Peter Mayer Publishers Inc. v. Shilovskaya

• Decision Date: 31 March 2014
• Docket Number: No. 12 Civ. 8867PGG.,12 Civ. 8867PGG.
• Citation: 11 F.Supp.3d 421,110 U.S.P.Q.2d 1396
• Parties: PETER MAYER PUBLISHERS INC. d/b/a Overlook Press, Plaintiff, v. Daria SHILOVSKAYA and Sergey Shilovskiy, Defendants.
• Court: U.S. District Court — Southern District of New York

11 F.Supp.3d 421

110 U.S.P.Q.2d 1396

PETER MAYER PUBLISHERS INC. d/b/a Overlook Press, Plaintiff

v.Daria SHILOVSKAYA and Sergey Shilovskiy, Defendants.

No. 12 Civ. 8867PGG.

United States District Court, S.D. New York.

Signed March 31, 2014.

David S. Korzenik, Ramona Houck, Miller Korzenik Sommers, New York, NY, for Plaintiff.

Timothy M. O'Donnell, Solo Practitioner, New York, NY, for Defendants.

MEMORANDUM OPINION & ORDER

PAUL G. GARDEPHE, District Judge.

This is a declaratory judgment action that involves a copyright dispute. In 1995, Ardis Publishers, the predecessor-in-interest to Plaintiff Peter Mayer Publishers, Inc., d/b/a Overlook Press, secured a copyright to the English translation (“the Translation”) of The Master and Margarita (“the Work”), a Russian novel written by Mikhail Bulgakov. The Work had fallen into the public domain for failure to comply with the formalities of the United States Copyright Act. Plaintiff, or its predecessor-in-interest, has been publishing the Translation in printed form since that time. Plaintiff now seeks a declaratory judgment confirming its right to publish the Translation in electronic book (“eBook”) form.

Defendants Daria Shilovskaya and Sergey Shilovskiy—Bulgakov's descendants—oppose Plaintiff's request. They hold a restored copyright interest in the Work as a result of the Uruguay Round Agreements Act (“URAA”). The URAA, codified at Section 104A of the Copyright Act, restored copyrights to certain foreign works, but also offered safeguards to those who, like Plaintiff, had relied on the public domain status of those works. Defendants acknowledge Plaintiff's right under Section 104A to continue publishing the print version of the Translation. They argue, however, that an eBook version of the Translation would constitute a new “derivative work” and therefore infringe on their restored copyright.

Accordingly, this Court must decide whether an eBook version of the Translation constitutes a new derivative work for purposes of Section 104A(d)(3)(B) of the Copyright Act. For the reasons set forth below, the Court determines that it does not. Plaintiff's motion for summary judgment will therefore be granted.

BACKGROUND

Bulgakov wrote the Work, which critics have lauded as one of the greatest novels of the twentieth century, sometime before his death in 1940. (Joint Stipulation (“Joint Stip.”) (Dkt. No. 15–1) ¶ 5) The Work offers a phantasmagorical view of life in Stalinist Russia. (Id. ) Although fiction, Russian authorities suppressed its publication. (Id. ) The Work was not published until 1968 when Bulgakov's heirs—predecessors-in-interest to Defendants—authorized its publication in France. (Id. ¶ 6)

Because Bulgakov's heirs did not comply with the formalities of American copyright law, the Work entered the public domain when it was initially published. (Id. ¶ 7) In 1989, Ardis Publishers (“Ardis”), predecessors-in-interest to Plaintiff, commissioned the English-language Translation. (Id. ¶ 9) Ardis registered a copyright for the Translation in 1995 and began publishing it in hardcover and paperback. (Id. ¶ 10–11) In 1999, Ardis licensed the print publication rights to the Vintage division of Random House, Inc., and Vintage continues to publish the Translation in paperback. (Id. ¶ 12) Plaintiff succeeded to all rights in the Translation when it purchased Ardis in 2001. (Id. ¶ 8) No electronic version of the Translation currently exists. (Id. ¶ 13)

In 1994, Congress enacted the Uruguay Round Agreements Act. (Id. ¶ 18) The URAA amended Section 104A of the Copyright Act to restore U.S. copyright protection to many foreign works then in the public domain, including Bulgakov's The Master and Margarita. (Id. ¶¶ 18–19) For restoration of copyright protection, Section 104A requires, inter alia, that (1) at the time the work was created, at least one of its authors was a native or domiciliary of an eligible source country; (2) the work was not in the public domain in the eligible source country due to expiration of the protection period; and (3) the work was in the public domain of the United States on the date of the URAA's enactment for one of three reasons: (i) failure to comply with statutory formalities, (ii) lack of protection for sound recordings prior to 1972, or (iii) lack of a copyright relationship between the United States and the country of production at the time of publication. See 17 U.S.C. § 104A(h)(6)(B)-(D). Because the Work met these conditions, its copyright was restored as of January 1, 1996, the URAA's effective date. (Joint Stip. (Dkt. No. 15–1) ¶¶ 20–21); 17 U.S.C. 104A(h)(2)(A). Defendant Shilovskaya filed a Notice of Intent to Enforce the restored copyright on July 31, 1997. (Joint Stip. (Dkt. No. 15–1) ¶ 20)

While Section 104A restored copyright protection to many foreign works, the statute also offered certain safeguards and benefits to parties who had previously relied on the public domain status of those works.¹ See 17 U.S.C. § 104A(h)(4). First, Section 104A “imposed no liability for any use of foreign works occurring before restoration.” Golan, 132 S.Ct. at 883. Second, the statute permitted “reliance parties” to continue to exploit a restored work until the owner of the restored copyright gave notice of an intent to enforce the copyright. Id. (citing 17 U.S.C. § 104A(c), (d)(2)(A)(i) ). Finally, those parties who, like Plaintiff, created a “derivative work,” are allowed to continue to exploit that work indefinitely as long as they pay the copyright holder “reasonable compensation.” Id. (citing 17 U.S.C. § 104A(d)(3) ).

Here, Plaintiff has compensated Defendants in connection with its publication of the Translation in print form. (Def. 56.1 Stmt. (Dkt. No. 20) ¶ 6). Plaintiff now intends to publish an eBook version of the Translation. (Joint Stip. (Dkt. No. 15–1) ¶ 14). Defendants contend that Plaintiffs reliance interest in the Translation does not extend to an eBook version of the Translation, because an eBook version would constitute an entirely new derivative work. (Id. ¶ 27)

Plaintiff asks this Court for a declaration that an eBook version of the Translation would not constitute a new derivative work under the Copyright Act. In the event that this Court issues a declaratory judgment in Plaintiff's favor, both sides request that this Court also determine the reasonable compensation amount under Section 104A(d)(3)(B). (Joint Stip. (Dkt. No. 15–1) ¶ 29)

DISCUSSION

I. LEGAL STANDARD

“A court may properly address the merits of a declaratory judgment action through a motion for summary judgment.” Middlesex Ins. Co. v. Mara, 699 F.Supp.2d 439, 444 (D.Conn.2010). Summary judgment is warranted when the moving party shows that “there is no genuine issue as to any material fact” and that it “is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A dispute about a ‘genuine issue’ exists for summary judgment purposes where the evidence is such that a reasonable jury could decide in the non-movant's favor.” Beyer v. Cnty. of Nassau, 524 F.3d 160, 163 (2d Cir.2008). In deciding a summary judgment motion, the Court “resolve [s] all ambiguities, and credit[s] all factual inferences that could rationally be drawn, in favor of the party opposing summary judgment.” Cifra v. Gen. Elec. Co., 252 F.3d 205, 216 (2d Cir.2001). However, “a party may not ‘rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment.’ ” Lipton v. Nature Co., 71 F.3d 464, 469 (2d Cir.1995) (quoting Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 12 (2d Cir.1986) ).

II. THE PROPOSED EBOOK IS NOT A NEW DERIVATIVE WORK AND WOULD NOT INFRINGE ON DEFENDANTS' RESTORED COPYRIGHT

The Berne Convention for the Protection of Literary and Artistic Works is the primary international agreement governing copyright relations. Golan, 132 S.Ct. at 877. Although the Berne Convention took effect in 1886, the United States did not recognize the Convention until 1989. Id. In 1994, in order to fulfill this nation's obligations under the Convention, Congress enacted a statute giving foreign copyrighted works the same protections that U.S. copyrighted works enjoy. Id. at 877–78. These protections are set forth in Section 514 of the Uruguay Rounds Agreement Act, which is codified at Section 104A of the Copyright Act. Id. at 878 ; see 17 U.S.C. § 104A.

Prior to the URAA's passage, Bulgakov's The Master and Margarita had never been registered in the United States. Consequently, it had fallen into the public domain. (Joint Stip. (Dkt. No. 15–1) ¶ 7) The parties agree that Section 104A(h)(6) restored the Work's copyright status. (Id. ¶ 19) That Section provides:

[t]he term “restored work” means an original work of authorship that ... is in the public domain in the United States due to noncompliance with formalities imposed at any time by United States copyright law, including failure of renewal, lack of proper notice, or failure to comply with any manufacturing requirements[.]

17 U.S.C. § 104A(h)(6)(C)(i).

The parties also agree that Defendants are the rightful owners of the restored copyright in the Work. (Joint Stip. (Dkt. No. 15–1) ¶ 21) “A restored work vests initially in the author or initial rightholder of the work as determined by the law of the source country of the work.” 17 U.S.C. § 104A(b). “Copyright subsists, in accordance with this section, in restored works, and vests automatically on the date of restoration.” Id § 104A(a)(1)(A). “The ‘date of restoration’ of a restored copyright is ... January 1, 1996 ...” Id § 104A(h)(2). Under Russian law, Defendants are the initial rightholders of the Work, and on January 1, 1996, they became the sole owners of the restored United States copyright. (Joint Stip. (Dkt. No. 15–1) ¶¶ 15, 21)

In restoring copyright protection for certain foreign works that had entered the public domain, Congress provided a safe harbor for those who had created “derivative works” based on these foreign works. Section 104A defines these “reliance...