60 F.3d 978 (2nd Cir. 1995), 571, Woods v. Bourne Co.

Docket Nº:571, Docket 94-7421.
Citation:60 F.3d 978
Party Name:35 U.S.P.Q.2d 1577 David D. WOODS, Florence L. Woods, Kristine Woods and Benjamin Woods, d/b/a Callicoon Music, Plaintiffs-Appellees, v. BOURNE CO., Defendant-Appellant, American Society of Composers, Authors and Publishers, Defendant.
Case Date:July 25, 1995
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

Page 978

60 F.3d 978 (2nd Cir. 1995)

35 U.S.P.Q.2d 1577

David D. WOODS, Florence L. Woods, Kristine Woods and

Benjamin Woods, d/b/a Callicoon Music, Plaintiffs-Appellees,


BOURNE CO., Defendant-Appellant,

American Society of Composers, Authors and Publishers, Defendant.

No. 571, Docket 94-7421.

United States Court of Appeals, Second Circuit

July 25, 1995

Argued Feb. 3, 1995.

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[Copyrighted Material Omitted]

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Robert C. Osterberg, New York City (Abeles Clark Osterberg and Prager, of counsel), for defendant-appellant.

Frederick F. Greenman, New York City (Deutsch Klagsbrun & Blasband, Alvin Deutsch, David Blasband, of counsel), for plaintiffs-appellees.

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Before: FEINBERG, CARDAMONE and McLAUGHLIN, Circuit Judges.

FEINBERG, Circuit Judge:

This appeal requires us to address conflicting claims to royalties generated by various uses of the song "When the Red, Red, Robin Comes Bob, Bob, Bobbin' Along" (the Song) during what is known in copyright law as an extended renewal term. Plaintiffs, heirs of song composer Harry Woods, and defendant Bourne Co., Woods's music publisher, both claim the right to receive certain royalties generated during this period. Essentially, plaintiffs claim that they are entitled to the royalties because they have exercised their statutory right to terminate the publisher's interests in the Song pursuant to 17 U.S.C. Sec. 304(c). Bourne maintains that the royalties belong to it because all the disputed post-termination uses of the Song are attributable to so-called derivative works, which were prepared under its authority prior to termination and which therefore do not revert to the author. 17 U.S.C. Sec. 304(c)(6)(A).

The royalties at issue were generated by several different uses of the Song following termination. These uses include (1) television performances of movies and television programs that incorporate the Song (hereafter sometimes referred to collectively as "audiovisual works"); (2) radio performances of sound recordings of the Song; and (3) sales of reprints of published arrangements. Following a bench trial before Judge Richard Owen in the United States District Court for the Southern District of New York, judgment was entered in March 1994 granting all the disputed royalties to plaintiffs-appellees. The opinion of the district court is reported at 841 F.Supp. 118.

The district court essentially reached its determination by analyzing whether any of the musical arrangements of the Song contained in the movies, television shows, sound recordings and printed arrangements were sufficiently original to qualify as derivative works. Finding that, with one minor exception, no version of the Song was sufficiently original, the district court granted judgment for the plaintiffs. The district court did not consider it relevant that some of the disputed royalties were generated by performances of audiovisual works, such as movies containing the Song, which are conceded to be original enough to qualify as derivative works.

For reasons set forth below, we hold that when a musical arrangement is contained within an audiovisual work produced under license from a publisher prior to termination, the publisher is entitled to receive royalties from post-termination performances of the audiovisual work under the terms of pre-termination licenses governing performance rights. It is irrelevant to disposition of those royalties whether the musical arrangement in the audiovisual work would qualify independently as a derivative work. We reverse the ruling of the district court in this respect and direct payment of royalties to Bourne for these performances in accordance with the terms of the licenses governing performance of the Song immediately prior to termination.

Whether a particular musical arrangement prepared under the authority of the publisher is a derivative work is relevant, however, to most other disputed categories of royalties before us. We essentially affirm the judgment with respect to those categories. For reasons set forth below, we affirm in part, reverse in part and remand for further proceedings consistent with this opinion.

I. Background

A. The Grant

Harry Woods (Woods) wrote the words and music to "When The Red, Red, Robin Comes Bob, Bob, Bobbin' Along" in 1926. That same year, Woods entered into a Songwriter's Agreement with the publishing company of Irving Berlin, Inc. (Berlin). The heirs of Woods, doing business as Callicoon Music (Callicoon), are plaintiffs-appellees in this matter. At some point in the 1940s, the Bourne Company (Bourne), defendant-appellant herein, succeeded to Berlin's interests in the Song.

By the Songwriter's Agreement, Woods transferred to Berlin

the original musical composition ... including the publishing rights, the performing rights, the rights to use the same for mechanical reproduction, the right to

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make, publish and perform any arrangement or adaptation of the same, and all copyrights and the rights to secure copyrights and extensions and renewals of copyrights in the same, or in any arrangements or adaptations thereof.

In April 1926, Berlin obtained a certificate of registration of copyright for the original unpublished musical composition. The copyright certificate indicates that Woods is the author of the words and music. Berlin also published a piano-vocal arrangement, and Berlin obtained a certificate of copyright for that arrangement one month after registering the unpublished Song. The copyright certificate for the piano-vocal arrangement also names Woods as the author of the words and music. Berlin is listed as the copyright owner on both certificates. The certificates do not indicate that anyone other than Woods acted as arranger.

B. The Extended Renewal Term

Under the Copyright Act of 1909, in effect at the time of Woods's grant to Berlin, the original term of a copyright was 28 years, followed by a renewal term of another 28 years. Pub.L. No. 349, 35 Stat. 1075, Sec. 23 (1909). Thus, the grant from Woods to Berlin in the Songwriter's Agreement, which included renewal rights, was to endure for up to 56 years, ending in 1982.

The reason for including a renewal term in the Copyright Act was to permit an author who sold the rights in his work for little consideration, when measured against the work's subsequent success, to enjoy a second opportunity with more bargaining power to reap the full value of the work. See 2 Melville B. Nimmer & David Nimmer, Nimmer on Copyright Sec. 9.02 at 9-28 to 9-29 (1994). 1 Thus, Congress attempted to alleviate the problem of the inability of authors to know the true monetary value of their works prior to commercial exploitation. Id. at 9-30. That purpose, however, was largely eroded by a subsequent Supreme Court decision holding that renewal rights were assignable along with original term rights in a work. Fisher Music Co. v. M. Witmark & Sons, 318 U.S. 643, 63 S.Ct. 773, 87 L.Ed. 1055 (1943); see 2 Nimmer Sec. 9.06[B] at 9-108.

When the Copyright Act was thoroughly revised in 1976, Pub.L. No. 94-553, 90 Stat. 2541 (1976), Congress attempted to restore a second chance to authors or their heirs. Among other changes, Congress prolonged the duration of copyrights then in the renewal term so that they would continue for an additional 19 years. 17 U.S.C. Sec. 304(b). At the end of the 28th year of the renewal term, the author (if alive) or the author's surviving spouse or children may terminate the rights of a grantee, usually a publisher, to whom the author had transferred rights in the original work. 17 U.S.C. Sec. 304(c)(1)-(3). During the 19-year extended renewal term, a copyrighted work does not enter the public domain but continues to generate royalties. If the author or heirs elect to terminate the publisher's rights, royalties become payable to them rather than to the publisher. 17 U.S.C. Sec. 304(c)(6). The author or heirs thus "recapture" rights in the copyrighted work and may thereby be relieved "of the consequences of ill-advised and unremunerative grants that had been made before the author had a fair opportunity to appreciate the [work's] true value." Mills Music, Inc. v. Snyder, 469 U.S. 153, 172-73, 105 S.Ct. 638, 649, 83 L.Ed.2d 556 (1985).

There is an important exception to the reversion rights of the author or heirs for derivative works produced by an authorized party during the original and renewal copyright terms. The Copyright Act of 1976 provides that

[a] derivative work prepared under authority of the grant before its termination may continue to be utilized under the terms of the grant after its termination, but this privilege does not extend to the preparation after the termination of other derivative works based upon the copyrighted work covered by the terminated grant.

17 U.S.C. Sec. 304(c)(6)(A) (referred to hereafter as "the Derivative Works Exception" or

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simply "the Exception"). The Act defines a derivative work as

a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a "derivative work."

17 U.S.C. Sec. 101.

The renewal term for Bourne's copyright in the Song came to an end in April 1982, and Callicoon terminated Bourne's rights immediately thereafter.

C. Registration and Commercial Exploitation of the Song

During the original and renewal copyright terms, Berlin, and then its successor Bourne...

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