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Two recent decisions illustrate the continuing debate over the scope of the pre-emption clause of the Copyright Act. One, Bowers v. Baystate Techs. Inc., 320 F.3d 1317 (Fed. Cir. 2003), concluded that contract actions are not pre-empted by the Copyright Act, a result in keeping with the majority view. The other, Toney v. L’Oreal United States, No. 02 C 3002, 2002 U.S. Dist. Lexis 21229 (N.D. Ill. Oct. 30, 2002), found a right-of-publicity claim pre-empted by copyright law, a question on which considerable division remains. Section 301 of the Copyright Act pre-empts certain rights based on state law. The section states: “[A]ll legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103 … are governed exclusively by this title.” Sec. 102 lists eight categories of works protected by copyright. It also includes a catch-all paragraph listing material excluded from copyright, among which are ideas, processes and procedures. Sec. 103 extends copyright protection to compilations and derivative works. In Bowers, the U.S. Court of Appeals for the Federal Circuit applied the law of the 1st Circuit in concluding that copyright did not pre-empt contract claims. Harold Bowers had developed a template to improve computer-aided design software. Dubbing his software Designer’s Toolkit, he sold it accompanied by a shrink-wrap license that prohibited “reverse engineering.” Purchasers of Designer’s Toolkit would see the shrink-wrap license when removing the software from its package, though there could not be any assurance that they had actually read and understood it. Bowers had offered to license the Designer’s Toolkit to Baystate to allow Baystate to include it as part of its own software package. Though spurning Bowers’ offer, Baystate came out several months later with a new version of its software that included many of the features of Bowers’ Designer’s Toolkit. At trial, Bowers prevailed on his patent, copyright-infringement and breach-of-contract claims. On appeal to the Federal Circuit, Baystate argued that the Copyright Act pre-empted Bowers’ contract claim, since it was based on the shrink-wrap license that accompanied his Designer’s Toolkit. FINDING OF NO PRE-EMPTION In ruling that the Copyright Act did not pre-empt Bowers’ contract claim, the Federal Circuit topped its analysis with a nod to the respect that courts owe to parties’ contracts. The panel also acknowledged that, like other circuits, the 1st Circuit had found no pre-emption when “a state cause of action requires an extra element, beyond mere copying, preparation of derivative works, performance, distribution or display.” Still, it recognized that “not every ‘extra element’ of a state law claim will establish a qualitative variance between the rights protected by federal copyright law and those protected by state law.” When the extra element involves merely giving a new label to a requirement of copyright protection, pre-emption can still occur. The Bowerscase was one of first impression, as the 1st Circuit had not previously addressed the interplay of copyright law and contractual restraints on copying. The Federal Circuit concluded that the 1st Circuit would find no pre-emption of Bowers’ contract claim and that it would do so for the reasons given in ProCD Inc. v. Zeidenberg, 86 F. 3d 1447 (7th Cir. 1996) and its progeny. In ProCD, the plaintiff had offered a database of telephone directory information. Since telephone directories are generally ineligible for copyright protection, their compilers often will rely on contractual restrictions, rather than copyright law, for protection. ProCD, for instance, had included in each package of its consumer version of its CD-ROM media both a printed license agreement and an electronically readable form of the license. The license displayed each time the software ran, and required purchasers of the software to limit use to noncommercial purposes only. Matthew Zeidenberg purchased the consumer version of the CD-ROM and, defying ProCD’s license restrictions, offered the database over the Internet for a fee. Zeidenberg challenged ProCD’s paper-based and computer-displayed software agreement as lacking mutuality. Since their full terms were not visible until after purchase, he claimed that he could not have assented to the terms of the license at the time of purchase. The 7th Circuit rebuffed Zeidenberg, pointing out that consumer transactions are replete with terms and conditions fully disclosed only after a sale occurs. It gave as examples the purchase of airline tickets, home electronics and insurance. As for pre-emption, the court concluded that ProCD’s contractual control over the reproduction of its database was not equivalent to the rights enjoyed under copyright law. While copyright protection embraced “the world,” the ProCD contract affected only the parties to the transaction. “Strangers,” the court concluded, “may do as they please.” THE MINORITY VIEW OF ‘VAULT’ The Bowersand ProCDrulings stand on one side of the debate over copyright pre-emption of contracts. On the other side is Vault Corp v. Quaid Software Ltd., 847 F.2d 255 (5th Cir. 1988), a ruling from which the ProCDcourt was at pains to demur. For in Vault,unlike ProCD, the 5th Circuit enunciated an early and still minority view that the terms and conditions that accompany software can face pre-emption. Vault had offered a copy-protection program that makers of software applications could license to render their programs copyproof. Each copy of Vault’s copy-protection software was accompanied by a license agreement with broad proscriptions on purchaser copying, modification or conversion of the Vault program into human-readable form. When Quaid offered a software program intended to defeat Vault’s copy-protection program, Vault charged Quaid with violating Vault’s license. Louisiana law, which governed, included a statute expressly recognizing the validity and enforceability of terms and conditions that accompany software. The 5th Circuit, however, struck down the Louisiana statute as contrary to the Copyright Act and refused to enforce Vault’s license. It pointed, for instance, to 17 U.S.C. 117 of the Copyright Act permitting the owner of a copy of software, under certain conditions, to make an adaptation of the program, much as Quaid had done. Concluding that Louisiana’s law touched upon, and conflicted, with federal copyright, the court ruled that the restrictions of the Vault software license must give way to the Copyright Act. Yet despite the eclipse of the Vaultview of pre-emption by that of Bowersand ProCD, Vaultstill has its adherents. In SoftMan Products Co. LLC v. Adobe Systems Inc.,171 F. Supp. 2d 1075 (C.D. Calif. 2001), for instance, SoftMan had purchased a bundled collection of Adobe software, accompanied by a license agreement, the full terms of which were visible to a user only upon installation of the software. SoftMan sold the unbundled components of the software separately, an act that the license agreement expressly prohibited. SoftMan defended its actions under the right of exhaustion, or first-sale doctrine, embodied in the Copyright Act at 17 U.S.C. 190(a). Under the first-sale doctrine, a copyright owner is divested of the right to control downstream transfers of a copyrighted work after the first transfer. Therefore, having purchased the software, SoftMan claimed it had the right to resell its unbundled components despite the license restrictions. Adobe countered that the first-sale doctrine was inapplicable because Adobe had licensed, not sold, its software to end users. Hence, no first sale had occurred to divest Adobe of control. The U.S. District Court for the Central District of California disagreed, applying what it termed an “economic reality” test. Under that test, the court found the Adobe license to be pre-empted by the Copyright Act as a sale rather than a license. It concluded that “[i]f a transaction involves a single payment giving the buyer an unlimited period in which it has rights to procession, the transaction is a sale.” On the thorny issue of assent to license terms not fully disclosed until after a purchase takes place, the SoftMancourt rejected the reasoning of ProCD. It found that SoftMan could not be bound merely by a notice on the outside of the Adobe software package that the complete terms of the license would be disclosed only upon installation of the software. PUBLICITY RIGHT PRE-EMPTION In Toney, in contrast to Bowers, pre-emption cut off a claim based on state law. The dispute arose when a model who had licensed her photograph for use on a hair care product, asserted a violation of her right of publicity when use of the photograph continued after the expiration of the license. The U.S. District Court for the Northern District of Illinois concluded that the contested photograph met the requirements for copyrightable material because it was both fixed in tangible form and was copyrightable subject matter. While the model’s image was the subject of the photograph, the district court viewed the crux of the dispute as the right of the hair care maker to reproduce and distribute the photograph. Those rights, the court felt, were governed by copyright law. Other courts, however, have taken a different view. They see the right of publicity as protecting an individual’s persona. Since a persona is not copyrightable subject matter and therefore not covered by the copyright law, these courts treat right-of-publicity claims as not pre-empted. These divergent lines likely stem from the imprecision of the � 301 prerequisite for pre-emption, namely that state rights “come within the subject matter of copyright as specified by sections 102 and 103.” The act offers no definition of the phrase, leaving the courts to puzzle over its meaning. The 7th Circuit has come in for heavy criticism in holding that the right of publicity can be pre-empted. In Baltimore Orioles v. Major League Baseball Players Ass’n, 805 F.2d 663 (7th Cir. 1986), the 7th Circuit held baseball players’ rights of publicity in their performances on the field to be pre-empted. The court reasoned that the players’ performances in a baseball game were within the subject matter of copyright because the videotape of the game fixed the players’ performances in tangible form. The syllogism ran that since a work fixed in tangible form is copyrightable, the players’ hitting and fielding, captured on videotape, qualified as copyrightable subject matter. OPPOSING VIEW IN ‘BROWN’ Brown v. Ames, 201 F.3d 654 (5th Cir. 2000), takes the opposite view. There, Collectibles Inc., a seller of vintage recordings, faced copyright-infringement claims from the artists whose music was featured on the recordings. The artists also asserted right-of-publicity claims for unauthorized use of their names and images in the promotion and sale of the recordings. Collectibles argued that the artists’ rights-of-publicity claims were pre-empted. Those claims, according to Collectibles, grew out of the use of the artists’ personas to identify Collectibles’ recordings, so that their rights of publicity and their copyright claims were essentially the same. The 5th Circuit concluded otherwise, holding that a persona could not be pre-empted by copyright because it does not come within the subject matter of copyright; it is not a writing by an author. Nor could Collectibles succeed with its constitutional pre-emption defense. Constitutional pre-emption can occur independent of Copyright Act pre-emption when a state law obstructs the accomplishment of the full purposes and objectives of Congress. The 5th Circuit discerned no such tension resulting from the artists’ claims. As for the 7th Circuit’s view that a performance, such as that of a baseball player, once fixed, is governed exclusively by copyright, the Collectiblescourt tactfully implied that that may have been a bad call. It will likely require U.S. Supreme Court action or clarification of � 301 of the Copyright Act finally to bring uniformity to the courts’ application of the pre-emption doctrine to claims based on state law. Stephen J. Meyers is a partner in the intellectual property group in the Philadelphia office of Drinker Biddle & Reath ( www.drinkerbiddle.com). His practice involves trademarks, copyrights, unfair competition and related areas. 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