, the question of whether an idea can be protected is not an easy one to answer in any specific situation because the answer depends so heavily on the individual fact pattern of each case. Although it may not be apparent from its length, this article in no way exhausts the body of legal information and case law that exists with regard to the protectible nature of an idea. Therefore, if you have questions concerning this issue, please contact a respected entertainment attorney.

Having stated this, with regard to submission of ideas in general, the following are recommendations that can be followed:

(1) First, trademark all slogans, titles or name, at the very least your state level, but preferably at the federal level;

(2) Make sure the idea is as fleshed out as it can be, i.e. as “concrete” as possible. Rather than a mere outline, insert summaries of each bullet point. Then, flesh out selected points, e.g., create a summary of each chapter of a particular example book, or maybe even two or more examples of each. Then, create a few complete chapters of a books, for example;

(3) Mark everything confidential and, in addition to the copyright notice generally included, add the phrase “All rights reserved” after it. The copyright notice and your intent to be the owner of the copyright should be clearly indicated in the beginning of the correspondence;

(4) Attempt to procure an agent, and ask if the agent is willing to enter into a non-compete and confidentiality agreement;

(5) As an alternative to paragraph (4), solicit the publishers by telephone or in some other general fashion, preferably with written followup, to encourage them to “solicit” the work in advance; and

(6) As an alternative to paragraphs (4) and (5), place your idea submission in an envelope, draft a summary cover letter explaining that this is the submission of a copyrighted idea and that by opening the envelope, they are agreeing to the confidentiality and non-disclosure of the submission and further, agree to pay for it if they decide to use it.

While these ideas may not be “iron-clad,” they will go a long way toward establishing the necessary elements of an idea misappropriation claim.

[1] 17 U.S.C. § 102(b) . See e.g., Holmes v. Hurst, 174 U.S. 82 (1899); Kalem Co. v. Harper Bros., 222 U.S. 55 (1911) ; Dymow v. Bolton, 11 F.2d 690 (2d Cir. 1926) ; Nichols v. Universal Pictures Corp., 45 F.2d 119 (2d Cir. 1930) ; Dellar v. Samuel Goldwyn, Inc., 150 F.2d 612 (2d Cir. 1945) ; Gaye v. Gillis, 167 F. Supp. 416 (D.C. Mass. 1958 ). This was also the rule under common law copyright. Fendler v. Morosco, 253 N.Y. 281, 171 N.E. 56 (1930) ; Weitzenkorn v. Lesser, 40 Cal.2d 778, 256 P.2d 947 (1953) ; Desny v. Wilder, 46 Cal.2d 715, 299 P.2d 257 (1956) ; Ware v. Columbia Broadcasting Sys., Inc., 61 Cal. Rptr. 590, 155 U.S.P.Q. 413 (Cal. App. 1967).[Back]

[2]Ernest Olson, V. National Broadcasting Company, Inc., 855 F.2d 1446 (9th Cir. 1988).[Back]

[3]Gallup, Inc. V. Talentpoint, Inc., 2001 U.S. Dist. LEXIS 18560; 61 U.S.P.Q.2D (BNA) 1394 (M.D. PA. 2001).[Back]

[4]George L. Kregos v. Associated Press and Sports Features Syndicate, Inc., 937 F.2d 700; 1991 U.S. App. Lexis 12113; 19 USPQ2d (BNA) 1161; Copy. L. Rep. (Cch) P26,744 (Ct. App. 2nd Cir. 1991).[Back]

[5]Presby Construction, Inc., v. Normand Clavet, et al, 2001 DNH 210; 2001 U.S. Dist. LEXIS 20951; 61 U.S.P.Q.2D (BNA) 1184 (Dist. NH 2001).[Back]

[6]Matthew Bender & Company, Inc., et al v. West Publishing Co. et al, 158 F.3d 674; 1998 U.S. App. LEXIS 30790; 48 U.S.P.Q.2D (BNA) 1560 (App. Ct. 2nd Cir 1998). [Back]

[7]Desny v. Wilder, 46 Cal.2d 715, 299 P.2d 257 (1956).[Back]

[8]Stanley v. Columbia Broadcasting Sys., 35 Cal.2d 653, 221 P.2d 73 (1950).[Back]

[9]Stone v. Goodson, 8 N.Y.2d 8,200 N.Y.S.2d 627 (1960).[Back]

[10]This exclusion also applies to scientific ideas.[Back]

[11]Affiliated Enterprises, Inc. v. Gruber, 86 F.2d 958 (1st Cir. 1936).[Back]

[12]Lewis v. Kroger, 109 F. Supp. 484 (S.D. W.Va. 1952).[Back]

[13]Burnell v. Chown, 69 Fed. 993 (N.D. Ohio 1895).[Back]

[14]See Kienzle v. Capital Cities/American Broadcasting Co., Inc. , 774 F. Supp. 432, 436 n.8, 438 n.13 (E.D. Mich. 1991) (Treatise cited). McGhan v. Ebersol, 608 F. Supp. 277, 284 (S.D.N.Y. 1985) (New York law). [Back]

[15] Noble v. Columbia Broadcasting Sys., 270 F.2d 938 (D.C. Cir. 1959) ; Santilli v. Philip Morris & Co., 283 F.2d 6 (2d Cir. 1960) ; Stevens v. Continental Can Co., Inc., 308 F.2d 100 (6th Cir. 1962) ; Pittman v. American Greeting Corp., 619 F. Supp. 939 (W. D. Ky. 1985) ; Downey v. General Foods Corp., 31 N.Y.2d 56, 286 N.E.2d 257 (1972) (no promise to pay for an idea will be implied or enforced if the idea is not both novel and original).[Back]

[16]Webster's New Int'l Dictionary (2d ed.) 1670.[Back]

[17]Williamson v. N.Y. Central R.R., 16 N.Y.S.2d 217, 258 App. Div. 226 (1939) ; Bailey v. Haberle-Congress Brewing Co., 193 Misc. 723, 85 N.Y.S.2d 51 (1948 ) ; Masline v. New York, New Haven and Hartford R.R., 95 Conn. 702, 112 Atl. 639 (1921) ; contra Brunner v. Stix, 352 Mo. 1225, 181 S.W.2d 643 (1944).

[18] Giangrasso v. CBS, Inc., 534 F. Supp. 472 (E.D.N.Y. 1982) ; Curtis v. United States, 168 F. Supp. 213 (Ct. Cl. 1958), cert. denied, 361 U.S. 843 (1959) ; see Borden & Barton Enters. v. Warner Bros., 99 Cal. App. 2d 760, 222 P.2d 463 (1950) ; Donahue v. Ziv Television Programs, Inc., 54 Cal. Rptr. 130 (Cal. App. 1966) ; Official Airlines Schedule Info. Serv., Inc. v. Eastern Air Lines, Inc., 333 F.2d 672, 674 (5th Cir. 1964) (concurring opinion); Sterner v. Hearst Corp., 144 U.S.P.Q. 237 (N.Y. Sup. Ct. 1964) .[Back]

[19]Desny v. Wilder, 46 Cal. 2d 715, 739, 299 P.2d 257, 270 (1956) ; Aliotti v. R. Dakin & Co., 831 F.2d 898, 903 (9th Cir. 1987).[Back]

[20] Cole v. Lord, 262 A.D. 116, 28 N.Y.S.2d 404 (1st Dep't 1941) ; Kurlan v. Columbia Broadcasting Sys., 40 Cal. 2d 799, 256 P.2d 962 (1953) ; Vantage Point, Inc. v. Parker Bros., Inc., 529 F. Supp. 1204 (E.D.N.Y. 1981) (Treatise cited), aff'd mem., 697 F.2d 301 (2d Cir. 1982); Bevan v. Columbia Broadcasting Sys., Inc., 329 F. Supp. 601 (S.D.N.Y. 1971) (Treatise cited); cf. McGhan v. Ebersol, 608 F. Supp. 277, 285 (S.D.N.Y. 1985) (New York law); Bailey v. Haberle Congress Brewing Co., 193 Misc. 723, 85 N.Y.S.2d 51 (Mun. Ct. 1948).[Back]

[21] See, e.g., Whitfield v. Lear, 751 F.2d 90 (2d Cir.) , where in advance of submission, plaintiff sent a mailgram to defendants advising that a submission was being sent.[Back]

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