An Exclusive License Is Not an Assignment: Disentangling Divisibility and Transferability of Ownership in Copyright

Author:Christopher M. Newman
Position:Assistant Professor, George Mason University School of Law
Pages:59-115
 
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An Exclusive License Is Not an Assignment:
Disentangling Divisibility and Transferability of
Ownership in Copyright
Christopher M. Newman*
I. INTRODUCTION
A. The Problem
Is an exclusive license the same thing as an assignment? For
most of the history of Anglo-American jurisprudence, to seriously
pose such a question would have been simply to confess one’s
ignorance of the meanings of the terms. An assignment is a
conveyance of one’s entire ownership interest in some property to
someone else.1 The assignee becomes the new owner while the
assignor becomes an ex-owner. A license, on the other hand, is
merely a permission.2 It creates a limited-use privilege in the
licensee and therefore necessarily curtails to that extent the owner’s
right to exclude. It leaves all other residual powers of ownership,
however, firmly in the licensor’s sole possession.
In the realm of copyright, this clear distinction has been
muddied—many claim obliterated—by the Copyright Act of 1976,
which included the term “exclusive license” within the statutorily
defined term “transfer of copyright ownership.3 In Gardner v. Nike,
the U.S. Court of Appeals for the Ninth Circuit held that while this
Copyright 2013, by CHRISTOPHER M. NEWMAN.
* Assistant Professor, George Mason University School of Law. I would
like to thank all of the following for their cr itical comments and/or
encouragement: Eric Claeys, Rob ert Haverly, Bob Brauneis, Rob Mer ges, Pam
Samuelson, Molly Va n Houweling, Kevin Co llins, Adam Mosso ff, James
Grimmelman, Henry Butler, and all participants in the 2012 Henry Manne Forum
at George Mason University, the Berkeley IP Workshop, and the Levy Workshop
at George Mason. I would also like to thank Rob Wi lley for valuab le research
assistance.
1. See BLACKS LAW DICTIONARY 119 (6th ed. 1990) (defining assignment
as “a transfer or making over to another of the whole of any property, real or
personal, in possession or in action, or of any estate or right therein”).
2. See, e.g., Clifford v. O’Neill, 42 N.Y.S. 607, 609 (N.Y. App. Div. 1896).
It may be conceded that a license is merely a permission to do an act
which, without such permission, would amount to a trespass; and that
such permission, when related to real esta te, is not equivalent to an
easement; nor will the continuous enjoyment of the privilege conferred,
for any period of time, cause it to ripen into a tangible inter est in the land
affected.
Id.
3. 17 U.S.C. § 101 (2006).
60 LOUISIANA LAW REVIEW [Vol. 74
provision, in conjunction with others, confers on exclusive copyright
licensees the “protection and remedies” accorded to “copyright
owners” by the 1976 Act—including the right to sue for
infringement—it does not entirely obliterate the distinction between
licenses and assignments.4 In particular, the Ninth Circuit held that
the statute did not abrogate the preexisting presumption that
copyright licenses are not transferable without the consent of the
licensor.5
Scholarly commentary on Gardner (including that of the two
leading copyright treatises) has been uniformly and vociferously
critical,6 and on one recent occasion, a bill that would have
overruled the Ninth Circuit’s reading of the statute was introduced
in Congress, though the relevant provision was not enacted.7
Gardner’s critics assert—with no little vehemence—that the holding
blatantly contradicts the statutor y text and legislative history and
that it runs counter to the policy of copyright divisibility adopted in
the 1976 Act.8 According to these critics, by saying that an
exclusive license is a “transfer of copyright ownership,” the statute
necessarily gives exclusive licensees full powers of title with respect
4. Gardner v. Nike, 279 F.3d 774 (9th Cir. 2002).
5. Id.
6. See MELVILLE B. NIMMER & DAVID NIMMER, NIMMER ON COPYRIGHT
10.02[B][4][b] (criticizing Gardner and suggesting that it “should not be
followed”); WILLIAM F. PATRY, PATRY ON COPYRIGHT § 5:103 (Westlaw 2013)
(calling it “one of the most baffling copyright opinions ever . . . . [D]ecision
making run amok”); Alice Haemmerli, Why Doctrine Matters: Patent and
Copyright Licensing and the Meaning of Ownership in Federal Context, 30
COLUM. J.L. & ARTS 1, 14–19 (2006) (severely criticizing the opinion’s reasoning
and result); Peter H. Kang & Jia Ann Yang, Case Note, Doctrine of Indivisibility
Revived?, 18 SANTA CLARA COMPUTER & HIGH TECH. L.J. 365, 371–73 (2002)
(criticizing the court’s statutory interpretation of § 201(d)(4)); Aaron Xavier
Fellmeth, Control Without Interest: State Law of Assignment, Federal Preemption,
and the Intellectual Property License, 6 VA. J.L. & TECH. 8, 20–27 (2001)
(criticizing the district court decisio n).
7. See S. 3689, 111th Cong. § 4(a) (2010), enacted as Pub. L. No. 111-295,
124 Stat. 3180 (2010). The bill would have added to the end of § 201(d)(2) the
phrase “including the right to transfer or license the exclusive right to another
person in the absence of a written agreement to the contrary.’’ Id. (internal
quotation marks omitted).
8. See, e.g., PATRY, supra note 6, § 5:103.
Gardner is Exhibit A in why courts shouldn’t be making policy: the
principle of divisibility was thrashed out by the Congress, the Copyright
Office, copyright experts, and the copyright industries over 16 years; yet,
all that work was jeopardized by judges who do not possess the expertise,
who did not participate in the policy choices, who did not draft the
statutory language, and who refuse to apply the statute.
Id.
2013] EXCLUSIVE LICENSE IS NOT AN ASSIGNMENT 61
to the licensed rights, including unfettered powers of subdivision
and transfer.9
This Article takes the position that Gardner’s critics are
mistaken and that there is a strong case that the Ninth Circuit’s
decision was both correct as a matter of statutory interpretation and
consistent with the legislative history. More fundamentally, this
Article argues that Gardner’s critics are making a number of
mistaken assumptions in their thinking about ownership and
divisibility, assumptions that underlie and explain their erroneous
reading of the statute. Properly understood, the policy of divisible
copyright is perfectly compatible with the view that exclusive
licenses are nontransferable ownership interests.
Divisibility permits a copyright owner to split off some subset of
exclusive rights to the work and assign it separately, thus
relinquishing all authority over it and effectively creating an entirely
separate object of ownership. By choosing instead to grant an
exclusive license, the copyright owner signals the intent to retain
ultimate residual authority over the use rights granted. The exclusive
license interests enabled by the 1976 Act constitute a form of
ownership in that they vest exclusive licensees with certain
enumerated independent powers of title that had been denied them
under previous law. Such licenses still fall short of plenary title,
however, in that the licensing owner retains the authority to control
the use of her work by controlling the identity of the licensee.
Permitting this type of arrangement is potentially beneficial as a
matter of copyright policy because on the margins it should tend to
reduce fragmentation of title and enhance auth orial control.
B. The Sources of the Legal Dispute
1. The Statutory Language
The Copyright Act of 1976 provides in 17 U.S.C. § 101 that:
A ‘‘transfer of copyright ownership’’ is an assignment,
mortgage, exclusive license, or any other conveyance,
alienation, or hypothecation of a copyright or of any of the
exclusive rights comprised in a copyright, whether or not it
is limited in time or place of effect, but not including a
nonexclusive license.10
On its face, this definition does not purport to alter the meanings
of any of the terms subsumed under the one being defined. What it
9. See infra note 39.
10. 17 U.S.C. § 101 (2006).

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