Source: https://law.justia.com/cases/federal/appellate-courts/F3/310/280/495699/
Timestamp: 2019-02-23 04:24:55
Document Index: 791994516

Matched Legal Cases: ['§ 304', '§ 304', '§ 304', '§ 24', '§ 101', '§ 101', '§ 304', '§ 304', 'art:\n17', '§ 304', '§ 304', '§ 1738', '§ 304', '§ 304', '§ 304', '§ 304', '§ 304', '§ 304', '§ 304', '§ 304', '§ 304', 'art, 495', '§ 304', '§ 304', '§ 304', '§ 11', '§ 304', '§ 26', '§ 304', '§ 19', '§ 304', '§ 304']

Marvel Characters, Inc., Plaintiff-counter-defendant-appellee, v. Joseph H. Simon, Defendant-counter-claimant-appellant, 310 F.3d 280 (2d Cir. 2002) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Second Circuit › 2002 › Marvel Characters, Inc., Plaintiff-counter-defendant-appellee, v. Joseph H. Simon, Defendant-counter...
Marvel Characters, Inc., Plaintiff-counter-defendant-appellee, v. Joseph H. Simon, Defendant-counter-claimant-appellant, 310 F.3d 280 (2d Cir. 2002)
U.S. Court of Appeals for the Second Circuit - 310 F.3d 280 (2d Cir. 2002)
Argued: June 3, 2002
Decided: November 7, 2002
This appeal requires us to examine the scope of the termination provision of the Copyright Act of 1976 (the "1976 Act"), 17 U.S.C. § 304(c). Section 304(c) grants authors (or if deceased, their statutory heirs) an inalienable right to terminate a grant in a copyright fifty-six years after the original grant "notwithstanding any agreement to the contrary." 17 U.S.C. § 304(c) (3),(5). The termination provision, however, has one salient exception: copyright grants in works created for hire cannot be terminated. 17 U.S.C. § 304(c).
Under the Copyright Act of 1909 (the "1909 Act"), in effect at the time of Simon's purported creation of Captain America and assignment to Timely, an author was entitled to a copyright in his work for twenty-eight years from the date of its publication. 17 U.S.C. § 24, repealed by Copyright Act of 1976, 17 U.S.C. § 101 et seq. Upon expiration of the first twenty-eight year term, the author could renew the copyright for a second twenty-eight year period (the "renewal term") simply by applying to the United States Copyright Office ("Copyright Office"). Id. The Supreme Court has noted that the renewal term operated to "permit [] the author, originally in a poor bargaining position, to renegotiate the terms of the grant once the value of the work has been tested." Stewart v. Abend, 495 U.S. 207, 218-19, 110 S. Ct. 1750, 109 L. Ed. 2d 184 (1990); see also Woods v. Bourne Co., 60 F.3d 978, 982 (2d Cir. 1995) (" [Through the renewal term] Congress attempted to alleviate the problem of the inability of authors to know the true monetary value of their works prior to commercial exploitation."). As the House committee which drafted the 1909 Act explained, "it should be the exclusive right of the author to take the renewal term, and the law should be framed as is the existing law, so that he could not be deprived of that right." H.R.Rep. No. 60-2222, at 14 (1909).
The legislative purpose behind the 1909 Act's renewal right — to provide authors a second chance to benefit from their works — was dealt a serious blow by the Supreme Court's decision in Fred Fisher Music Co. v. M. Witmark & Sons, 318 U.S. 643, 63 S. Ct. 773, 87 L. Ed. 1055 (1943). See Woods, 60 F.3d at 982. In Fisher Music, the Supreme Court addressed the renewal rights in the ever-popular (not to mention mellifluous) song "When Irish Eyes Are Smiling." The Court held that renewal rights were assignable by an author during the initial copyright term, before the renewal right vested. See id., 318 U.S. at 656-59, 63 S. Ct. 773.
In 1976, Congress enacted a comprehensive revision of the Copyright Act. See Pub. L. No. 94-553 (1976) (codified at 17 U.S.C. §§ 101-810); see also Mills Music, Inc. v. Snyder, 469 U.S. 153, 159-62, 105 S. Ct. 638, 83 L. Ed. 2d 556 (1985). Responding to the continual erosion of authors' rights subsequent to the 1909 Act, Congress extended the duration of copyrights then in their renewal terms for an additional nineteen years (the "extended renewal term"). See 17 U.S.C. § 304(b). More significantly, however, the 1976 Act gave new protections to authors. It allowed authors to terminate the rights of a grantee to whom the author had transferred rights in the original work. See 17 U.S.C. § 304(c); Woods, 60 F.3d at 982. This termination provision provides, in relevant part:
17 U.S.C. §§ 304(c) and 304(c) (5) (emphasis added). Section 304 further provides that terminations may be "effected at any time during a period of five years beginning at the end of fifty-six years from the date copyright was originally secured." 17 U.S.C. § 304(c) (3).
The standards governing summary judgment are well-settled. Summary judgment is appropriate only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits ... show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). The party seeking summary judgment has the burden to demonstrate that no genuine issue of material fact exists. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598, 26 L. Ed. 2d 142 (1970); Gallo v. Prudential Residential Servs. L.P., 22 F.3d 1219, 1223-24 (2d Cir. 1994).
In determining whether a genuine issue of material fact exists, a court must examine the evidence in the light most favorable to, and draw all inferences in favor of, the non-movant, in this case Simon. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986); Weinstock v. Columbia Univ., 224 F.3d 33, 41 (2d Cir. 2000). Summary judgment is improper if there is any evidence in the record that could reasonably support a jury's verdict for the non-moving party. Pinto v. Allstate Ins. Co., 221 F.3d 394, 398 (2d Cir. 2000).
Determining the preclusive effect of the Prior Actions requires an analysis of the common law doctrines of res judicata and collateral estoppel. These related but distinct doctrines operate to prevent parties from contesting matters that they have had a full and fair opportunity to litigate, thereby conserving judicial resources and protecting parties from the expense and vexation of multiple lawsuits. See, e.g., Montana v. United States, 440 U.S. 147, 153-54, 99 S. Ct. 970, 59 L. Ed. 2d 210 (1979).
We apply federal law in determining the preclusive effect of a federal judgment, PRC Harris, Inc. v. Boeing Co., 700 F.2d 894, 896 n. 1 (2d Cir. 1983), and New York law in determining the preclusive effect of a New York State court judgment, Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 81, 104 S. Ct. 892, 79 L. Ed. 2d 56 (1984); see also 28 U.S.C. § 1738 (implementing the Full Faith and Credit Clause of the United States Constitution). The parties agree that there is no discernible difference between federal and New York law concerning res judicata and collateral estoppel. See, e.g., Pike v. Freeman, 266 F.3d 78, 90 n. 14 (2d Cir. 2001). Therefore, we see no need to undertake a separate analysis of the preclusive effect of the Federal and State Actions.
Under the doctrine of res judicata, or claim preclusion, a final judgment on the merits of an action precludes the parties or their privies from relitigating claims that were or could have been raised in that action. See Allen v. McCurry, 449 U.S. 90, 94, 101 S. Ct. 411, 66 L. Ed. 2d 308 (1980). It is clear that a dismissal, with prejudice, arising out of a settlement agreement operates as a final judgment for res judicata purposes. See, e.g., Nemaizer v. Baker, 793 F.2d 58, 60-61 (2d Cir. 1986). It is equally well settled, however, that a prior judgment "cannot be given the effect of extinguishing claims which did not even then exist and which could not possibly have been sued upon in the previous case." Lawlor v. Nat'l Screen Serv. Corp., 349 U.S. 322, 328, 75 S. Ct. 865, 99 L. Ed. 1122 (1955). Likewise, res judicata does not bar subsequent litigation when the court in the prior action could not have awarded the relief requested in the new action. See, e.g., Leather v. Eyck, 180 F.3d 420, 425 (2d Cir. 1999); Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir. 1994); Davidson v. Capuano, 792 F.2d 275, 278 (2d Cir. 1986).
Whether a claim that was not raised in the previous action could have been raised therein "depends in part on whether the same transaction or connected series of transactions is at issue, whether the same evidence is needed to support both claims, and whether the facts essential to the second were present in the first." Woods v. Dunlop Tire Corp., 972 F.2d 36, 38 (2d Cir. 1992) (internal quotations omitted) (emphasis added). "Also dispositive to a finding of preclusive effect, is whether an independent judgment in a separate proceeding would impair or destroy rights or interests established by the judgment entered in the first action." Sure-Snap Corp. v. State Street Bank & Trust Co., 948 F.2d 869, 874 (2d Cir. 1991) (internal quotations omitted). To determine whether two actions arise from the same transaction or claim, "we look to whether the underlying facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations or business understanding or usage." Pike, 266 F.3d at 91 (internal quotations omitted).
However, " [t]hat both suits involved essentially the same course of wrongful conduct is not decisive." Lawlor, 349 U.S. at 327, 75 S. Ct. 865 (internal quotations omitted). For a single course of conduct may give rise to more than a single cause of action for res judicata purposes. See id. at 327-28, 75 S. Ct. 865.
Marvel cites Precision Air Parts, Inc. v. Avco Corp., 736 F.2d 1499 (11th Cir. 1984), and Hernandez v. City of Lafayette, 699 F.2d 734 (5th Cir. 1983) for the proposition that " [a] change in law ... will only enable a party to re-litigate a claim where that change could have affected the outcome of the litigation." Appellee's Br. at 30. Marvel also argues, correctly, that despite the enactment of the 1976 Act, the 1909 Act governs the authorship of the Works at issue here. See, e.g., Roth v. Pritikin, 710 F.2d 934, 937-39 (2d Cir. 1983) (holding that the 1976 Act's "work for hire" provisions — which differ from the 1909 Act — are not to be applied retroactively). However, it does not follow, as Marvel suggests, that since the Works' authorship was at issue in the previous actions, Simon's termination claim is precluded here. While Simon's assertion of authorship is the sine qua non of both his prior claim to renewal rights and his present claim to termination rights, it is merely an issue that determines the viability of each claim. See Yoon v. Fordham Univ. Faculty & Admin. Retirement Plan, 263 F.3d 196, 202 (2d Cir. 2001).
Collateral estoppel, or issue preclusion, prevents parties or their privies from relitigating in a subsequent action an issue of fact or law that was fully and fairly litigated in a prior proceeding. See Boguslavsky v. Kaplan, 159 F.3d 715, 719-20 (2d Cir. 1998); see also Comm'r of Internal Revenue v. Sunnen, 333 U.S. 591, 598, 68 S. Ct. 715, 92 L. Ed. 898 (1948) ("Once a party has fought out a matter in litigation with the other party, he cannot later renew that duel."). Collateral estoppel applies when: "(1) the identical issue was raised in a previous proceeding; (2) the issue was actually litigated and decided in the previous proceeding; (3) the party had a full and fair opportunity to litigate the issue; and (4) the resolution of the issue was necessary to support a valid and final judgment on the merits." Boguslavsky, 159 F.3d at 720 (internal quotations omitted).
Simon does not dispute that he raised the issue of the Works' authorship in the Prior Actions; nor does he contest that, by virtue of the stipulations of dismissal filed in the Prior Actions, he did not prevail on that issue. However, where a stipulation of settlement is "unaccompanied by findings," it does "not bind the parties on any issue ... which might arise in connection with another cause of action." Lawlor, 349 U.S. at 327, 75 S. Ct. 865; see also Motrade v. Rizkozaan, Inc., No. 95 Civ. 6545, 1998 WL 108013, at *5 (S.D.N.Y. March 11, 1998) ("To have a preclusive effect on specific issues or facts, however, a voluntary dismissal also must be accompanied by specific findings sufficient for a subsequent court to conclude that certain matters were actually decided.").
Having concluded that Simon is not precluded from asserting that he is the author of the Works for purposes of exercising his statutory termination right, we turn, at length, to the issue of first impression presented by this case: whether an agreement made subsequent to a work's creation that declares that it is a work created for hire constitutes an "agreement to the contrary" under § 304(c) (5) of the 1976 Act. The district court never addressed this question. Instead, it simply assumed that because Simon had conceded in the unambiguous Settlement Agreement that the Works were created for hire, he could not now assert that he was the Works' author for purposes of exercising the termination right in this action. While the district court was undoubtedly correct that the Settlement Agreement is not ambiguous — a contention disputed by the amici curiae — this is not the relevant analysis on this issue. Instead, we must analyze the legislative intent and purpose of § 304(c) of the 1976 Act to determine its application to this case.
In order to determine the meaning of § 304(c), we apply the well established canons of statutory construction. In interpreting a statute, we look first to the language of the statute itself. See, e.g., Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 739, 109 S. Ct. 2166, 104 L. Ed. 2d 811 (1989); Auburn Housing Auth. v. Martinez, 277 F.3d 138, 143 (2d Cir. 2002). When the language of a statute is unambiguous, "judicial inquiry is complete." Connecticut Nat'l Bank v. Germain, 503 U.S. 249, 254, 112 S. Ct. 1146, 117 L. Ed. 2d 391 (1992). When the terms of a statute are ambiguous, however, we may seek guidance in the legislative history and purpose of the statute. See Novak v. Kasaks, 216 F.3d 300, 310 (2d Cir. 2000). In so doing, we must "construct an interpretation that comports with [the statute's] primary purpose and does not lead to anomalous or unreasonable results." Connecticut v. United States Dep't of the Interior, 228 F.3d 82, 89 (2d Cir. 2000).
Here, whether § 304(c) (5)'s phrase "any agreement to the contrary" includes a settlement agreement stating that a work was created for hire is not clear from the text of the statute itself. Generally speaking, the Settlement Agreement is an agreement to the contrary. But without more specific or compelling evidence from the text, we find it necessary to go beyond the mere text and consider the legislative intent and purpose of § 304(c) to ascertain the statute's meaning.
The principal purpose of the amendments in § 304 was to provide added benefits to authors. The ... concept of a termination right itself, w [as] obviously intended to make the rewards for the creativity of authors more substantial. More particularly, the termination right was expressly intended to relieve authors of the consequences of ill-advised and unremunerative grants that had been made before the author had a fair opportunity to appreciate the true value of his work product. That general purpose is plainly defined in the legislative history and, indeed, is fairly inferable from the text of § 304 itself.
Mills Music, 469 U.S. at 172-73, 105 S. Ct. 638 (footnote omitted) (interpreting the derivative works exception to the termination clause of § 304(c)). Furthermore, the legislative history of the termination provision reflects Congress's intent to protect authors from unequal bargaining positions. See H.R.Rep. No. 94-1476, at 124 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5740 ("A provision of this sort is needed because of the unequal bargaining position of authors, resulting in part from the impossibility of determining a work's value until it has been exploited."); see also Mills Music, 469 U.S. at 173 n. 39, 105 S. Ct. 638. As these statements suggest, the clear Congressional purpose behind § 304(c) was to prevent authors from waiving their termination right by contract. Accord Stewart, 495 U.S. at 230, 110 S. Ct. 1750 ("The 1976 Copyright Act provides ... an inalienable termination right.").
When examining the legislative intent and purpose of § 304(c), it becomes clear that an agreement made after a work's creation stipulating that the work was created as a work for hire constitutes an "agreement to the contrary" which can be disavowed pursuant to the statute. Any other construction of § 304(c) would thwart the clear legislative purpose and intent of the statute. If an agreement between an author and publisher that a work was created for hire were outside the purview of § 304(c) (5), the termination provision would be rendered a nullity; litigation-savvy publishers would be able to utilize their superior bargaining position to compel authors to agree that a work was created for hire in order to get their works published. In effect, such an interpretation would likely repeat the result wrought by the Fred Fisher decision and provide a blueprint by which publishers could effectively eliminate an author's termination right. We conclude that Congress included the "notwithstanding any agreement to the contrary" language in the termination provision precisely to avoid such a result.
The parties to a grant may not agree that a work shall be deemed one made "for hire" in order to avoid the termination provisions if a "for hire" relationship... does not in fact exist between them. Such an avoidance device would be contrary to the statutory provision that " [t]ermination of the grant may be effected notwithstanding any agreement to the contrary." ... [I]t is the relationship that in fact exists between the parties, and not their description of that relationship, that is determinative.
3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 11.02 [A] [2] (2000 ed.) (footnote omitted). This reading of the statute also explains why copyright grants in works created for hire are not subject to termination. See 17 U.S.C. § 304(c). Under the 1909 Act, the statutory author of a work created for hire was the employer-publisher. See, e.g., 17 U.S.C. § 26 (repealed 1976); Cmty. for Creative Non-Violence, 490 U.S. at 743-44 & n. 9, 109 S. Ct. 2166. Because an employer-publisher does not face the same potential unequal bargaining position as an individual author, it follows that an employer-publisher does not need the same protections as an individual author.
This reading of § 304(c) is also consistent with the way in which courts have interpreted the 1909 Act's "work for hire" provision. Courts engaging in such an analysis have focused on the actual relationship between the parties, rather than the language of their agreements, in determining authorship of the work. See, e.g., Donaldson Pub. Co. v. Bregman, Vocco & Conn, Inc., 375 F.2d 639, 640-42 (2d Cir. 1967) (holding that a composer's work was not created as a work for hire for defendant even though his contract with defendant provided him with a drawing account during his "employment"); see also Murray v. Gelderman, 566 F.2d 1307, 1310-11 (5th Cir. 1978) (holding that a writer was not the "author" of a book produced by the defendant even though she expressly contracted for "exclusive control" of its contents).
Additionally, this Court has looked to agency law to determine whether a work is created "for hire" under the 1909 Act. See Aldon Accessories Ltd. v. Spiegel, Inc., 738 F.2d 548, 552 (2d Cir. 1984). And under agency law, " [t]he manner in which the parties designate the relationship is not controlling, and if an act done by one person in behalf of another is in its essential nature one of agency, the one is the agent of such other notwithstanding that he or she is not so called. Conversely, the mere use of the word `agent' by parties in their contract does not make one an agent who, in fact, is not such." 3 Am.Jur.2d Agency § 19 (2002) (footnotes omitted).
In sum, we hold that an agreement made subsequent to a work's creation which retroactively deems it a "work for hire" constitutes an "agreement to the contrary" under § 304(c) (5) of the 1976 Act. Therefore, Simon is not bound by the statement in the Settlement Agreement that he created the Works as an employee for hire. Because Simon has proffered admissible evidence that he did not create the Works as an employee for hire, the district court's grant of summary judgment to Marvel was erroneous. It will be up to a jury to determine whether Simon was the author of the Works and, therefore, whether he can exercise § 304(c)'s termination right. See, e.g., Medforms, Inc. v. Healthcare Mgmt. Solutions, Inc., 290 F.3d 98, 110 (2d Cir. 2002) (noting that authorship is a jury question).
Finally, Marvel cannot establish detriment for equitable estoppel purposes. Marvel has received the full economic benefit of the Works' twenty-eight year renewal term. Even if a jury concludes that Simon is the Works' author and can therefore terminate Marvel's copyright in the Works, Marvel can continue to exploit every Captain America property created prior to the effective date of termination. See Mills Music, 469 U.S. at 173, 105 S. Ct. 638 (noting that pre-termination derivative works may continue to be utilized under the terms of the terminated grant).