Court Opinion

ID: 9497873
Source: CourtListenerOpinion
Date Created: 2023-08-05 17:02:16.919607+00
Date Added: 2024-06-11T17:58:28.387916
License: Public Domain

BERZON, Circuit Judge,
with whom REINHARDT, Circuit Judge, joins, dissenting:
I respectfully dissent. Applying the usual mode of analysis used in this circuit for determining whether a statute allows assignment of claims, I would conclude that Nancey Silvers, as the original creator *891of “The Other Woman,” should be allowed to pursue the accrued causes of action that Frank & Bob Films II assigned to her.
Section 501(b) of the 1976 Copyright Act establishes the standing requirement for infringement actions:
The legal or beneficial owner of an exclusive right under a copyright is entitled, subject to the requirements of section 411, to institute an action for any infringement of that particular right committed while he or she is the owner of it.
17 U.S.C. § 501(b). The majority relies on the notion that “[t]he meaning of that provision appears clear,” ante at 884, to conclude that the assignment to Silvers is invalid because she does not own an exclusive right under the copyright. Ante at 890.
The majority opinion, however, is internally inconsistent, provides inadequate support for its conclusion, and ignores our analogous precedents.
1. The inconsistency turns on the majority’s citation of § 501(b)’s durational limitation, i.e., that the owner is not entitled to sue unless the alleged infringement occurred “while he or she [was] the owner of [the copyright right],” as evidence of Congress’s tight circumscription of persons who have standing to sue. Ante at 885-86. The majority maintains that “Congress’ explicit listing of who may sue for copyright infringement should be understood as an exclusion of others from suing for infringement.” Ante at 885.
As the majority later acknowledges, however, the durational limitation is hardly airtight. After a copyright holder sells a copyright, in whole or in part, the new owner may pursue a cause of action that accrued before purchase, as long as the cause of action is transferred along with the copyright. Ante at 890, fn. 1. The majority maintains that this “makes per-feet sense,” because “[w]hen one acquires a copyright that has been infringed, one is acquiring a copyright whose value has been impaired,” and “[e]onsequently, to receive maximum value for the impaired copyright, one must also convey the right to recover the value of the impairment by instituting a copyright action.” Ante at 890, fn. 1.
However practical this analysis, the fact remains that it cannot be squared with a literal reading of section 501(b), on which the majority otherwise rests. And, as the language of section 501(b) is not necessarily determinative in deciding the viability of assignments of accrued rights to sue for copyright infringement, section 501(b) cannot, absent further analysis, dictate the majority’s conclusion that no assignment of accrued causes of action without transfer of the underlying copyright is permissible.
2. If the language of § 501(b) is not determinative, then what is? I agree with Judge Bea that the assumption that background common law principles apply with regard to assignment of accrued causes of action applies to the Copyright Act as to other federal statutes. Post at 901-03. I part company with Judge Bea, however, at the point at which he suggests that an entirely free market for accrued causes of action in copyright is the proper antidote to the majority’s preclusion of effective transfer of such accrued causes of action. Post at 905. Instead, I would hold that Silvers, given her status as the original creator of the contested “work-for-hire,” may pursue the accrued claims assigned by Frank & Bob Films, while a complete stranger to the creative process could not.
Contrary to the majority’s strict statutory approach, the question of valid assignment “is appropriate for the development *892of interstitial federal common law [to ensure] harmony with the overall purposes of the [Copyright Act].” Gulfstream III Assocs. v. Gulfstream Aerospace Corp., 995 F.2d 425, 438 (3d Cir.1993). Our circuit’s precedents support this approach to the general question of whether claims created by federal statute are assignable. In particular, this circuit’s cases deciding whether to enforce assignments of Employee Retirement Income Security Act (“ERISA”) claims, which focus on whether “the general goal of the statute would be served by prohibiting the type of assignments involved in th[e] case,” Misic v. Bldg. Serv. Employees Health & Welfare Trust, 789 F.2d 1374, 1377 (9th Cir.1986) (per curiam), provide a helpful analog for consideration of Silvers’ case.
Misic decided that a health care provider, assigned accrued causes of action for health welfare benefits by his patients, could pursue his ERISA lawsuit. Our analysis proceeded in two steps. First, we reviewed the statutory text to decide whether ERISA permitted assignment of the claims for reimbursement of welfare benefits. Id. at 1376-77. The statute specifically precludes assignment or alienation of pension benefits, but is silent as to assignment of welfare benefits.1 We interpreted ERISA’s silence on assignment in the welfare benefit plan context, in light of the explicit anti-assignment provision for pension claims, to allow assignment of welfare claims, because “[n]either the specific purpose of the anti-assignment provision nor the general goal of the statute would be served by prohibiting the type of assignment involved in [the] case.” Id. at 1377 (emphases added).
Second, we decided that the assignee, Misic, had standing to sue, even though the statutory provision authorizing suit identified only “participants, beneficiaries, fiduciaries, and the Secretary of Labor” as the parties with standing bring suit.2 Id. at 1378 (citing 29 U.S.C. § 1132(a)). Unlike the majority in this case, we did not consider the statutory language determinative on the question of assignability of accrued causes of action. Instead, we looked to the relevant statute to determine whether the assignors had standing, not to decide whether to honor the assignment. We concluded that the assignment was permissible because “Dr. Misic ‘st[ood] in the shoes of the [b]eneficiaries;’ and Dr. Misic’s assignors, beneficiaries under the Act [were] expressly authorized by[the statute] to sue to recover benefits due under a plan.” Id. (emphasis added, second alteration in original).
We took the same general approach, albeit with the opposite result, in Simon v. Value Behavioral Health, Inc., 208 F.3d 1073 (9th Cir.2000). Although we read Misic to allow assignment to healthcare providers, we refused in Simon to honor the assignment of claims from “health care providers to whom the beneficiaries origi*893nally assigned their claims.” Id. at 1081. Simon explains that in Misic,
we granted derivative standing to health care providers not because we believed that federal common law on derivative standing trumps the plain language of [the statute]. We granted it because permitting health care providers to sue in place of the beneficiaries they had treated was consistent with Congressional intent in enacting ERISA.
Id. Our decision to disallow assignment of claims by health care providers was related to underlying public policy concerns, as “granting] Simon standing would[have] be[en] tantamount to transforming health benefit claims into a freely tradable commodity.” Id. Predicting that the opposite result “would allow third parties with no relationship to the beneficiary to acquire claims solely for the purpose of litigating them,” we declined to recognize the assignment as it was unclear “how such a result would further ERISA’s purpose.” Id.
Both this circuit and others have used similar policy-based analyses in deciding whether assignments of other federal statutory claims were valid. See, e.g., Simon, 208 F.3d at 1082-83 (antitrust claim under the Clayton act); Klamath Lake Pharm. Ass’n v. Klamath Med. Serv. Bureau, 701 F.2d 1276 (9th Cir.1983) (considering the background rule that only a real party in interest may prosecute claims in federal court to hold that an assignment was valid); Pac. Coast Agric. Export Ass’n v. Sunkist Growers, Inc., 526 F.2d 1196 (9th Cir.1975); see also Tex. Life, Accident, Health & Hosp. Serv. Ins. Guar. Ass’n v. Gaylord Entm’t Group, 105 F.3d 210, 215 (5th Cir.1997) (using Misic’s approach to consider whether “derivative standing to assignees of breach of fiduciary duty claims ... [would] frustrate ERISA’s purpose”). I would do so here as well.
3. I turn, therefore, to whether Frank & Bob Films’ assignment of the accrued cause of action to Silvers, the original creator of “The Other Woman,” should be permitted under 17 U.S.C. § 501(b).
As the majority makes clear, Silvers is not the owner of the copyright and therefore would not ordinarily be permitted to pursue a copyright infringement claim. Following our approach in the ERISA cases discussed above, the relevant inquiry is whether recognition of the assignment to Silvers is consistent with Congress’ overall intent in enacting the 1976 Copyright Act.
The basic purpose of copyright is “to promote the creation and publication of free expression.” Eldred v. Ashcroft, 537 U.S. 186, 219, 123 S.Ct. 769, 154 L.Ed.2d 683 (2003). Congress has struck “a difficult balance between the interests of authors and inventors in the control and exploitation of their writings and discoveries on the one hand, and society’s competing interest in the free flow of ideas, information, and commerce on the other hand.” Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 429, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984). To achieve that balance, embedded in “the traditional contours of copyright protection,” Eldred, 537 U.S. at 221, 123 S.Ct. 769, are two major First Amendment protections: (1) as “between ideas and expression ... only the latter [is] eligible for copyright protection,” id. at 219, 123 S.Ct. 769; and (2) “the ‘fair use’ defense allows the public to use not only facts and ideas contained in a copyrighted work, but also expression itself in certain circumstances.” Id. (citing 17 U.S.C. § 107).
I see nothing in the assignment of accrued claims of Frank & Bob Films for infringement of a work created by Silvers to Silvers that violates these background principles. Silvers has a significant inter*894est in the infringement of “The Other Woman,” as she was the original creator. She might well herself have held the copyright had she not contracted with Frank & Bob Films to create a work-for-hire. Although she relinquished the right to the copyright through her contract with Frank & Bob Films, she maintained an interest in how her work was used. More importantly, Silvers, as the creator, is the person for whom the copyright system is designed to provide incentives for more creations.
In addition, allowing this assignment is consistent with “the need for free alienability and divisibility” of copyright. Gardner v. Nike, Inc., 279 F.3d 774, 781 (9th Cir.2002). It also conforms with “the necessity [of] preserving] the rights and control of ... owners and creators.” Id.
Supporting this result is the consideration, discussed above, that section 501(b)’s limitations have not been and should not be read as narrowly as possible. As noted, the majority makes clear that allowing a copyright owner to pursue claims that accrued before he held the copyright, once assigned along with the copyright, is eminently sensible. Ante at 890, fn. 1. I see no reason why allowing assignment to original creators of copyrighted works without the copyright would any more undermine the delicate balance that Congress has struck. Moreover, as Judge Bea notes, post at 900-01, Congress is perfectly capable of including anti-assignment provisions in federal statutory schemes, but declined to so in the 1976 Act.
I would hold, therefore, that Frank & Bob Films, for whom Silvers completed her work-for-hire, may assign its accrued causes of action related to that work-for-hire to Silvers.
4. The majority places significant weight on Crown Die & Tool Co. v. Nye Tool & Machine Works, 261 U.S. 24, 43 S.Ct. 254, 67 L.Ed. 516 (1923), dealing with a somewhat similar question under patent law. The differences between copyright and patent law, and between the nature of the assignment in Crown Die and this case, are significant enough to warrant a different result.
In general, “patents and copyrights do not entail the same exchange.” Eldred, 537 U.S. at 216, 123 S.Ct. 769. “The disclosure required by the Patent Act is ‘the quid pro quo of the right to exclude.’ ” J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int’l, Inc., 534 U.S. 124, 142, 122 S.Ct. 593, 151 L.Ed.2d 508 (2001) (quoting Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 484, 94 S.Ct. 1879, 40 L.Ed.2d 315 (1974)). “For the author seeking copyright protection, in contrast, disclosure is the desired objective, not something exacted from the author in exchange for the copyright.” Eldred, 537 U.S. at 216-17, 123 S.Ct. 769.
These distinctions are reflected in the rules governing suits for infringements of copyrights and patents. Patentees, for example, “should be joined, either voluntarily or involuntarily, in any infringement suit brought by an exclusive licensee.” Prima Tek II, L.L.C. v. A-Roo Co., 222 F.3d 1372, 1377 (Fed.Cir.2000) (emphasis added). This scheme differs markedly from that of copyright infringement suits, as a copyright holder may transfer the “ ‘exclusive’ rights to use and to authorize the use of his work in five qualified ways.”3 Sony Corp., 464 U.S. at 433, 104 S.Ct. 774 (citing 17 U.S.C. § 106). Once he does so, “[t]he *895owner of any particular exclusive right is entitled, to the extent of that right, to all of the protection and remedies accorded to the copyright owner.” 17 U.S.C. § 201(d)(2).
With these differences in mind, I do not find the majority’s reliance on Crown Die, 261 U.S. 24, 43 S.Ct. 254 (1923), persuasive in the current circumstances. The majority states that “Crown Die effectively creates a presumption that, when we consider standing under a statutory scheme involving intellectual property, common law doctrine does not apply.” Ante at 889-90. I find no support for such a broad statement, given the significant changes to copyright law since Crown Die was decided. Issuance of a copyright no longer “vest[s] an exclusive right in an author,” Wheaton v. Peters, 33 U.S. (8 Pet.) 591, 663, 8 L.Ed. 1055 (1834) (emphasis added), but several exclusive rights that the copyright holder may then divide infinitely. Furthermore, unlike an inventor who holds a patent, the original copyright holder need not remain involved in every infringement action brought under a copyright.
In addition, and critically, Crown Die dealt with a very different factual scenario than the one we have here. Reed Manufacturing, the patentee of a screw-thread cutting device invented by Wright and Hubbard, assigned its infringement claims against Crown Die & Tool Company to Nye Tool & Machine Works, a competitor of Crown Die. Crown Die, 261 U.S. at 25-26, 43 S.Ct. 254. The assignment would have been analogous to the one before us if Reed had assigned its claims to Wright and Hubbard, rather than to a competitor of Crown Die. Crown Die did not, therefore, decide the precise question we have before us.
A different result in Crown Die would not only have created significant tension with the nature of the monopoly that a patentee holds, but it would have made an accrued cause of action a commodity on an open market, permitting assignees without connection to the patented invention to pursue infringement claims, “with the sole motive of harassing [infringers].” Id at 39, 43 S.Ct. 254. That Nye and Crown Die were competitors could only have reinforced this concern.
The 1976 Act ushered in a new era of copyright law, while leaving in place the general principal goal of copyright: “to promote the creation and publication of free expression.” Eldred, 537 U.S. at 219, 123 S.Ct. 769. I find no reason why Frank & Bob’s Films’ assignment of accrued claims against Sony to Nancey Silvers does not comport with that goal. I respectfully dissent.

. ERISA provides:
Assignment or alienation of benefits
(1).Each pension plan shall provide that benefits provided under the plan may not be assigned or alienated.
(2) For the purposes of paragraph (1) of this subsection, there shall not be taken into account any voluntary and revocable assignment of not to exceed 10 percent of any benefit payment, or of any irrevocable assignment or alienation of benefits executed before September 2, 1974.
29 U.S.C. § 1056(d).

. The statute provided, in relevant part: "A civil action may be brought (1) by a participant or beneficiary ... (B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a) (emphasis added).

. As the majority notes, ante at 886-87, the 1976 Act’s legislative history indicates that "[ejach of the five enumerated rights may be subdivided indefinitely and, ... each subdivision of an exclusive right may be owned and enforced separately." H.R.Rep. No. 94-1476, at 61, reprinted in 1976 U.S.C.C.A.N. 5659, 5674 (emphases added).