Stewart v. Abend


 * Syllabus

In 1945, author Cornell Woolrich agreed to assign the motion picture rights to several of his stories, including the one at issue, to petitioners' predecessor in interest. He also agreed to renew the copyrights in the stories at the appropriate time and to assign the same motion picture rights to the predecessor in interest for the 28-year renewal term provided by the Copyright Act of 1909. The film version of the story in question was produced and distributed in 1954. Woolrich died in 1968 without a surviving spouse or child and before he could obtain the rights in the renewal term for petitioners as promised. In 1969, his executor renewed the copyright in the story and assigned the renewal rights to respondent Abend. Apparently in reliance on Rohauer v. Killiam Shows, Inc., 551 F.2d 484 (CA2)-which held that the owner of the copyright in a derivative work may continue to use the existing derivative work according to the original grant from the author of the pre-existing work even if the grant of rights in the pre-existing work lapsed-petitioners subsequently re-released and publicly exhibited the film. Abend filed suit, alleging, among other things, that the re-release infringed his copyright in the story because petitioners' right to use the story during the renewal term lapsed when Woolrich died. The District Court granted petitioners' motions for summary judgment based on Rohauer and the "fair use" defense. The Court of Appeals reversed, rejecting the reasoning of Rohauer. Relying on Miller Music Corp. v. Charles N. Daniels, Inc., 362 U.S. 373, 80 S.Ct. 792, 4 L.Ed.2d 804-which held that assignment of renewal rights by an author before the time for renewal arrives cannot defeat the right of the author's statutory successor to the renewal rights if the author dies before the right to renewal accrues-the court concluded that petitioners received from Woolrich only an expectancy in the renewal rights that never matured, and that his executor, as his statutory successor, was entitled to renew the copyright and to assign it to Abend. The court also determined that petitioners' use of Woolrich's story in their film was not fair use.


 * Held:

1. The distribution and publication of a derivative work during the copyright renewal term of a pre-existing work incorporated into thederivative work infringes the rights of the owner of the pre-existing work where the author of that work agreed to assign the rights in the renewal term to the derivative work's owner but died before the commencement of the renewal period and the statutory successor does not assign the right to use the pre-existing work to the owner of the derivative work. Pp. 216-236.

(a) The renewal provisions of the 1909 and 1976 Copyright Acts, their legislative history, and the case law interpreting them establish that they were intended both to give the author a second chance to obtain fair remuneration for his creative efforts and to provide his family, or his executors absent surviving family, with a "new estate" if he died before the renewal period arrived. Under Miller Music, although the author may assign all of his exclusive rights in the copyrighted work by assigning the renewal copyright without limitation, the assignee holds nothing if the author dies before commencement of the renewal period. This being the rule with respect to all of the renewal rights, it follows, a fortiori, that assignees such as petitioners of the right to produce a derivative work or some other portion of the renewal rights also hold nothing but an unfulfilled and unenforceable expectancy if the author dies before the renewal period, unless the assignees secure a transfer of the renewal rights from the author's statutory successor. Pp. 216-221.

(b) Petitioners' contention that any right the owner of rights in the pre-existing work might have had to sue for infringement that occurs during the renewal term is extinguished by creation of the new work is not supported by any express provision of the Act nor by the rationale as to the scope of protection achieved in a derivative work, and is contrary to the axiomatic principle that a person may exploit only such copyrighted literary material as he either owns or is licensed to use. Section 7 of the 1909 Act and § 103(b) of the 1976 Act made explicit the well-settled rule that the owner of a derivative work receives copyright protection only for the material contributed by him and to the extent he has obtained a grant of rights in the pre-existing work. Pp. 221-224.

(c) Nor is petitioners' position supported by the termination provisions of the 1976 Act, which, for works existing in their original or renewal terms as of January 1, 1978, empowered the author to gain an additional 19 years' copyright protection by terminating any grant of rights at the end of the renewal term, except, under 17 U.S.C. § 304(c)(6)(A) (1988 ed.), the right to use a derivative work for which the owner of the derivative work has held valid rights in the original and renewal terms. No overarching policy preventing authors of pre-existing works from blocking distribution of derivative works may be inferred from § 304(c)(6)(A), which was part of a compromise between competing special interests. In fact, the plain language of the section indicates that Congress assumed that the owner of the pre-existing work continued to possess the right to sue for infringement even after incorporation of that work into the derivative work, since, otherwise, Congress would not have explicitly withdrawn the right to terminate use rights in the limited circumstances contemplated by the section. Pp. 224-227.

(d) Thus, the Rohauer theory is supported by neither the 1909 nor the 1976 Act. Even if it were, however, the "rule" of that case would make little sense when applied across the derivative works spectrum. For example, although the contribution by the derivative author of a condensed book might be little as compared to that of the original author, publication of the book would not infringe the pre-existing work under the Rohauer "rule" even though the derivative author has no license or grant of rights in the pre-existing work. In fact, the Rohauer "rule" is considered to be an interest-balancing approach. Pp. 227-228.

(e) Petitioners' contention that the rule applied here will undermine the Copyright Act's policy of ensuring the dissemination of creative works is better addressed by Congress than the courts. In attempting to fulfill its constitutional mandate to "secur[e] for limited Times to Authors . . . the exclusive Right to their Respective Writings," Congress has created a balance between the artist's right to control the work during the term of the copyright protection and the public's need for access to creative works. Absent an explicit statement of congressional intent that the rights in the renewal term of an owner of a pre-existing work are extinguished when his work is incorporated into another work, it is not the role of this Court to alter the delicate balance Congress has labored to achieve. Pp. 228-230.

(f) Section 6 of the 1909 Act, 17 U.S.C. § 7 (1976 ed.)-which provides that derivate works when produced with the consent of the copyright proprietor of the pre-existing work "shall be regarded as new works subject to copyright . . .; but the publication of any such new works shall not affect the force or validity of any subsisting copyright upon the matter employed . . .," or be construed to affect the copyright status of the original work-does not, as the dissent contends, give the original author the power to sell the rights to make a derivative work that upon creation and copyright would be completely independent of the original work. This assertion is derived from three erroneous premises. First, since the plain meaning of the "force or validity" clause is that the copyright in the "matter employed"-i.e., the pre-existing work when it is incorporated into the derivative work is not abrogated by publication of the derivative work, the dissent misreads § 7 when it asserts that only the copyright in the "original work" survives the author's conveyance of derivative rights. Second, the substitution of "publication" for "copy right" in the final version of the force or validity clause does not, as the dissent contends, establish that it was the publication of the derivative work, and not the copyright, that was not to "affect . . . any subsisting copyright." Since publication of a work without proper notice sent it into the public domain under the 1909 Act, the language change was necessary to ensure that the publication of a derivative work without proper notice, including smaller portions that had not been previously published and separately copyrighted, would not result in those sections moving into the public domain. Third, the dissent errs in interpreting § 3 of the 1909 Act-which provides that a copyright protects all copyrightable component parts of a work and "all matter therein in which copyright is already subsisting, but without extending the duration or scope of such copyright"-as indicating, when read with § 7, that the copyright on derivative work extends to both the new material and that "in which the copyright is already subsisting," such that the derivative work proprietor has the right to publish and distribute the entire work absent permission from the owner of the pre-existing work. When § 7 states that derivative works "shall be regarded as new works subject to copyright," it simply confirms that § 3's provision that one can obtain copyright in a work, parts of which were already copyrighted, extends to derivative works. More important, § 7's second clause merely clarifies what might have been otherwise unclear-that the § 3 principle of preservation of the duration or scope of the subsisting copyright applies to derivative works, and that neither the scope of the copyright in the matter employed nor the duration of the copyright in the derivative work is undermined by publication of the derivative work. Pp. 230-236.

2. Petitioners' unauthorized use of Woolrich's story in their film does not constitute a noninfringing "fair use." The film does not fall into any of the categories of fair use enumerated in 17 U.S.C. § 107 (1988 ed.); e.g., criticism, comment, news reporting, teaching, scholarship, or research. Nor does it meet any of the nonexclusive criteria that § 107 requires a court to consider. First, since petitioners received $12 million from the film's re-release during the renewal term, their use was commercial rather than educational. Second, the nature of the copyrighted work is fictional and creative rather than factual. Third, the story was a substantial portion of the film, which expressly used its unique setting, characters, plot, and sequence of events. Fourth, and most important, the record supports the conclusion that re-release of the film impinged on Abend's ability to market new versions of the story. Pp. 236-238.

(CA9 1988), affirmed and remanded.

O'CONNOR, J., delivered the opinion of the Court, in which BRENNAN, MARSHALL, BLACKMUN, and KENNEDY, JJ., joined. WHITE, J., filed an opinion concurring in the judgment, post, p. 238. STEVENS, J., filed a dissenting opinion, in which REHNQUIST, C.J., and SCALIA, J., joined, post, p. 239.

Louis P. Petrich, Los Angeles, Cal., for petitioners.

Peter J. Anderson for respondent.

Justice O'CONNOR delivered the opinion of the Court.