Inside Out, Upside Down: Circuit Court Confusion Over Character Copyrightability

• Publication year: 2023

Inside Out, Upside Down: Circuit Court Confusion Over Character Copyrightability

Caitlin E. Oh

INSIDE OUT, UPSIDE DOWN: CIRCUIT COURT CONFUSION OVER CHARACTER COPYRIGHTABILITY Abstract

Enormous amounts of new content are posted on social media every day. Ordinarily, if a work is original and created by the author, the work is automatically protected under copyright without the need for registration. However, in recent years, copyright protection has become difficult to obtain for one type of expression: fictional characters.

Today, characters hold immense cultural significance. For some, characters provide an escape from reality, entertainment, and, in some cases, a blueprint to which one can aspire. For entertainment studios, characters hold immense economic value. If a character is popular—holding cultural significance—a studio might create a prequel or spin-off television series about the character to satiate fan bases.

Despite the cultural and economic significance of characters, the only characters which have been granted copyright protection possess long tenures in recognizable entertainment companies, such as James Bond, Godzilla, Superman, and the Batmobile. Sparse copyright protection for characters is a result of a circuit split where three jurisdictions apply divergent standards not based on originality. In 2020, The Moodsters, five anthropomorphic personifications of moods, were denied copyright protection in the Ninth Circuit, which has the highest standard for character copyrightability. This heightened standard ultimately allowed Disney to make billions off its animated film Inside Out. The decision—made in Daniels v. Walt Disney Co.—underscores the repercussions of a heightened standard for character copyrightability, which has allowed courts to grant copyright protection for famous characters alone.

This Comment proposes the following solution to this problem: adopting the Seventh Circuit's "stock character" test for character copyrightability. To lay the foundation, it explores the disparate standards set by the Second, Seventh, and Ninth Circuits for character copyrightability. Particularly, it delves into the evolution of the doctrine in the Ninth Circuit, which has greatly expanded protection for character copyrights. It then analyzes the Daniels v. Walt Disney Co. decision and its flaws—noting specifically how its rationale raises the

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already-heightened standard. Finally, it analyzes the constitutional basis for copyright, the policy and economic considerations of copyright, and the Supreme Court's foundational copyright decision, Feist Publications v. Rural Telephone Service Co.

Table of Contents

Introduction..........................................................................................631

I. Circuit Court Confusion Over Character Copyrightability........................................................................ 635

A. Staying Close to Constitutional Roots: The Seventh Circuit's "Stock Character" Test...................................................................... 636
B. Learning from Judge Learned Hand: The Second Circuit's "Sufficient Delineation" Test.................................................. 638
C. The Ninth Circuit Expands Copyright for Fictional Characters: The Development of Two Distinct and Heightened Standards for Character Copyrightability..................................................... 640

1. The "Story Being Told" Test: Implications and Confusion (1954-1988) ..................................................................... 640
2. The District Court Validates Fame with Three Significant Decisions (1989-1998) ..................................................... 643
3. The Road to the Modern Doctrine: The Mystery Magician to Eleanor (2003-2008) ........................................................ 645
4. The Modern Doctrine: The Batmobile and the Dangers of the DC Comics v. Towle Standard .......................................... 648

II. The Daniels v. Walt Disney Co. Decision...................................652
III. Rationale for a Uniform Standard......................................... 656

A. The Policy Behind Copyright .................................................. 657

1. The Constitutional Basis for Copyright ............................. 657
2. The Copyright Act of 1976 ................................................ 658
3. The Idea/Expression Dichotomy........................................ 659

B. Feist and Originality............................................................... 660

1. The Feist Case .................................................................. 661
2. How the Originality Requirement is Constitutionally Mandated.......................................................................... 662

IV. A Uniform Standard...................................................................663

A. Where's Waldo? Geographic Location Determines Character Copyrightability...................................................................... 664

1. Ambiguity Among Us: The Second Circuit's Failure to Provide Clarity .............................................................................. 664

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2. Down the Rabbit Hole: Perverse Implications of the Ninth Circuit's Decision ............................................................. 665

B. Considerations for a Uniform Standard .................................. 668

1. Policy and Economic Considerations ................................ 668
2. Failure to Comply: The Copyright Act of 1976 .................. 669

C. An Oldie but a Goodie: The Seventh Circuit's "Stock Character" Test as the Uniform Standard.................................................. 670

1. Preserving the Idea/Expression Dichotomy ....................... 671
2. Application to The Moodsters............................................ 672

Conclusion.............................................................................................672

Introduction

Both the anticipation of seeing a loved one and the feeling of emptiness following a loss are experiences paired with emotions. The first—the anticipation—is related to excitement or happiness; the second—the emptiness—is accompanied by sadness. These are natural and universal. People experience emotions through the limbic system,¹ which processes basic feelings like happiness, sadness, anger, fear, love, and disgust.² In school, children are taught that they experience these emotions through chemical reactions, such as the release of dopamine through a positive experience.³

But "[d]o you ever look at someone and wonder, 'what is going on inside their head?'"⁴ Maybe instead of chemicals being released, it is a personified emotion where the color correlates with what they are feeling. If the individual is angry, an upset red character disgruntledly presses a button resulting in the subsequent response to anger—a stomp of the foot or an audible grunt. Disney's movie, Inside Out, may provide a familiar visual.⁵

Most people assume the idea and subsequent expression of the emotions in Inside Out were developed by Disney, but they have a different beginning. Rather, these anthropomorphic characters personifying emotions were originally established by Denise Daniels, RN, MS.⁶ Daniels is an expert in parent and child

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development, "specializ[ing] in the social and emotional development of young children."⁷ In an effort to improve children's mental health outcomes and help children reach their full potential through managing their emotions, Daniels and her company, Moodsters Co., developed and copyrighted "five gendered anthropomorphic animated characters each paired with a core body color that lived together 'inside a child,' and which each included many other nuanced expressions."⁸

To develop these characters, Daniels and her company, Moodsters Co., "raised over $3 million in investment capital,"⁹ "recruited industry-leading talent to help develop and express the characters,"¹⁰ and implemented a diverse children's focus group to test the efficacy of the characters at Yale University.¹¹ In 2005, Moodsters Co. released The Moodsters Bible,¹² which told the story of five personified, anthropomorphic emotions representing happiness, sadness, anger, fear, and love.¹³ Two years later, in 2007, it released a pilot episode titled "The Amoodsment Mixup" for a proposed animated television show surrounding The Moodsters.¹⁴ Further, in 2015, Moodsters Co. "developed a line of toys and books . . . that were sold at Target and other retailers,"¹⁵ thus affording children both emotional support and the ability to play.¹⁶

With the development process and hope for a television show, Moodsters Co. used its 2005 bible and 2007 pilot to pitch the characters to potential collaborators.¹⁷ From 2005 to 2009, Daniels and Moodsters Co. annually pitched The Moodsters to Disney executives.¹⁸ Daniels asserted that over these years,

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she was in contact with the CFO of the Walt Disney Company, who informed her he would communicate Moodsters Co.'s pitch to Roy E. Disney, Walt Disney's son.¹⁹ Daniels also claimed she spoke with Pete Docter, Inside Out's film director, about The Moodsters.²⁰

In 2010, one year after Moodsters Co. stopped pitching The Moodsters, Disney began working on the movie Inside Out, which "features five color-coded, single-emotion characters"²¹ in the mind of Riley, an eleven-year-old girl.²² "The emotions represented [were] joy, fear, sadness, disgust, and anger."²³ Pete Docter, whom Daniels claims to have been in contact with, cowrote and directed the screenplay, and claimed the idea for the film came from "the manner with which his 11-year-old daughter dealt with new emotions as she matured."²⁴ Inside Out premiered in 2015.²⁵ Two years later, in 2017, Daniels and her company, Moodsters Co., sued Disney for breach of implied-in-fact contract²⁶ and copyright infringement of The Moodsters as a...