# FILED August 19, 1998 Cecil W. Crowson Appellate Court Cle rk IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE

MICHAEL MEYERS, ) ) Plaintiff/Appella

nt, ) Davidson Chancery No. 95-2518-I

) vs. ) ) MARK A. COLE, ) Appeal No. 01A01-9710-CH-00543 ) Defendant/Appellee. )

APPEAL FROM THE CHANCERY COURT OF DAVIDSON COUNTY

AT NASHVILLE, TENNESSEE

THE HONORABLE IRVIN H. KILCREASE, JR.

For the Plaintiff/Appellant : For the Defendant /Appellee : Stephen M. Miller George E. Copple, Jr. Nashville, Tennessee Nashville, Tennessee

REMANDED

HOLLY KIRBY LILLARD, JUDGE

CONCUR: W. FRANK CRAWFORD, P. J., W.S. ALAN E. HIGHERS, J.OPINION

This case involves the dissolution of a partnership fo

rmed tocreate and sell music. The trial court determined the partners’ respective rights in some properties and ordered some items sold. We remand. Plaintiff/Appellant

Michael Meyers ("Meyers") and Defendant/Appellee Mark Cole ("Cole" ) formed an oral partnershi p in late 1992 named MusicArts. The partnership initially produced and sold musical "jingles" for use in advertising. Meyers wrote the jingles to meet the advertising needs of clients solicited by Cole. Af ter some time, Cole trie

d to expand the foc

us of the partner

ship to include the creation of video footage to correspond with the jingles. This led to a rift between the partners. The dispute intensified in e arly February 1995 and culminated in a series of faxes and telephone conversations be tween the partie

s. On February 13, 1995, Meyers advised Cole that "[a]s of today, you don't represent me in a business capacity. . . . I think a clean bre ak is necessary a

t this time." Meyers and Cole su bsequently

divided the partne

rship's business eq

uipment between th

em. They did not attempt to dispose of the name MusicArts, the custo mer list, or the audio and video tapes containing edited music/commercials (“the DAT tapes”). Meyers filed suit on August 15, 1995, seeking a declaratory judgment as to the p a rties’ respectiv e rights. Cole filed an answer and counterclaim seeking a complete accounting of the

revenues and expenses of the partnership. The trial court referred the matter to the Clerk and Master fora full hear ing. The trial cour t adopted the Clerk

and Master's find

ings as the judgment

of th e court. The trial court foundth at the parties ha d been acting unde

r an oral partne

rship agreement

. The partnership dissolved on February 13, 1995 when Meyers withdrew, but did not terminate on that date. Eight months after

dissolution, while th

is suit was pending, Cole created advertising using works developed during

the partnership f

or two former cli

ents of the partne

rship. The trial c

ourt did notrequire Cole to account to Meyers or to the partnership for the income from these projects. The trial court found, however, that Meyers had breached his fiduciary duty toward Cole by not sharing profits from jobs begun before the dissolution, but completed afterwards. The court further found that the DAT tapes should not be divided or copied and or dered them to be sold and the proceeds divided equally between the parties. At the sale for the DAT tapes, Cole bid $100. Meyers objected to the sale because the court had not determined the rights of the respective parties in the tapes. He2

also refused to bid at t

he sale because

he claimed the sa

le was not “comm

ercially reasonable.” Meyers moved for a stay of the sale of the tapes pending appeal, and this motion was granted. On appeal, Meyers argues that the trial court’sfindings are incomplete. Meyers contends that the trial court failed to require Cole to account for transactions whic h occurred afte

r this li tigation began, involving works developed during the partnership. Meyers notes that Cole’ s transactions with former MusicArts clients involved music that Meyers created during the partie

s’ partnership. Meyers argues th at, consequently, Coleis accountable to Meyers or to the partnershi

p for the profits from th

ese projects. Me

yers also claims that the trial court erred in ordering the sale of the DAT tapes with

out first determin

ing who owned the c

opyrights to

the creative works on

the tapes. Cole initially argues t hat Meye rs is prohibited fr om raising the issue

of Cole’s postdissolution projects because the order of reference to the Master did not include that issue. While the order of reference

did not list Cole’s pro

jects as an issue to

be determined, th

e issue was in

fact considered by the Master and the trial court. The Master’s report indicates that it considered “the amount of funds owing either party after winding up of part nership aff

airs.” Moreover, Meyers noted this issue in his objec tions to the Master’ s report. Thus, we f ind the issue of wha

t funds, if any, Cole owed to Meyers for use of the music created during the partnership was presented to the trial court and ma

y be raised on app

eal. Cole argues that

the money collect

ed from Meyers’ jobs was partner ship property

because those projects were “

in the pipeline,” o

r in progress, as o

f the date he alle

g es the partnersh

ip terminated, February 13, 1995. Cole asserts that he did not solicit or perform any work for former MusicArts

clients until appro

ximately two months a

fter this lawsu

it was fil ed and at least eight months after the alleged

termination. Consequently, Cole argues that p rofits from these

projects did not have to be accounted for during the winding up of the partnership. In this appeal, Meyers asks this Court to review the trial court’s dec ision regarding pr

ofits Cole received on projects begun after dissolution and finished before terminationof the partnership. “A concurrent

finding of fact by a Master and a trial court is conclusive on appeal, except where the f inding . . . is based on an error of law or a mixed question of fact and law, or where t he factua l finding is not based on material evidence.” Aussenberg v. Kramer , 944 S.W.2d 367, 370 (Tenn. App. 1996) (citing Archer v. Archer , 907 S.W.2d 412, 415 (Tenn. App. 1995)). The issues raised3

by Meyers in this appeal are mixed questions of fact and law, subject to review. Id. (citing Bubis v. Blackman , 58 Tenn. App. 619, 632, 435 S.W.2d 492, 498 (1968)); see Aaron v. Aaron , 909 S.W.2d 408, 410 (Tenn. 1 995). In th is case, no presumption of correctness attaches to the trial court’s findings, and “this Court has great latitude to determine whether findings as to mixed questions of fact and law made by the trial court are sustained by probative evidence on appeal.” Aaron v. Aaron , 909 S.W.2d 408, 410 (Tenn. 1995). Th e rules g overning dissolution and winding up of partnerships are well settled in Tennessee: Upon dissolution, a withdrawing partner who h as no t wrongfully dissolved the partnership

may require a winding up of the partnership affairs, and share proportionately

in both profits and losses until ter mination, when all p

artnership affairs are settled. In th is event, the resp

ective inte

rests of th e partners in the partnership, including profits and losses, do not change until fina l settlement (termination). Shepherd v. Griffin , 929 S.W.2d 336, 343 (Tenn. App. 1995) (citation omitted) (citing Shepherd v. Griffin , 776 S.W.2d 119, 122 (Tenn. App. 1989)). “Dissolution is caused: . . . [b]y the express will of any partner” when the partnership is ind

efinite in term. Te

nn. Code Ann. § 61-1 -130(1)(B) (1989). In this case, the p artnership dissolv

ed on February 13 , 1995, the date on w hich Meyers told Cole that Cole no longer represented Meyers in the busi ness. However, dissolution does not terminate the partnership. See Shepherd v. Grif fin , 776 S.W.2d 119, 121 (Tenn. App. 1989). In this case, there was no partner ship ag reement controlling the dissolution, distribution of assets or accounting upon dissolution of th e partnersh

ip. Consequently, th e Uniform Partner ship Act governs. Hoppen v. Powell

, 600 S.W.2d 736, 738 (Tenn. App. 1980). Under the Tennessee Uniform Partnership act, the partnership continues until the winding up of the partnership is completed, and the partnership is terminated. Tenn. Code Ann. § 61-1-129 (1989). The process of winding up includes an accounting and distribution of the partnersh ip assets. “Until termination of the pa rtnership the inte rests of the partn

ers in partnersh

ip assets, profits, liabilities and losses do not change, even though they exist at or occur after dissolution.” Shepard , 776 S.W.2d at

122 (citing Young v. Cooper , 30 Tenn. App. 55, 203 S.W.2d 376, 386 (1947); 20 Tenn.Jur. Sec. 43). The partners’ interests “remain unchanged until the partners

hip is terminated.” Id. (citing 59A Am.Jur.2d Partnerships, § 809 (1987)).4

Therefore, the partnership did not terminate in February of 1995. Termination does no t oc cur until the assets are equi tably distributed. Tenn. Code Ann. § 61-1-129 (1989). In this case, termination has not yet occurred, in part due to the ongoing litigation. An unresolved issue of law and fact remains as to Cole’s use of the works created by Meyers during the term of the partnership in two projects unde

rta ken o n Cole’s behalf, the Burford project and the Cunningham project. In the Burford project, Cole used a jingle and/or music

created during the partnership which had been previously

used in another te

levision commerci

al for that c

lien t. The new advertisement incorporated

elements of the earlier project and carried the same theme. In the Cunningham projec t, Cole made minor changes to a prior MusicArts television ad for the same client. The Cunningham project also utilized works created during the partnership. In addition, Cole acknowledged that he had assumed that he could continue to use the DAT tapes for solicitation of business independent of the partnership. The resolution of the issue involving Cole’s use of works cre ated by Meyers during the partnership

depen ds in part on another issue: the rights of the parties in the copyrights to the copyrightable

works developed during the partnership. Meyers contends that the trial court did not determine what rights the parties or the partnership ac quired in the copyrights to the music or commercials recorded on the DAT tapes. Meyers raised the issue after the report of the Clerk and Master was issued. The trial court considered

the DAT tapes to be a partnership asset because it ordered the tapes sold and the proceeds divided evenly. By

implication, then, t

he trial court must

have considere

d the partnership

to be the

owner of the copyrights to the tapes. This, too, is a mixed issue of law and fact, properly review

able by this court. See Aussenberg v. Kramer , 944 S.W.2d at 369. Copyrightsare governed by federal copyright law, and any provision of the Copyright Act of 1976 (“the Act”), 17 U.S.C.S. § 101, et seq. (1994 ), whi ch deals with the is sue at hand would preempt state law. § 301(a). The pro visions of the Act w

hich deal most clos

ely with the issue in this case concern the doctrines of (1) a “work made for hire” in § 101 and § 201(b), and (2) transfer of ownership

in a copyright

in § 201(d) and § 204(a). Creative works de veloped during the

partnership could be deemed p

artnership prope

rty under one of th

ese two doctrine

s. Section 101 reads in pertinent part that “[a] ‘work made for hire’ is--(1) a work prepared by

an employee within the

scope of his

or her employment

.” § 101. In the abs

ence of an expr

ess written5

agreement,

a “work madefor hire” is owned by the employer. 17 U.S.C.S. § 201(b). In Community for Creative Non-Viole

nce v. Reid

, 490 U.S. 730, 109 S.Ct. 2166, 104 L.Ed.2d 811 (1989), the Courtindicated that the phrase “scope of employment” should be interpreted according to the “general common law of agency, rather than on the law of any particular State. ” Id . at 74 0. The Courtlisted factors relevant to the issue of whether a hired party is an employee under agency law. See id. at 751-52 . These fact ors include the skill required to create the work, the source of the instrumentalities and tools used to cr eate the work, th

e locatio n of the work, the duration of the relationship

between the par

ties, whether the

hiring party has th

e right to assign ad

ditional projects to the hired party, the extent of the hired part y’s discretion over when and how long to work, the method of payment, the hired party’s role in hiring out and paying assistants, whethe r the work is part of the regular business of the hiring party, whether the hiring party is in business, theprovision of employee benefits, and the t ax treat ment of the hired party. Id. Community did not involve a partnership, and it is unclear w hether these

factors would be pertinent in the context of a partnership. We found no cases determining whether the “works made for hire” doctrine a

pplies to works created by a partner du ring the pa rtnership. Consequently, we look to caselaw in analogous situations. For example, Wheeler v. Hurdman , 825 F.2d 257 (10th Cir. 1987), involved the issue of whether federal anti-discrimination laws (Title VI I, AD EA, and FLSA), which protect “employees,” should apply to a partner within the context of a general partnership. The court in Wheeler

reviewed the many ways in which the characteristics of a partner differ from thos e of an employee, such as the right to share in profits and participate in management decisions, the right to a ct as agen t for the other partner, and unlimited personal liability for partnership

losses. It noted tha

t th e partner’s “participation in profits and losses , exposure to liability, investment in the firm, partial ow nership of firm assets, and her voting rights--plus her position under the partnership agreement and partnershi p l aws--clearly placed her in a different economic and legal category.” Id . at 276. It ultimatel y determined that

Congress intentionally used the term “employee” in these statutes to exclude partners in a general partnership. Id . at 276. This case involves an analogous situation. An employee who creates works for an employer functions in a more protected positio n than a partner;

he is shielded fro

m unlimited persona

l liability for the organization’s obligations. As in Wheeler , thi s fact is significant, as are the other characteristics that distinguish an employee from a partner. The Copyright Act in cludes no6

indication that Congress intended the “works made for hire” doctrine to apply to works created by

a partner during the course of the partnership, and we decline to do so. Therefore, we hold that the works created solely by Meyers are not “works made for hire” as defined in 17 U.S.C.S. § 101, and that the partnership does not own the copyrights by virtue of this doctrine. In the absence of application of the “works for hire” doctrine, the copyright to an original work such as the music in

this case “vests in

itiallyin the author or au

thors of the work. ” 17 U.S.C.S. § 201(a). However, the copyright to the music created by Meyers could be owned by the partn ership if ownership was transferred to the partnership by agreement of the partners. Under the Copyright Act, such a transfer

would be valid only if the “instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights.” 17 U.S.C.S. §204(a). There is little caselaw de

aling with the ownership of the copyright on original works in the context of a partnership. In Oddo v. Ries , 743 F.2d 630 (9th Cir. 1984), two parties entered into a written par tne rship agreement to write a book. One partner agreed to provide the capital and supervise the business end of the venture and the other agreed to wri te the book. Because of the written partnership agreement, the Oddo court held that the partners we re co-owners of the partnership’s assets, including the copyright in the book. In Konigsberg Int’l Inc. v. Rice , 16 F.3d 355 (9th Cir. 1994), the court d

iscussed at length the law regarding copyrights. In Konigsberg , two movie producers met ove

r lunch with

a popular novelist. During the lunch meeting, they orally agre

ed that the novelis

t would create a manuscript which could be developed further within several media. No written agreement was ever signed. Later, a dispute arose c

oncerning the co

pyright to the manus

cript and a lawsu

it was f iled. The Konigsberg

court distinguished this situation from Oddo , in which there was a writ ten partnership agreement. The Konigsberg court construed § 204(a) of the Act as requiring a written agreement which clearly divests the creator of a work of his copyright. Id . at 357-58. Therefore, Konigsberg held that the oral partnership agreement was not sufficient to transfer ownership o f a copyright to the partnership. Accord Effects Assocs., Inc. v. Cohen , 908 F.2d 555, 557 (9th Cir. 1990). Under the Copyright Act

and the reasoning in Konigsberg , in the absence of any evidence that Meyers transfe

rred in writing ow

nership of the cop

yright to the partn

ership, Meyers’ rights in the works created solely by him during the partnership were not transferred to the partnership and remain vested in Meyers. If bo th partn ers significantly contributed to creation of the music or7

commercials, under copyright law, they may be construed as co-owners of the

copyrights to those works. See 17 U.S.C.S. § 101 (definition of “joint work”); Oddo v. Ries , 7 4 3 F.2d at 633.

In this case, the record

is insufficient for this Court to determine ownership of the copyright t o the work s at issue. Consequently, we remand the case for the trial court to determine the respective contributions of each partner to the creation of the copyrightable works during the term of the partnership, whether there is written evidenc

e of a transfer

of the copyrights

from either part

y to the partnership, and

any other issues pertinent to ownership of the copyrights. On

ce ownership of the copyrights is determined, the trial court must determine the proper accounting of each partner for the use of the music or commercials during the winding up of the partnership. The cause is remanded to the trial court for further proceedings consistent

with this Opinion. Costs on appeal are assessed equally against Appellant and Appellee, for which execution may issue if necessary.

HOLLY KIRBY LILLARD, J. CONCUR:

W. FRANK CRAWFORD , P. J., W.S.

ALAN E. HIGHERS, J.