A Stitch In Time...: Federal Appeals Court Holds That Retroactive Copyright Licenses Are Legally Invalid

Intellectual Property & Technology Newsletter

 

December 2007

Last month, the United States Court of Appeals for the Second Circuit, in Davis v. Blige, ___ F.3d ___, 2007 WL 2893003 (2d Cir., October 5, 2007), rejected a long-standing rule that putative copyright infringers may “cure” acts of past infringement by obtaining, after the fact, a “retroactive” license or assignment from the owner (or any co-owner) of the infringed work.  The novel ruling, which is the first time the issue has been addressed at the appellate level, is a stern reminder to putative licensees to obtain written licenses, or at least proof of an oral license, prior to using a copyrighted work. 
 

At issue in Davis v. Blige was a fairly straightforward claim of copyright infringement.  Davis, a songwriter, alleged that two songs contained on Mary J. Blige’s triple-platinum-selling album “No More Drama” (“Love” and “Keep It Moving”) were substantially similar to (and thus infringed) two of Davis’ songs.  It was conceded, however, that the two infringed works were co-authored (and co-owned) by a third party, Bruce Chambliss.  While Davis’ case was pending, Chambliss executed a document that he claimed memorialized a prior oral agreement transferring to one of the defendants, Bruce Miller, all of Chambliss’ rights in and to the two works at issue, including “all causes of action for infringement … past, present, and future.”  The District Court found that there were disputed factual issues as to whether the written agreement actually memorialized a prior oral agreement.  Nevertheless, it granted summary judgment in favor of the defendants on the ground that the written agreement was a “retroactive” assignment by Davis’ co-owner, Chambliss, to Miller.  Because Miller, in turn, had licensed the use of the work to the other defendants (most notably, Blige, her record company, and her music publisher), the District Court held that the assignment “cured” any past infringement by the defendants.  In support of its ruling, the District Court relied on the longstanding principle that any co-owner of a copyright may license the use of the work.  It also cited a long and unbroken line of district court cases that held that the issuance of a retroactive license by a co-owner cures a defendant’s past infringement.  
 

The Second Circuit disagreed.  In reversing summary judgment, the Second Circuit held not only that “retroactive” licenses cannot cure or immunize a defendant’s past acts of infringement, but that all “retroactive” licenses and assignments are invalid as a matter of law.  The rationale for this decision ostensibly was to correct what the Court perceived as a blurring of the distinction between “licenses” and “settlements.”  The Second Circuit reasoned that, while a license may authorize the prospective use of a copyrighted work, it cannot cure infringement claims arising from any prior use of that work.  That can only be done by virtue of a formal settlement or release agreement.  Moreover, while any co-owner of a copyrighted work has the authority and ability to issue a license for the entirety of that work, that is not the case with respect to a settlement -- in which a signatory only may bind him or herself.  The Second Circuit cited a variety of policy reasons for its decision, including that it would increase certainty and predictability (for example, there would be less confusion as to whether a use was authorized or unauthorized) and reduce the temptation of an infringer to “buy” its way out of an infringement claim by negotiating a retroactive license with a co-owner.  
 

The takeaway from Blige can be summarized as follows:  While any one co-owner of a copyright can license a work without the consent of his or her co-owners, the moment a copyrighted work has been used without authorization, that past use no longer can be licensed.  At that point, the only way legally to cure the infringement is to enter into a settlement and release agreement with all co-owners of the copyrighted work.  Though technical, the Blige rule, at its heart, reaffirms an obvious principle of copyright licensing:  Whenever possible, formal written licenses should be obtained prior to any use of a copyrighted work.  When this is not possible, a putative licensee should at least attempt to obtain a brief written or e-mail confirm-ation of consent from at least one co-owner of the licensed work reflecting the essential license terms.  In that case, it could be argued that a license executed after the fact was in fact merely a confirmation of an earlier agreement.  Finally, in the event a copyrighted work is used without a prior formal or informal license, it is important to make sure that any document retroactively authorizing the use (1) contains language that not only authorizes the use, but also specifically releases any claims in connection with any past use, and (2) is executed by or on behalf of all co-owners of the work.  Unless these two requirements are met, the document will, at best, authorize only prospective uses, and will not resolve any past uses.