Source: http://ivanhoffman.com/cp.html
Timestamp: 2018-11-17 04:32:58
Document Index: 543165337

Matched Legal Cases: ['§ 301', '§ 301', '§ 201', '§ 6', '§ 106', '§ 106', '§ 201']

Are Copyrights Community Property?
Although we can talk about copyrights as community property in the abstract, these issues most likely are going to arise within the context of a divorce proceeding (or indeed within a probate context and for the latter, read “Dying and Copyrights” on my site. For the sake of simplicity, I will limit the discussion in this article to the divorce context. These are somewhat different issues, although related, to those discussed in “Divorce and Copyright.”
Keep in mind that I write this article merely to explain the law. I am not, in this article, advocating the position of one side or the other. I leave that advocacy to my representation of particular clients.
Although there are other community property states in the United States, I will base this discussion on California law since that is likely to be a state with a significant number of parties owning copyright interests (books, musical compositions, films, records and the like). The laws of the other states may vary in terms of community property but the overlay of federal copyright law would seem to make the reasoning in this article applicable to matters in those states as well. However, if you are in those states, you should consult with a family law attorney in that state as well.
If a song, book or other copyrightable work is created during the marriage while domiciled in California, it is presumed to be community property. In Re: Marriage of Worth, 195 Cal. App. 3rd 768 (1987). Despite comments about and issues with the decision, that is the law in California.
But let’s explore some of those issues.
Family Code section 760 states:
However, federal copyright law applies to all copyrightable works which are “fixed in any tangible medium of expression” (17 U.S.C. section 102 (a)) and whenever you have an estuary of federal and state law, if there is a conflict, federal law will control. Hisquierdo vs. Hisquierdo (439 U.S. 572 (1979). This is so because of the Supremacy Clause of the Constitution (Article VI, Clause 2) as well as section 301 of the copyright act (17 U.S.C.) which section provides in part:
And at that estuary, yet another section of the copyright law comes very much into focus.
Section 201 and its several sub-sections provide as follows:
Subsections (b) and (c) are not relevant for purposes of this article so let me focus on (a), (d) and (e).
Section (a): As indicated above, the provisions of California law state that from creation, a work including a work of copyright, is community property and thus is owned jointly by the author and the spouse of the author. This would seem, it could be argued, to be in direct conflict with (a) above. In other words, under federal law, the author is the owner of all rights from creation and fixation but under California law, the non-author spouse is deemed to be an equal owner of those rights from the moment of creation. Thus, the argument would be that, under section 301, federal law must control and any community property provision to the contrary must fail.
Section (d): The Worth court dealt with this issue by citing to section (d)(1) and stating:
Thus, the Court found that there was no conflict between California and federal law and that by virtue of the state law, the non-author spouse had a community property interest because there was a transfer “by operation of law.” The implication here is that there was some nanosecond from the time the rights vested solely in the author under federal law but that after that nanosecond, the rights were vested in the author and the non-author spouse “by operation of law.” This would seem to be contrary to Family Code section 760 which seems to say that such community property rights vest from the moment of creation.
Section (e): But even if the Worth argument wins the day (or perhaps only the “nanosecond”), then you have to argue your way out of 201 (e).
Remember that in Worth, the “individual author” had previously… “transferred voluntarily” an interest in the copyrights under the interlocutory decree. The Court stated at 773-774:
In the present case, husband conceived, wrote and published the trivia books during the marriage. Thus, the conclusion is inescapable that such literary works constituted community property. Indeed, at the time of the interlocutory decree, husband virtually conceded that the books were community property. Under the terms of the stipulated judgment (drafted by husband's attorney), it is provided in pertinent part: "The parties agree that future royalties from the books ... listed on the Petition, along with all reprints shall be paid equally to Petitioner and Respondent. The parties agree that the literary agent for Respondent shall be joined as a party and that the agent shall pay directly to Petitioner her one-half interest in the royalties. The parties agree that the court shall reserve jurisdiction over any issues that may subsequently arise regarding the distinction between a re-edition or complete reworking of any book which is community property." The reference in the final sentence to "any book which is community property" strongly indicates the parties' understanding and agreement that the listed books, which include the trivia books, were community property.
Thus, under those circumstances, perhaps subsection (e) would not be an issue.
But suppose the author spouse contests the non-author spouse’s claim to a community property interest in the copyrights. At that point, if there is no prior “voluntary” transfer as in Worth, we need to see the workings of (e). Although this section was added as a result of Cold War events between the United States and the Soviet Union (remember them?), clearly the statute has meaning beyond that now out-dated conflict. If read literally, it would seem to prevent any “transfer” by operation of law, section (d)(1) to the contrary notwithstanding, since it would be “involuntarily.”
That said, the statute is silent as to what constitutes a voluntary “transfer.” A “transfer” is defined under section 101 of the Copyright Act as:
Is the use of “transfer” in (e) intended to limit what falls within that section to only those “transfers” defined in 101? Answer is unknown. Does this have to be a transfer to the non-author spouse or does it apply to any prior voluntary transfer to any party? Answer is unknown.
Further, a transfer of copyright ownership requires a writing signed by the author or the author’s agent. Section 204 (a) provides:
So a transfer by operation of law does not have to be in writing. So it would seem that a court decree transferring rights of copyright, such as an interlocutory decree, could satisfy the definition of a “transfer.” However, the termination of transfer statutes (discussed below) require the grant to have been “executed.” What if there is a court judgment that has not been the subject of an agreement that has been executed? What of the doctrine of “merger” of the agreement into the judgment?
In Rodrigue vs. Rodrigue (55 F.S.2d 534 (E. District La. 1999), this issue was squarely faced and the District Court analyzed various legal theories dealing with the issue of “involuntary” transfer and concluded that merely because parties are married and reside in a community property “regime” does not constitute a “voluntary transfer.” Even though the outcome changed on appeal (discussed below), the reasoning of the trial court was preserved on that appeal and thus such reasoning is instructive here. The issue was whether certain “themes” used by the husband in his paintings after the divorce were also community property and whether the wife was a co-owner of all rights therein (as derivative works). The Court summarized the claims as follows:
Historically, however, all legal issues relating to families have been the exclusive province of state law not federal law. Hisquierdo v. Hisquierdo, 439 U.S. 572, 99 S.Ct. 802, 808, 59 L.Ed.2d 1 (1979). When there is conflict between state family law and federal law, state law is not lightly set aside. Id. Preemption of state law may be necessary when Congress has positively required preemption by direct enactment. Id. However, a "mere conflict in words" between federal law and state family and family property law is not sufficient grounds for overturning state law. Id. Rather, "family property law must do `major damage' to `clear and substantial' federal interests" before state law is overridden. Id. Under the test described in Hisquierdo, in order for federal law to preempt state family law, (1) there must be some sort of express conflict between the two; and (2) the state law must do "major damage" to "clear and substantial" federal interests. Id. [emphasis added]
On its face, § 301 does not expressly preempt community property law because community property law does not necessarily purport to provide rights "equivalent" to those specified by the Act. However, there are specific areas of potential conflict between the Act and Louisiana community property law that result in preemption. [see discussion below about termination of transfer issues]
Moreover, the owner of the rights of copyright (or a given right) is the sole party entitled to exploit the same. A spouse not the author has no such rights. However, under California community property law, each party (thus including the non-author party) is entitled to an undivided equal share and that includes the right to exploit the same (subject to accounting to the other party). Family Code section 1100 et. seq. That, too, appears to be in conflict. Could the non-author party make a deal for the exploitation of the copyrights? (see discussion in Rodrigue at 544-545)
On appeal in Rodrigue, the Fifth Circuit (at 218 F.3d 432 (2000)) essentially agreed with the district court’s analysis of the issues related to conflict between federal and Louisiana state laws but concluded that there were provisions in the state laws that were not in conflict with the copyright laws including that even though the author-husband was the sole owner of all rights in the copyrights and thus the sole party entitled to manage the same, Louisiana state law allowed for the non-author spouse to share in the “economic benefits” from the copyrights. The Court stated:
In 2018, in the case of In Re: The Marriage of Waldman and Clement, Cal: Court of Appeal, 2nd Appellate Dist., 7th Div. 2018, (a case not certified for publication), the California Appellate Court briefly discussed Worth but decided the case on other (but nearly related) grounds. However, the Court did cite another case from Hawaii in which the issue was squarely presented.
In 2012, the Supreme Court of Hawaii had to decide how to rule on these issues in the case of Berry vs. Berry, 127 Hawai`i 243. At issue was whether the copyrights of a software developer created during the marriage were community property under the laws of that state. The facts deal considerably with due process and proper service of court papers and I will not get into those issues here. However, the relevant facts are that there was a proposed decree prepared by the wife in which the wife indicated that she would relinquish an interest in the husband/creator’s copyrights in consideration of a payment representing the value of the wife’s interest in any proceeds received from those copyrights. This approach was similar to the approach of the court in Rodrigue. The trial court however awarded a ½ interest in the said copyrights to the wife. The husband/creator filed a motion to dismiss, claiming in part that the court had no jurisdiction to award that interest to the wife, citing 17 USC 201 (e) and 301 (a) (discussed above) and no right to grant an interest in the said copyrights to the wife, as opposed to a payment of the value thereof.
The Court reviewed both Rodrigue and Worth, noting the above legal difficulties in reconciling Worth with federal copyright law. Among the issues was that in order to overcome the language of 201 (e), a court would have to find that the creator spouse voluntarily transferred his or her interest at some point and in some manner prior to a court awarding a share thereof to the non-creator spouse. In the instance of Berry, no such facts could be found. As indicated above, the mere existence of community property laws in a state in which parties get married would not be sufficient to constitute such a voluntary transfer. The Berry Court stated in part:
It would seem apparent that preservation of Worth's rationale requires legal gymnastics. In light of 17 U.S.C. § 301(e), [sic ED NOTE: this probably should be a reference to 201 (e)] which prohibits involuntary transfers of copyrights, to hold that part "ownership of a copyright... transfer[s]" to the nonauthoring-spouse by "operation of [Hawai`i marital property] law" under 17 U.S.C. § 201(d) requires this court to create a legal presumption that the authoring-spouse consented to sharing his or her ownership by virtue of marriage. 1 Nimmer on Copyrights § 6A.04. But, then, a second legal presumption that the nonauthoring-spouse consents to the authoring-spouse maintaining exclusive control over all of the exclusive rights delineated in 17 U.S.C. § 106 would also need to be created to avoid the risk of circumventing the very purpose of the Copyright Act. We decline to adopt this approach.
But the Court then discussed Rodrigue and found that that approach was more likely to be reconcilable with federal law. The Court determined that the pre-emption provisions of copyright law (301 (a) discussed above) only applies to state laws dealing with copyrights and not to state laws dealing with division of marital property including copyrights. The Court stated in part:
With respect to the equitable division of ownership interests in a copyright, instead of creating the legal presumptions required to uphold Worth's approach, we adopt the approach taken by Rodrigue that any distribution by the court must result in the authoring-spouse retaining the exclusive rights set forth under 17 U.S.C. § 106, but that the non-authoring spouse is entitled to an economic interest in the copyrights.
The Court concluded that the trial court ruled improperly in granting the non-creator spouse an interest in the copyrights and should have only granted an interest in the economic value of the income therefrom. The creator-spouse would retain the ownership with rights of administration and so on but would have to share a community property interest with the non-creator spouse.
Did Congress, in section 201, express any sort of “intent” to deal with the rights of the spouse under the community property laws and if so, does making copyrights community property conflict with that intent?
To respond to that situation, one could argue that Congress did express that intention in section 201 (a) to the effect that the author is the owner of all rights. The proponent of this argument would then likely further argue that under California law, the non-author spouse acquires a community interest from the moment of creation (or at least from the moment the work is “fixed in a tangible medium of expression”) and thus, such ownership rights in a non-author conflict with the stated intention of Congress. The opponent of such an argument would claim that the community interest arises a “nanosecond” after the ownership interest in the author arises.
In Hisquierdo vs. Hisquierdo, supra, 439 U.S. 572 (1979), the issue was whether or not a divorced spouse had a community property interest in benefits under the Railroad Retirement Act (“RRA”) related to the spouse’s husband having worked for the railroads during the marriage. The RRA had an express provision stating that the spouse did not have an interest in those benefits under the RRA. The United States Supreme Court ruled that because of that express exclusion, which represents a clear intent of Congress to exclude a spouse from ownership of the benefits, for the spouse to have such a community property interest would conflict with federal law and thus the community property laws did not apply and the widow had no interest as community property.
In Berry, the Court further discussed the issue of Congressional intent by citing Worth and then stating:
see also McCarty v. McCarty, 453 U.S. 210, 224, 101 S.Ct. 2728, 69 L.Ed.2d 589 (1981) (determining that military retirement pay not subject to state community property laws); Free v. Bland, 369 U.S. 663, 668-669, 82 S.Ct. 1089, 8 L.Ed.2d 180 (1962) (determining that U.S. Savings Bonds standing in the name of husband "or" wife not subject to state community property laws); Wissner v. Wissner, 338 U.S. 655, 658, 70 S.Ct. 398, 94 L.Ed. 424 (1950) (determining that a National Service Life Insurance policy was not subject to state community property laws, and that proceeds belong to the named beneficiary).[37]
Worth distinguished the foregoing cases from the case before it, reasoning that in those cases, the benefit at issue "was expressly defined by Congress to be the separate property of the designated recipient." 195 Cal.App.3d at 777, 241 Cal.Rptr. 135. In contrast to those cases, Worth asserted, "the Copyright Act expressly provides for co-ownership as well as transfer of all or part of a copyright." Id. In addition, Worth declared that although under 17 U.S.C. § 201(a), a copyright "`vests initially in the author[,]'" "nothing in the Copyright Act precludes the acquisition of a community property interest by a spouse[.]" Id. (emphasis in original).
But, as indicated above, even if there is an argument to be made that copyrights are community property in the abstract, there are issues that arise as a result of the copyright law that present challenges to the argument in that context. These issues arise as to what is called “termination of transfers.” To date, no court has decided whether community property survives the termination of transfer issues under federal law. Rather than go through the entirety of the explanation, the reader should stop here and read “Divorce and Copyright” on my site.
OK. You’re back presumptively with a full understanding of the termination of transfer issues related to divorce.
So if the rationale for “is there a conflict or not” is whether Congress has spoken about a given issues, it would seem that an argument could be made that Congress has indeed done so in great detail as to who is entitled to these rights in both sections 203 and 304(c). Thus the issue is whether state laws dividing those rights differently than federal law can survive. If the former spouse is entitled to retain a share of the balance of the term of copyright as a community property share, this would seem to conflict with federal law which indicates to the contrary since a former spouse is not one of the specifically enumerated classes of parties entitled to terminate transfers and accede to the rights to the balance of the duration of copyright.
Among the many issues involved in this area is whether the termination right is an expectancy, as the language of the federal “renewal rights” cases state (see these cases discussed in “Divorce and Copyright”) or is a contingent interest. In the case of In Re: Marriage of Brown (15 C. 3d. 838) the California Supreme Court ruled that benefits that had not yet vested were not “expectancies” but “contingent property interests” and thus were community property. If these termination of transfer rights are merely an expectancy, then if they have not vested by the time of the divorce, then one could argue that the divorced spouse would not be entitled to a community property share of the termination rights since they were not community property. Thus there would be no conflict between state and federal law. On the other hand, if the termination rights are not a mere expectancy but a contingent interest, then perhaps they are community property and thus the termination rights might exist only as to the author’s half. But that would appear to conflict with federal law since it would provide the divorced spouse with 50% as community property even though, when the termination rights arise, a divorced spouse would not be entitled to any such interest under those statutes.
Similar issues arise in the context of estate issues should the testator have left copyright interests including interests in agreements that might be terminable to parties other than the ones set forth in the copyright statute. Again, read “Dying and Copyright” on my site.
This article is in many senses speculative since the case law interpreting the issues is far from clear and there are no cases dealing with these issues in regard to termination of transfer issues.
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