It has long been established in this Circuit that a title dispute is a traditional state court property dispute which does not necessarily confer federal copyright jurisdiction. If it were otherwise, then every copyright title dispute could be brought in federal court. That said, many copyright ownership disputes clearly do arise under the Copyright Act. For example, a dispute that turns on whether a copyrighted work was created independently or as a ‘work made for hire’ is an ownership dispute that unquestionably arises under the Copyright Act.
(Opinion pdf page 4).
Federal courts have exclusive jurisdiction (i.e., power to decide the case) over copyright cases. State courts do not have jurisdiction to decide federal copyright issues. What determines whether a copyright ownership dispute is simply a contractual issue to be decided in state court or whether it is a copyright issue to be decided in federal court?
Courts in the Second Circuit apply a two prong test to determine whether a claim arises under federal copyright law. Under the two prong test, a suit arises under the Copyright Act if:
- The Complaint is for a remedy expressly granted by the Act, e.g. a suit for infringement or for the statutory royalties for record reproduction; or
- The Complaint asserts a claim requiring construction of the Act.
(Opinion pdf pages 3-4).
Database application developer Jeff Cohen sued Versatile Studios, Inc. to establish his ownership of the database application code he wrote for Versatile Studios. Versatile Studios argued that the federal district court did not have jurisdiction over the ownership issue, that it was an issue that must be decided in state court. Cohen argued that the case turned on whether the code he wrote was a work made for hire, requiring construction (interpretation) of the Copyright Act.
The district court agreed with Cohen that the complaint centered on whether Cohen’s work was a work made for hire, requiring the court to apply the Copyright Act to the facts of the case. There was no written agreement, so the court could decide the work made for hire issue only by applying the Copyright Act to the facts of the case.
Although the district court determined that it did have jurisdiction over the copyright claim, the district court granted defendant Versatile Studio’s motion for summary judgment on the basis that there was no actual controversy. Versatile Studios did not try to use the code or prevent Cohen from re-using the code for other projects. “Versatile has asserted complete apathy to the ownership issue.” (Opinion pdf page 5).
This case is Cohen v. Versatile Studios, Inc., No. 13-cv-08280 (VEC), U.S. District Court, Southern District of New York.