Future Direction For Copyright Pools

With the recent focus on copyright policy by the Obama Administration, it is clear that copyrights will gain an even higher significance as a component of American intellectual property. The Department of Commerce recently released a green paper, entitled Copyright Policy, Creativity, and Innovation in the Digital Economy, which is intended to advance discussion on copyright policy issues.

Copyright subject matter covers a very broad swath of industries and subject matter (sculptures, jewelry, graphics, music, audiovisual works, printed materials, computer programs, etc.). It is especially important for nations that create a lot of products. Copyrights come into being by virtue of creation of the copyrightable works in tangible media, and no registration is required (although an application to register the copyright for American sourced works before suit can be brought to enforce the copyright). Rights can last for a century or more.  U.S. Copyright registrations are easy to get and inexpensive to obtain.

However, because recovery on any individual copyright might be small, there is much less news about high stakes copyright litigation. That argues for the formation of large-scale copyright pools for enforcement and licensing purposes. The advantage of scale would lower the marginal cost of enforcement and licensing, and in turn augment the value of individual copyrights.

But as the recent decision in Righthaven LLC v. Wayne Hoehn shows, transfer of rights to form such pools must be genuine and cannot involve sham transfers of only the right to enforce.

Righthaven LLC was the brainchild of a lawyer. The company identifies copyright infringements on behalf of third parties and, after receiving “limited, revocable assignment[s]” of those copyrights, sues the infringers.  The pool of copyrights on newspaper articles was based on “copyright assignments” calling the company the copyright owner.  But the original owner retained ‘the unfettered and exclusive ability’ to exploit the copyrights. Righthaven also had ‘no right or license’ to exploit the work or participate in any royalties associated with the exploitation of the work.

The Ninth Circuit Court of Appeals found that merely calling someone a copyright owner does not make it so. As the panel further explained, “the contract evinced not just an intent that Righthaven receive whatever rights were necessary for it to sue, but also an intent that Stephens Media retained complete control over all exclusive rights. The problem is not that the district court did not read the contract in accordance with the parties’ intent; the problem is that what the parties intended was invalid under the Copyright Act.”

In other nations that have a lot of manufacturing and thus generate many copyrights each year, the Righthaven case should provide some guidance on what is necessary to form legitimate pools of copyrights for enforcement and licensing.

If you need any help with Intellectual Property issues, from filing a patent, trademark or copyright, or just need advice regarding how best to protect your inventions, ideas or your brand, please contact me at 1-855-UR IDEAS (1-855-874-3327). Stay up-to-date on the latest Intellectual Property Law news from Sheldon Mak & Anderson.

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