Opposition Brief — Dumas v. Playboy Enterprises, Inc.

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34 Poe 6) NOV 3 196 | :

Supreme Court of the United States

Ocroser TERM, 1995

Ae a,

Late

pe he

JenniFer Dumas, et al.,

Petitioners,

Vv.

PLAYBOY ENTERPRISES, INC., et al.,

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Second Circuit

BRIEF IN OPPOSITION

DONALD B. VERRILLI, JR.*

JENNER & BLOCK

601 Thirteenth Street, N.W.

Washington, D.C. 20005

(202) 689-6000

KENNETH P. NORWICK

NoRWICK & ScHaD

: One Madison Avenue

_ New York, New York 10010

: (212) 447-5000

* Counsel of Record

TABLE OF CONTENTS

Page

ABE GH AUTOR oan vvcanvccnnecncenccnccsceeesscneeaceseees ii

STATEMENT OF THE CASE ....000.00000000.0200.20-.- coLe ee an 1

POR SRT GEN ico A a 1

B. The District Court’s Decision .............................-.-. 6

C. The Court of Appeals’ Decision ....................00........ 8

REASONS FOR DENYING THE WRIT .........................- 10

I. NO GENUINE CONFLICT EXISTS BE-

TWEEN THE COURT OF APPEALS’ DECI-

SION IN THIS CASE AND THE SEVENTH

CIRCUIT'S DECISION IN SCHILLER &

SCHMIDT, INC. v. NORDISCO CORP. ............. 11

Il. THE SECOND CIRCUIT’S INTERPRETA-

TION OF SECTION 101(2) IS BOTH COR-

RECT AND CONSISTENT WITH PREVAIL-

ING PRACTICE IN THE INDUSTRIES TO

WHICH SECTION 101(2) APPLIES ................ 15

Ill. THE SECOND CIRCUIT'S DECISION IS NOT

FINAL, AND THE FACT-FINDING OR-

DERED ON REMAND COULD AVOID THE

NECESSITY FOR RESOLVING OR COULD

HAVE AN IMPORTANT BEARING ON THE

QUESTION PRESENTED .......0022.2.....2..2.20-.e--0--0-- 19

IV. THE DECISION IN THIS CASE DOES NOT

EVEN ARGUABLY CONFLICT WITH THE

NINTH CIRCUIT’S DECISION IN KONIGS-

BERG INTERNATIONAL INC. v. RICE............ 20

V. THE SECOND CIRCUIT’S DECISION DOES

NOT REMOTELY REQUIRE AN EXERCISE

OF THIS COURT’S SUPERVISORY POWERS.. 21

CONCLUSION ........... shctinilianatintiedlihespactnictn tidal tile acl esnintidctisbait 23

TABLE OF AUTHORITIES

Cases Page

Blue Chip Stamps v. Manor Drug Stores, 421 U.S.

TA CEG ON miniissncocicecctisbateicctntcbalientee diodes 16

Brattleboro Publishing Co. v. Windmill Publishing

Corp., 369 F.2d 565 (2d Cir. 1966) ....................... 7

Brotherhood of Locomotive Firemen and Engine-

men v. Bangor & Aroostook R.R., 389 U.S. 327

¢> 5 POD ERa in Demme Sle Ned NRA ELST 19

Community For Creative Non-Violence v. Reid, 490

Ch. Fk CD caccctdicetialnslec bab omisienacnins 17

Hamilton-Brown Shoe Co. v. Wolf Bros. & Co., 240

Lis ei Re fi |; NOt Mei awl ees ae (Lea Ae 19

Konigsberg Int'l, Inc. v. Rice, 16 F.3d 355 (9th Cir.

| AM ie MONE Sea IEE ger Se eke eR N HAT 11, 20

Monessen S.W. Ry. v. Morgan, 486 U.S. 330

§ ; } SES SINE eet Crab eid ST aS 16

Schiller & Schmidt, Inc. v. Nordisco Corp., 969 F.2d

GOD CUT Tey BOOED ce niecsincocccetsensas naan passim

Virginia Military Inst. v. United States, 113 S. Ct.

, 9a. + SSE Sa CeOR nS. 8 19

Statutes and Rules

Vou: R. Ce FB ak cnctise ee eae 22

Pek. TC re te ii ee eee 20

Constitutional Provisions

A Bill to Amend The Copyright Law Regarding

Work for Hire: Hearing on S. 2044 Before the

Comm. on the Judiciary, United States Senate,

p/p oe. ee P| Dh) RE noe 16

A Bill to Amend the Copyright Law Regarding

Works Made for Hire: Hearings on S. 1253

Before The Subcomm. of Patents, Trademarks

and Copyright of the Senate Comm. on the

Judiciary, 101st Cong., Ist Sess. 195 (1990) ........ 16

S. 1253, 101st Cong., Ist Sess. (1989) ......................... 15

S. 2044, 97th Cong., 2d Sess. (1982) -..........0. 22.2... 15

S. 2138, 98th Cong., Ist Sess. (1983) .............. a 15

S. 2330, 99th Cong., 2d Sess. (1986) ..................---...--- 15

iii

TABLE OF AUTHORITIES—Continued

Miscellaneous Page

1 Melville B. Nimmer & David Nimmer, Nimmer

5 Se aa 18

2 E. Gabriel Perle & John Taylor Williams, The

Publishing Law Handbook (2d ed. 1992) .......... 18

In THE

Supreme Court of the United States

OCTOBER TERM, 1995

No. 95-549

JENNIFER DuUMAS, et al.,

" Petitioners,

PLAYBOY ENTERPRISES, INC., et al.,

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Second Circuit

BRIEF IN OPPOSITION

The petition for certiorari paints this case as a depar-

ture from settled law respecting the writing requirement

for works for hire under Section 101(2) of the Copyright

Act of 1976, 17 U.S.C. § 101(2). It is nothing of the

sort. To the contrary, the Second Circuit interpreted the

“work for hire” provision in a straightforward manner

that is faithful to its text, legislative history and prior

decisions of this Court, with due sensitivity to the practi-

cal need to apply that provision across a wide range of

diverse factual settings. The court’s opinion is careful,

balanced and well reasoned, and does not warrant review

by this Court.

STATEMENT OF THE CASE

A. The Facts.

The petition for certiorari misstates critical facts, and

thereby creates a misleading impression both of the nature

of the relationship between the artist Patrick Nagel and

respondent Playboy Enterprises, Inc. (“Playboy”), and of

the record on which the Second Circuit decided this case.

The work-for-hire issue arises out of a dispute between

a corporation formed by Nagel’s widow and Playboy

magazine, over ownership of the reproduction rights in

some 300 illustrations Nagel prepared on assignment from

Playboy magazine between 1974 and Nagel’s death in

1984. During his lifetime, Nagel never asserted any inter-

est in, or sought to republish, any of the illustrations he

prepared for Playboy. Several years after his death, his

widow, petitioner Jennifer Dumas, asserted ownership of

the copyright in these works, claiming that Playboy had

obtained only one-time reproduction rights.

During the decade preceding Nagel’s death in 1984,

he produced approximately 300 illustrations for publica-

tion in Playboy magazine. (Record on Appeal (“A”)

19.) It is undisputed that “Nagel accepted assignments

from Playboy, created illustrations, and delivered them”

for publication. See Joint Pretrial Order (PTO), Stipu-

lated Facts (Stip.) 434 (A-19). Virtually all of the

Nagel drawings appearing in Playboy were highly stylized

renderings of women, and were designed to illustrate

features in the magazine. Nagel received his first assign-

ment from Playboy in 1974. At Playboy’s request and

direction, he produced an illustration to accompany an

article on Lillian Hellman. Thereafter, at least one Nagel

illustration appeared in every issue of Playboy magazine

from August 1975 until July 1984. (Pl. Ex. 22, A-1232.)

During the first years of their commercial relationship,

Playboy gave Nagel detailed instructions for composing

each illustration. Nagel often submitted sketches or

“pencil roughs” of his works for approval. Various Play-

boy employees also made suggestions and offered advice

to help refine Nagel’s style. Thereafter, Nagel continued

to create illustrations in conformity with the original

parameters set by Playboy. The illustrations accompanied

—

three regular monthly features in the magazine: Playboy

Advisor, After Hours and Forum. Nagel delivered il-

lustrations conforming to these parameters each month

during his decade-long relationship with Playboy. (Pl. Ex.

22, A-1232.)

According to the stipulated facts:

. .. [i]t has been the regular and consistent practice of

Playboy at all relevant times to seek to acquire from

freelance writers, artists anc photographers who con-

tribute to Playboy magazine ai! rights, including all

copyrights in and to their contributions to Playboy

magazine and to seek to enter into agreements and

relationships under which their contributions are con-

sidered to be works made for hire under the U.S.

(PTO Stip. 423 (A-17).) Playboy’s policy was well

known in the publishing industry, was reflected in con-

temporary trade publications (Pl. Ex. 51, A-2671), and

was specifically communicated to artists who took assign-

ments from Playboy. (A-446.)

Playboy’s standard terms for art assignments were

memorialized in check legends. Playboy issued a total of

approximately 258 checks to Nagel. Between 1974 and

July 1979, 104 checks were issued to Nagel bearing

Legend Agreement A, which reads as follows

Any alteration of this legend agreement voids this

check. By endorsement of this check, payee acknowl-

edges payment in full for the assignment to Playboy

Enterprises, Inc. of all right title and interest in and

to the following items: [a description followed].

(PTO Stip. ¢ 43, A-21; Pl. Ex. 22, A-1232.)

Between September 1979 and March 1981, 60 checks

were issued to Nagel bearing Legend Agreement B, which

reads as follows:

Any alteration of this legend agreement voids this

check. BY ENDORSEMENT, PAYEE: acknowl-

edges payment in full for services rendered on a work-

made-for-hire basis in connection with the Work

named on the face of this check, and confirms own-

ership by Playboy Enterprises, Inc. of all right title

and interest (except physical possession), including

all rights of copyright, in and to the Work.

(PTO Stip. ¢ 44, A-21; Pl. Ex. 22, A-1232.)

Between March 1981 and May 1984, 94 checks were

issued to Nagel bearing Legend Agreement C, which reads

as follows:

Any alteration of this legend agreement voids this

check. IT CONTAINS THE ENTIRE AGREE-

MENT OF THE PARTIES AND MAY NOT BE

CHANGED EXCEPT BY A WRITING SIGNED

BY BOTH PARTIES. BY ENDORSEMENT,

PAYEE: acknowledges payment in full for services

rendered on a work-made-for-hire basis in connec-

tion with the Work named on the face of this check,

and confirms ownership by Playboy Enterprises, Inc.

of all right title and interest (except physical posses-

sion), including all rights of copyright, in and to the

Work.

(PTO Stip. 4 45, A-22; Pl. Ex. 22, A-1232.)

It is stipulated that the 258 checks bearing Legend

Agreements A, B and C were endorsed and deposited by

“Nagel, his corporation, his bank, his representative or his

accountant.” (PTO Stip. 434, A-19.) Nagel kept the

proceeds from the checks, id., and never sought to alter

the terms of the Legend Agreements. (PI. Ex. 22, A-

1232.) There is no evidence or claim that he ever ques-

tioned, challenged or attempted to modify the terms and

conditions set forth in the Legend Agreements during his

10-year relationship with Playboy. Nagel never affixed

Playboy. Nor did he ever seek to register copyright in

those works. Significantly, however, he did affix a copy-

right notice to other works that were not published in

————————

Playboy. (PTO Stip. 4 69, A-27.) There was, in short,

no evidence that Nagel was ever dissatisfied in any way

with the terms of his relationship with Playboy.

Nor would he have had reason for dissatisfaction. By

appearing in Playboy magazine each month, Nagel reached

an audience of millions, and greatly enhanced his profes-

sional reputation. Nagel’s own agent testified that Nagel

wanted to appear in Playboy for precisely this reason.

(Pl. Ex. 53, A-2732.) Another agent testified that artists

sought out Playboy because it was a “terrific showcase”

that often led to additional opportunities. (Tr. 501,

A-899.) It was stipulated that Nagel’s reputation resulted

largely from his appearances in Playboy (PTO Stip.

47, A-22), and over the years his widow earned millions

of dollars from reproductions of Nagel’s works. (PTO

Stip. ¢4 29, 30, A-19.)

Piayboy’s regular payments to artists for works created

for use in the magazine from 1974 through 1984 were:

$250 per spot illustration; $800 per full-page illustration;

and $1,200 per spread. (PTO Stip. 4 36, A-20). It was

Playboy’s standard policy to pay artists a “turn-down fee”

for rejected works. (Tr. 58, A-453.)

Nagel was paid in conformity with these policies. (PI.

Ex. 22, A-1232.) On numerous occasions, Playboy paid

Nagel a turn-down fee when Playboy decided, on the

basis of rough sketches submitted for approval, that it

would not publish a particular illustration.’ The checks

paying these fees contained a legend stating: “This check

constitutes a “Turn Down’ payment for payee’s work,”

and identifying the particular work for which the fee was

paid. (Pl. Ex. 22, A-2153, 2279.) Nagel was also paid

for many finished illustrations Playboy chose not to pub-

lish. For those illustrations, Nagel received the full price,

1 Nagel was paid a turn-down fee in December 1974, October 1975,

December 1975, March 1977, June 1978, and September 1979. (PI.

Ex. 22, A-2200, A-2202, 2203, 2211, 2152-53, 2171-72, 2278-79,

2228.)

not the turn-down fee.” Thus, over the course of their

ten-year relationship, Nagel submitted illustrations on a

routine monthly basis for use in conjunction with the

Advisor, After Hours, and Forum features, received pay-

ment on a routine basis for the illustrations he submitted

—whether Playboy published them or not—and from mid-

1979 onward, signed Legend Agreements expressly con-

firming that the works were to be considered works for

hire.

In 1989, petitioner entered into agreements with third

parties for reproduction of certain Nagel artwork that

had previously appeared in Playboy magazine. Playboy

sued for infringement in the United States District Court

for the Northern District of Illinois. The action was

settled when the parties entered into a partnership ar-

rangement to market all of Nagel’s artwork jointly. The

partnership was mutually terminated effective June 1,

1991. (PTO Stip. 44 61-65, A-25.)

B. The District Court’s Decision.

Shortly after termination of the partnership, Playboy

brought a declaratory judgment action in the United

States District Court for the Southern District of New

York, claiming copyright in the Nagel illustrations that

had appeared in Playboy magazine. Playboy claimed

that the illustrations were works for hire under both the

1909 Copyright Act (which applied before 1978) and

the 1976 Copyright Act (which applied thereafter), and

that Playboy therefore owned copyright as the technical

“author” of the works. Alternatively, Playboy contended

that Nagel had transferred copyright by virture of the

Legend Agreements.

After a bench trial, the district court held that, not-

withstanding the hundreds of legend agreements reciting

that Playboy owned all rights in the Nagel illustrations

2 Pl. Ex. 22, A-1232.

and that the parties considered the works to be works for

hire, Playboy had acquired only one-time reproduction

rights in the illustrations. The court therefore ruled

against Playboy on the declaratory judgment action, and

for petitioner on the infringement counterclaim.

With respect to works delivered prior to January 1,

1978—the effective date of the 1976 Copyright Act—the

court applied the Second Circuit’s “instance and expense”

test for determining whether works by. an independent

contractor should be considered works for hire under the

1909 Copyright Act. See Brattleboro Publishing Co. v.

Windmill Publishing Corp., 369 F.2d 565, 567 (2d Cir.

1966). The court found that the works were created at

Playboy’s instance, but not at Playboy’s expense. The

latter conclusion was premised on the court’s finding that

Nagel “provided his own tools, worked his own hours,

hired his own assistants, and paid his own taxes and bene-

fits.” (Pet. App. 66a.) Inexplicably, and notwithstand-

ing the undisputed documentary evidence that Nagel re-

peatedly received turn-down payments, the court also

found there was no evidence that Nagel ever benefitted

from, or was even aware of, Playboy’s turn-down fee for

commissioned work it chose not to publish. (Pet. App.

66a. )*

The district court also held that the Nagel works sub-

mitted to Playboy after January 1, 1978 were not works

for hire under the 1976 Copyright Act. Section 101 of

the 1976 Act provides that a “work made for hire” in-

cludes a “work specially ordered or commissioned for

use as a contribution to a collective work .. . if the

parties expressly agree in a written instrument signed by

them that the work shall be considered a work made for

hire.” 17 U.S.C. $101. Acknowledging that Nagel’s

works were contributions to collective works, and that the

parties had expressly agreed in written instruments signed

* The Second Circuit subsequently ruled that that finding was

clearly erroneous. (Pet. App. 12a-13a.)

by both of them that Nagel’s contributions were to be |

considered works for hire, the court nonetheless held |

against Playboy for two reasons. First, the court con-

cluded that Playboy had not met what it described as the

“instance, expense or risk” test. (Pet. App. 70a.) The

court acknowledged that Playboy had the right of artistic

control in Nagel’s works, but concluded that Playboy had |

not exercised that right, and therefore did not meet the

“instance” requirement. (Pet. App. 70a.) The court con- |

cluded that Playboy did not meet the “risk and expense”

requirement because, again, Nagel supplied his own tools

and worked on his own time, and because there was (sup-

posedly) no evidence that Nagel benefitted from or knew

of the turn-down fee. (Pet: App. 70a.) Second, the court

held that Legend Agreements B and C did not satisfy

Section 101(2)’s writing requirement because they were

not executed prior to creation of the particular works

covered by each Legend Agreement (although they were

executed prior to creation of all subsequent works). To

support this second ruling, the district court relied on the

Seventh Circuit’s opinion in Schiller & Schmidt, Inc. v.

Nordisco Corp., 969 F.2d 410 (7th Cir. 1992), which

had opined that a writing “came too late” to satisfy Sec-

tion 101(2) unless it preceded creation of the work in

question. (Pet. App. 70a-74a.)

C. The Court of Appeals’ Decision.

On appeal to the Second Circuit, the case was decided

by a panel of Judges Oakes, Winter and Cardamone.

The court unanimously reversed the district court on the

work-for-hire issues. Applying the 1909 Act to works

created before January 1, 1978, the court held that those

works should be considered works for hire under the 1909

boy’s instance and expense. The Secon! Circuit accepted

the district court’s finding that many of the pre-1978

works were created at Playboy’s instance. But the appeals

court overturned as clearly erroneous the district court’s

er ee ene ne ae am

finding that the works were not created at Playboy’s

expense.

Prior to 1978, there was no statutory requirement of

a writing expressly memorializing the work for hire ar-

rangement. Rather, in the absence of a written agreement,

establishing that a work was created at the publisher’s

instance and expense created a rebuttable presumption

that it was made for hire. The court held that petitioner

had not overcome the presumption, and that the works

during the pre-1978 period were works for hire. (Pet.

App. 17a.) This holding is not challenged in the cer-

tiorari petition.

For works governed by the 1976 Act, the appeals court

applied a similar analysis to determine whether Nagel’s

works were “specially ordered or commissioned” within

the meaning of Section 101(2). The Second Circuit

again reversed as clearly erroneous the district court’s

finding that the works were not prepared at Playboy’s

expense. (Pet. App. 12a-30a.) The court concluded that

a factual issue remained as to whether the works were

produced at Playboy’s instance, and remanded for an in-

quiry into whether Playboy was the motivating factor in

the creation of the works. (Pet. App. 31a-32a.)

The Second Circuit then addressed whether Section

101(2)’s writing requirement was satisfied. The court

held that Legend Agreements B and C satisfied the writ-

ing requirement set forth in Section 101(2). The court

concluded, on the basis of undisputed historical facts, that

Nagel and Playboy had a mutual understanding that

Nagel’s contributions to the Magazine would be consid-

ered works for hire, that the Legend Agreements memo-

rialized this understanding, and that the requirements of

Section 101(2) were thereby satisfied. As the court

explained:

... the parties’ continued use of Legends B and C

is sufficient to show that they intended a work-for-

hire relationship. Playboy, by drafting the legends,

clearly intended the works to be made for hire. For

his part, Nagel, by endorsing Playboy’s checks below

Legends B and C, may be assumed to have con-

sented to a continuing practice whereby any works

he sold to Playboy would be considered works made

for hire. While Nagel’s endorsement of Playboy’s

first check bearing legend B may not evidence his

pre-creation consent to a work-for-hire relationship,

Nagel’s subsequent pre-creation consent to such a

relationship may be inferred from his continued en-

dorsements. Therefore, beginning with the second

check containing Legend B, Nagel’s endorsement of

Piayboy’s checks constitutes sufficient evidence that

the parties agreed before the creation of each work

that it would be made for hire.

(Pet. App. 25a) (emphasis added). The Second Cir-

cuit took note of the statement in Schiller & Schmidt on

which the district court had relied, but held that a prior

writing was not required by the statutory text, and was

unnecessary as a matter of policy in cases such as this

one, where there was clear and undisputed evidence of

the parties mutual intent before creation of the works in

question that they be considered works for hire.* Requir-

ing such proof, the court concluded, would fully address

the policy concerns identified by the Seventh Circuit in

Schiller & Schmidt. (Pet. App. 21a-23a.)

REASONS FOR DENYING THE WRIT

There is no need for this Court to grant review to

address the purported conflict between the decision below

and the Seventh Circuit’s 1992 decision in Schiller &

Schmidt, Inc. v. Nordisco Corp., 969 F.2d 410 (7th Cir.

1992). The allegedly conflicting portion of Schiller &

Schmidt was dictum, and that dictum has not been fol-

* Because some of the Legend Agreements had been signed by

Nagel’s agents rather than Nagel himself, the Court also remanded

for further inquiry into whether those agents had authority to act

on Nagel’s behalf.

lowed in any subsequent published decision. Further-

more, the present case differs from Schiller & Schmidt

in a critical way: in this case, the Second Circuit con-

cluded, based on undisputed facts, that Nagel and Play-

boy “agreed before the creation of each work that it

would be made a work for hire,” and that the series of

written work-for-hire legend agreements over many years

made clear that the parties’ mutual and continuing intent

was that all such illustrations be considered works for

hire. (Pet. App. 25a) (emphasis added). There was no

such evidence or factual finding in Schiller & Schmidt.

The Seventh Circuit therefore never considered how Sec-

tion 101(2)’s writing requirement should apply in the

quite different factual setting presented here.

Review is also unwarranted because the Second Cir-

cuit’s interpretation of Section 101(2) is correct. More-

over, the decision below is not yet final, and the additional

fact-finding ordered on remand may avoid the necessity

for resolving or may otherwise affect the question pre-

sented. Finally, there is not even an arguable conflict

between this case and the other decision cited by peti-

tioner, Konigsberg Int'l, Inc. v. Rice, 16 F.3d 355 (9th

Cir. 1994), because Konigsberg did not involve Section

101(2) at all.

I. NO GENUINE CONFLICT EXISTS BETWEEN

THE COURT OF APPEALS’ DECISION IN THIS

CASE AND THE SEVENTH CIRCUIT’S DECISION

IN SCHILLER & SCHMIDT, INC. v. NORDISCO

CORP.

In Schiller & Schmidt, Inc. v. Nordisco Corp., the Sev-

enth Circuit did state that the writing required by Sec-

tion 101(2) “must precede the creation of the property.”

But despite this broad language, there is no genuine con-

flict between the Second and Seventh Circuits that would

warrant review at this time. The cases involved dramati-

cally different facts, and the Seventh Circuit’s discussion

of the writing requirement was plainly dictum. Thus, it

is not at all clear that even the Seventh Circuit itself

would deny work-for-hire status on the facts presented

here. Because of that uncertainty, and because no re-

ported decision has adopted Schiller & Schmidt's dictum

regarding Section 101(2), there is little reason for this

Court to consider the issue now.

Schiller & Schmidt involved a dispute over the copy-

right in 18 photographs taken prior to 1983. The pho-

tographer, an independent contractor, had been commis-

sioned by Schiller & Schmidt to prepare the photographs

for use in a merchandise catalogue. The photographs were

subsequently misappropriated by a former employee of

Schiller & Schmidt, and used in a rival catalogue. 969

F.2d at 411. Schiller & Schmidt sued for infringement.

In the course of litigation, they obtained a written state-

ment from the photographer that he “agreed that Schiller

and Schmidt has owned the copyright” in the photographs.

Id. at 412. Unlike this case, the writing was not signed

by Schiller & Schmidt, did not expressly state that the

works were to be considered works for hire, and was

executed more than 5 years after the 18 photographs were

created.

On these facts, the Seventh Circuit held that the 1988

writing failed to satisfy Section 101(2), noting that

“(t]he statement was not signed by Schiller . . . as the

statute required if the photos were to be works for hire.”

969 F.2d at 412. The court then stated—without any

analysis of the text or legislative history of Section

101(2), or of prevailing practice in the affected industries

—-that the writing was also invalid because it did not

“precede the creation of the property.” Jd. at 413. In

any event, the court held, Schiller & Schmidt lacked

standing to allege infringement because the company had

previously assigned any copyright it may have held in the

photographs to a third party as part of the sale of its

catalogue business. /d. at 414.

Interpreted in light of these facts, the Seventh Circuit’s

Statement that the writing required by Section 101(2)

“must precede the creation of the property” does not

present a genuine conflict with this case. To begin with,

that statement was dictum. Wholly apart from when it

was signed, the writing at issue in Schiller & Schmidt was

rejected by the Seventh Circuit because it did not meet

either of Section 101(2)’s express requirements. It was

not signed by both parties, and it failed to state that the

covered works were made for hire, thus violating the stat-

utory requirements that “the parties expressly agree in a

written instrument signed by them that the work shall be

considered a work made for hire.” 17 U.S.C. § 101(2)

(emphasis added). Indeed, Schiller & Schmidt did not

even have standing to assert a copyright violation because

it had assigned all copyright to a third party as part of

the sale of its business some years before the lawsuit. 969

F.2d at 413.

Moreover, the Seventh Circuit’s actual ruling on the

timing issue was much narrower than the court’s expan-

sive language suggests. The writing at issue was executed

more than 5 years after the covered works were created,

and after litigation had begun. Unlike this case (where

contemporaneous writings were executed just after each

work was created), there was no evidence or finding that

the parties had mutually agreed prior to creation of the

works that they would be considered works for hire.

Indeed, even the subsequent writing prepared in 1988

did not specify that the works at issue were to be con-

sidered works for hire. In short, in Schiller & Schmidt

there was no evidence—either contemporaneous or after-

the-fact—that the parties ever intended a work-for-hire

relationship.

Thus, even if the Seventh Circuit’s statement that the

writing “came too late” to satisfy Section 101(2) is con-

sidered a holding rather than dictum, it is not truly in

conflict with the Second Circuit’s decision here because

it would not control the outcome on the facts of the

present case. The Second Circuit identified a critical fact

—the existence of a contemporaneous and continuing

understanding between the parties that the illustrations

at issue were works made for hire, expressly manifested

in a continuing course of conduct involving more than a

hundred individual written agreements signed by both

parties. That factual situation was not present in Schiller

& Schmidt, and thus was not considered by that court.

This distinction is crucial because the risks identified by

the Seventh Circuit simply are not present where, as here,

clear evidence exists that the parties had a pre-existing

and continuing agreement that the series of works in

question would all be made for hire, and contemporane-

ously memorialized that agreement when each such work

was delivered to the publisher.

Moreover, this Court should not grant review irrespec-

tive of whether the Second Circuit’s decision technically

conflicts with Schiller & Schmidt. Petitioner has been

unable to point to any decisions following Schiller &

Schmidt, and there appear to be no other reported deci-

sions rejecting a writing as inadequate under Section

101(2) on the ground that the writing must in all cir-

cumstances precede creation of the work. In the two

decades since passage of the 1976 Act, the question pre-

sented here has not been passed upon in any case other

than this one and, in dictum, in Schiller & Schmidt. As

demonstrated, the facts of the two cases differed in critical

respects, and these factual differences explain the divergent

outcomes. Any conflict in approach between the two

decisions is tolerable, and this Court should await further

developments before deciding whether this issue needs to

be addressed on the merits.

II. THE SECOND CIRCUIT’S INTERPRETATION OF

SECTION 101(2) IS BOTH CORRECT AND CON-

SISTENT WITH PREVAILING PRACTICE IN

THE INDUSTRIES TO WHICH SECTION 101(2)

APPLIES.

Review is also unwarranted because the Second Cir-

cuit’s interpretation of Section 101(2) was correct. Far

from creating uncertainty as to the meaning of Section

101(2), the Second Circuit reaffirmed its proper con-

struction. The court’s ruling is likely to contribute to

stability and uniformity in the application of this provision.

The statutory text does not by its terms require a

writing prior to the creation of a work made for hire. It

states that works in a particular category are works for

hire if they are specially ordered or commissioned and

the parties sign a writing stating the work “shall be con-

sidered a work made for hire.” As both the district court

and the Second Circuit recognized in this case, that lan-

guage looks both forward and backward. (Pet. App.

201-23a (Second Circuit); 71a (district court)). A writ-

ing can stipulate that a work “shall be considered a work

for hire” either before or after the work is created. So

long as the work is specially ordered or commissioned,

and the parties have agreed that it should be considered

a work for hire, they need only memorialize that agree-

ment in a writing signed by both of them.

This conclusion is confirmed by the many subsequent

attempts—all unsuccessful—to amend Section 101(2) to

require that the writing precede creation of the work in

question. Senator Cochran unsuccessfully introduced such

legislation in 1982, 1983, 1986, 1987 and 1989. See

S. 2044, 97th Cong., 2d Sess. (1982); S. 2138, 98th

Cong., Ist Sess. (1983); S. 2330, 99th Cong., 2d Sess.

(1986); S. 1253, 101st Cong., Ist Sess. (1989). That

proposed amendment, which provoked substantial oppo-

sition during legislative hearings, would have expressly

‘required a writing “before commencement of the work.”

Congress’ repeated failure to enact the proposed amend-

ment is persuasive evidence that Section 101(2) contains

no prior writing requirement. See Monessen S.W. Ry.

v. Morgan, 486 U.S. 330, 339 n.8 (1988); Blue Chip

Stamps v. Manor Drug Stores, 421 U.S. 723, 732

(1975). Indeed, proponents of the legislation argued

that the prior writing requirement was necessary precisely

because after-the-fact writings were the norm in the pub-

lishing industry under Section 101(2) as enacted in

1976.°

There is no merit to petitioner’s argument that the

Second Circuit’s decision fails to respect the careful

compromise reflected in Section 101(2). That compro-

mise was achieved by specifying the categories of work

by independent contractors eligible for work-for-hire

status. When a work is made for hire, the purchaser, or

commissioning party, obtains the rights to the renewal

term as well as the initial copyright term. Creators were

protected by limiting the types of works in which pub-

lishers could obtain, and creators could thus bargain

away, these rights. Unless a work was within one of the

Statutory categories, that work simply could not be a

work for hire, and the independent contractor thus could

not bargain away the right to recapture copyright at the

end of the first term under any circumstances. But Con-

gress also recognized that publishers had a legitimate

5A Bill to Amend The Copyright Law Regarding Work for Hire:

Hearing on S. 2044 Before the Comm. on the Judiciary, United

States Senate, 97th Cong., 2d Sess. 1, 26 (1982) (describing regular

practice of New York Times to use after-the-fact writings to con-

firm work for hire relationships with regular contributors) ; A Bill

to Amend the Copyright Law Regarding Works Made for Hire:

Hearings on S. 1253 Before The Subcomm. of Patents, Trademarks

and Copyright of the Senate Comm. on the Judiciary, 101st Cong.,

Ist Sess. 195, 675 (1990) (statement by President of Association

of American Publishers that change in current practice regarding

confirmatory writings under Section 101(2) would cause serious

administrative problems).

interest in acquiring the right to recapture renewal rights

in works falling within the categories specified in the stat-

ute, and enabled them to bargain with independent con-

tractors to obtain these rights.

When this Court referred to the need to respect the

congressional compromise underlying Section 101, see

Community For Creative Non-Violence v. Reid, 490 U.S.

730, 748 (1989), it was this compromise to which the

Court referred. The overly broad construction some

courts had given to Section 101(1)’s definition of “em-

ployee” had effectively allowed the works of independent

contractors to be treated as works for hire even though

they did not fall within any of the statutory categories of

Section 101(2), by the expedient of reclassifying inde-

pendent contractors as “employees” whenever the pub-

lisher exercised actual control over the content of the

work in question.

The Second Circuit’s decision in this case in no way

threatens that compromise. To the contrary, it is peti-

tioner’s interpretation of Section 101(2) that threatens

Congress’ objectives by placing artificial obstacles in the

way of work-for-hire relationships that are entirely per-

missible because they involve a category of works ex-

pressly eligible for work-for-hire status under the statute.

The commentators are generally in agreement with the

Second Circuit’s interpretation of Section 101(2) because

the requirement of a prior writing simply does not con-

form to the practical realities of the magazine industry.

Petitioner’s own expert testified at trial that there were

situations in which a subsequent writing could properly

confirm a prior agreement that a work would be consid-

ered made for hire. (A-938-40, 977-80). He made the

Same point in his published treatise:

The trouble, of course, is that, in the real world, pub-

lishers and editors frequently deal informally with

writers, artists and photographers. The telephone,

and not a “written instrument” is the means by which

the assignment is made and by reason of which the

work is performed. Under these circumstances, it

would seem that a court should be willing to accept

a retroactive recitation that the work was intended

to be a work made for hire where such a work made

for hire relationship was tacitly contemplated.

2 E. Gabriel Perle & John Taylor Williams, The Publish-

ing Law Handbook, § 15.03(g), at 15-23 (2d ed. 1992).°

The Nimmers have similarly criticized a rigid prior

writing rule because it will often operate to frustrate the

intent of the contracting parties, and to jeopardize market

predictability:

[OJjne can imagine claims involving parties each of

whom knew of the unanimous intent among all con-

cerned that the work for hire doctrine would apply,

notwithstanding that some of the paperwork re-

mained not fully executed until after the creation

of the subject work. In that latter circumstance, the

bright line rule [stated in Schiller] could frustrate

the intent of the parties, and cloud rather than serve

the goal of certainty.

1 Melville B. Nimmer & David Nimmer, Nimmer on

Especially when weighed against these important practi-

cal considerations, Schiller & Schmidt's broad theoretical

concerns about market predictability are vastly overstated,

and in many circumstances flat wrong. For example, to

some extent, all statutes of frauds limit alienability be-

cause a buyer may be unable to resell the purchased item

until a written instrument validates the initial purchase.

But the buyer can solve that problem by insisting on a

® The petition for certiorari quotes a contrary statement by Mr.

Perle on this issue (see Pet. at 51). The quoted statement is from

the 1993 supplement to the treatise quoted in the text accompanying

this footnote. At the time of the second edition of the treatise, Mr.

Perle had not yet testified as an expert for petitioner in this case.

The supplement, which contains the contrary statement, was pub-

lished after he testified as an expert for petitioner.

prompt confirmatory writing, and will have every incentive

to do so. For such reasons, the law does not interfere

with the parties’ intent by invalidating the transaction

unless a writing is executed at the time of the initial oral

agreement. There is no reason why the result should be

different here.

Ill. THE SECOND CIRCUITS DECISION IS NOT

FINAL, AND THE FACT-FINDING ORDERED ON

REMAND COULD AVOID THE NECESSITY FOR

RESOLVING OR COULD HAVE AN IMPORTANT

BEARING ON THE QUESTION PRESENTED.

Review is also unwarranted at this time because the

Second Circuit remanded the case to the district court for

further factual developmeni. This lack of finality is a

sufficient reason to deny the petition. See Brotherhood

of Locomotive Firemen and Enginemen v. Bangor &

Aroostook R.R., 389 U.S. 327, 328 (1967) (“because

the Court of Appeals remanded the case, it is not yet

ripe for review by this Court”); Hamilton-Brown Shoe

Co. v. Wolf Bros. & Co., 240 U.S. 251, 257-58 (1916):

Virginia Military Inst. v. United States, 113 S. Ct. 2431

(1993) (opinion of Scalia, J. respecting denial of cer-

tiorari).

Review is particularly unwarranted at this time because

the additional findings required by the court of appeals

could well have a bearing on the proper resolution of

the question presented in the petition. If the court con-

cludes that Playboy was not the motivating factor in crea-

tion of the works in question, then the question presented

in the petition will be entirely hypothetical. Alternatively,

more detailed findings about the nature of the relationship

between Nagel and Playboy may well provide further sup-

port for the Second Circuit’s approach.

IV. THE DECISION IN THIS CASE DOES NOT EVEN

ARGUABLY CONFLICT WITH THE NINTH (CiR-

CUIT’S DECISION IN KONIGSBERG INTERNA-

TIONAL INC. v. RICE,

Petitioner also makes a half-hearted argument that the

Second Circuit’s decision conflicts with the Ninth Circuit’s

decision in Konigsberg Int'l Inc. v. Rice, 16 F.3d 355

(9th Cir. 1994). (See Pet. at 56-57). Konigsberg in-

volved the writing requirement of a different section of

the Act, Section 204(a), which applies to transfers.

The facts of Konigsberg were truly unique. An author,

Anne Rice, had agreed with two movie producers to pro-

duce a story outline, which the author would exploit by

turning into a novel and which the producers had a two-

year license to exploit by turning into a movie. 16 F.3d

at 356. No written contract was ever signed. The author

produced the story outline and was paid by the producers.

The producers, however, did not make the movie within

the two-year period. After the author’s novel became a

bestseller, the movie producers sought a declaratory judg-

ment that they retained movie rights. The district court

dismissed the complaint for failure to plead the existence

of a written memorandum of transfer required by Section

204(a). Thereafter, the author wrote what the Ninth Cir-

cuit described as an “indignant letter” to the producers,

claiming that “these contracts, though never signed, were

honored to the letter.” 16 F.3d at 356. The producers

then sought reconsideration pursuant to Fed. R. Civ. P.

60(b), on the ground that this after-the-fact letter satisfied

Rule 204’s writing requirement.

On these unique facts, the Ninth Circuit held that the

author’s letter “though ill-advised—was not the type of

writing contemplated by Section 204 as sufficient to effect

a transfer of the copyright.” 16 F.3d at 357. That deci-

sion is not even in tension, much less in conflict, with the

Second Circuit’s ruling in this case. Konigsberg did not

involve works for hire under Section 101 of the Act, and

thus cannot conflict with the Second Circuit’s interpreta-

tion of Section 101(2)’s writing requirement. Further-

more, even if the Ninth Circuit’s interpretation of Section

204’s writing requirement applied here, the outcome would

be no different. The Ninth Circuit held that a Section 204

writing must “be executed more or less contemporaneously

with the agreement.” The legend agreements at issue in

the present case would therefore satisfy the Ninth Circuit's

timing requirement.

V. THE SECOND CIRCUIT’S DECISION DOES NOT

REMOTELY REQUIRE AN EXERCISE OF THIS

COURT’S SUPERVISORY POWERS.

The consistent understanding between Nagel and Play-

boy that Nagel’s contributions to Playboy would be con-

sidered works for hire renders this case decisively different

from the Seventh Circuit’s decision in Schiller & Schmidt,

and greatly weakens petitioner’s argument on the merits.

Petitioner is thus compelled to attack the Second Circuit’s

ruling on that point, even though it raises an entirely fact-

bound question of concern only to the particular parties

in this case.

In any event, the Second Circuit’s ruling was plainly

correct. The court concluded that the legend agreements

themselves provided strong evidence of a consistent under-

standing between Nagel and Playboy Magazine that

Nagel’s contributions to Playboy would be considered

works for hire. The historical facts on which the Second

Circuit relied in drawing this factual conclusion are un-.

disputed. Each and every legend agreement signed by

Nagel or his agents after August, 1979 (well over a

hundred in total) contained a statement that his contri-

butions were to be considered works for hire, and he con-

tinued to contribute to Playboy without ever complaining

about or seeking to change that understanding in any

way. During Nagel’s lifetime, he never acted in a man-

ner inconsistent with that understanding. He never

sought to publish any of his contributions to Playboy in

any other manner, though he did publish many other

works during the period in question. Nagel’s contribu-

tions to Playboy continued to serve the same function

month after month—illustrating the Advisor, Forum and

After Hours features in Playboy magazine. Nagel con-

tinued to be paid for his work whether Playboy published

it or not.

These undisputed facts provide an ample foundation

for the Second Circuit’s conclusion that works produced

after January 1, 1978 (the effective date of the 1976

deed, the Second Circuit also found—and the petition for

certiorari does not dispute—that the works Nagel pro-

duced for Playboy before January 1, 1978 were works

for hire, and the evidence in support of a work-for-hire

relationship was even stronger after that date than

before.’

The Second Circuit simply drew the obvious inference

from these undisputed facts—that Nagel and Playboy

mutually understood that Nagel’s contributions would be

considered works for hire. In so doing, the Second Cir-

cuit did not reverse any particular finding of historical

fact rendered by the district court, and certainly did not

take issue with any finding based on demeanor evidence.

Thus, it is simply not correct that the Second Circuit

failed to abide by Fed. R. Civ. P. 52(a).

Moreover, the district court’s findings, far from being

“soundly based,” (see Pet. at 60), were clearly and obvi-

ously erroneous in several critical respects. To begin with,

the district court found that Playboy never paid Nagel

when his works were not published, but the court in-

explicably ignored voluminous undisputed documentary

evidence, including cancelled checks, that Playboy paid

7In this Court, petitioner does not dispute in this Court that

Nagel and Playboy had a work-for-hire relationship prior to 1978,

and that this relationship continued on the same terms after 1978.

Nagel a “turn down” fee whenever his submitted works

were not published. This finding, as the appeals court

properly held, was clearly erroneous. Moreover, the dis-

trict court applied the wrong legal standard in assessing

whether Nagel’s works were “specially ordered or com-

missioned” within the meaning of Section 101(2), and

thus its factual findings on that issue were clearly errone-

ous as well. And the district court completely ignored the

more than 100 contemporaneous legend agreements in

which Nagel or his agents confirmed that his contribu-

tions to Playboy were to be considered works for hire.

Thus, the court of appeals had ample reason to conclude

that the district court’s factual findings were clearly

erroneous.

CONCLUSION

The petition should be denied.

Respectfully submitted,

DONALD B. VERRILLI, JR.*

JENNER & BLOCK

601 Thirteenth Street, N.W.

Washington, D.C. 20005

(202) 639-6000

KENNETH P. NORWICK

NORWICK & SCHAD

One Madison Avenue

New York, New York 10010

(212) 447-5000

* Counsel of Record

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.