Two issues of first impression came before the Third Circuit in Brownstein v. Lindsay. “First impression” means that it is a new legal issue for that court. The first issue of first impression addressed the point in time at which a joint authorship claim under the Copyright Act arises and accrues. In other words, when does the statute of limitations start running for joint authorship claims? The second issue addressed whether courts have the authority to cancel copyright registrations.
- December 1993 – Tina Lindsay created Ethnic Determinate System (EDS), a set of rules for predicting ethnicity based on names and other data. EDS was designed for use in a direct mailing list business.
- January 1994 – Lindsay persuaded co-worker Peter Brownstein to create a set of computer programs (ETHN) incorporating the EDS rules. Brownstein updated and improved the programs over the years.
- The combination of EDS, the rules, and ETHN, the computer code, became known as LCID.
- February 1996 – Lindsay received the EDS registration from the Copyright Office.
- December 1996 – Lindsay received the second EDS registration from the Copyright Office for an improved version of EDS. Lindsay included a copy of Brownstein’s ETHN in the deposit copy. Copyright registration requires that a copy or copies of the work be deposited with the Copyright Office. 17 U.S.C. §408(a).
- 1997 – 2000 – Lindsay attempted to unilaterally license and transfer ownership in LCID through a series of agreements. Lindsay and Brownstein continued to partner in business.
- 1998 – 2009 – A series of lawsuits resulted in licensing and settlement agreements.
- 2009 – Brownstein and Lindsay had a falling out.
- December 2009 – Brownstein filed his own copyright registrations in the ETHN programs.
- 2010 – Lindsay testified at a deposition in a related case that she might be claiming to be the sole author of LCID as a result of the copyright registrations she filed.
- March 2010 – Brownstein filed a declaratory judgment action for a judgment of joint authorship in LCID. Lindsay counterclaimed for the cancelation of Brownstein’s copyright registration in the computer code.
The district court granted Rule 50(a) judgment as a matter of law to Lindsay on Brownstein’s joint authorship claim and granted Lindsay’s counterclaim to cancel Brownstein’s copyright registrations. Judgment as a matter of law means that no reasonable jury would find for the non-moving party on the facts presented. On review, the Third Circuit was required to consider the evidence in the light most favorable to Brownstein. The Third Circuit reversed the district court rulings and remanded for a new trial on Brownstein’s joint authorship claim.
Lindsay and Brownstein were co-authors and the extent of their interests must be determined by the jury.
Authors become co-authors and co-owners of a work when they create a joint work. Each co-author must contribute a non-trivial amount of creative expression and the authors must intend for their individual contributions to be combined. The contributions must be “inseparable or interdependent parts of a whole.” In this case, Lindsay conceded that EDS and ETHN were interdependent works, that they were irrevocably entwined.
The Third Circuit drew a distinction between an author’s interest in a copyright and the act of registering a copyright. The deposit copy submitted with the registration materials is not necessarily co-extensive with the filing author’s ownership interest.
EDS and LCID were distinct works with distinct copyrights. The scope of Lindsay’s copyright registrations did not extend to LCID as a whole or to the ETHN programs. The Third Circuit ruled that the first registration referred only to EDS, Lindsay’s rule system. The second registration also covered only the EDS, since that registration displayed the same title as the first registration and was identified as a derivative work in the registration application. Derivative works are based on previous works and are often created to improve the previous work. The changes in the derivative work over the original work are separately copyrightable. Lindsay could not claim ownership of ETHN based solely on her inclusion of ETHN in her deposit copy.
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 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.
(Opinion pdf pages 21-22).
Further, because Lindsay and Brownstein were co-authors, Lindsay could not grant an exclusive license or transfer ownership in LCID without Brownstein’s consent. An agreement made by one co-author does not affect the other co-author’s ownership rights. Co-authors also owe each other the duty of accounting for any profits made through exploitation of the work.
Even if one of the settlement agreements put an end to Brownstein’s interest in the original work, he owned the derivative work computer programs, the updates and improvements, he created. “The extent of Brownstein’s authorship and ownership of these derivative works is a factual question that must be decided by a jury.” (Opinion pdf page 24).
The point at which Brownstein knew that Lindsay repudiated his ownership claim is a question for the jury.
The statute of limitations for civil copyright cases is three years. 17 U.S.C. §507(b). Brownstein must show that the statute of limitations for his joint authorship claim did not begin to run until March 22, 2007, at the latest, since Brownstein filed his complaint on March 22, 2010.
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.
(Opinion pdf page 27).
A claim accrues under the discovery rule when the plaintiff discovers or, with due diligence, should have discovered, that her rights have been violated.
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. 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.
(Opinion pdf page 29).
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.
(Opinion pdf page 30).
The Third Circuit discussed seven different events occurring between 1996 and 2010. Considering the evidence in the light most favorable to Brownstein, the Third Circuit pointed out how it’s possible that none of the events set off “storm warnings” that Lindsay expressly repudiated Brownstein’s co-authorship. All of the events involved questions of fact that should have been left to the jury. The district court erred by not letting the jury decide these questions of fact.
The district court erred in ordering the cancellation of Brownstein’s 2009 copyright registrations.
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.
(Opinion pdf page 39).
We are in no way holding that courts are incapable of invalidating underlying copyrights. While the two concepts are undoubtedly related, 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.
(Opinion pdf page 43).
This case is Brownstein v. Lindsay, Nos. 12-2506 & 12-4471, Third Circuit Court of Appeals.