30 August 2004

Red-Hot Dancing Shoes

Time for a little fairy tale. And, like all fairy tales, it's full of allegories and symbolism and metaphors; so you techies had better pay attention, too. Hey! The frog is there for kissing, you reprobate, not dissection!

Once upon a time, in a metropolis far closer than I'd prefer, a famous dancer—you'd know the name, even if you don't pay much attention to dance—decided that she needed the limited liability and tax advantages of a corporate structure. She therefore incorporated her thriving business, and became the owner, chief executive, employee, cook, and bottle washer. She continued her successful choreography for many years thereafter.

Then she died. And thus, a lawsuit was eventually born.

The corporation (which had split, and changed names) continued to exist, and was not owned by her heir. Both the corporation and the heir wanted to control the copyrights in the choreography. The evil fairies lawyers convinced each side that they were in the right. And so, they took their dispute to the Court at the Castle on the Hudson. Really, the Post Office on the Hudson; but that's a different tale, involving dwarves, architects, extortion, and nastiness that doesn't belong in a bedtime story—even one calculated to scare the living daylights out of the listeners, like this one.

The Court decided that the incorporeal corporation had a better claim than did the heir by the will. Mostly, anyway. In Martha Graham Trust v. Martha Graham Center, No. 02-9451 (2d Cir. Aug. 18, 2004), the Court said that

The primary issue is whether the work-for-hire doctrine applies to works created by the principal employee of a corporation that was, in the Appellants' view, "created to serve the creative endeavors of an artistic genius."… [W]e agree with the District Court that the work-for-hire doctrine was properly applied to dances created after 1966.

Slip op. at 2–3 (ellipses added). Reaching this conclusion was not an easy task; as Judge Newman noted for the court,

The critical events span sixty-five years, many of the pertinent facts are obscured by inadequate record-keeping, and the copyright issues require consideration of several provisions of both the 1909 and 1976 Copyright Acts, and other statutes.

Slip op. at 4 (citations omitted). N.B. This is called "foreshadowing," a sign of quality literature.

The basic dispute arises from some remarkably sloppy lawyering and clienting over the years. (Well, it actually arises from greed, egotism, and narcissism, but that wouldn't make for a very distinctive story. Humor me.) Critically, most of the disputed works—71 dances—had not been registered upon creation, but were instead registered only after Martha Graham's death as "unpublished works" by her heir. The Center (the corporation in question) claimed that it, not Graham, had owned the copyrights in the works at the time of her death (and that therefore they were not part of her estate and could not pass to the heir) because they had been either works for hire (WFH) or subject of proper transfers. The Court partly split the baby. Or, rather, 71 babies:

In the end, the Court found that [the heir] was entitled to a declaration of ownership of only the renewal term of copyright in a single dance, Seraphic Dialogue. The Defendants were entitled to a declaration of ownership of copyright in 45 dances. Of these, eighteen… belonged to the Center by assignment.

The other 27 belonged to the Center because they were works for hire, "authored" by the Center for purposes of copyright proprietorship. Sixteen of these… were works for hire under the 1909 Act, and eleven of these… were works for hire under the 1976 Act. The Court found that ten dances… were in the public domain for lack of timely renewal, five… belonged to commissioning parties who were not parties in this action, and ownership of copyrights in nine of the dances… had not been established.

Slip op. at 10–12 (citations and footnotes omitted). (Ridiculous aside: The individual who proofread this needs to reread the Bluebook and CMS on proper treatment of numbers in series.)

We are now 25% of the way through the opinion and haven't gotten to any legal reasoning yet. This is a bad sign for our hero. Whoever our hero may be, said the narrator with a particularly evil smile upon his shark-like visage.

In any event, the Court of Appeals affirmed the trial court on virtually everything. The Court of Appeals did find that Graham's status as only a part-time employee whose regular duties did not clearly include choreography from 1956 to 1965 meant that the ten dances choreographed in that period were not WFH, and therefore not the property of the Center on that basis. Two of these ten, however, fell into the public domain because they were not published with the required notice. Starting in 1966, Graham's employment contract with the Center changed; the Court of Appeals affirmed the trial court in finding that these were WFH and the Center's property from the beginning.

[Appellant argues that] where a corporation is formed for the purpose of fostering a supportive environment in which an employed artist will have the opportunity to create new works, the default rule should leave the copyrights in the new works with the employee, and place on the employer the burden of pursuing a contract to obtain her copyrights. Whatever the intrinsic merit of such an approach, we conclude that its adoption is a matter of legislative choice for Congress in the future, not statutory interpretation for a court at present.

Slip op. at 29. In the end, Graham's status as a virtually unfireable "doyenne" of dance did not overcome all of the other factors that made her an employee. It matters not whether the corporation ever did fire her, or could reasonably have been expected to do so—only whether the corporation had the legal power to do so, which could have been clearer but was clear enough.

It's time for the moral now. Why should techies, and for that matter anyone else, care about fifty-year-old choreographic notation? Principally because programmers, and many others, who create intellectual property frequently resort to creating small corporations without adequate legal counsel. Consider, for example, Netscape. True, Navigator is a descendant of an academic project begun down the road here at the Beckman Center; but we're not going to delve into whether the University of Illinois therefore has a claim on web browsers… civil procedure geeks will recall Blonder-Tongue, and the rest of you just have to know that the U of I has been in considerable hot water (enough to appear in virtually every civil procedure casebook) over such claims in the past. However, the copyrights in the programmers' work ended up the property of AOL after a series of corporate transactions. This may well have been the intended, or at least an unobjectionable, result; for many, however, it would not be. This is just an abstract moral, though, and therefore not helpful to children.

The real moral, though, is that keeping records and at least responding to your lawyer's recommendations can really come in handy. The heir really screwed up his case with his own actions, which only compounded poor corporate and individual recordkeeping stretching back half a century. This really points out that reaching a "just" result depends largely upon the admissible evidence presented to a court. It is thus in every techie's interests to make sure that the evidence exists, and (as best as is possible) will be admissible. This doesn't require a lawyer's help; merely establishing a systematic set of business records kept in the ordinary course is enough under the Federal Rules of Evidence, and since copyright is under exclusive federal jurisdiction (28 U.S.C. § 1338) that's enough. And it's not hard. Even if the evidence created is not favorable in the end, at least it will be clear; and that saves more in legal fees than the princess ever created for that Rumpelstiltskin guy. I should know—I was plaintiff's counsel in Regina v. Dwarvish Rights Institute… although, since the record remains partly sealed, you'll just have to trust me.

Now, children, it's not bedtime yet. I want you all to write fifty times "I will not neglect to clarify copyright ownership in employment agreements" on the inside of your eyelids. Then kiss that frog.