Philadelphia Eagles Football Club, Inc. v. City of Philadelphia

CONCURRING OPINION

Justice SAYLOR.

The majority’s conclusion that the media receipts constituted copyright royalties is not without some appeal, and finds support in published opinions from two other jurisdictions’ intermediate appellate courts. See Cincinnati Bengals, Inc. v. Papania, 92 Ohio App.3d 785 , 637 N.E.2d 330, 331 (1993) (per curiam); Detroit Lions, Inc. v. Department of Treasury, 157 Mich.App. 207 , 403 N.W.2d 812, 817 (1986) (per curiam). It nonetheless rests upon the proposition that the copyrights were assigned to the NFL at the time the Network Contracts were signed. See Majority Opinion, slip op. at 20, 23-24. As *234 those instruments were executed before any of the games occurred, however, the underlying works of authorship—i.e., the telecasts—and their associated copyrights, were not yet in existence. 1 Thus, the prospective assignment, as memorialized in the contracts, was not consummated until each game was played and televised.

While I agree with the majority that the monies at issue are not fees for services rendered, see Majority Opinion, slip op. at 10-13, in light of the sui generis nature of the networks’ activities in both authoring and broadcasting the telecasts of the games, I believe that the media receipts are best understood as compensation for the exclusive right to simultaneously create and use intellectual property (the telecasts of the games) ultimately subject to copyright protection. They are unlike royalties in that the benefit obtained by the networks in return for such monies is not the utilization of intellectual property already created, but the exclusive privilege of capturing images of others’ activities and thereby creating, in the first instance, the subject works. The consideration provided in return for such right consists of the fees paid as well as the prospective transfer of copyrights to the NFL; upon broad *235 cast and creation of each telecast, transfer of the copyright then occurred as to all future uses. 2

For these reasons, I would hold that the media receipts were not copyright royalties for purposes of Section 322 of Philadelphia’s Business Privilege Tax. Since non-royalty revenues are only assessed to the extent the underlying business activities take place within the city, I concur in the Court’s ultimate determination that, for the tax years at issue, the media receipts should be apportioned accordingly.

Justice LAMB joins this concurring opinion.

. A copyright comes into existence when a work of authorship is created and fixed in some tangible medium of expression. See 17 U.S.C. § 102 (a); see also § 302(a) (providing that copyright in a work subsists "from its creation”); Rodrigue v. Rodrigue, 218 F.3d 432 , 436 & n. 15 (5th Cir.2000) (stating that copyright "arises at the moment of creation of the work”) (citing 1 Nimmer & Nimmer, Nimmer on Copyright, § 505(B)(1)); cf. Cable News Network, Inc. v. Video Monitoring Svcs. of Am., 940 F.2d 1471, 1480-81 (11th Cir.1991) (observing that there is no such thing as a copyright in a work that has not yet come into existence), vacated on other grounds, 949 F.2d 378 (11th Cir.1991). Ownership of the copyright vests initially in the author of the work. See 17 U.S.C. § 201 (a); Community for Creative Non-Violence v. Reid, 490 U.S. 730, 737 , 109 S.Ct. 2166, 2171 , 104 L.Ed.2d 811 (1989) {"CCNV"). Unless the work is a work-for-hire, the party in which copyright initially vests is the author-in-fact. See CCNV, 490 U.S. at 737 , 109 S.Ct.- at 2171 (indicating that "the author is the party who actually creates the work”). I agree with the majority that the televised games were not works for hire. Additionally, there does not appear to be any dispute that the networks are the authors-in-fact of the telecasts; that the telecasts are subject to copyright protection; or that the copyright in the telecasts vested initially in the networks. See Majority Opinion, slip op. at 17.

. In this regard, I note that the court in Detroit Lions relied upon Commissioner of Internal Revenue v. Affiliated Enterprises, 123 F.2d 665 (10th Cir.1941), for the conclusion that the existence of a patent or copyright is not necessary to characterize payments as royalties. See Detroit Lions, 403 N.W.2d at 817 . Such reliance was arguably misplaced, however, as Affiliated Enterprises ’ essential thesis was that royalties could be paid for the use of technological improvements, trade secrets, and trademarks that were not subject to patent or copyright protection. See Affiliated Enterprises, 123 F.2d at 668 . In such instances, unlike the present case, the underlying intellectual property had to exist prior to its use.