Peter Brownstein v. Tina Lindsay

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 12-2506 & 12-4471
_____________
PETER BROWNSTEIN,
Appellant
v.
TINA LINDSAY; ETHNIC TECHNOLOGIES
_____________
APPEAL FROM THE UNITED STATES
DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
(D.C. Civ. Action No. 3:10-cv-01581)
District Judge: Honorable Joel A. Pisano
______________
Argued July 10, 2013
______________
Before: GREENAWAY, JR., SLOVITER, and BARRY,
Circuit Judges.
(Filed: January 29, 2014)
Jay R. McDaniel, Esq. [ARGUED]
McDaniel Law Firm
54 Main Street
Hackensack, NJ 07601
Counsel for Appellant
Thomas S. Howard, Esq. [ARGUED]
Kirsch, Gartenberg & Howard
Two University Plaza
Suite 400
Hackensack, NJ 07601-0000
Counsel for Appellees
______________
OPINION
______________
GREENAWAY, JR., Circuit Judge.
This case concerns Appellant Peter Brownstein’s claim
under the Copyright Act seeking a declaratory judgment of
joint authorship of an ethnic identification system that he
created with Appellee Tina Lindsay, the Lindsay Cultural
Identification Determinate (“LCID”). Lindsay purports to
have conveyed the copyrights to the LCID to Appellee Ethnic
Technologies (“E-Tech”). The contested work is a computer
program that implements rules for identifying the ethnicity of
proper names for the purposes of direct marketing. In
addition to a declaration of his joint authorship, Brownstein
2
sought an accounting of the profits from the ethnic
identification system. In response, Appellees counterclaimed
to cancel the copyright registrations that Brownstein had
received for the system’s computer code, which was his
contribution to the work.
After the District Court denied summary judgment, the
case went to trial. At the end of Brownstein’s case, the
District Court granted Appellees judgment as a matter of law
under Rule 50(a) on Brownstein’s joint authorship claim.
Fed. R. Civ. P. 50(a). The District Court found that
Brownstein’s claim was time-barred and that he could not
succeed on the merits of his claim based on the evidence
adduced at trial. The District Court severed Appellees’
counterclaim and later issued an opinion granting summary
judgment to Appellees on their counterclaim.
This appeal presents two issues of first impression for
our Circuit. The first is when a joint authorship claim under
the Copyright Act arises and accrues and the second is
whether courts have the authority to cancel copyright
registrations. For the following reasons, we hold that an
authorship claim arises and accrues when a plaintiff’s
authorship has been “expressly repudiated”. We also hold
that courts have no authority to cancel copyright registrations.
We will reverse both the District Court’s grant of judgment as
a matter of law to Appellees and its grant of summary
judgment to Appellees on their counterclaim. Also, we will
remand the case for a new trial.
I. BACKGROUND
A. BROWNSTEIN’S RELATIONSHIP WITH LINDSAY AND E-
TECH
3
1. The Beginning
Brownstein and Lindsay worked together at Future
Prospective Clients, Inc. (“FPCI”), a direct mailing list
company, when they began developing the ethnic
identification system. FPCI later assumed a new corporate
identity, List Services Direct, Inc. (“LSDI”).1 Beginning
around December 1993, Lindsay began devising the idea and
developing the rules for categorizing names by ethnicity (e.g.,
by looking at first names, last names, suffixes, prefixes, and
geographic location). These rules became known as the
Ethnic Determinate System (“EDS”) — they could be written
out in text, just as one might write out a recipe or driving
directions. The system would use this set of rules to run a
computer program that would predict the ethnicity of a
random list of names from a direct mailing database.
In January 1994, Lindsay enlisted Brownstein to turn
her rules into computer code. This required Brownstein to
code a number of computer programs that did everything
from rewriting a list of names into the proper data format for
processing to turning Lindsay’s rules into computer code.
These programs became known as the ETHN programs.2
Over the years, Brownstein improved and updated the ETHN
programs, with each new generation of programs being a
1
For our purposes, the two are interchangeable.
2
The programs are called the ETHN programs because they
were named ETHN04, ETHN05, etc. The computer code
they contained were scripts of written commands that would
be read by a computer, which would then execute the
commands to perform the functions listed in the code.
4
distinct work from the previous generation. The combined
system of Lindsay’s rules and Brownstein’s computer code
was named the LCID. The result was that Lindsay was the
sole author of the EDS, as an independent work of the LCID,
Brownstein was the sole author of the ETHN programs, as
another independent work of the LCID, and they both had an
equal authorship interest in the LCID as a joint work of the
EDS and the ETHN programs.
Lindsay and Brownstein did much of their work on the
LCID during company time. In June 1996, they incorporated
TAP Systems, Inc. (“TAP”) to commercialize the LCID.
Lindsay and Brownstein were equal owners of TAP and the
LCID became known as the TAP system.
Lindsay and Brownstein also decided to register the
copyrights to their work for extra security. Lindsay received
her first copyright registration for the EDS in February 1996,
entitled “An Ethnic Determinant System — Knowledge and
Rule/Exception Basis”. Copyright Registration No. TXu 730-
872 (the “‘872 registration”). Later that year, in December
1996, Lindsay received a second copyright registration to
protect her improved version of the EDS, which carried the
same title. Copyright Registration No. TXu 778-127 (the
“‘127 registration”). As such, the second registration was for
a “derivative work” of the first registration.3 The difference
with the second registration is that she included a copy of
Brownstein’s ETHN programs as a “deposit copy” for the
‘127 registration and several fields of the registration
3
As will be discussed infra, a derivative work is an
independently copyrightable work that is based upon a
preexisting work. 17 U.S.C. § 101.
5
application referenced a “computer process” and “codes”
associated with the copyright.4 Lindsay applied for and
secured both copyright registrations on her own, without the
involvement of Brownstein, and listed herself as the only
author. She then gave Brownstein a copy of the copyright
registrations to hold for safekeeping — he claims that he
never reviewed the registrations until many years later,
shortly before trial.
In the fall of 1996, Lindsay and Tom Raskin, an
executive at LSDI, had a confrontation over the copyright
registration she had filed earlier that year for the EDS, which
Brownstein overheard and recounted in a 1997 affidavit.
Raskin demanded that she turn over the copyright registration
to him because he believed that LSDI was the rightful owner
of her system. Lindsay refused, which infuriated Raskin to
no end (and would cause Raskin to later sue Lindsay and
Brownstein). Eventually, with tension building between the
LSDI management and the duo, and their venture gaining
steam, they both left LSDI in June 1997.
Throughout this whole time, Brownstein let Lindsay
handle TAP’s business affairs. He was so focused on
programming code for the LCID that he claims that he did not
know of a 1997 software license purportedly granting TAP
ownership of the LCID until 2009.
2. The Progress of TAP
4
As will also be discussed infra, a deposit copy must be
submitted with most registrations in order to provide an
example of the registered work. 17 U.S.C. §§ 407(a), 408(b).
6
Over the course of several years, Lindsay executed a
number of agreements to form new business entities to
promote the LCID and to transfer ownership of the LCID to
those entities.
On June 1, 1997, Lindsay unilaterally attempted to
grant TAP ownership of the LCID (the combined system of
her rules and Brownstein’s ETHN programs). (App. 663
(Software License Agreement, June 1, 1997).) By doing so,
Lindsay had hoped that TAP would own the LCID and be
able to exploit it freely. Lindsay was the only signatory to
that 1997 Software License — she signed both as the
“Copyright Holder” of the LCID and the agent of TAP.
Brownstein was not a signatory to the license, nor was he
asked to be one.
Later that year, Lindsay and Brownstein decided to
partner with one of their former employers, Consumers
Marketing Research, Inc. (“CMR”), to create E-Tech, a joint
venture between the two companies. A September 26, 1997
License Agreement (the “1997 Agreement”) was signed only
by Linsday and CMR’s executive, Ginger Nelson. The 1997
Agreement listed Lindsay and Brownstein as executive
officers of the new venture (which was just called the “LLC”
until a superseding agreement in 2000 formally named the
venture “Ethnic Technologies, LLC”). (App. 631.) The
parties agreed to combine CMR’s technology with the LCID
(which was referred to as the “TAP SYSTEM”), the
combination of which would be called the E-Tech system.
The agreement also acknowledged that TAP owned the
LCID. The superseding December 28, 2000 Agreement (the
“2000 Agreement”) largely mirrored the 1997 Agreement,
except that it formally called the joint venture “Ethnic
Technologies, LLC” and the combined system “E-Tech”.
7
(App. 639.) Lindsay and Nelson were also the only
signatories to the 2000 Agreement, although Brownstein
initialed three corrections made to the agreement. (App. 640-
41.) Thus, while Brownstein can be imputed with knowledge
of these agreements as a 50% owner of TAP and an executive
of E-Tech, he never signed the agreements.
As an E-Tech executive, Brownstein executed five
licensing agreements to E-Tech customers between 2000 and
2005. (App. 695-702 (2001 Agreement with Edith Roman
Associates); App. 702-06 (2002 Agreement with Wells
Fargo); App. 707-13 (2002 Agreement with Penn Media);
App. 714-20 (2003 Agreement with Merkle Data
Technologies); App. 721-27 (2005 Agreement with Central
Address Systems, Inc.).) One of these agreements
acknowledged that the E-Tech system was the “exclusive
property” of E-Tech, while the four others acknowledged that
E-Tech “owns all rights, including copyrights” to the E-Tech
system.
8
3. The Aftermath
The remainder of Brownstein’s relationship with E-
Tech was marred by three lawsuits: the first initiated by LSDI
in federal court, the second initiated by him in New Jersey
state court, and the third initiated by him in federal court.
Although Brownstein did not sign any of the aforementioned
licensing agreements (including the 1997 Software License,
1997 Agreement, and 2000 Agreement), he did sign the two
settlement agreements related to litigation with LSDI in 1998
and the New Jersey state court oppressed shareholder lawsuit
in 2009.
In 1998, LSDI and Raskin (Lindsay and Brownstein’s
former employer) sued TAP in the District of New Jersey
over its use of the LCID. That action eventually settled in
September 1998, with LSDI retaining rights to the ETHN
programs written up to that point (and any derivative works
or modifications thereof), referred to as the “LSDI Program”,
and TAP retaining the rights to the EDS (and any derivative
works or modifications thereof).5
The September 18, 1998 Settlement Agreement (the
“1998 Settlement Agreement”) from the LSDI litigation
stated 1) that Lindsay and Brownstein would not claim rights
to certain computer programs and derivatives or
modifications thereof (the “LSDI Program”) and 2) that they
had rights to Lindsay’s copyrights. (App. 2768-69
(Settlement Agreement ¶¶ 1-3).) Notably, the 1998
5
We need not determine whether post-1998 versions of the
ETHN programs are derivative works of the LSDI Program
since that issue is not before us on appeal.
9
Settlement Agreement equated the EDS with the LCID
(“EDS which may be called LCID”) — the District Court in
this litigation found this to be a critical fact.6 (App. 2769
(Settlement Agreement ¶ 3).)
In May 2009, Brownstein left E-Tech on bad terms.
He filed an oppressed shareholder lawsuit against Lindsay
and E-Tech in the Superior Court of New Jersey. This
litigation settled in May 2010. During this period,
Brownstein filed for his own copyright registrations in
December 2009, which covered his ETHN programs.
The May 25, 2010 Settlement Agreement (the “2010
Settlement Agreement”) from the New Jersey state court
oppressed shareholder lawsuit 1) stated that the terms of the
settlement would not affect the lawsuit leading to this appeal,
which was then pending, 2) forced Brownstein to relinquish
his interests in E-Tech, and 3) released the defendants
(Lindsay and E-Tech) and Brownstein from related claims.
(App. 519-24 (Settlement Agreement ¶¶ 2.6, 3.3, 5.1.1,
5.1.2).) Specifically, this 2010 Settlement Agreement vitiated
Brownstein’s “right, title, and interest” as a “shareholder,
officer, employee or director in TAP or as manager, partner,
member, officer, director or employee of E-Tech”. (App.
520-21 (Settlement Agreement ¶ 2.6).)
Nevertheless, it was not until March 2010 that
Brownstein took affirmative steps to protect his joint
authorship of the LCID by filing the instant lawsuit seeking
6
As will be noted infra, the District Court’s assumption was
incorrect because the 1998 Settlement Agreement could not
define the scope of Brownstein’s and Lindsay’s copyrights.
10
declaratory judgment of his authorship of the LCID (and, by
virtue thereof, his ETHN programs) against Lindsay and E-
Tech. This lawsuit was instigated by Lindsay’s 2010
deposition testimony for the New Jersey oppressed
shareholder lawsuit, in which she confirmed what Brownstein
had not intuited until then: She had submitted Brownstein’s
ETHN programs with her second copyright registration, the
‘127 registration, and might be claiming sole authorship of
the LCID as a result. In total, he waited 14 years from the
date of Lindsay’s copyright registrations, 1996, to file a
lawsuit.
B. THE DISTRICT COURT PROCEEDINGS
On March 22, 2010, Brownstein filed his complaint in
this instant action, which sought a declaratory judgment of
joint authorship of the LCID, an accounting of the profits
from his joint authorship of the LCID, and replevin of
physical copies of the ETHN programs allegedly kept at E-
Tech’s offices. Lindsay and E-Tech filed a counterclaim to
cancel Brownstein’s 2009 copyright registrations to the
ETHN programs.
In February 2012, a jury trial was held in this action —
the only witnesses called were Brownstein and Lindsay.
Brownstein testified first; Lindsay was then called and
Brownstein’s counsel conducted his direct examination.
Before Appellees’ counsel called Lindsay as their own
witness, Appellees moved under Rule 50 for judgment as a
matter of law. The following day, the District Court heard
oral argument on the motion and ruled from the bench in
Appellees’ favor.
11
1. The Rule 50(a) Ruling from the Bench (Brownstein’s
Claim for Joint Authorship of the LCID)
The District Court granted Rule 50(a) judgment as a
matter of law in favor of Appellees on Brownstein’s joint
authorship claim.7 Foremost, the basis of the District Court’s
ruling was that the statute of limitations under the Copyright
Act had run since Brownstein had adequate notice of his
authorship claim more than three years prior to filing his
complaint. (App. 1127-34 (Trial Tr. 333:9-340:3).) As the
District Court framed it, “[W]hy did [Brownstein] wait 14
years and [until after] all of the other ensuing events without
saying anything about it?” (App. 1130 (Trial Tr. 336:15-16).)
Under the “discovery rule”, the District Court found
that there were sufficient “storm warnings” to Brownstein
that Lindsay was claiming sole authorship of the LCID, as far
back as 1996. Finding that Lindsay’s act of registering her
copyrights started the statute of limitations running, the
District Court explained that “there is evidence that the
injurious act [of Lindsay applying for copyright registration]
was actually known as far back as 1996.” (App. 1131 (Trial
Tr. 337:13-21).) The District Court found it dispositive that
Brownstein not only had the copyright registrations in his
possession but that he also had “actual knowledge” of the
series of agreements and the 1996 argument between Lindsay
and Raskin, all of which showed that Lindsay was holding
herself out as the sole author of the LCID. (App. 1133 (Trial
Tr. 339:10-24).) In particular, the District Court found that
Brownstein had conceded that Lindsay’s copyright
7
There was also the replevin claim that the District Court
dismissed, but Brownstein has not appealed this decision.
12
registrations covered the LCID because he signed the 1998
Settlement Agreement, which the District Court paraphrased
as stating that “Tina Lindsay obtained a Certificate of
Registration from the copyright office in 1996 for EDS,
which may be called LCID.” (App. 1132 (Trial Tr. 338:5-9).)
The District Court reasoned that “every . . . piece of
evidence in this case contradict[ed]” Brownstein’s testimony
that he had no clue that Lindsay was claiming to be the sole
author of the LCID (including his ETHN computer programs)
until she gave her 2010 deposition. (App. 1133 (Trial Tr.
339:5-9).) From this, the District Court concluded not only
that Brownstein had constructive knowledge that Lindsay
considered herself the sole author but also that he had actual
knowledge of it. The District Court also concluded that there
was no evidence that Lindsay ever considered Brownstein a
co-author of the LCID.
The District Court further ruled that Brownstein was
not a co-author of the LCID or of his computer programs
because “there is no evidence to support this claim of co-
authorship in the record.” (App. 1133 (Trial Tr. 339:5-12).)
Therefore, the District Court reasoned, even if he was not
barred by the discovery rule and the statute of limitations, his
claim would still fail on the merits.
2. The Summary Judgment Opinion (Lindsay and E-
Tech’s Counterclaim to Cancel Brownstein’s Copyright
Registrations)
After it granted Appellees’ Rule 50 motion on
Brownstein’s authorship claim, the District Court issued an
opinion granting summary judgment on Appellees’
counterclaim to cancel Brownstein’s two copyright
13
registrations. The District Court found that it had authority to
cancel Brownstein’s copyright registrations because the
“threshold determination as to the ownership of the works at
issue is to be made by the Court, as [Appellees] seek to
invalidate the registration because [Brownstein] had no right
to register the work, not because of some regulatory defect.”
(App. 12-13 (Summ. J. Op. at 4-5).) The District Court
proceeded to cancel Brownstein’s copyright registrations
because it had “previously found . . . that [Brownstein’s] co-
authorship claim was without merit” in deciding the Rule 50
motion. (App. 13 (Summ. J. Op. at 5).) Thus, it concluded
that Brownstein had no authorship interest in the LCID or his
ETHN programs and that all of the LCID and its derivatives
were created for TAP and owned exclusively by TAP. (App.
13 (Summ. J. Op. at 5).) The District Court noted that,
“specifically, the 1997 and 2000 agreements[] refer to the
relevant programs as belonging exclusively to TAP.” (App.
13 (Summ. J. Op. at 5).) The District Court also found that
the 2010 Settlement Agreement from the New Jersey
oppressed shareholder lawsuit relieved Brownstein of any
“right, title and interest” in TAP and E-Tech, including the
LCID, which it found that TAP and E-Tech owned. (App. 13
(Summ. J. Op. at 5).)
II. STATEMENT OF JURISDICTION AND
STANDARD OF REVIEW
The District Court had jurisdiction under 28 U.S.C.
§§ 1331, 1338, and 1367. We have jurisdiction under 28
U.S.C. § 1291.
Our review of a judgment as a matter of law under
Rule 50(a) is plenary. Beck v. City of Pittsburgh, 89 F.3d
966, 971 (3d Cir. 1996). “A motion for judgment as a matter
14
of law under Federal Rule [of Civil Procedure] 50(a) ‘should
be granted only if, viewing the evidence in the light most
favorable to the nonmoving party, there is no question of
material fact for the jury and any verdict other than the one
directed would be erroneous under the governing law.’” Id.
(quoting Macleary v. Hines, 817 F.2d 1081, 1083 (3d Cir.
1987)).
Our review of a district court’s grant of summary
judgment is plenary. William A. Graham Co. v. Haughey,
568 F.3d 425, 437 (3d Cir. 2009). Summary judgment may
only be granted if there is no genuine dispute as to a material
fact and the moving party is entitled to judgment as a matter
of law. Fed. R. Civ. P. 56(a).
III. ANALYSIS
Our Circuit has rarely had occasion to venture into the
area of joint authorship under the Copyright Act. In Andrien
v. Southern Ocean County Chamber of Commerce, 927 F.2d
132 (3d Cir. 1991), we touched upon the issue in determining
whether a printer’s contribution to the printing of a map gave
it joint authorship of the map or whether such contributions
through printing were works for hire. This is the first time
that our Circuit has faced a joint authorship claim squarely on
the merits.
In granting Appellees’ Rule 50 motion, the District
Court decided two factual issues. The first issue was whether
Brownstein was a co-author of the LCID. If he was deemed a
co-author, the second issue was whether his joint authorship
claim was barred by the statute of limitations because he was
put on inquiry notice that Lindsay had disclaimed his co-
authorship. In deciding both of these issues, the District
15
Court erred because these were factual determinations that
should have been left to the jury. When viewed in the light
most favorable to Brownstein, the evidence presented at trial
could allow him to succeed on his joint authorship claim.
In granting summary judgment on Appellees’
counterclaim, the District Court determined that it had the
authority to invalidate Brownstein’s copyright registrations.
For the reasons that follow, the District Court should not have
granted summary judgment on the counterclaim because it
had no authority to cancel Brownstein’s copyright
registrations.
We will address each of these three issues in turn —
whether Brownstein was a co-author of the LCID, whether
his claim is barred by the statute of limitations, and whether
the District Court had authority to cancel Brownstein’s
copyright registrations.
A. JOINT AUTHORSHIP
In order to reach the issue of when Brownstein’s
authorship claim arose and accrued, we must first determine
if he was a co-author of the LCID.
1. The LCID as a Joint Work
The issue at the root of this case is whether Brownstein
is a co-author of the LCID, which depends on whether the
LCID is a joint work. When two or more people create a
“joint work”, they become co-authors and co-owners of the
work, each entitled to “undivided ownership in the entire
work”. 1 Melville B. Nimmer & David Nimmer, Nimmer on
Copyright § 6.03 [hereinafter Nimmer on Copyright]; see 17
16
U.S.C. § 101 (defining a “joint work”); Andrien, 927 F.2d at
136. This ownership interest vests from the act of creating
the work, rather than from any sort of agreement between the
authors or any act of registration with the Copyright Office.
For two or more people to become co-authors, each
author must contribute some non-trivial amount of creative,
original, or intellectual expression to the work and both must
intend that their contributions be combined. 1 Nimmer on
Copyright § 6.07; see Gaiman v. McFarlane, 360 F.3d 644,
658-59 (7th Cir. 2004). The components must also be
“inseparable or interdependent” parts of a whole but each co-
author’s contribution need not be equal for them to have an
equal stake in the work as a whole. 17 U.S.C. § 101; 1
Nimmer on Copyright § 6.03. Thus, if Person A writes lyrics
to a song and intends for a composer to write the score,
Person B who writes the score becomes a co-author in the
work. See Gaiman, 360 F.3d at 659 (providing the example
of two co-authors, one a professor with brilliant ideas and the
other an excellent writer); Childress v. Taylor, 945 F.2d 500,
504 (2d Cir. 1991) (holding that a lyricist and composer of a
song were co-authors “even though the lyricist wrote the
words before he knew the identity of the composer who
would later write the music”).
At oral argument, Appellees conceded that Brownstein
and Lindsay were co-authors of the LCID up until its 1997
iteration. Oral Arg. at 17:10-19:00, 21:21-28 (July 10, 2013).
This concession means that Appellees admit that Brownstein
contributed a non-trivial amount of creative expression to the
LCID through his work on the ETHN programs and that
Lindsay intended for the EDS to be combined with the
computer code he drafted to form the LCID. Moreover, this
framework concedes that the EDS and the ETHN programs
17
are interdependent works, which comports with Lindsay’s
assertions. In both the 1997 Software License and her
testimony at trial, she admitted that her rules and
Brownstein’s code were inseparable. (App. 1050 (Trial Tr.
256:1 (“[The] LCID had to have programs.”)).) In Schedule
A of the license, she wrote that the “series of computer
programs” and “system data” of the LCID were “irrevocably
entwined”. (App. 668 (Software License Agreement,
Schedule A).)
Importantly, this concession also means that Appellees
admit that the ETHN programs were not works for hire, as
Lindsay had insinuated in some of her testimony at trial. The
District Court also concluded that the ETHN programs were
works for hire in granting summary judgment on Appellees’
counterclaim, which was an argument that Appellees
advanced in their answer and which we find to be in error.
To analogize here, Lindsay wrote the lyrics, while
Brownstein composed the score. The exception to this joint
authorship rule is the “work for hire” rule, where a
collaborator creates his contribution to the work as part of his
employment or for a commission.8 17 U.S.C. § 201(b); 1
Nimmer on Copyright § 5.03. In such a case, authorship
inures to the employer or commissioner. 17 U.S.C. § 201(b).
8
A classic example of a work made for hire is a magazine
article written by an editor employed by the magazine’s
company. Unless they agree otherwise, the editor’s
employer, the magazine’s company, owns the copyright to his
article, despite the fact that he created the article with his own
intellectual creativity.
18
A work for hire requires that the work be made by an
employee within the scope of his or her employment or that
the work be commissioned. 17 U.S.C. § 101; see 1 Nimmer
on Copyright § 5.03; Marco v. Accent Publ’g Co., 969 F.2d
1547, 1549-50 (3d Cir. 1992); see also Warren Freedenfeld
Assocs., Inc. v. McTigue, 531 F.3d 38, 48 (1st Cir. 2008). At
trial, Lindsay claimed that she directed Brownstein on how to
turn her rules into computer code. (App. 1051 (Trial Tr.
257:19-22 (“At my direction. I told him exactly what to
write.”)).) On the other hand, Brownstein had to use his own
intellectual creativity to select the computer commands to
use. He controverted Lindsay’s testimony on the stand when
he testified that he automated Lindsay’s manually inputted
list of rules and names, which gave Brownstein “[q]uite a bit
[of discretion]” in how he coded the ETHN programs. (App.
910 (Trial Tr. 116:8-10).)
By every indication, and given Appellees’ concession,
Brownstein’s computer programs were not works for hire. 17
U.S.C. § 201(b). Brownstein was both an officer and
shareholder of TAP and an officer of E-Tech. He was not an
employee of TAP or E-Tech; nor was he commissioned to
write the code by TAP or Lindsay. Most importantly, he was
not compensated for the express purpose of writing code for
them.
2. The Effect of Lindsay’s and Brownstein’s Copyright
Registrations
Pivotal to this case is distinguishing an author’s
interest in the copyright to his work from the registration of
his work. A “copyright”, as a right, vests immediately upon
the creation of the work. 17 U.S.C. § 201(a). For this reason,
a copyright must not be confused with the act of registering
19
that right. Registration serves primarily to create a record of
the creation of the work and it also allows the author to bring
civil claims under the Copyright Act. 17 U.S.C. § 411(a); 2
Nimmer on Copyright § 7.16.
With few exceptions, a deposit copy must be submitted
with an application for copyright registration. 17 U.S.C. §§
407(a), 408(b). A deposit copy does not necessarily limit the
copyrightable work itself. 2 Nimmer on Copyright § 7.17.
Here, a deposit copy means that Lindsay sent a physical
printout of Brownstein’s code to the Copyright Office for
safekeeping (and was only sent a deposit receipt in return),
which would serve an “archival function” in the event of
infringement and help elucidate her copyrightable work. Id.
a. Lindsay’s Copyrights and Copyright Registrations
Due to the District Court’s conflation of the EDS and
the LCID, which are distinct works with distinct copyrights, it
was misled into finding that Lindsay’s copyright registrations
covered the entire LCID, including Brownstein’s ETHN
programs. This false premise then led the District Court one
step further to conclude that Lindsay could unilaterally
transfer ownership of the LCID through the trio of licensing
agreements that she executed. The District Court largely
assumed that her copyright registrations covered the entire
LCID because Brownstein’s ETHN programs were included
as a “deposit copy” with her second registration. But the
District Court’s assumption is belied by the copyright
registrations themselves and the law undergirding the
registration process. Lindsay’s copyright registrations only
cover the EDS.
20
Lindsay’s registrations did not extend to the LCID as a
whole or the ETHN programs. Notably, Lindsay’s first
registration was entitled “An Ethnic Determinant System —
Knowledge and Rule/Exception Basis”, which
unambiguously refers to the EDS, her system of rules. Her
second registration had the same title and was marked as a
derivative work of the first, so it, too, only covered the EDS.
The most significant difference between her two registrations
is that the second registration included Brownstein’s ETHN
programs as the deposit copy and described the EDS as “[a]
computer system process and data rules” in the Nature of
Authorship field of the registration application. She also
wrote “[a]dditional ethnic categories, additional rules, names,
codes . . . [d]escription of computer process included” in
another field of the second registration. Nowhere, though,
did she write “ETHN programs” in the registration.
Accordingly, her registrations could not claim ownership of
the ETHN programs simply based on the contents of the
deposit copy.
The District Court’s reliance on the deposit copy as an
indication of the second registration’s scope was also
misguided. Lindsay, herself, admitted as much at trial. She
testified that the deposit copy did not reflect the scope of her
copyrights or authorship, explaining that the deposit copy of
the ETHN programs was only meant to provide “an example”
of how the EDS would be implemented, not to claim
ownership of Brownstein’s programs. (App. 1049 (Trial Tr.
255:1-4).)
Thus, the fact that Lindsay submitted Brownstein’s
code in the form of the deposit copy does not establish that
she held a copyright to his ETHN programs or the LCID as a
whole. Since Brownstein, alone, wrote the code, the only
21
rights Lindsay could have had to his code would flow through
the LCID as a joint work with her rules. Further, even if her
registrations covered the LCID and were entitled “The LCID,
Including the ETHN Programs”, that act would not vest
exclusive ownership of the LCID in Lindsay. Brownstein
would remain a co-author and co-owner because copyright
registration does not establish the copyright, which attaches at
the moment of creation. Consequently, Lindsay’s copyright
registrations, if anything, are merely placeholders for the
indivisible joint rights she inherently had in the EDS and the
LCID with Brownstein.
b. Brownstein’s Copyrights and Copyright Registrations
As mentioned above, Brownstein had copyrights
exclusively in his ETHN programs as an independent work
and non-exclusively in the LCID as a co-author. In addition,
he also had copyrights to whatever new generations of the
ETHN programs and LCID that he created as “derivative
works” of his first set of ETHN programs and the LCID.
Therefore, although LSDI retained rights to the ETHN
programs that were considered the “LSDI Program” in the
1998 Settlement Agreement, the subsequent generations of
ETHN programs that Brownstein developed remained under
his ownership because they were derivative works of the
LSDI Program. Brownstein’s 2009 copyright registrations
would, therefore, cover any post-1998 generations of the
ETHN programs that were not covered by the 1998
Settlement Agreement with LSDI.
3. Derivative Works of the LCID
At oral argument, Appellees contended that the post-
1997 versions of the LCID are derivative works and that,
22
therefore, Brownstein has no rights to these improved
versions of the LCID. Appellees are correct in one respect
and wrong in another: The post-1997 versions of the LCID
may indeed be derivative works but Brownstein retains an
interest in the post-1997 versions of the LCID insofar as they
are based on any version of the LCID to which he is a co-
author. It is possible that the post-1997 versions of the LCID
continued to employ the code created by Brownstein, but
such a determination would require additional factual
development at trial.
Derivative works are works that build upon and
improve a previous work, such as a remix of an old song. 17
U.S.C. § 103. While the original work may be copyrightable,
a derivative work is copyrightable on its own basis. Id.; 1
Nimmer on Copyright § 3.04. Derivative work protection
only extends to those parts of the derivative work that are
novel beyond the original work and the author or authors of
the underlying work retain their rights to their original work.
See Dam Things from Denmark, a/k/a Troll Co. ApS v. Russ
Berrie & Co., 290 F.3d 548, 563 (3d Cir. 2002).
A copyright is better described as a bundle of rights:
the right to reproduce the copyrighted work, the right to
prepare derivative works from the copyrighted work, and the
right to perform or display the copyrighted work. 17 U.S.C. §
106; see Davis v. Blige, 505 F.3d 90, 98 (2d Cir. 2007).
Thus, the author has the exclusive right to produce derivative
works. See Dun & Bradstreet Software Servs., Inc. v. Grace
Consulting, Inc., 307 F.3d 197, 212-13 (3d Cir. 2002); Dam
Things from Denmark, 290 F.3d at 563-64. If the original
work is copyrightable, then the original author or authors
must consent to the creation of a derivative work by a third
party — unauthorized creation of a derivative work, which
23
incorporates the original work, constitutes an infringement of
the underlying work. 17 U.S.C. § 106; 1 Nimmer on
Copyright § 3.04; Dun & Bradstreet Software Servs., Inc.,
307 F.3d at 212-13; Dam Things from Denmark, 290 F.3d at
563-64.
As a result, even if Brownstein is not a co-author of
some of the derivative versions of the LCID, he remains the
co-author of the underlying work and has an ownership
interest in derivative versions of the LCID to the extent that
they incorporate the underlying work. The extent of
Brownstein’s authorship and ownership of these derivative
works is a factual question that must be decided by a jury.
4. The License and Settlement Agreements
Having defined the inherent copyrights of Lindsay and
Brownstein, the next question is what rights were conveyed
by the series of license and settlement agreements. Some
agreements purport to grant licenses, while some purport to
transfer ownership, but it is not at all clear which agreements
accomplish what.
With respect to licensing a joint work, each co-author
is entitled to convey non-exclusive rights to the joint work
without the consent of his co-author. 1 Nimmer on Copyright
§ 6.10. See Davis, 505 F.3d at 98-100. The only caveat is
that the licensing author must account to his co-author for his
fair share of profits from any non-exclusive license. 1
Nimmer on Copyright § 6.12. If a co-author attempts to
convey exclusive rights, his co-author can convey the same
exclusive rights — in effect, such an exclusive license
becomes a non-exclusive license. Id. § 6.10; see Davis, 505
F.3d at 100-01 (“A co-owner may grant a non-exclusive
24
license to use the work unilaterally, because his co-owners
may also use the work or grant similar licenses to other users
and because the non-exclusive license presumptively does not
diminish the value of the copyright to the co-owners.”).
Accordingly, the only way for truly exclusive rights to be
conveyed to a joint work is for all co-authors to consent to
such an exclusive conveyance. As with tenants in common of
real property, a co-author can transfer or assign the rights to
his ownership interest in the joint work, but this does not
affect the ownership rights of his co-author. 1 Nimmer on
Copyright § 6.11; Davis, 505 F.3d at 99-100.
With respect to transferring the ownership of a joint
work, a co-author cannot transfer the ownership interest of his
co-author. The Copyright Act’s “statute of frauds” requires
that any transfer of an ownership interest must be signed and
in writing. 17 U.S.C. § 204(a); see Barefoot Architect, Inc. v.
Bunge, 632 F.3d 822, 827 (3d Cir. 2011).
Due to Appellees’ concession that Brownstein was a
co-author of the LCID through 1997, Lindsay could not have
transferred ownership of the LCID before 1998 without
Brownstein’s consent in a writing with his signature. Even if
Lindsay’s registrations covered the entire LCID, she would
have had no authority to convey an exclusive license to the
joint work of the LCID without Brownstein’s consent and
could only have assigned the rights to her own ownership
interest in the LCID. 1 Nimmer on Copyright §§ 6.10, 6.11;
see Davis, 505 F.3d at 99-100.
Under these facts, Lindsay could have only conveyed a
non-exclusive license to the LCID to TAP (and, subsequently,
to E-Tech). Such non-exclusive licenses to the LCID would
have no effect on Brownstein’s copyrights and ownership
25
interest in his ETHN programs and the LCID. Accordingly,
the only set of rights to which Lindsay could have conveyed
an exclusive license or transferred ownership on her own
would be to the EDS, of which she was the sole author. If
Lindsay did transfer her ownership of the EDS to TAP, that,
too, would not have disturbed Brownstein’s rights.
Since the 1997 Agreement and 2000 Agreement both
emanate from the rights conveyed in the 1997 Software
License, those two agreements rise and fall with the 1997
Software License. Since the software license did not transfer
Brownstein’s ownership interest in the LCID as a joint work,
neither could the 1997 Agreement or 2000 Agreement. The
2010 Settlement Agreement did divest Brownstein of any
interest he had in TAP and E-Tech. But, if TAP and E-Tech
never had exclusive rights to Brownstein’s ETHN programs
as part of the LCID, then Brownstein could not be divested of
those rights via the 2010 Settlement Agreement. Moreover,
the 2010 Settlement Agreement only quashed Brownstein’s
“right, title, and interest” as a “shareholder, officer, employee
or director in TAP or as manager, partner, member, officer,
director or employee of E-Tech”. It says nothing specifically
about his rights as co-author of the LCID or sole author of the
ETHN programs.
In sum, Brownstein’s copyrights and ownership
interest in his ETHN programs (and, by virtue thereof, the
LCID) were not affected by the series of agreements, except
to the extent that the 1998 LSDI Settlement Agreement
abrogated his ownership of the pre-1998 generations of the
ETHN programs, the “LSDI Program”.
26
B. THE STATUTE OF LIMITATIONS
Even though Brownstein is a co-author of the LCID
through 1997 and possibly a co-author of derivative versions
of the LCID created thereafter, an open question remains
about whether the statute of limitations has run on his
authorship claim. The statute of limitations under the
Copyright Act is three years for all civil actions.9 17 U.S.C. §
507(b). Here, Brownstein must show that his joint authorship
claim did not begin to accrue until March 22, 2007, at the
latest.
1. Inquiry Notice of Brownstein’s Authorship Claim
Once Brownstein was on inquiry notice of his
authorship claim, his cause of action began to accrue and the
statute of limitations began to run. Deciding when
Brownstein was on inquiry notice of his authorship claim
depends on two determinations: 1) when a cause of action
first arose and 2) when he should have known that a cause of
action had arisen. In our Circuit, the discovery rule governs
the second determination, while we adopt the express
repudiation rule from our sister circuits to govern the first.
9
Brownstein argues that the statute of limitations does not
even apply since Lindsay’s copyright registrations and
agreements only related to the EDS and Brownstein is only
seeking a declaration that he is a co-author of the LCID.
(Appellant’s Reply Br. 11-15.) While it is true that Lindsay’s
testimony at trial is internally inconsistent, Lindsay is still
asserting in her counterclaim that she is the sole author of the
LCID, which contests Brownstein’s joint authorship of the
LCID.
27
a. The Discovery Rule
We follow the “discovery rule” in determining when a
cause of action begins to accrue. The discovery rule is a
general inquiry notice rule, which states that a claim accrues
when the plaintiff discovers or should have discovered with
“due diligence” that his rights had been violated. William A.
Graham Co., 568 F.3d at 438. In William A. Graham Co., we
extended the discovery rule to copyright actions, noting that
eight of our sister circuits had done the same. Id. at 433-37.
We held that a plaintiff would be able to discover his injury
with due diligence if there were “storm warnings” which gave
the plaintiff “sufficient information of possible wrongdoing to
place [him] on inquiry notice . . . of culpable activity.” Id. at
438 (internal quotation marks omitted). The discovery rule
also holds that the clock only starts running once a cause of
action arises since a plaintiff cannot experience storm
warnings of a violation until his rights have been violated. Id.
at 438-39. Consequently, prospective plaintiffs have no duty
to investigate future causes of action. Id. at 439.
b. Express Repudiation
Since Graham does not establish when a cause of
action arises for declaration of authorship, we must turn to
our sister circuits for guidance.10
10
As of 1996, the Ninth Circuit observed that “[t]here is a
surprising lack of precedent on the question of when a cause
of action claiming co-ownership of a copyright accrues.”
Zuill v. Shanahan, 80 F.3d 1366, 1370 (9th Cir. 1996).
Likewise, as of 2005, the Eastern District of Michigan
commented that “[t]here is surprisingly sparse precedent on
28
The Ninth Circuit, Seventh Circuit, and Second Circuit
have adopted an “express repudiation” rule, such that a joint
authorship claim arises and an author is alerted to the
potential violation of his rights when his authorship has been
expressly repudiated by his co-author. See Zuill, 80 F.3d at
1370-71; Gaiman, 360 F.3d at 653; Gary Friedrich Enters.,
LLC v. Marvel Characters, Inc., 716 F.3d 302, 317 (2d Cir.
2013). Thus, in assessing the accrual of a joint authorship
claim, we will apply the discovery rule to the express
repudiation rule. Fusing these two concepts, the discovery
rule will only apply once a plaintiff’s authorship has been
expressly repudiated since he can only be on inquiry notice
once his rights have been violated.
This express repudiation rule spawned from a Ninth
Circuit case, Zuill v. Shanahan, 80 F.3d 1366 (9th Cir. 1996).
Since Zuill, only a smattering of circuit cases have endorsed
the rule. See Cambridge Literary Props., Ltd. v. W. Goebel
Porzellanfabrik G.m.b.H. & Co. KG., 510 F.3d 77, 88-89, 91
(1st Cir. 2007); Roger Miller Music, Inc. v. Sony/ATV Publ’g,
LLC, 477 F.3d 383, 389-90 (6th Cir. 2007). Similar to the
discovery rule, the express repudiation rule looks for evidence
that a co-author has acted adversely to the plaintiff’s status as
a co-author.11 See Gaiman, 360 F.3d at 653; Zuill, 80 F.3d at
the question of when a cause of action claiming co-ownership
of a copyright accrues.” Diamond v. Gillis, 357 F. Supp. 2d
1003, 1006 (E.D. Mich. 2005).
11
In Zuill, the plaintiffs’ joint authorship was expressly
repudiated when the co-creator of Hooked on Phonics made
declarations that he was the “sole” owner of the contested
copyrights in a compensation contract reviewed by the
putative co-creators of the music and the co-creators saw a
29
1370-71; Gary Friedrich Enters., LLC, 716 F.3d at 317-19;
see also Aalmuhammed v. Lee, 202 F.3d 1227, 1230-31 (9th
Cir. 2000); Merchant v. Levy, 92 F.3d 51, 53, 56 (2d Cir.
1996). Many of these cases analogize co-authors of
copyrights to tenants in common of real property. See Zuill,
80 F.3d at 1370; Gaiman, 360 F.3d at 654; Davis, 505 F.3d at
98-99.
Applied here, Brownstein’s injury occurred whenever
Lindsay expressly repudiated his joint authorship of the
LCID. This required that Lindsay do something that
communicated not merely that she is the author, but that she
is the sole author or that Brownstein is not a co-author.12 For
published version of the work with the defendant listed as the
only author. 80 F.3d at 1368. In Gaiman, the plaintiff’s joint
authorship claim was expressly repudiated when the
defendant sent a letter to him which stated that “all rights . . .
shall continue to be owned” by the defendant’s company.
360 F.3d at 652. Unlike Brownstein, the plaintiffs in those
cases had no ownership interest in the entity that was claimed
to own the putative copyrights and they were directly shown a
document with a declaration of the defendants’ sole
authorship.
12
A critical nuance is that Lindsay’s assertion of her sole
authorship to unspecified copyrights in an agreement is not an
express repudiation of Brownstein’s co-authorship of the
LCID and his sole authorship of his ETHN computer
programs. If Lindsay’s copyrights did not cover the joint
work of the LCID but, instead, only the EDS, then her
declarations as sole author of her copyrights would have said
nothing about Brownstein’s authorship of his computer code.
30
instance, this would occur if Brownstein became aware that
she was claiming that she was the sole author of the LCID in
an agreement or if Brownstein overheard a conversation
where Lindsay said that she commissioned Brownstein to do
the work for her as a work for hire. Or, as in Gaiman and
Zuill, this would happen if Lindsay directly sent Brownstein a
letter which stated that she was the sole author of the LCID.
Express repudiation could also occur if Lindsay was
exploiting the LCID without remuneration to Brownstein.
See, e.g., Gary Friedrich Enters., LLC, 716 F.3d at 318-19;
Cambridge Literary Props., Ltd., 510 F.3d at 91.
The District Court considered the date of express
repudiation (which it characterized as the date of injury) to be
the date that Lindsay registered her copyrights since, in listing
herself as the only author of the registration, she was
implicitly disclaiming Brownstein’s joint authorship. (App.
1131 (Trial Tr. 337:13-15 (“In my view, the injurious act
defined by the statute actually occurred upon the registration
of the copyright.”)).) This stretches the meaning of express
repudiation too thin. The act of registering a copyright does
not repudiate co-authorship; put differently, the way to
expressly repudiate your co-author’s authorship is not to
register the copyright in your name.
As one of our sister circuits has held, a copyright
registration, standing alone, does not serve as repudiation of
joint authorship because co-authors are not expected to
investigate the copyright register for competing registrations.
See Gaiman, 360 F.3d at 654-55. But see Saenger Org., Inc.
v. Nationwide Ins. Licensing Assocs., Inc., 119 F.3d 55, 66
(1st Cir. 1997) (holding that copyright registration puts the
world on constructive notice of ownership); Diamond v.
Gillis, 357 F. Supp. 2d 1003, 1007 (E.D. Mich. 2005)
31
(holding that registration of a song qualified as express
repudiation). In Gaiman, the Seventh Circuit held that the
purpose of a copyright registration is “not to start the statute
of limitations running” because it is not adverse to a co-
author’s interest in the joint work. 360 F.3d at 653-54.
The peril of the District Court’s rationale is apparent:
A challenger to a plaintiff’s authorship could surreptitiously
apply for copyright registration of the plaintiff’s work to start
the statute of limitations running and, if the plaintiff did not
discover the registration until three years thereafter, the
plaintiff’s authorship would be nullified.
Appellees contend that blanket statements in some of
the agreements declaring Lindsay as the sole author of the
LCID expressly repudiated Brownstein’s authorship rights.
We disagree. The more apt inquiry is whether any statement
in the agreements was hostile or adverse to Brownstein’s
authorship rights. See Gaiman, 360 F.3d at 654; Zuill, 80
F.3d at 1370. For repudiation to be express, it must be plain.
See Aalmuhammed, 202 F.3d at 1230-31. A copyright holder
should not be required to investigate every whisper and rumor
that another has declared himself the author of his
copyrighted work. See Gaiman, 360 F.3d at 654-55. A
whisper or rumor also does not stir up the type of “storm
warning” that would put an author on inquiry notice. It
follows that, if an action is not hostile to an author’s rights, it
may not be plain that his authorship rights have been
repudiated.
There are several potential sources of express
repudiation at play: Lindsay’s copyright registrations, the
1996 argument between Lindsay and LSDI’s Raskin, the trio
of license agreements (the 1997 Software License, the 1997
32
Agreement, and the 2000 Agreement), the settlement
agreements (the 1998 Settlement Agreement and the 2010
Settlement Agreement), and the E-Tech licensing agreements
executed by Brownstein (from 2000 until 2005). We will rule
out one of these sources and leave the others for the jury to
decide on remand.
i. Lindsay’s Copyright Registrations
Lindsay’s copyright registrations could not have
expressly repudiated Brownstein’s rights since, by their plain
language, they only covered the EDS. As discussed above,
the deposit copy did not expand the scope of her second
registration by including Brownstein’s ETHN programs.
More importantly, as just established, a registration does not
expressly repudiate authorship.
ii. The 1996 Argument with Raskin
In the 1996 argument, which Brownstein recounted in
his 1997 affidavit for the LSDI litigation, Lindsay told Raskin
that “the copyright was in her name because she initiated it
and did all the work and spent her own money and time to do
it.” (App. 2744-45 (Brownstein Aff. ¶ 31).) This argument
declared very little expressly about Lindsay’s copyrights: It
did not identify the work to which she was claiming
ownership and, at that time, Raskin and LSDI were not yet
aware of the LCID (they were only aware of the EDS). As a
result, this 1996 argument did not necessarily provide
Brownstein a storm warning that Lindsay was repudiating his
joint authorship of the LCID.
33
iii. The 1997 Software License
The 1997 Software License is key because it is the first
link in the chain of title that Lindsay supposedly conveyed
through the trio of agreements — all of the subsequent license
and settlement agreements turn on what was originally
conveyed to TAP in this software license. The 1997 Software
License purported to give TAP an exclusive license to the
LCID, which included Lindsay’s rules and Brownstein’s
computer programs. (See App. 668 (Software License
Agreement, Schedule A).) In her testimony, Lindsay
explained that this was her intention because the software
license was supposed “to mak[e] sure that TAP owns both
[the rules and the computer code]”. (App. 1066 (Trial Tr.
272:15-20).) Lindsay was the only signatory to the license,
both as the copyright holder and the representative of TAP.
Brownstein was not a signatory to the agreement, which is the
foible of Lindsay’s plans.
Interestingly, her intention to grant an exclusive
license to Brownstein’s ETHN programs, as part of the LCID,
did not actually interfere with Brownstein’s ownership rights.
As described previously, a co-author is allowed to grant a
license to the joint work without the consent or involvement
of her co-author — but such a license is treated like a non-
exclusive license and does not negate the other co-author’s
ownership interest. 1 Nimmer on Copyright § 6.10; see
Davis, 505 F.3d at 99-100. Viewing the evidence in the light
most favorable to Brownstein, it is possible that he thought
that the 1997 Software License merely conveyed a non-
exclusive license for the LCID to TAP rather than declaring
Lindsay the sole author of the LCID. Despite her subjective
thoughts or evaluations, Brownstein’s rights were not
adversely affected by Lindsay’s actions.
34
Further, a close look at the agreement shows that the
language does not state that Lindsay was the exclusive author
or owner of the entire LCID. It vaguely calls Lindsay the
“Copyright Holder” without describing her specific copyright
interests or referencing her actual copyright registrations.
(App. 663 (Software License Agreement, June 1, 1997).) A
reader might assume from this that she is the sole copyright
holder of the LCID, but this would only be an assumption and
not based on the strict language of the agreement.
iv. The 1997 Agreement and the 2000 Agreement
The 1997 Agreement (which partnered TAP with
CMR) fares no better in Lindsay’s attempt to establish
express repudiation since it was contingent on the rights held
by TAP. The strongest language from this agreement only
says that “TAP owns all rights, including copyrights” to the
TAP system, which is the “exclusive property of TAP”.
(App. 631.) As discussed above, the 1997 Software License
could not have conveyed Brownstein’s ownership interest in
the LCID to TAP without his consent in a signed writing. At
most, TAP owned Lindsay’s ownership interest in the LCID.
In fact, the 1997 Agreement states that the joint
venture and the counterparty, CMR, “acknowledge at all
times that the original TAP SYSTEM [the LCID] remains the
property of TAP.” (App. 633.) How could the property
interest in the LCID be transferred to a new owner if it
remained the property of the original owner? Thus, all the
agreement actually did was give the joint venture, what would
become E-Tech, a non-exclusive license to use the LCID and
allowed E-Tech to combine the LCID with CMR’s
technology. It said nothing that was adverse to Brownstein’s
35
ownership interest in the LCID — his rights could co-exist
with the terms of the 1997 Agreement.
Although very similar to the 1997 Agreement, the
2000 Agreement did convey all of TAP’s assets to the joint
venture, but this also did not disturb Brownstein’s ownership
interest in the copyrights to the ETHN programs (and, by
virtue thereof, the LCID). As mentioned, all TAP possessed
was a non-exclusive license to the LCID from the 1997
Software License and possibly the assignment of Lindsay’s
ownership interest in the LCID. Thus, contrary to Lindsay’s
belief, the 2000 Agreement did not vest E-Tech with
exclusive ownership over the LCID. As long as his
ownership rights remained intact, Brownstein might not have
seen any storm warnings requiring him to investigate the
potential repudiation of his authorship.
v. The 1998 Settlement Agreement
The agreement which presents the most potential for
Lindsay’s argument is the 1998 LSDI Settlement Agreement,
which Brownstein actually signed and which gave LSDI
ownership over certain computer code referred to as the
“LSDI Program”. Lindsay claims that it decreed her
exclusive ownership of the LCID by stating that her two
copyrights cover the EDS “which may be called [the] LCID”,
but it is not for a settlement agreement to define the scope of
her copyrights or her copyright registrations.13 Such a
13
A contract or agreement cannot alter copyrights or
copyright registrations by simply renaming a work since
nomenclature does not affect the substance or content of a
work.
36
misnomer did not necessarily serve as a storm warning of
repudiation of Brownstein’s joint authorship of the LCID.
Otherwise, it does not say much in her favor.
That language only renamed the EDS (which is all her
exclusive copyrights and her copyright registrations likely
covered) as the LCID, for the purposes of the agreement.
Moreover, other language in the agreement controverts any
exclusive ownership Lindsay would have been given over the
LCID in the agreement by declaring that “Lindsay, Nelson,
Brownstein, ET, TAP and CMR . . . are the sole owners of the
copyrights”. (App. 2772 (Settlement Agreement ¶ 18).)
Thus, if the settlement language governed the boundaries of
the copyrights, then Lindsay would actually have to share
ownership in her copyrights with Brownstein and the other
parties to the settlement agreement. It is surely difficult to
characterize this as a storm warning — if anything, it might
have confirmed for Brownstein that his rights to the LCID
were preserved.
vi. The 2010 Settlement Agreement
The 2010 Settlement Agreement is of little help to
Lindsay. She argues that, by disowning any “right, title and
interest” in E-Tech, Brownstein forfeited his ownership
interests in his computer code. But what the agreement
actually says is that Brownstein forfeited his rights and
interest as a “shareholder, officer, employee or director in
TAP or as manager, partner, member, officer, director or
employee of E-Tech.” (App. 520-21 (Settlement Agreement
¶ 2.6).) There is no basis to argue that Brownstein’s
independent ownership rights in his ETHN programs were
subsumed in his positions in TAP or E-Tech. Further, as
noted earlier, it is doubtful that TAP or E-Tech ever had
37
exclusive ownership of the LCID and Brownstein’s ETHN
programs.
vii. Brownstein’s E-Tech Licensing Agreements (2000-
2005)
These standard consumer licensing agreements state
that E-Tech owns the copyrights to the E-Tech system as its
exclusive property, which is accurate and undisputed.
Brownstein signed five of these agreements with E-Tech
customers between 2000 and 2005, which satisfies the statute
of frauds and imputes him with knowledge of their language.
The distinguishing and critical fact is that the E-Tech system
is a joint work formed from the combination of the LCID and
CMR’s own system. Therefore, by declaring that E-Tech
owned the E-Tech system, the agreements were not asserting
that E-Tech owned the copyrights to the LCID, which is a
separately copyrightable component of the E-Tech system. It
is plausible that Brownstein might have been put on inquiry
notice by these agreements but, viewing the evidence in the
light most favorable to Brownstein, it is also plausible that
these agreements would not have provided storm warnings of
repudiation — after all, Brownstein would not have been
concerned with, and has never claimed authorship of, the E-
Tech system.
c. Questions Remaining for the Jury
Based on these potential sources of express
repudiation, the District Court made its Rule 50(a) ruling
when there were still genuinely disputed issues of material
fact to be decided by the jury. As mentioned, Lindsay’s
registrations, standing alone, could not have repudiated
Brownstein’s authorship as a matter of law.
38
All the other potential sources of repudiation — the
1996 argument with Raskin, the 1997 Software License, the
1997 Agreement and 2000 Agreement, the 1998 Settlement
Agreement, and the 2010 Settlement Agreement — involved
factual determinations that should have been left for a jury.
Accordingly, the issues of whether these six sources expressly
repudiated Brownstein’s authorship were inappropriately
decided under Rule 50(a) and should have gone to the jury.
C. CANCELLATION OF BROWNSTEIN’S COPYRIGHT
REGISTRATIONS
In granting summary judgment to Appellees on their
counterclaim, the District Court ordered the cancellation of
Brownstein’s 2009 copyright registrations. The District
Court was in error ab initio. We hold that courts have no
authority to cancel copyright registrations because there is no
statutory indication whatsoever that courts have such
authority. Also, there is substantial indication that courts do
not have such authority.
Like most courts, our Circuit has never had the chance
to ascertain the role of courts in the cancellation of copyright
registrations. Of the few courts to do so, several have
concluded that courts have no inherent or statutory authority
to cancel copyright registrations. See Xerox Corp. v. Apple
Computer, Inc., 734 F. Supp. 1542, 1549 (N.D. Cal. 1990)
(basing its decision on the Copyright Act, its legislative
history, and Copyright Office regulations); Leegin Creative
Leather Prods., Inc. v. M.M. Rogers & Co., No. 94-4644,
1994 WL 761725, at *2 (C.D. Cal. Oct. 24, 1994) (observing
that the Copyright Act and Copyright Office regulations do
not call for judicial cancellation of registrations); Syntek
Semiconductor Co. v. Microchip Tech. Inc., 307 F.3d 775,
39
781-82 (9th Cir. 2002) (holding that cancellation of a
copyright registration is an administrative remedy that must
be sought from the Copyright Office). We agree.
Most decisively, there is no statutory authority in the
Copyright Act that gives courts any general authority to
cancel copyright registrations. 17 U.S.C. § 101 et seq.; see 5
William Patry, Patry on Copyright § 17:108. In fact, there is
evidence that the statute does not give courts any such
authority. Section 701, which describes the functions of the
Copyright Office, explicitly states that “[a]ll administrative
functions and duties under this title, except as otherwise
specified, are the responsibility of the Register of
Copyrights.” 17 U.S.C. § 701(a) (emphasis added).
Cancellation of a copyright registration is certainly an
administrative function, at least as much as issuing a
registration is an administrative function.14 See Syntek
Semiconductor Co., 307 F.3d at 781-82.
14
Quizzically, Brownstein argues that the District Court had
authority to cancel his registrations, but we disagree.
Brownstein suggests that the requisites of § 411(b), which
establish the criteria for obtaining a copyright registration,
also implicitly provide the criteria for courts to cancel a
registration. 17 U.S.C. § 411(b). But a list of requirements is
not a grant of authority. Section 411(b) states that “the court
shall request the Register of Copyrights to advise the court
whether the inaccurate information, if known, would have
caused the Register of Copyrights to refuse registration,” but
it does not actually give courts authority to cancel a copyright
registration. Id. If anything, this suggests that courts are not
to adjudicate the grounds of cancellation because they are
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It is also telling that the Lanham Act explicitly
provides courts with the general authority to cancel
trademarks. 15 U.S.C. § 1119 (“In any action involving a
registered mark the court may determine the right to
registration, order the cancellation of registrations, in whole
or in part, restore canceled registrations, and otherwise rectify
the register with respect to the registrations of any party to the
action.”). If Congress had intended to grant courts the same
general authority with respect to copyright registrations, it
could have done so in equally express statutory language.
It bears noting that there is a provision in the
Copyright Act that grants courts cancellation authority with
respect to “original designs”.15 17 U.S.C. § 1324. In carving
limited to consulting the Register of Copyrights on such
matters.
Brownstein also points to the cancellation regulation,
37 C.F.R. § 201.7, as evidence that Congress intended for
courts to cancel copyright registrations. While § 201.7(b)
clearly enumerates the requirements for cancellation of
registration, § 201.7(a) also clearly delegates that authority to
the Copyright Office. 37 C.F.R. § 201.7(a) (“Cancellation is
an action taken by the Copyright Office . . . .”). This only
reaffirms that the authority to cancel copyright registrations
resides with the Copyright Office.
15
Entitled “Power of court over registration”, this provision
recites that “[i]n any action involving the protection of a
design under this chapter, the court, when appropriate, may
order registration of a design under this chapter or the
cancellation of such a registration” — thus, it only applies to
41
out a specific power of cancellation, this provision only
further suggests that courts have no general authority to
cancel copyright registrations. It is surely indicative that
there is no such general cancellation provision in the
Copyright Act. Where Congress has used language in one
provision but excluded it from another, we must generally
ascribe meaning to the exclusion. Barnhart v. Sigmon Coal
Co., 534 U.S. 438, 452-53 (2002); Russello v. United States,
464 U.S. 16, 23 (1983). Moreover, § 1324 would be
superfluous if Congress intended for courts to already have
the general authority to cancel copyright registrations.
This does not mean that courts have no place in the
cancellation process and that aggrieved parties are without
recourse to the courts when faced with faulty registrations.
While courts may not directly cancel copyright registrations,
courts have an oversight role in the administrative functions
of the Copyright Office. All actions of the Copyright Office
are subject to the Administrative Procedure Act (“APA”) and
the judicial review attendant to the APA. 17 U.S.C. § 701(e)
(“Except as provided by section 706 (b) and the regulations
issued thereunder, all actions taken by the Register of
Copyrights under this title are subject to the provisions of the
Administrative Procedure Act . . . .”). Thus, aggrieved parties
may challenge an unfavorable decision by the Copyright
Office in a cancellation matter by challenging its decision in
court under the APA.
It also goes without saying that courts are authorized to
police copyright registrations through authorship claims and
designs and only to that chapter of the Copyright Act. 17
U.S.C. § 1324.
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infringement claims. As emphasized earlier, a registration
does not secure or create a copyright, as a right, or guarantee
success on the merits of a claim — it entitles an author to
bring an action under the Copyright Act and serves as proof
of authorship of the copyrighted work.
Finally, we are in no way holding that courts are
incapable of invalidating underlying copyrights. While the
two concepts are undoubtedly related,16 the distinction
matters. Holding that federal courts have the authority to
cancel registrations would essentially be declaring that the
judicial branch has the authority to order a legislative branch
agency that is not a party to the litigation to take an
affirmative action. A federal court’s finding that a copyright
is invalid, on the other hand, is a determination of ownership
which does not disturb the registration of a copyright. Courts
have no authority to cancel copyright registrations because
that authority resides exclusively with the Copyright Office.
IV. CONCLUSION
For the foregoing reasons, we will reverse the District
Court’s Rule 50(a) grant of judgment as a matter of law on
16
Validity of a copyright denotes ownership — a necessary
element to bring a copyright infringement action. See
Masquerade Novelty, Inc. v. Unique Indus., Inc., 912 F.2d
663, 667 (3d Cir. 1990) (“‘The elements of a copyright
infringement action are (1) ownership of a valid copyright
and (2) copying by the alleged infringer.’”) (internal citations
omitted). Registration of a copyright, on the other hand, is
merely “‘prima facie evidence of the validity of the copyright
. . . .’” Id. (quoting 17 U.S.C. § 410(c)).
43
Brownstein’s joint authorship claim and remand for a new
trial. We will also reverse the District Court’s grant of
summary judgment on Appellees’ counterclaim to cancel
Brownstein’s copyright registrations.
44