Court Opinion

ID: 8915477
Source: CourtListenerOpinion
Date Created: 2022-11-27 04:51:01.248464+00
Date Added: 2024-06-11T17:08:56.435609
License: Public Domain

NEWMAN, Circuit Judge,
concurring:
I concur in the result and in all of Judge Kearse’s comprehensive opinion for the Court, except Part IIA. The Court there holds that the plaintiffs’ attempt to terminate MGM’s right to use the character Tarzan in a remake of the 1932 film was ineffective because the plaintiffs’ notice of termination of rights, pursuant to § 101 of the new Copyright Act, 17 U.S.C. § 304(c) (1976), which listed 35 titles including Tarzan of the Apes, omitted five other titles in which the character of Tarzan appears. In my view, omission of the five titles from the notice the Burroughs’ heirs gave to Edgar Rice Burroughs, Inc. (ERB, Inc.) is irrelevant to the issues in this case, but the attempted termination of MGM’s rights is otherwise ineffective because the heirs failed to give notice of termination to MGM.
1. I accept the majority’s premise that the omission of the five titles from the termination notice the heirs gave to ERB, Inc. left the corporation with the same rights it would have had if the 1923 grant from Burroughs had conveyed rights in only those five titles. But I cannot agree with the conclusion that the Corporation, as grantee of copyright in the five omitted titles, would have been able to convey to MGM any right under copyright to the character Tarzan. This conclusion fails to reckon with the fundamental principle of copyright law that a proprietor’s copyright protects only what is original with the proprietor or his grantor. See 1 Nimmer on Copyright § 2.01 (1981). On the assumption that the character Tarzan is sufficiently delineated to support a copyright, cf. Nichols v. Universal Pictures Corp., 45 F.2d 119 (2d Cir. 1930), cert. denied, 282 U.S. 902, 51 S.Ct. 216, 75 L.Ed. 795 (1931), there is no dispute that the delineation was complete upon the 1912 appearance of the first Tarzan title Tarzan of the Apes. Subsequent titles, including the omitted five, contained original exploits of Tarzan, but were not original with respect to the character itself. As to the character Tarzan, the subsequent titles were sequels, “subsequent stories employing the same eharacter[ ],” Goodis v. United Artists Television, Inc., 425 F.2d 397, 406 (1970) (Waterman, J., with whom Kaufman, J. joins, concurring). Without doubt, as the majority points out, the grant of rights to a work that contains material protected by the grantor’s copyright in an earlier work implicitly authorizes use of all material in the granted work. The grantee of copyright in a collective work, for example,1 can make use of all of the material in it, including a chapter originally created as a separate item and protected by the author’s copyright. But the copyright protection of such use is limited to the use of the work as a collective work; it does not include authority to take a previously copyrighted chapter and deal with it as one’s *632own. For example, the proprietor of copyright in a collective work cannot enjoy or convey to a third party, the right to publish separately, or to create a derivative work based on, a single chapter in which the author of the chapter retained his copyright interest.2 Or, as Professor Nimmer expresses it, viewing the matter from the perspective of what interests are protectable, “[Cjopyright in a derivative or collective work merely protects against copying or otherwise infringing the particular compilation of arrangement of a collective work, or the original contribution contained in the derivative work.” 1 Nimmer, supra, § 3.04, at 3-12 to 3-13.
In this case, had Burroughs granted to his Corporation only the five missing titles, the Corporation could “use” each of those works as an entity. However, since the character Tarzan is not an original work of authorship in any of those five titles, the copyright proprietor of those works would have no interest under copyright law to use the character Tarzan distinct from the five stories and consequently could not convey sequel rights to MGM to create an original story, and thereafter a film and a remake, based on the character Tarzan.
When Burroughs granted to the Corporation the rights to Tarzan of the Apes, he conveyed a copyright interest in the character Tarzan.3 Section 101(c)(6) of the Act, 17 U.S.C. § 304(c)(6), provides that upon the effective date of termination, “all of a particular author’s rights under this title that were covered by the terminated grant revert” to those owning the author’s interest in the extended renewal term, in this case, the heirs. At least as between the heirs and the Corporation, the termination notice, by including Tarzan of the Apes among the 35 listed titles, effectively restored to the heirs all of their copyright interest in that work, including the character Tarzan.
Even if the contract between the Corporation and MGM conveyed some rights to the character Tarzan protectable under state law concerning contracts or unfair competition, such state law cannot impair the paramount federal provision of the 1976 Copyright Act permitting an author’s heirs to enjoy rights under copyright law for the 19-year extended renewal term created by the Act. Though the issue is not free from doubt,4 I conclude that the omission of the five titles did not prevent the heirs from securing an extended renewal term to the copyright in the character Tarzan. I therefore confront the further issue of whether the heirs’ failure to serve the termination notice upon MGM renders the notice ineffective to divest MGM of its license to use the character Tarzan in a remake of the 1932 film. That issue requires further con*633sideration of the Act and the pertinent regulations.
2. The Copyright Act introduces two new provisions affording authors or their heirs a second chance to exploit the commercial value of a work in recognition of the fact that an initial grant of rights frequently fails to realize fair compensation. As to rights conveyed prior to January 1, 1978, the Act creates an extended renewal term of 19 years and permits the author or his heirs to recapture rights previously granted and enjoy them during the newly created term. 17 U.S.C. § 304(c). As to rights conveyed after January 1, 1978, the Act permits termination of the grant after 35 years and enjoyment of the recaptured rights for the balance of the term of the copyright. 17 U.S.C. § 203. Exercise of rights under either provision requires service of a notice of termination upon “the grantee or the grantee’s successor in title.” §§ 203(a)(4), 304(c)(4). As to § 304(c) terminations of extended term renewal rights, but not as to § 203 terminations of rights conveyed after 1978, the regulations provide an investigation procedure that will satisfy the statutory notice requirement.5 37 C.F.R. § 201.10(d)(2) and (d)(4) (1981). The (d)(2) provision specifies that the service requirement of the statute “will be satisfied” upon compliance with two conditions: making a “reasonable investigation” as to the current ownership of the rights being terminated, and serving the notice on the person to whom “there is reason to believe” the rights being terminated have been transferred by the grantee. The (d)(4) provision specifies that the failure to comply with the (d)(2) provision “will not affect the validity of the service.” 6
It is simply not clear from the statute or the regulations who must receive notice of termination, and the legislative history offers no guidance. The Act does not define “successor in title,” a phrase appearing nowhere else in the statute. The heirs contend that “successor in title” means transferee of some exclusive right. They also contend that even if MGM were a “successor in title” by virtue of its 1931 receipt of a non-exclusive license, § 304(c) gives the person seeking to terminate rights an option to serve either the grantee, which they assert is ERB, Inc., or the successor in title. MGM contends that it is either a grantee or a successor in title and that the Act does not create an option as to service but requires service upon anyone holding whatever rights are sought to be terminated. The District Court ruled that service of notice upon MGM was required in this case because of the heirs’ close connection with the Corporation and because the heirs were or should have been aware of MGM’s rights. 519 F.Supp. at 393, adopting ruling made on motion for preliminary injunction, 491 F.Supp. at 1325.
The positions of the parties represent the extremes of interpretation. Under the heirs’ view, an author could set up a corporation to own and license his copyright and then effectively exercise his termination-rights simply by serving notice upon his corporation, without giving notice to any of *634the third parties to whom his corporation may have conveyed a license, an assignment of one of more of the exclusive rights of copyright,7 or even an assignment of all the rights in the copyright. This is the result of interpreting “or” in the phrase “grantee or successor in title” to give an author’s heirs a choice to serve either the author’s grantee or the transferee of some or all of the grantee’s rights.8 Under MGM’s view, an author who sold his copyright for a small sum and later sought to terminate rights in the extended renewal term being exercised by non-exclusive licensees of his grantee would be required to serve notice upon such licensees. Though the statute provides few guides to its meaning, I do not find either of these extreme positions consistent with the purposes of the Act.
MGM’s position interprets the phrase “successor in title” to include a non-exclusive licensee of an author’s grantee. Though MGM suggests, without providing a reasoned ground of distinction, that such an interpretation need not cover all the numerous non-exclusive licensees of a performing arts society, it does insist that it is a “successor in title” as a non-exclusive licensee of rights that Burroughs conveyed to ERB, Inc. This reading is not persuasive. In the absence of some indication that non-exclusive licensees were to be included, it is unlikely that Congress intended such broad coverage within a phrase that suggests ownership of rights more substantial than a non-exclusive license. Having used the words “transfer” and “license” to describe the grants subject to termination, Congress could reasonably have been expected to use the words “transferee” and “licensee” in the notice provisions if it meant to cover all persons who take any rights from the author’s grantee. Some more limited meaning is suggested by the phrase “successor in title.”
The pertinent regulations offer a plausible clue to interpretation. 87 C.F.R. § 201.-10(d)(2), in providing for reasonable investigation of current “ownership” of the rights sought to be terminated as a means of satisfying the statutory notice requirement, refers to grounds for believing that the rights “have been transferred by the grantee to a particular successor in title.” This suggests that rights capable of being transferred to a “successor in title” are those included in the Act’s definition of “transfer of copyright ownership,” which includes assignments and exclusive licenses and excludes non-exclusive licenses. 17 U.S.C. § 101.9 Interpreting “successor in title” to include all assignees and exclusive licensees but to exclude non-exclusive licensees makes tolerable the notice burden upon those exercising termination rights. MGM, as a non-exclusive licensee of the right to use the character Tarzan in an original screenplay, was not required to be served as a “successor in title.”
More persuasive is MGM’s contention that in the circumstances of this case it should be considered for purposes of receiving notice as if it were a grantee directly *635from the author. The purpose of the termination provisions is to afford authors or their heirs a second opportunity to exploit rights previously conveyed at a price inadequate in light of the work’s subsequent success. That purpose is not served by treating as the “grantee” for purposes of the notice provisions a family-owned corporation to which the author has conveyed his copyright. When Burroughs transferred his copyrights to ERB, Inc., he was not negotiating for value at any price, whether fair or inadequate; he was simply facilitating the marketing of rights for the benefit of himself and his family. Without question he was entitled to do this. And, though not necessary to carry out the statutory purpose, it is plausible to permit the author or his heirs to terminate rights previously granted to a family corporation. But since non-exclusive licensees of an author’s grantee are left at some risk because they normally need not be served with notice of termination, that risk should be no more extensive than is required to achieve the “second chance” purpose of the terminations provisions.10 Specifically, when an author like Burroughs has not in any realistic sense bargained away his rights by transferring them to his family corporation, non-exclusive licensees of that corporation should not bear the risk that their rights were terminated by service of notice solely upon the corporation. By giving such limited notice, the heirs were, in Judge Werker’s words, “essentially serving themselves.” 491 F.Supp. at 1325.11 At a minimum, the heirs were obliged to serve MGM, as the realistic “grantee” of Burroughs, in the circumstances of this case where, as Judge Werker ruled, the existence of MGM’s rights was or should have been well known to the Burroughs heirs who signed the notice. In 1962, their family corporation was involved in prior litigation with MGM concerning MGM’s first remake of the 1932 film, Edgar Rice Burroughs, Inc. v. Metro-Goldwyn-Mayer, Inc., 205 Cal.App.2d 441, 23 Cal.Rptr. 14 (2d Dist. 1962). I conclude that termination of MGM’s rights under copyright, conveyed under the 1931 contract, required service of the notice of termination upon MGM. For lack of such service, the heirs failed to recapture from MGM its sequel right to use the character Tarzan in a remake of the 1932 film.

. A collective work, which by definition contains separate “works” capable of supporting a copyright interest, 17 U.S.C. § 101 (1976), is not precisely analogous to a subsequent Tarzan story containing the character Tarzan, because the original new exploits and the unoriginal character are not “separate and independent” works within the definition of a “collective work.” Nevertheless, for analytical purposes, the analogy is close enough to warrant consideration of the use a grantee of copyright in a collective work (or a derivative work) can make of the unoriginal portions contained within the collective work.

. Cf. G. Ricordi & Co. v. Paramount Pictures, Inc., 189 F.2d 469 (2d Cir. 1951), in which the plaintiff, proprietor of copyright in an opera derived from a copyrighted novel, was prevented from asserting motion picture rights to the opera to the extent that such rights would infringe the copyright in the novel. The proprietor “is not entitled to make general use of the novel for a motion picture version of [the novel]; it must be restricted to what was copyrightable as new matter in its operatic version.” Id. at 471.

. There is no occasion in this litigation to consider the intriguing question whether a grant of rights to a book in which a well-delineated character first appears constitutes a relinquishment by the author of his own “sequel” rights to reuse his original character, or whether, at least as between the creator of a character and the creator’s grantee, an author retains his own sequel rights, in addition to sequel rights conveyed to his grantee, at least in the absence of an explicit relinquishment of such personal rights.

. See 3 M. Nimmer, Nimmer on Copyright, ¶ 11.06[B], at 11-40 n.33 (1981), suggesting that the District Court “may have been correct” in concluding that omission of the five titles did not effectively terminate MGM’s right to use the character Tarzan. Professor Nimmer notes that the “grant” was only as to the right to use the characters but not the stories in which they appeared. The grant, as contained in the 1931 contract, effectively conveyed to MGM the right to use the characters because the grantor, ERB, Inc., held rights to all of the works in which each of those characters made a first appearance. The fact that the grant to MGM concerned only use of characters does not determine whether any right under copyright to such characters was conveyed by referring in the grant to the five titles in which Tarzan and some of the other characters did not first appear.

. Application of the “reasonable investigation” provision only to § 304(c) terminations has been characterized by a noted commentator as “rather odd.” 3 Nimmer § 11.06[B], at 11-39 n.29.3. Perhaps the Copyright Office was recognizing that an author making grants before 1978 could not be expected to anticipate the new Act’s extended renewal term provision and therefore had no reason to make any provision in his grant requiring his grantee to inform him or his heirs of the identity of transferees of the grantee on whom notice should be served. Grants made after 1978, subject to termination under § 203, could include such provisions; hence the ameliorating effect of the “reasonable investigation” technique for complying with the notice requirement was not as necessary.

. It is not readily apparent what the Copyright Office had in mind in providing that serving a termination notice upon a transferee of rights identified by reasonable investigation will satisfy the service requirement of the statute and also providing that not serving the notice upon such a transferee will not affect the validity of the service. Perhaps the (d)(4) provision means that failure to investigate the existence of transferees and serve those identified does not affect the validity of the service that has been made upon the initial grantee, but that such failure renders the notice ineffective to terminate the rights held by the grantee’s transferee.

. The heirs express doubt that the holder of rights subject to termination could own less than all of the rights included in a grant of copyright, relying on the pre-Act doctrine of indivisibility of copyright. But “successor in title” cannot mean only a person owning all rights in a copyright because the same phrase is used in § 203(a)(4) to describe the recipient of notice of termination of post-1978 grants, which clearly are divisible, 17 U.S.C. § 201(d)(2) (“Any of the exclusive rights comprised in copyright ... may be transferred . .. and owned separately”).

. Whatever the meaning of “grantee” and “successor in title” in the notice termination provision, it seems evident that their expression in the disjunctive was intended to cover various contingencies, not to afford those exercising termination rights a choice as to whom to serve. The statute is sensibly read to mean that notice is to be served (a) on the grantee, if the grantee has retained all rights originally conveyed, (b) on the transferee, if the grantee has conveyed all rights to a transferee, or (c) if only some rights have been conveyed, on the grantee or the transferee (or both) depending upon which rights are sought to be terminated. See 3 Nimmer § 11.06[B], at 11-39 to -40.

. The regulation also makes clear that a “successor in title” is someone to whom rights have been transferred by the grantee, thereby precluding a narrow interpretation that would limit the phrase to those who succeed to rights only by inheritance.

. The heirs contend that whatever risk nonexclusive licensees of an author’s grantee face in having their rights terminated without service of notice upon them is satisfactorily minimized by constructive notice. The Act requires that notice of termination “shall be recorded in the Copyright Office before the effective date of termination, as a condition of its taking effect,” § 304(c)(4)(A), and provides that proper recordation “gives all persons constructive notice of the facts stated in the recorded document,” § 205(c). While constructive notice has to be relied upon by non-exclusive licensees from a grantee to whom the author bargained away his copyright, there is no reason to press the statutory scheme to its limit and rely on constructive notice for a non-exclusive licensee like MGM, which is realistically as entitled to actual notice as if Burroughs had conveyed the license directly to it, instead of using the intermediary of his family corporation.

. Requiring actual notice to all licensees from an author’s family corporation does not detract from the legitimacy of the corporation for all of the normal purposes of corporation law. It simply disregards the corporate structure for the limited purpose of determining proper recipients of notice under a novel statute that permits return to an author or his heirs of rights previously conveyed.