Producers Of Creative Work Beware

• Published date: 11 October 2021
• Subject Matter: Employment and HR, Intellectual Property, Employee Benefits & Compensation, Copyright
• Law Firm: Littler Mendelson
• Author: Mr Darren Nadel and Iris Lozano

The U.S. Court of Appeals for the Second Circuit recently held that the creator of The Friday the 13^th screenplay could terminate his copyright grant to Horror Inc. (the producer of the movie franchise) and reclaim it. The horror show for employers is that if they do not assume ownership of their own copy (such as software code) at the inception of the copy's creation, they too can lose ownership under the Copyright Act's reclamation provision.

In Horror Inc. v. Miller, No. 18-3123-cv (Sept. 30, 2021), the Second Circuit affirmed that the original screenwriter of the horror film successfully terminated ownership rights that he had conveyed to the production company back in 1979. This decision hinged on whether the copyrighted work was created by its author as an employee of the production company or as an independent contractor. Employees create so called "works for hire" that are owned by the employer from its inception. Independent contractors create works that they own and can assign, subject to the right to terminate the assignment and reclaim their property interest in the copy.

Background

In 2018, the production company Horror, Inc., sought a declaration from the U.S. District Court for the District of Connecticut that screenwriter Victor Miller, who originally wrote the "Friday the 13th" screenplay, was an employee when he created the screenplay in 1979.¹ If so, the screenplay would have been a work for hire owned by the production company from the outset and not subject to a reclamation right.² The company argued mainly that Miller's membership in the Writer's Guild of America, East, Inc. (WGA) and its own participation in the collective bargaining agreement with the Writer's Guild established that Miller was an employee.

The Copyright Act provides two distinct circumstances under which a copy constitutes a "work made for hire" that cannot be reclaimed by the original author: 1) all works created by an employee within the scope of employment, and 2) works prepared by writers who are not employees, but only if the parties expressly agree to the "work made for hire" status in a signed writing. See 17 U.S.C.A. ' 101-02, Community for Creative Non-Violence v. Reid, 490 U.S. 730, 737 (1989) (Reid).

The lower court found that because the original screenplay was not specifically commissioned as a "work made for hire" under the original contract, and because, in its view, Miller was not an employee at the time he wrote the screenplay, the screenplay was...