Supreme Court says freelancers’ copyrights may have some value without registration

By Bill Powell, OWAA Legal Counsel
The class action settlement intended “to achieve a global peace in the publishing industry” over copyright infringement of freelance work by initial publishers and electronic databases has been re-instated by the Supreme Court. The effect of this narrow ruling is to restore at least some slight value to copyright owners who have failed to register their copyrights with the United States Copyright Office.
The Supreme Court’s decision was rendered March 2, 2010, in Reed Elsevier, Inc. v. Muchnick.
The court just below the Supreme Court, the federal Court of Appeals, without any party asking it to, had thrown out a $15- to $18-million settlement reached at the trial court level among a large class of freelancers and a large class of defendant publishers and defendant electronic databases. This settlement had been pounded out over a period of years following the Supreme Court’s 2001 decision in New York Times Co. v. Tasini, which found that inclusion of freelancer work in electronic databases by publishers who had purchased only one-time publication rights constituted copyright infringement by both the original publishers and the electronic databases.
Just as no party asked the Court of Appeals to throw out the settlement, no party could be found to defend the Court of Appeals decision before the Supreme Court, so it appointed someone to do so. The basis for the Court of Appeals decision was that the class of freelancers included in the settlement, who were to be paid something for the re-publication infringements they had suffered, included many who had never registered their copyrights with the Copyright Office. A section of the Copyright Act requires that such registration be made before a copyright owner may sue for infringement.
The Court of Appeals had seen this registration requirement as trumping another provision of the Act, which declares that the creator of a work owns the copyright from the moment of creation, and concluded that it left the federal courts without any jurisdiction to deal in any way with unregistered copyrights. Under the Court of Appeals decision all value was drained from unregistered copyrights, since they could never be enforced.
As anticipated in earlier reports of this case in Outdoors Unlimited and in OWAA’s recently published Legal Handbook for Freelancers, this reinstatement of the settlement is a positive development for freelancers and for copyright owners generally. It solidifies the Supreme Court’s position as the only Court consistently making rulings favorable to copyright owners. The actual settlement of the case, however, is not such a favorable thing for freelancers generally, since most do not register their copyrights, and the settlement was constructed on the assumption that the value of an unregistered copyright is nearly zero. Those owning unregistered copyrights, the largest group of plaintiffs, get the least under the settlement. Luckily, the Supreme Court included in its opinion this statement: “In concluding that the District Court had jurisdiction to approve the settlement, we express no opinion on the settlement’s merits.”
There is, no doubt, more to come. In the meantime, freelancers should register their copyrights. It’s easy to do electronically and doesn’t cost much. Go to ◊

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