Opinion ID: 779794
Heading Depth: 2
Heading Rank: 3

Heading: Application of Section 304(c) of the 1976 Act

Text: 46 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. 47 Simon contends that the district court's failure to give effect to § 304(c)'s mandate that authors can terminate copyright grants notwithstanding any agreement to the contrary contravenes the legislative intent and purpose of § 304(c). Further, because Simon has submitted testimony that he was not in fact an employee for hire when he created the Captain Marvel character, he maintains that a genuine issue of material fact exists regarding Marvel's claims that the Termination Notices are invalid and it is the sole owner of the copyright in the Works. Marvel's only response to Simon's contentions is that if Simon's reading of the statute is upheld, no litigation concerning a claim to authorship could ever be resolved by settlement. We find Simon's arguments persuasive and Marvel's prediction unfounded. 48 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). 49 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. 50 The Supreme Court has elucidated the intent and purpose behind the termination provision of the 1976 Act: 51 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. 52 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.). 53 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. 54 This view finds support in Nimmer on Copyright: 55 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. 56 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. 57 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). 58 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). 59 Contrary to Marvel's dire prediction about an expansive interpretation of § 304(c), we believe that parties will still be able to resolve their authorship disputes by settlement. If parties intend to preclude any future litigation regarding authorship by settling their claims, they need only comply with the requirements of collateral estoppel by filing a detailed stipulation of settlement, complete with sufficient factual findings on authorship, with the court. Furthermore, when the relationship between parties has deteriorated to the point of litigation, presumably all parties are represented by counsel. Accordingly, the need to protect ill-advised authors from publishers or other more sophisticated entities — the policy concern underlying § 304(c) — is no longer present. 60 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).