Opinion
Civil Action No. 02-421 Section: E/5.
August 16, 2004
ORDER AND REASONS
The plaintiff, Jenny Kasten ("Kasten") moved for partial summary judgment as to defendant's liability on her breach of contract and copyright infringement claims and dismissal of defendant's counterclaims for an injunction and damages for slander. Rec. Doc. 54. Defendants John Jerrytone and Art d'Orleans (collectively "Jerrytone") moved for partial summary judgment dismissing plaintiff's complaint against them, enjoining her from reproducing any of the paintings at issue as prints for retail sale and from interfering with his exclusive rights to reproduce, distribute and sell reproductions of her paintings. The motions were heard at oral argument at an earlier date.
Facts and Procedural Background
This dispute is essentially about the right to reproduce prints of twenty-one original watercolors painted by Kasten and sold to Jerrytone. The following facts are undisputed. In 1993 Kasten began to display and sell her art, mostly watercolors of typical French Quarter scenes and structures, from a spot on the fence of Jackson Square in the French Quater. She painted and sold the same scenes repeatedly depending on their popularity. Beginning in 1995, and prior to November 17, 1996, Jerrytone purchased a total of sixteen original watercolors from Kasten. Of those, he specifically commissioned fourteen and purchased two from Kasten's display on the fence. All were paid for in full at Kasten's asking price. During this period the two discussed Jerrytone's interest in reproducing her paintings for retail sale as boxed sets of note cards.
He actually commissioned several additional paintings, but those paintings are not at issue here.
On November 17, 1996, Kasten and Jerrytone signed the following "Memo Agreement" that was written in longhand by Jerrytone:
John Jerrytone M.D. and Jennie Kasten agree to the following:
Jennie Kasten agrees to produce artworks for use on greeting cards and other items for retail sales. John agrees to pay Jennie for her artwork at which time it becomes his property. In addition John agrees to pay Jennie 5% of sales to the retailers of the items cards based on the wholesale cost for each box.
Payment will start after the 1st 1000 boxes are sold. For example, the first 1000 boxes sold will not require a 5% royalty payment. Royalty payments will be made within fifteen days of the close of each business quarter. For example for sales between January through March payment will be made to Jennie no later than April 15th.
Art use of the above created items by Jennie shall be used exclusively by John for reproduction and distribution. Either John or Jennie may terminate the agreement on thirty days notice given to each other at 1022 Orleans St. New Orleans, Louisiana, 70116.
If John or Jennie terminates the agreement Jennie will continue to receive the 5% Royalty on her designs as long as the cards and items continue to sell.
After the Agreement was signed, Jerrytone requested and Kasten produced four watercolors which Jerrytone purchased. Although not mentioned in the Agreement, Jerrytone formed Art d'Orleans, Inc., to produce and market the cards and "other items".
Jerrytone initially produced three different boxed sets of cards eight cards, each box containing two cards each of four different scenes. A fourth boxed set included the four paintings produced by Kasten and purchased by Jerrytone after the Agreement was signed. On September 4, 1997, and November 12, 1998, Jerrytone made royalty payments of $375.00 each to Kasten. The third royalty payment of $375.00 was made January 7, 2001. He made four quarterly royalty payments for sales in 2001, which ranged in amount from a low of $169.50 to a high of $466.16.
Attached as Ex. 1 to Kasten's supplemental affidavit, which was attached to her post hearing memorandum, was a copy of a royalty check from Jerrytone dated April 15, 2004, in the amount of $113.24, to cover sales for the first quarter of 2004.
In early 1998 Kasten informed Jerrytone that she intended to reproduce prints of her watercolors for retail sale. The business relationship deteriorated over the next two years during which Kasten was unable to contact Jerrytone. During this period Kasten began producing and selling prints of her original paintings. Jerrytone reappeared on the scene and visited Kasten at her spot on Jackson Square on January 7, 2001, at which time she refused his request to paint several additional watercolors for reproduction. Kasten subsequently contacted Jerrytone by telephone to reiterate that she intended to continue to reproduce and sell prints of her original paintings and that she did not want him to do so.
On April 7, 2001, Kasten observed 8" by 12" prints of the paintings used for the greeting cards for sale at various retail locations around the city. On that day she contacted Jerrytone (apparently by telephone) to inform him that she was terminating the 1996 Agreement. He responded that she could only terminate her ability to sell him paintings. On April 11, 2001, she sent letters terminating the Agreement to his Orleans Avenue and California addresses by certified mail, return receipt requested. Both were returned unclaimed. She later sent letters to a business address provided by the AMA, and to an email address obtained from the back of one of the more recent cards produced by Art d'Orleans. All were returned unclaimed.
Beginning in November of 2001 Kasten began contacting the retail outlets that carried the Art d'Orleans merchandise to ask that they no longer sell the cards and prints, and informed the merchants that Art d'Orleans did not have a legal right to sell them. At some point after December 31, 2001, Jerrytone created a web site for Art d'Orleans which featured the twenty-one paintings offered as card sets and prints. He also advertised "French Quarter Greeting Cards" for sale in Arthur Hardy's Mardi Gras Guide, Annual Edition 2002. Between October 9, 2001, and February 15, 2002, Kasten received Certificates of Copyright Registration for all twenty-one disputed paintings. This lawsuit was filed on February 15, 2002.
Kasten's lawsuit named (and served) as defendants, in addition to Jerrytone and Art d'Orleans, the retail merchants who had failed to remove the cards and prints. Jerrytone responded with a letter to the merchants from his attorney advising the merchants to ignore Kasten's "scare tactics". All defendants except Jerrytone and Art d'Orleans have been dismissed.
Kasten claims the Agreement was a limited licensing agreement subject to revocation on 30 days notice by either party. She also asserts that the "other items" mentioned in the Agreement refers only to mugs, not to prints of her paintings. Jerrytone claims by signing the Agreement, Kasten transferred to him an irrevocable, exclusive license to reproduce, distribute and sell cards and prints (the "other items") of all paintings for 35 years under the Copyright Act.
On these cross motions for partial summary judgment, neither party has produced evidence of any accounting as to the royalty payments due or made, or for that matter, the specific items sold and when they were sold. The evidence before the Court includes Copies of the paintings and certificates of copyright, an advertisement in Arthur Hardy's Mardi Gras Guide, the advertisement on Art d'Orleans website, a series of letters between the parties, Kasten's letter terminating the Agreement, letters from both parties to merchants, and Kasten's and Jerrytone's affidavits and affidavits of another artist who sold paintings in Jackson Square and an affidavit of an acquaintance of Kasten's who downloaded prints of Kasten's paintings from Art d'Orleans' website.
Analysis
A motion for summary judgment is properly granted only if there is no genuine issue as to any material fact, and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c);Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L. Ed. 3d 265 (1986); Fed.R.Civ.P. 56(c). An issue is material if its resolution could affect the outcome of the action.Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L.Ed. 2d 202 (1986). In deciding whether a fact issue has been created, we must view the facts and the inferences to be drawn therefrom in the light most favorable to the nonmoving party. See Olabisiomotosho v. City of Houston, 185 F.3d 521, 525 (5th Cir. 1999). However, once a moving party properly supports a motion for summary judgment, the nonmoving party "must go beyond the pleadings and designate specific facts in the record showing that there is a genuine issue for trial."Lawrence v. Univ. of Tex. Med. Branch at Galveston, 163 F.3d 309, 311-12 (5th Cir. 1999), quoting Wallace v. Texas Tech. Univ., 80 F.3d 1042, 1047-48 (5th Cir. 1996). The nonmoving party cannot satisfy its burden with "unsubstantiated assertions" or "conclusory allegations." Id.
Transfer of a copyright, or any one or more of the bundle of rights granted the owner of the copyright in 17 U.S.C. § 106, is governed by 17 U.S.C. § 201(d). "Ownership of a copyright may be transferred in whole or in part by any means of conveyance. . . . The owner of any particular exclusive right is entitled, to the extent of that right, to all of the protection and remedies accorded to the copyright owner by this title." Id. However, "[o]wnership of a copyright, or of any of the exclusive rights under a copyright, is distinct from ownership of any material object in which the work is embodied." 17 U.S.C. § 202. Title 17 further provides for the execution of a transfer of ownership of a copyright as follows:
A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent.17 U.S.C. § 204(a). The requirement that the transfer of a copyright be in writing "ensures that the creator of a work will not give away his copyright inadvertently." Effects Assocs., Inc. v. Cohen, 908 F.2d 555, 556-57 (9th Cir. 1990).
While ownership of a copyright initially vests in the author of the original work, when a work is made for hire, "the employer or other person for whom the work was prepared is considered the author" and, unless otherwise agreed by the parties in a written instrument, owns all of the bundle of rights comprised in the copyright. 17 U.S.C. § 201(a) and (b). The applicable definition of a "work made for hire" is:
(1) a work prepared by an employee within the scope of his or her employment; or
(2) a work specially ordered or commissioned for use as a contribution to a collective work, as part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.17 U.S.C. § 101. The writing requirement was created, in part, "to make the ownership of intellectual property rights clear and definite." Playboy Enterprises, Inc., v. Dumas, 53 F.3d 594, 559 (2nd Cir. 1995), cert. denied, 116 S.Ct. 567 (1995), citing Community for Creative Non-Violence v. Reid, 490 U.S. 730, 750 (1989). The Dumas court held that although the writing itself need not be executed before the work in question was created, such a post-creation writing must confirm a prior agreement, either implicit or explicit, made before the creation of the work. Dumas, 53 F.3d at 559, citing 1 Nimmer § 5.03[B][2][b] (1994).
The protection granted by a copyright is exclusively provided by federal law, but the contract or writing purporting to transfer a copyright is governed by state law. Walthal v. Rusk, 172 F.3d 481, 485 (7th Cir. 1999); Rodrigue v. Rodrigue, 218 F.3d 432, 441 (5th Cir. 2000). The Agreement is therefore interpreted according to Louisiana contract law. Accordingly, where the terms of the contract are clear and explicit, those terms must be enforced as written. La.Civ.C. Art. 2046. "A provision susceptible of different meanings must be interpreted with a meaning that renders it effective and not with one that renders it ineffective." La.Civ.C. Art. 2049. Each provision in the Agreement "must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole." La.Civ.C. Art. 2050. Moreover, "[i]n case of doubt that cannot be otherwise resolved, a provision in a contract must be interpreted against the party who furnished the text." La.Civ.C. Art. 2056.
The Court's task here is to interpret the Agreement in light of the provisions of the Copyright Act. The "work made for hire" issue determines the author of the work, and therefore, who can later transfer the copyright. Dumas, 53 F.3d at 553. If the paintings were "works made for hire", then Jerrytone owns the copyright as well as the original paintings, and Kasten cannot terminate his right to reproduce and sell the reproductions of her paintings. If Kasten's paintings are not "works made for hire", then she owns the copyrights, and can transfer them pursuant to a written agreement. Finally, if she did transfer the copyrights pursuant to the Agreement, what is the effect of the termination clause in the Agreement.
1) Are any of Kasten's paintings commissioned and purchased by Jerrytone "works made for hire"?
In Easter Seal Soc. v. Playboy Enterprises, 815 F.2d 323 (5th Cir. 1987), the Fifth Circuit, adopted a literal interpretation of the 1976 Copyright Act as follows:
We hold that a work is "made for hire" within the meaning of the Copyright Act of 1976 if and only if the seller is an employee within the meaning of agency law, or the buyer and seller comply with the requirements of § 101(2).Id. at 334-35. There is no dispute that Kasten was not an employee of Jerrytone or Art d'Orleans, but was an independent contractor. The Fifth Circuit observed that the nine narrow categories listed in § 101(2) of the Act "are statutory permission to allow certain kinds of independent contractors to sign away their authorship to their buyers." Id. at 335 (emphasis in original).
Kasten argues that her paintings are not works made for hire because they do not fall into any of the nine "narrow categories" enumerated in § 101(2). Jerrytone argues that all of her paintings that he purchased, including the ones he commissioned and purchased prior to the Agreement, are works made for hire pursuant to the Agreement which memorialized a prior oral agreement.
The only one of the nine categories listed in § 101 (2) that would possibly be at issue here is that the paintings were a contribution to a collective work. The paintings were created individually, purchased individually, and reproductions were sold individually as well as in boxed "collections" of four individual scenes. Kasten ultimately copyrighted each painting individually. Following the Fifth Circuit's literal interpretation of the statute, the Court finds that none of the artworks at issue is a "work made for hire" within the meaning of the copyright act because they were not commissioned for a "collective work". Kasten was and is the author of each painting and owns the copyright in each painting.
The most explicit definition of a "collective work" the Court found is in 37 C.F.R. § 202.3(b)(3)(i)(A), quoted inGranse v. Brown Photo Co., 1985 WL 26033 *16 (D. Minn.) as follows:
(3) Registration as a single work. (i) For the purpose of registration on a single application and upon payment of a single registration fee, the following shall be considered a single work: (A) In the case of published works: All copyrightable elements that are otherwise recognizable as self-contained works, that are included in a single unit of publication, and in which the copyright claimant is the same; . . . For these purposes, a combination of such elements shall be considered a "collection" if: (1) The elements are assembled in an orderly form; (2) the combined elements bear a single title identifying the collection as a whole; (3) the copyright claimant in all of the elements, and in the collection as a whole, is the same; and (4) all of the elements are by the same author. . . .
The Court need not reach Jerrytone's argument that the written agreement confirmed a prior oral agreement between the parties that all of Kasten's paintings were to be "works made for hire".
2) Did Kasten transfer any of the bundle of rights available under the Copyright Act to Jerrytone in the Agreement, and if so, which rights and as to which of the artworks at issue?
Jerrytone argues that in the Agreement Kasten irrevocably transferred the copyrights in all paintings to him. The written Agreement states in pertinent part as follows:
Jennie Kasten agrees to produce artworks for use on greeting cards and other items for retail sales. John agrees to pay Jennie for her artwork at which time it becomes his property
. . . .
Art use of the above created items by Jennie shall be used exclusively by John for reproduction and distribution."
(Emphasis supplied.) The Agreement does not use the word "copyright", and although the writing requirement of § 204 is not intended to be unduly burdensome, it must be clear. Johnson v. Tuff-n-Rumble Management, Inc., 2000 WL 1145748 *5 (E.D.La.) (Vance, J.) citing MELVILLE B. NIMMER DAVID NIMMER, NIMMER ON COPYRIGHT § 10.03[A][2] (2000) (other citations omitted).
The right to reproduce copyrighted work and to distribute the reproductions are among the exclusive rights owned by, and which can be transferred by, the owner of the copyright. By definition, a contract granting to another an exclusive license to reproduce and distribute copies of a copyrighted work is a "transfer of copyright ownership". The Court concludes that Kasten transferred to Jerrytone the ownership of her copyrights encompassing the right to reproduce these artworks in copies ( 17 U.S.C. § 106(1)) and to distribute copies of the copyrighted work to the public by sale ( 17 U.S.C. § 106(3)), to the extent expressed in the language of the written contract of transfer.
"A `transfer of copyright ownership' is an assignment, mortgage, exclusive license, or any other conveyance, alienation, or hypothecation of a copyright or of any of the exclusive rights comprised in a copyright, whether or not it is limited in time or place of effect, but not including a nonexclusive license." 17 U.S.C. § 101.
The Agreement does not explicitly (or implicitly) refer to any paintings that Jerrytone commissioned and purchased prior to the Agreement. Indeed, the terms "to produce artworks" and "to pay Jennie" suggest future acts, not past acts. At ¶ 17 of her complaint, Kasten acknowledges that she delivered and was paid for four paintings that were commissioned and purchased by Jerrytone after November 17, 1996: the paintings were of Preservation Hall, St. Louis Cathedral, a red brick townhouse, and a French Market scene. However, for several years after the Agreement was signed, Jerrytone reproduced and distributed boxed sets of greeting cards featuring all of Kasten's paintings that he had purchased for reproduction, and Kasten accepted royalty payments based on the sales of those boxed sets as well as individual cards. See Defendant's Reply Memorandum, copies of Kasten's handwritten notes attached to Jerrytone's affidavit.
Kasten claims that Jerrytone actually rejected the original "red brick townhouse" painting that he commissioned, and would not purchase it. She sold that painting from her fence display, and she painted the same building several times. She admits that Jerrytone subsequently purchased one of her later paintings of the townhouse from her fence display. The Court finds that his purchase of a later version rather than the first one of the painting that he commissioned is sufficient to fall within the terms of the Agreement.
Pursuant to Louisiana law, a contract is formed by the consent of the parties through offer and acceptance, and acceptance can be made by action or inaction that under the circumstances is clearly indicative of consent. La. Civ. Code Art. 1927. Moreover, a contract may be modified by the mutual consent of the parties. Ahner v. Hatfield, 865 So.2d 205, 206 (La.App. 4 Cir. 2003). Modification can be presumed by silence, inaction or implication.Id., (citations omitted). Even if the sixteen paintings Jerrytone commissioned and purchased from Kasten prior to signing the Agreement are not expressly included within the language of the Agreement, Kasten's and Jerrytone's actions and mutual performance indicates mutual consent to modify the written Agreement to include those paintings.
3) Does the Agreement apply to prints of the paintings?
Kasten claims that she never intended to allow Jerrytone to reproduce prints of her paintings, and that she understood the term "other items" to refer to mugs as they had discussed. The language of the Agreement expressly identifies greeting cards, but does not exclude any particular items from "other items". The phrase "other items" is clearly broad enough to include prints as well as mugs, at a minimum. The Court concludes that Jerrytone was entitled to reproduce and distribute prints of Kasten's paintings under the terms of the Agreement.
The Court notes, however, that while a print of Kasten's painting of a Lucky Dog vendor appeared on Art d'Orleans' website and in the advertisement placed in Arthur Hardy's Mardi Gras Guide, there is no evidence that Jerrytone either commissioned or purchased that painting from Kasten. He was therefore not entitled reproduce or distribute that painting under any circumstances.
4) What is the effect of the termination clause?
The termination clause is as follows:
Either John or Jennie may terminate the agreement on thirty days notice given to each other at 1022 Orleans St. New Orleans, Louisiana, 70116. If John or Jennie terminates the agreement Jennie will continue to receive the 5% Royalty on her designs as long as the cards and items continue to sell.
Jerrytone argues that the transfer of the copyrights is irrevocable prior to the 35 year term announced in 17 U.S.C. § 203(a) (3), and that the only thing Kasten can terminate according to the terms of the Agreement is her obligation to create artworks commissioned by Jerrytone, and his obligation to purchase those artworks. He further argues that the Court must give all of the provisions of the contract effect, and that to hold otherwise would be to render the last sentence providing for continuation of the 5% royalty payments meaningless.
Kasten argues that the Agreement specifies that either party can terminate the entire Agreement at will, and that the last sentence simply means that Jerrytone must pay her the royalty on all remaining stocks of the cards as long as they sell.
The 35 year period stated in 17 U.S.C. § 203(a) (3) and cited by Jerrtone is a maximum, not a minimum term for a licence or transfer of a copyright, and then only if another term has not been specified in the written transfer or allowed under state law.Walthal, 172 F.3d at 484-85; Korman v. HBC Florida, Inc., 182 F.3d 1291, 1295 (11th Cir. 1999) (agreeing with Walthal). Additionally, the definition of a "transfer of copyright ownership" indicates that the transfer may be "limited in time or place of effect." 17 U.S.C. § 101.
The Agreement in this case specifies that either party may terminate the agreement on 30 days notice. It does not specify a written notice but provides that notice be given at Jerrytone's domicile, 1022 Orleans St., New Orleans, LA. On April 11, 2001, Kasten mailed a certified letter to Jerrytone at that address, which was returned unclaimed. The Court concludes that Kasten effectively terminated the license agreement as of May 11, 2001, 30 days after April 11, 2001. Pursuant to the last sentence of the Agreement, Jerrytone is, or was, obligated to pay the 5% royalty to Kasten for any sales of the remaining stock after the date of termination of the Agreement.
5. Kasten's claim for defamation of character and Jerrytone's counterclaim for defamation of character.
Neither party addressed their defamation claim in their briefs or at oral argument. Kasten has not produced any evidence whatsoever of her claimed damages. Jerrytone's claim was based on his assertion that her actions in contacting the retailers after she terminated the Agreement, and in naming some of them as defendants in the lawsuit was defamatory, for which he is entitled to attorney's fees, court costs and sanctions. The Court has determined that Kasten did indeed transfer her copyrights to him in the Agreement, but that she had a right to and did terminate the Agreement. Consequently, Kasten is entitled to summary judgment dismissing his counterclaim for defamation, and Jerrytone is entitled to summary judgment dismissing her claim for defamation against him.
Accordingly,
IT IS ORDERED that plaintiff Jennie Kasten's motion for partial summary judgment is GRANTED as to claims against defendants for breach of contract and copyright infringement after May 11, 2001, and defendants are hereby ENJOINED from any further reproduction and distribution of her paintings, and dismissing defendants' counterclaim for defamation and for an injunction against her; and is DENIED as to defendants' claim of copyright infringement by Kasten before May 11, 2001; and
IT IS FURTHER ORDERED that defendants John Jerrytone's and Art d'Orleans' motion for partial motion for summary judgment dismissing plaintiff's complaint is DENIED as to her claims for breach of contract and copyright infringement after May 11, 2001, and is GRANTED as to his claims for copyright infringement before May 11, 2001, and as to her claim for defamation, dismissing that claim; and,
IT IS FURTHER ORDERED that both parties produce an accounting to the other party that includes the items reproduced, the dates on which each reproduction was sold, and the amount of the sale within 30 days of the date of this Order; and
IT IS FURTHER ORDERED that defendants produce an accounting of all royalties due and paid to Kasten pursuant to the terms of the Agreement within 30 days of the date of this Order; and
IT IS FURTHER ORDERED that the parties jointly contact Magistrate Judge Chasez to schedule a settlement conference to be held at least 30 days prior to the scheduled trial date of October 25, 2004.