COMMENTS AND VIEWS SUBMITTED TO THE COPYRIGHT OFFICE ON DIVISIBILITY OF COPYRIGHTS

This letter is a belated comment on the three very interesting pieces on divisibility of copyrights. The comments should be weighed in accordance with my rather limited experience in this field, but they may nevertheless be of some value to you.

First, the tax aspect of this subject seems comparatively unimportant in view of the 1950 amendment. In this respect it is interesting to note that Section 1235 of the 1954 Revenue Code provides as to individual inventors and their sponsors capital gains treatment of the kind denied to authors-but 1235 precludes use of its benefits where the patent has been "divided". In both instances-and this is the important point-special tax laws have largely removed the tax question from both the copyright and the patent law.

Second, it is implicit in all of the discussion on divisibility that the copyright can be divided in any manner the parties to an agreement desire, and that as between the parties such divisibility is enforceable as a matter of contract law. Third, the only remaining problem area is the question of who has the right to bring suit and the related question of how his identity is to be ascertained by other parties.

It is the odd fact that while the courts in patent, copyright, and other cases have been intoning the sweeping language of Waterman v. Mackenzie, the Supreme Court has rendered an intervening decision that in practical effect goes the other way. I speak of Independent Wireless v. RCA (269 U.S. 459 (1926)). This case is not only of general interest to the question of who may sue, but it is of special interest in the copyright field because on its facts the case closely resembles a typical copyright situation.

The plaintiff, RCA, received by a series of transactions—the "exclusive rights to use and sell in the United States, for radio purposes, apparatus for the transmission of messages" covered by the patents owned by the DeForest Radio Co. Incidentally, this included the basic triode tube patent. In any event, the patented inventions were useful for commercial radio transmission, telephone communication, amateur and home use, and in other fields. It is my understanding that there were in fact exclusive licenses to each of these fields. The defendant, Independent, bought apparatus from an amateur and experimental field licensee and was charged to be using the apparatus for commercial communication.

RCA brought the suit in its capacity as exclusive licensee for commercial communication and purported to make DeForest-the legal title owner of the patents a plaintiff without its consent (269 U.S. 462). DeForest was not located within the district in which suit was brought and accordingly was not available for the physical service of process. The Court sustained this joinder, stating:

"We think the cases cited go beyond the defendant's interpretation of them and do hold that, if there is no other way of securing justice to the exclusive licensee, the latter may make the owner without the jurisdiction a coplaintiff without his consent in the bill against the infringer. ***'' (269 U.S. 472).

Perhaps an exhaustive study of the cases, the 1948 judicial code, and the Federal rules might indicate that the Independent Wireless case is not quite as broad as a reading of the case would suggest. In the absence of some definite indication to the contrary, however, I would be inclined to regard the case as most persuasive of the proposition that the owner of book rights, for example, ought to be able to make the copyright titleholder a party plaintiff without its consent and thereby in effect bring legal action as if the book rights were divisible. Perhaps the Independent Wireless case had something to do with the reluctance of the Supreme Court majority in the Goldsmith case to place the decision on the "indivisibility" theory.

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Unfortunately, it does not appear that the Independent Wireless case takes one very far with respect to the problem of multiple suits. Also at least in the patent field-the case must be taken in the light of the earlier case of Crown Die & Tool v. Nye Tool (261 U.S. 24 (1923)), where the Court held that the right to recover for damages for patent infringement by a specified infringer and to enjoin further infringement was not assignable.

Coming now to the specific questions raised at page 28 of Mr. Kamenstein's paper, my reaction is as follows:

1. (a) The Independent Wireless case would seem to permit as a practical matter essentially the result referred to. However, it would seem much preferable to face up to the matter in the copyright law and couple such ability to sue with safeguards designed to protect the defendant against a multiplicity of suits.

(b) There must be a point where an exclusive license limited as to field becomes absurd. This is another point that the Court never reached in the Independent Wireless case. Perhaps the Crown Die & Tool case can be viewed as an instance of such an absurdly narrow field. In any event if a statute provided for suit by the exclusive licensee-and thus closed the door to a judicial development of this matter—it would seem that some expression must be used to prevent the absurd case. Whether it is possible to make a specific enumeration is something I do not know.

2. It strikes me that the whole subject of joinder is rather artificial unless it serves to prevent a multiplicity of suits. In other words if safeguards were provided in this direction one would suppose that joinder would take care of itself. 3. (a) Yes, insofar as such assignments and licenses provided a basis upon which suit might be brought.

(b) Yes.

(c) Yes, as to documents not forming the basis of suit.

(d) To the extent recording is permissive, the recording should only be effective as an actual notice, and then only when it is shown that the party in question actually did search the records and get the notice. Of course, this strips the recording in such instance of much of its possible value, but it would seem to be about the only sound course.

4. (a) I should suppose that if the suit and notice problems were taken care of by express provisions as to them there would be no occasion to get into the divisibility question, except in relation to problems too rare to justify concern. (b) See 4(a).

(c) Again I should suppose that this could be attended to under the questions of suit and ownership.

(d) I should say definitely yes.

See 1(b), above.

5. (a) It would seem to me that the notice requirement ought to be consistent with the person having the right to sue. If the scope of the exclusive license were such as to permit suit, I would think the name of the licensee on the notice would be appropriate, otherwise not.

(b) The requirement for two names on the notice might give rise to practical problems. Perhaps the matter could be handled through the recording system so that the public could ascertain the record titleholder by checking the recorded documents from the exclusive licensee notice.

(c) My reaction would be that here again some mechanism ought to be provided so that the public could ascertain all the facts from recorded instruments. If so, perhaps the general notice in a periodical would be adequate. The recorded documents would take care of identifying the rights of the parties so that the second question would also appear to be answered.

Again, the above are thoughts based on reviewing the papers and not predicated on any extensive experience.

Sincerely yours,

I have your letter of September 24th, asking for my views with regard to the divisibility issue. I wish I had time to write some extensive comments on this important problem since I have had strong feelings about it for many years. However, in view of pressure of work, including preparation for the Washington meeting, I must limit myself today to saying that I always have been and am now in favor of divisibility of copyright along the lines adopted by the Shotwell Committee bill, S. 3043, which was introduced by Senator Thomas in 1940. That

bill and some of the predecessor bills clearly recognized that all subsidiary rights should be subject to separate grant and that there should be a recordation of such grant. I also favor the provisions of that bill with regard to permitting licensees to sue for infringement without joining the licensor, on the theory that each exclusive licensee was to be considered as a partial owner of the copyright to the extent of his interests. I am not too impressed with the objections raised by the motion picture producers at the time and I believe it would be a great step forward if new legislation along the lines suggested in the Shotwell bill would be formulated.

Sincerely yours,

WALTER J. Derenberg.

By Ernest S. Meyers

OCTOBER 7, 1957.

It would be unfair to Dr. Kaminstein to dispose of in a summary manner the myriad questions suggested by his excellent and painstaking treatment of the problem of the Divisibility of Copyrights. To justify agreement with or dissent from the many principles discussed in this thorough report would require, in my view, the compilation and analysis of many practices, both procedural and substantive, in fields outside of the area of copyright, such as negotiable instruments, patents and real estate.

Due to present pressures, I am now only able to state my position in a summary fashion with respect to item No. 1 listed on page 28 of the report:

The law should include a provision permitting an exclusive licensee to sue without joining his grantor; Provided, That such a provision is restricted to an exclusive license of enumerated rights; and Provided further, That, as a condition to suit, the exclusive license must be recorded. (To this extent, I favor a permissive recordation statute.) As a measure of security to the alleged infringer where rights have not been clearly set forth in the license or statute, the alleged infringer should be permitted by law, if it is not now provided for in the Federal Rules of Civil Procedure, to implead or join the exclusive licensor (or grantor) in the action. Sincerely,

By Ralph S. Brown

ERNEST S. MEYERS.

OCTOBER 17, 1957.

Since no one seems to be opposed to the existing practice of divisibility, and since there are no significant policy arguments against it, the existing legal notion (I almost called it a fiction) should be abrogated.

There seem to be two areas where the concept is of practical importance. One of them can be taken care of by statutory language which would permit a partial assignee or an exclusive licensee to sue in his own name for the infringement of whatever rights he holds. Alleged infringers should probably be protected against multiple suits by nonexclusive licensees. Liberal joinder provisions can protect the interest both of plaintiffs and defendants in this situation.

With respect to contributions to periodicals, the statute should make it explicit that either the author or the publisher may obtain a copyright on a contribution, and that a copyright on the whole of a periodical number covers all its contents, regardless of the interpretation of the contract between author and publisher, I would add the presumption suggested in item 5c of Mr. Kaminstein's summary of the issues, that the author be deemed the copyright owner, subject to his assignment or license to the publisher.

If these two steps were taken, then there seems to be no necessity for enunciating general principles of divisibility in the statute. I would be strongly opposed to any attempt to enumerate the rights into which a copyright can be divisible. This would force a statutory strait jacket on commercial developments that can not be foreseen.

I have no present views on the desirable scope and affect of recordation or on the substitution of licensees in copyright notices. I should suppose that a licensee would always be free to announce his status, without displacing the original claimant to the copyright whose name appears in the notice.

RALPH S. BROWN.

By Elisha Hanson

OCTOBER 17, 1957. Somewhat belatedly I am forwarding my views on Mr. Kaminstein's most capable study of the aspects of divisibility of copyright. As you have been previously advised, I have been out of the country until recently and wished to defer comment until there was time for adequate study.

Since divisibility of copyright is an accomplished fact as a matter of industrial practice, the problem is how to reflect this condition in any revision of the law in a manner which would be equitable to all interested parties.

The views set forth below are keyed to the questions appearing under the heading "Summary of Issues," at pages 28, 29 of the Kaminstein article. For ease of reading, I have set forth the questions which appear on the mentioned pages.

1. Right to sue

(a) Should the law include a provision permitting an exclusive licensee to sue without joining his grantor?

The exclusive licensee should be permitted to protect his valuable interest in the copyright in his own name without joining his grantor. The enforcement of his right should not be made to depend upon either the availability or the cooperation of the grantor. However, there should be a provision for both permissive joinder and for intervention of interested parties, subject to the control of the court exercising a sound judicial discretion.

(b) Should such a provision be restricted to exclusive licensees of enumerated rights?

Yes. While the task of enumerating the rights which shall be the subjects of exclusive licenses may present some problems, it would seem wiser to proceed cautiously in revising the copyright law. Special inequities which may develop can be dealt with by amendment as those inequities appear.

2. Joinder of parties

(a) Should the law permit the joinder within the discretion of the court of— 1. Any interested party, or

2. Any person named in an assignment or license recorded in the Copyright Office?

Permissive joinder, within the discretion of the court, should extend to any interested party since that classification would be obviously broader and less arbitrary in its application. The holder of an unrecorded license or assignment may well have an interest which is unaffected by his failure to record. In addition, some consideration might be given to the advisability of a provision whereby notice of the pendency of litigation could be given to parties of record in the Copyright Office, upon court order.

(b) Should there be a provision dealing with avoidance of overlapping suits or damages, e.g., barring suit by an exclusive licensee unless he has recorded his license in the Copyright Office?

There should be a provision in the revised law requiring that exclusive licenses be recorded in the Copyright Office within a stated period of time. It would seem imperative to avoid use of the terminology "promptly" as it presently appears in connection with the requirement for deposit of copies. The holder of an interest in copyright is the owner of a valuable right and he should not be permitted to mislead others either by his failure to give public notice of that right by recordation or by his failure to deposit copies within a stated period of time.

At the same time, the exclusive licensee should not be precluded from a recovery as against the original copyright owner or any other person who has reaped a windfall by recovering from the infringer. Nor should an infringer who has not been misled by the failure to record be permitted to escape all liability.

3. Recordation

(a) Should the law require recordation of all assignments and licenses, as against third parties without notice?

Yes, as a general principle, no third party who records an interest acquired for consideration and without notice should be prejudiced by a prior unrecorded grant. Such a provision also makes for certainty of title. The primary responsibility for recordation should be squarely placed upon the original copyright proprietor with permission to a licensee to record if the proprietor fails.

However, the application of this general principle and the issue discussed under 2(b), above, to newspapers, magazines and other periodicals might present a considerable problem. To illustrate: each issue of a newspaper or periodical contains a large number of copyrightable parts. It would impose an undue burden to