Intellectual Property - Michael W. Rafter

• Publication year: 2000

Intellectual Property by Michael W. Rafter*

Previous issues of the Eleventh Circuit Survey have not included articles addressing developments in the Eleventh Circuit's intellectual property jurisprudence. But as the Internet and other forms of media make an ever-increasing amount of information available to anyone anywhere, intellectual property rights are becoming increasingly significant and valuable. Therefore, no better time exists than now to add an intellectual property article to the Survey. Accordingly, this Article examines several noteworthy cases involving intellectual property rights decided by the Eleventh Circuit during 1999.

I. The Constitutional Foundations of the Antibootlegging Statute

Perhaps one of the most interesting cases decided by the Eleventh Circuit in 1999 was United States v. Moghadam.¹ Moghadam involved the nation's first constitutional challenge to the quasi-copyright protections afforded musicians under 18 U.S.C. Sec. 2319A,² which, along with 17 U.S.C. Sec. 1101,³ is commonly known as the Antibootlegging Statute.⁴ This statute, enacted as part of the Uruguay Round Agree- menus Act in 1994,⁵ was an effort to comply with the United States's obligations under the Agreement on Trade Related Aspects of Intellectual Property.⁶ The legislative history of the Antibootlegging Statute—which is scant—indicates that Congress believed that it had authority to enact the Statute under the Copyright Clause of the Constitution.⁷

The Copyright Clause authorizes Congress "to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their Respective Writings and Discoveries."⁸ The term "Writings" has been interpreted broadly to encompass works not traditionally reduced to paper,⁹ but only if such works are "fixed" in some tangible form.¹⁰ For example, in 1971 Congress granted copyright protection to sound recordings.¹¹ But this protection did not apply to the unauthorized recording of live musical performances, which, by their nature, are not "fixed" in a tangible form.¹²

The Antibootlegging Statute ostensibly closed that loophole. Put simply, the statute imposes civil liability upon persons who record (or more properly, "fix") live musical performances without the consent of the performers, or who reproduce, transmit, or distribute such recordings.¹³ If these acts are done "for purposes of commercial advantage or private financial gain," the statute also provides for criminal penalties.¹⁴

Ali Moghadam, convicted of violating the criminal provisions of the Antibootlegging Statute, claimed that the statute was unconstitutional because it violated the "fixation" requirement of the Copyright Clause.¹⁵ Declining to decide "whether the fixation concept of the Copyright Clause can be expanded so as to encompass live performances that are merely capable of being reduced to tangible form, but have not been," the

Eleventh Circuit instead analyzed the case under the Commerce Clause.¹⁶

Not surprisingly, the court found a sufficient connection between bootleg recordings and interstate commerce to satisfy the requirements of United States v. Lopez.¹⁷ But the court did not stop there. The more challenging—and interesting—question the court faced was whether Congress could use its Commerce Clause power to avoid limitations that the Copyright Clause would impose on the same legislation.¹⁸ More specifically, could Congress avoid the fixation requirement of the Copyright Clause by enacting the Antibootlegging Statute pursuant to the Commerce Clause?¹⁹

The court concluded that Congress could indeed avoid the fixation requirement.²⁰ In effect the court determined that the term "Writings"—and therefore the fixation requirement—in the Copyright Clause is not an absolute limitation on Congress's power:

We hold that the Copyright Clause does not envision that Congress is positively forbidden from extending copyright-like protection under other constitutional clauses, such as the Commerce Clause, to works of authorship that may not meet the fixation requirement inherent in the term "Writings." The grant itself is stated in positive terms, and does not imply any negative pregnant that suggests that the term "Writings" operates as a ceiling on Congress' ability to legislate pursuant to other grants.²¹

Noting that extending "quasi-copyright protection to unfixed musical performances is in no way inconsistent with the Copyright Clause" and indeed "complements and is in harmony with" existing copyright protections, the court concluded that the Antibootlegging Statute was valid under the Commerce Clause.²²

Yet, Moghadam is not likely to be the last constitutional challenge to the Antibootlegging Statute. The Eleventh Circuit's holding is narrow—the only issue properly before the court was based on the fixation requirement inherent in the term "Writings" of the Copyright Clause.²³ For one thing, as the court observed, the Copyright Clause also provides that Congress may grant copyright protection for "Limited Times."²⁴ It is difficult to imagine a court interpreting this provision, as the Eleventh Circuit did with the "Writings" provision,²⁵ to constitute anything other than an express limitation on Congress's power.²⁶ Although the court did not explore this issue, the rationale employed in its opinion suggests that Congress could not use its powers under the Commerce Clause to enact the Antibootlegging Statute, and it seems likely that a court will sooner or later so decide. Otherwise, as one commentator wondered, "[I]s there any amendment to copyright law [Congress] cannot make under the commerce banner?"²⁷ Moreover, future challengers may raise First Amendment issues because the statute provides no affirmative defense for fair use.²⁸ It thus seems likely that courts will soon revisit questions regarding the constitutional foundations of the Antibootlegging Statute.

II. Copyright

A. Copyright Licenses of Indefinite Duration

Copyright licenses executed after January 1, 1978 are governed by 17 U.S.C. Sec. 203, which provides that "[termination of the grant may be effected at any time during a period of five years beginning at the end of thirty-five years from the date of execution."²⁹ In Korman v. HBC Florida, Inc.,³⁰ the Eleventh Circuit considered whether that statute creates a minimum thirty-five year duration for copyright licenses that are otherwise silent as to duration or termination.³¹ This question previously resulted in a split between the Seventh Circuit and the Ninth Circuit.³²

Over a period of seven years, Mimi Korman wrote several jingles for a Florida radio station. With Korman's permission, the station used one of these jingles as a station identifier. Korman later ended her relationship with the station and objected to the continued use of the jingle by the station. Still later, she applied for and received a copyright registration for the jingle and again demanded that the station cease using the jingle. When the station refused, she sued for copyright infringement.³³

The district court held that Korman had granted the station a nonexclusive license to use the jingle. That court then concluded that the provisions of 17 U.S.C. Sec. 203(a)(3) prevented Korman from terminating the license for a period of thirty-five years from the date on which it was granted. Needless to say, Korman appealed.³⁴

The Eleventh Circuit agreed that Korman had, in fact, granted an implied license to the station.³⁵ It likewise agreed that 17 U.S.C. Sec. 203 applied to the license.³⁶ However, the Eleventh Circuit disagreed with the district court's conclusion that the statute mandates a minimum term for copyright licenses of indefinite duration.³⁷

The court first observed that nothing in Section 203 prevents parties from entering into license agreements that provide for termination in less than thirty-five years.³⁸ The more interesting question, the court noted, was "whether section 203 imposes a 35-year term for a license of indefinite duration that would otherwise be subject to earlier termination under state contract law."³⁹ The Ninth Circuit concluded that it does,⁴⁰ and the Seventh Circuit concluded that it does not.⁴¹

The Eleventh Circuit concluded that both the plain language and the legislative history of the statute favored the Seventh Circuit's approach.⁴² First, the court observed that the language of Section 203(a)(3) cannot be construed to impose a minimum duration unless the word "only" is read into the phrase "may be effected."⁴³ The court refused to adopt this interpretation, however, stating that Congress did not include the word "only" in Section 203(a)(3) and that reading the word into the section would change the provision's plain meaning.⁴⁴ Moreover, the court noted, if Congress meant to create a minimum thirty-five year term for copyright licenses of indefinite duration, then allowing parties to agree to shorter terms would seem inconsistent.⁴⁵ Finally, the legislative history indicated that Congress intended Section 203 to benefit authors, "not publishers or broadcasters or others who benefit from the work of authors."⁴⁶ In the court's view, a minimum thirty-five year term would defeat that congressional intent rather than further it.⁴⁷

The court recognized, however, that Section 203(b)(6) could lend support to the Ninth Circuit's contrary reading of Section 203(a)(3): "Unless and until termination is effected under this section, the grant [of a copyright license], if it does not provide otherwise, continues in effect for the term of copyright provided by this title."⁴⁸ Read together with Section 203(a)(3), this section suggests that a license can be terminated before thirty-five years only if a license agreement contains an express provision to that effect.⁴⁹ But the Eleventh Circuit reconciled these sections, observing that state contract laws are read into license agreements and '"provide otherwise' within the meaning of...