Grosset & Dunlap, Inc. v. Gulf & Western Corp.

• Decision Date: 17 March 1982
• Docket Number: 79 Civ. 3745 (RJW).,No. 79 Civ. 2242 (RJW),79 Civ. 2242 (RJW)
• Citation: 534 F. Supp. 606
• Parties: GROSSET & DUNLAP, INC., Plaintiff, v. GULF & WESTERN CORPORATION and Stratemeyer Syndicate, a partnership, Defendants.
• Court: U.S. District Court — Southern District of New York

534 F. Supp. 606

GROSSET & DUNLAP, INC., Plaintiff, v. GULF & WESTERN CORPORATION and Stratemeyer Syndicate, a partnership, Defendants.

Nos. 79 Civ. 2242 (RJW), 79 Civ. 3745 (RJW).

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

March 17, 1982.

Coudert Brothers and Moses & Singer, New York City, for plaintiff; Carlton G. Eldridge, Jr., Pamela G. Ostrager, Peter L. Edwards, Stanley Rothenberg, Arthur F. Abelman, New York City, of counsel.

Dennis Angel and Proskauer Rose Goetz & Mendelsohn, New York City, for defendants; George G. Gallantz, Jeffrey A. Mishkin, Maxine A. Paul, New York City, of counsel.

ROBERT J. WARD, District Judge.

This is an application by defendants, prevailing parties at trial, for an award of attorneys' fees pursuant to section 505 of the Copyright Act of 1976, 17 U.S.C. § 505. In its findings of fact and conclusions of law, delivered orally at the close of trial, the Court determined that defendants were entitled to an award of attorneys' fees and directed them to submit an appropriate fee application.

Before the Court are (1) defendants' motion for a determination of the amount of attorneys' fees to be awarded and (2) that portion of plaintiff's motion pursuant to Rules 52(b) and 62(b), Fed.R.Civ.P., to amend the findings of fact and conclusions of law delivered orally on June 12, 1980, and the judgment entered thereon on July 9, 1980, by striking the award of attorneys' fees to defendants. The balance of plaintiff's motion was ruled on by the Court at oral argument on October 29, 1980, and the findings of fact and conclusions of law were modified accordingly by an order signed on February 9, 1981. For the reasons that follow, defendants' motion is denied, and the heretofore undecided portion of plaintiff's motion is granted. The Court's earlier determination to award attorneys' fees to defendants is vacated.

The Underlying Litigation

In this action, the Court was faced with difficult factual questions of contract interpretation concerning who controls the publication rights to some of the most widely read series of children's books of the twentieth century. The principal dispute in this action grows out of a 1930 contract ("the 1930 agreement") entered into by plaintiff with Edward Stratemeyer ("Stratemeyer"), the predecessor in interest to defendant Stratemeyer Syndicate ("Syndicate"), and a 1931 contract ("the 1931 agreement") between plaintiff, the estate of the then-deceased Stratemeyer, and Syndicate. Stratemeyer was the creator of, among many others, the series of children's books known as "The Bobbsey Twins Books," "The Hardy Boys," "The Nancy Drew Mystery Stories," and "The Tom Swift Books." The creative genius of Stratemeyer spawned the now-famous characters that the stories are about, together with the well-known pen names under which the stories were written.

In the 1930 agreement, Stratemeyer granted plaintiff the exclusive right to publish, in book form, the stories named in that agreement. The parties agreed that the books would only be published in hard-cover, or cloth, form. Stratemeyer died approximately two months after executing this agreement, leaving all "copyrights, bookrights, and printing plates" to his wife, who in turn granted the exclusive rights to Stratemeyer's stories to her and the creator's two daughters. The daughters, Harriet S. Adams and Edna C. Stratemeyer (later Edna C. Squier), organized Syndicate, a partnership, to carry on their father's business.

The 1931 agreement, executed just over one year after Stratemeyer's death, replaced the 1930 agreement, but essentially carried forward the terms and provisions of the earlier contract. Plaintiff was again granted exclusive "rights of book publication only," in cloth form. The 1931 agreement, which, like its immediate predecessor, covered the Bobbsey Twins, Hardy Boys, Nancy Drew and Tom Swift series, among others, is silent on the question whether plaintiff was granted publication rights for the copyright renewal terms of the stories covered by the agreement. As the Court determined after considering the evidence adduced at trial, however, a number of original copyrights were renewed during the period 1931 to 1978, and with Syndicate acquiescence (and acceptance of royalties) plaintiff continued to publish and sell the books. The Court found that this course of conduct demonstrated an intent to include in the 1931 agreement's grant of hard-cover publication rights, publication rights for the copyright renewal terms.

At the time of the 1931 agreement plaintiff was selling the Stratemeyer books, in cloth form, for the retail price of fifty cents. At that time, the paperback book market did not resemble the paperback market as it exists today, and none of the Stratemeyer books were being sold in paperback form. As the Court found after trial, Syndicate did not grant paperback publication rights to plaintiff. The market for paperbacks, as the term paperback is now understood, came into existence around 1939. In the early and mid-1930s, as the Court stated in its findings of fact, paperbacks were referred to in the United States, often pejoratively, as "dime novels" and at earlier times as "penny dreadfuls." The Court found that Stratemeyer and Syndicate, thus concerned about their reputation, specified publication in cloth form only to prevent plaintiff from publishing the stories in paperback form. However, the Court also found that, in obtaining a commitment from plaintiff to publish the stories covered by the 1930 and 1931 agreements, and by a similar 1934 agreement ("the 1934 agreement"), in hard-cover form only, Stratemeyer and Syndicate agreed by implication not to publish or to license anyone else to publish the stories as paperbacks.

For over forty years after the 1931 and 1934 agreements were executed, Syndicate and plaintiff operated under the terms of these agreements. Syndicate submitted to plaintiff new stories in the series covered by the agreements, and, once accepted, the stories were published by plaintiff in hard-cover form as additions to the series. Plaintiff argued at trial that the 1931 and 1934 agreements granted it the exclusive publication rights to all books in the series mentioned in those agreements, including any and all stories added to any of these series thereafter. The Court, however, found otherwise, holding that the stories not named in the agreements, and added to the series later, were published by plaintiff pursuant to individual implied-in-fact agreements, containing the same terms as the 1931 and 1934 agreements, for each of the later stories. Each such implied-in-fact agreement, the Court found, arose from the delivery to plaintiff of the manuscript of a Syndicate story and the subsequent hard-cover publication of the story by plaintiff with Syndicate's consent. The evidence demonstrated further that plaintiff was under no obligation to accept a Syndicate manuscript for publication or to continue publishing any given Syndicate story for any particular length of time.

This action had its genesis in a decision by Syndicate, unhappy about the royalties it was being paid by plaintiff, to publish through Simon & Schuster, an unincorporated division of defendant Gulf & Western Corporation, new stories in some of the series that up to that point had been published by plaintiff. As of the time of trial Simon & Schuster had published six new Syndicate stories, all in paperback form, four additions to the Hardy Boys series and two additions to the Nancy Drew series. The Court determined that Syndicate was contractually free to have new stories added to its series published by publishers other than plaintiff, and that Simon & Schuster had neither infringed any copyright nor otherwise acted improperly in publishing the six new Syndicate stories. But the Court also held that, although plaintiff had not been granted paperback publication rights for those stories it had already published in hard-cover, Syndicate was not free to grant paperback rights to those stories to anyone other than plaintiff.

The Copyright Claims

In the course of this action, plaintiff presented three statutory copyright claims, which form the basis for defendants' present application for attorneys' fees pursuant to section 505 of the Copyright Act of 1976, 17 U.S.C. § 505. These claims were based on (1) joint copyright under 17 U.S.C. § 101; (2) divisibility of copyright and copyright in characters under 17 U.S.C. § 101 and § 201(d); and (3) works for hire under 17 U.S.C. § 304. Plaintiff used these claims in various combinations to argue (A) that plaintiff was a copyright proprietor of the early Stratemeyer stories published pursuant to the written agreements, as well as of the new stories published by plaintiff; (B) that plaintiff's "exclusive right" in the series continued into the renewal terms of copyright with respect to each series story published by plaintiff; and (C) that publication by Simon & Schuster, pursuant to agreement with Syndicate, of new stories containing characters, character names, relationships, locales, etc., from the series, infringed plaintiff's rights under the copyright laws.

1. Joint copyright

The Court ruled that plaintiff was not a joint copyright owner of any Stratemeyer story by virtue of the illustrations provided by plaintiff. The Court found that, unlike those works consisting of music and lyrics, which must be performed together for there to be a song, Edward B. Marks Music Corp. v. Jerry Vogel Music Co., 140 F.2d 266 (2d Cir. 1944), and photographs and explanatory text, which must be published between the same covers for a picture book to convey its message, Donna v. Dodd, Mead & Co., 374 F.Supp. 429 (S.D.N.Y.1974), the Stratemeyer stories could be enjoyed in full without the illustrations provided by plaintiff (which were created pursuant to Syndicate specifications).

In sum, the Court decided that the text and illustrations in the books are not...