Itar-Tass Russian News Agency v. Russian Kurier, Inc.
Docket: Docket No. 97-7498
Court: Court of Appeals for the Second Circuit; August 27, 1998; Federal Appellate Court
The appeal addresses the choice of law in international copyright disputes, specifically the application of Russian copyright law regarding the rights of newspaper reporters versus publishers. The central legal question is whether a newspaper publisher can sue for copyright infringement of articles or if only the authors have standing. The Kurier defendants contest a judgment that enjoined them from copying articles from the plaintiffs, which include Russian newspapers and a news agency, and awarded damages for copyright infringement.
The court determined that Russian law governs the ownership of the copyrights in question, while U.S. law applies to infringement issues within the United States. Under Russian law, ownership of newspaper articles resides with the journalists who authored them, as newspapers are excluded from the work-for-hire doctrine. Publishers may have ownership rights regarding the selection and arrangement of articles but do not have the right to claim damages for text copying of those articles.
As a result, the judgment that awarded relief to the newspapers for copying article texts is reversed. However, due to the potential entitlement of one non-newspaper plaintiff to injunctive relief and damages, as well as other plaintiffs possibly deserving significant relief, the case is remanded for further proceedings.
The background reveals that the Kurier, a Russian-language weekly with a circulation of approximately 20,000 in New York, copied around 500 articles from the plaintiffs’ publications. The copying process involved extracting articles from these publications, including headlines and graphics, for reproduction in Kurier.
Kurier defendants did not dispute that they lacked permission from plaintiffs to copy articles, with one exception. Pogrebnoy's claim of having received permission from a newspaper publisher was rejected by the District Court, which also did not determine the credibility of his assertion regarding permission from authors of six articles, as it was irrelevant to the legal issues at hand. In a preliminary injunction ruling from May 1995, the District Court prohibited the Kurier defendants from copying works belonging to four plaintiff news organizations, establishing that the articles in question, published after March 13, 1995 (the date Russia joined the Berne Convention), were classified as "Berne Convention works." The plaintiffs' rights were governed by Russian copyright law, which stipulates that authors retain copyright unless there is a contractual assignment. The court found no evidence of such an assignment and examined the 1993 Russian Copyright Law regarding "works made for hire." While employers generally have exclusive rights to exploit service-related work, the court noted that this does not apply to newspapers. However, it was determined that press agencies like Itar-Tass, which are not classified as newspapers, do fall under this provision. Judge Koeltl referred to Article 11 of Russian Copyright Law, which grants compilers rights over their creative selections while respecting the authors' rights of included works, allowing authors to exploit their works independently unless otherwise stated in a contract.
Article 11(2) of the Russian Copyright Law delineates the rights of compilers of works not covered by the work-for-hire provision in Article 14(2). It grants editors exclusive rights to exploit publications such as encyclopedias and newspapers while allowing them to demand attribution. Authors retain independent rights to exploit their individual contributions regardless of the compilation. A translation of the law used in court emphasized the phrase “independently from the publication as a whole,” which became central to expert discussions during the trial. The District Court recognized a significant debate over the publisher's rights regarding the integrity of the work. Judge Koeltl determined that a preliminary injunction was appropriate based on the copying of the newspapers' creative efforts in compiling articles, but left uncertain whether damages could be claimed solely for compilation efforts or also for individual articles. Expert testimony revealed conflicting opinions; plaintiffs' expert, Michael Newcity, asserted that Article 11(2) allows newspapers to seek redress for copying both the entire publication and individual articles, arguing that both publishers and reporters hold parallel exclusive rights. He referenced the legislative history, noting modifications from the predecessor Article 485 of the Russian Civil Code, which shifted the language affecting the scope of these rights, fueling further disagreement among experts.
Newcity argued that even limited reprinting of articles from a newspaper would constitute copyright infringement, citing the deletion of the phrase "as a whole" in the 1993 revision of Article 11 as a significant change. He referenced a 1995 opinion from the Judicial Chamber for Informational Disputes, which stated that publishers could seek legal recourse for violations, including the improper printing of articles. In contrast, defense experts, including Professor Peter B. Maggs, contended that Article 11(2) grants authors exclusive rights to their articles while publishers hold rights only to the publication as a whole. Maggs asserted that copying a few articles would not infringe on the newspaper's rights as the copyright belongs to the individual authors. Michael Solton, another defense expert, noted that authors retain exclusive rights to their articles in compilations, and publishers acquire limited rights through assignment, but do not gain rights to individual articles. He dismissed the Informational Disputes Chamber's opinion as irrelevant due to its limited jurisdiction. Svetlana Rozina, who contributed to the 1993 copyright revision, confirmed that authors retain exclusive rights and that the reordering of phrases in the articles was for grammatical purposes, not substantive change. She concurred with Solton regarding the Chamber's lack of authority over copyright issues.
The District Court ruled in favor of Newcity regarding the interpretation of Russian copyright law, specifically rejecting the notion that newspapers have rights to individual articles under Article 14, as the work-for-hire doctrine does not apply. Judge Koeltl supported Newcity's interpretation of Article 11, highlighting the significance of the phrase "as a whole" and referencing the Informational Disputes Chamber’s opinion. He noted that publishers have a strong economic incentive to prevent unauthorized copying, which would otherwise lead to widespread infringements by Kurier. The Court estimated Kurier's profits at $2 million, attributing $500,000 in actual damages to the copied articles. Additionally, the plaintiffs were awarded statutory damages for 28 registered articles, totaling 15 awards at $2,700 each, with the violations deemed willful. The Court mandated that plaintiffs could choose between statutory or actual damages to prevent duplicative recovery. In a separate ruling against Lineo Printing, the Court awarded $3,934, consisting of adjusted actual damages and statutory damages.
The choice of law issue was raised as a critical consideration, as the parties initially relied solely on Russian law. The Court sought further input, appointing Professor William F. Patry as Amicus Curiae to address the complexities of international copyright law, which have been largely overlooked in prior case law. The document notes various cases where U.S. work-for-hire doctrine was applied without thorough examination of conflicts of law issues.
Various cases illustrate the application of foreign law in copyright disputes. In *Frink America, Inc. v. Champion Road Machinery Ltd.*, Canadian copyright law was relevant to ownership issues. Similarly, in *Greenwich Film Productions v. DRG Drugs Inc.*, French law was applied to determine ownership rights for a musical work commissioned in France. The case *Dae Han Video Production Inc. v. Doug San Chun* utilized foreign law to establish that the alleged licensor lacked rights. In *Autoskill, Inc. v. National Educational Support Systems, Inc.*, U.S. work-for-hire law was favored over a late-raised Canadian law claim. *Pepe (U.K.) Ltd. v. Grupo Pepe Ltda.* involved the application of both foreign and U.S. laws.
Notably, none of these cases explicitly adjudicated the choice of law issue. The conflicts issue was acknowledged but not resolved in *Greenwich Film Productions S.A. v. D.R.G. Drugs, Inc.* According to the Nimmer treatise, copyright conflicts are generally not problematic, relying on the "national treatment" principle from the Berne Convention and the Universal Copyright Convention, which states that authors from member states receive equal copyright protection in each member state. However, Nimmer's assertion that the applicable law is the copyright law of the infringement location is a simplification, conflating ownership and substantive rights.
Another commentator emphasizes that national treatment applies to the existence and scope of rights based on the law of the country where protection is claimed. The analysis of copyright conflicts begins with the Berne Convention Implementation Act of 1988, which asserts that rights in a work protected under U.S. law cannot be claimed based on Berne Convention provisions, thereby clarifying that any rights derived from U.S. law should not be altered by the Convention.
The analysis begins by noting the absence of relevant provisions in the Copyrights Act concerning conflicts issues, necessitating the development of federal common law to address these matters. The applicable law is based on established jurisprudential principles that align with the Act's policy objectives, allowing for the incorporation of private international law. The choice of law for the case is not uniform across all issues; specifically, for copyright ownership, the law of the state with the "most significant relationship" to the property and parties is applied. Here, since the works in question were created and first published in Russia by Russian nationals, Russian law is deemed appropriate for determining ownership rights, a conclusion supported by both the Amicus Curiae and the parties involved.
While the United States Copyright Act and the Berne Convention identify Russia as the "country of origin," this designation may not always dictate ownership choice of law. The Berne Convention does not resolve ownership issues except in one irrelevant instance. However, a procedural requirement under U.S. law mandates that a copyright owner, including those determined by foreign law, must meet the standing criteria of 17 U.S.C. 501(b) to sue for infringement in U.S. courts.
For infringement issues, the prevailing conflicts principle is lex loci delicti, typically applied in tort cases. This approach has been implicitly adopted in U.S. copyright law, particularly in cases involving works unprotected in their country of origin. In the current case, as the tort occurred in the United States and the defendant is a U.S. corporation, U.S. law governs infringement issues. The distinction between ownership and infringement issues may not always be straightforward, indicating potential complexities in conflicts analysis.
Ownership of copyright in cases involving contending parties is determined by the law of the country with the closest relationship to the work. In some instances, such as the current case, the discussion extends beyond mere ownership to the nature of the ownership interest. It is important to distinguish between the nature of a copyright interest and copyright infringement, as they are related but separate issues. In the context of Russian law, which governs the determination of ownership rights, the plaintiffs must establish whether they own an exclusive right under U.S. copyright law. The District Court is tasked with interpreting foreign law, which is a legal issue rather than a credibility issue among expert witnesses.
According to Article 14 of the Russian Copyright Law, Itar-Tass holds copyright interests for articles written by its employees, while Article 14(4) excludes newspapers from the work-for-hire doctrine. The newspaper plaintiffs must find their ownership rights elsewhere, relying on Article 11. The District Court supported their claim of exclusive rights despite Article 11(2) also granting reporters exclusive rights to their articles. However, a review indicates that the defendants’ experts offer a more persuasive interpretation of Article 11, particularly since Article 14 denies newspapers work-for-hire rights. Article 11 is likely intended to apply to compilations, granting compilers rights in the selection and arrangement of material while preserving authors' rights to their individual works.
Article 11 permits authors of newspaper articles to sue for infringement of their text rights, while also allowing newspaper publishers to sue for wholesale copying or for portions that reflect their selection, arrangement, and presentation of articles. Newcity's interpretation, which grants publishers exclusive rights to the text of articles, misreads the significance of the phrase “as a whole” in Article 11(2), as the shift in its placement was a grammatical change, not a substantive broadening of rights. Furthermore, the interpretation suggesting that both publishers and authors hold exclusive rights to the same article is flawed, particularly since it implies that a publisher could license third parties for articles while authors retain exclusive rights. The Informational Disputes Chamber's opinion does not substantiate plaintiffs' claims, as its authority is limited to free press matters and it does not assert that newspapers have copyright in the text of articles. The District Court's rationale, arguing that extensive copying would occur without redress for individual articles, is also questionable given that authors or their assignees can prevent such copying. Additionally, Russian copyright law allows for collective administration of authors' rights, indicating that organizations like UJR can protect reporters' rights. Despite disagreements with the District Court's interpretation of Article 11, defendants cannot freely copy. Itar-Tass, as a press agency under Article 14, is eligible for injunctive relief and damages against unauthorized copying, affirming the judgment in favor of this plaintiff.
Newspaper plaintiffs may not receive relief for the direct copying of their article texts but could be entitled to injunctive relief and damages if they demonstrate that Kurier infringed on their ownership rights concerning newspaper compilations. The District Court recognized the newspapers' rights regarding text copying but did not address potential relief related to Kurier’s reproduction of the newspapers’ creative content, including headlines and graphics. Given that Kurier’s actions likely violated these rights, it is anticipated that the newspaper plaintiffs could achieve injunctive relief and damages upon remand.
The case also raises questions about relief for UJR, which represents authors whose articles were copied. The District Court previously noted UJR's lack of organizational standing to pursue claims on behalf of its members, but it later ruled that UJR had standing. However, UJR's failure to provide a membership list hindered the crafting of a specific injunction. On remand, the court should reconsider potential relief for UJR's member-authors while allowing UJR to amend its claims for damages. Additionally, the District Court should explore the feasibility of notifying affected authors about their rights to intervene in the lawsuit. The injunction remains in effect pending the District Court's reevaluation and any necessary modifications. The judgment is affirmed regarding Itar-Tass, reversed concerning the other plaintiffs, and remanded for further proceedings.
Under Russian jurisprudence, it is questioned whether a publisher must show complete copying of a newspaper for standing in court or if infringement through reprinting one or two articles suffices. Prof. William F. Patry, an authority on copyright law and former adviser to the Register of Copyrights, notes that while the "actual supervision and control" test for the work-for-hire doctrine has been rejected, the application of U.S. law regarding ownership remains valid due to the work's U.S. origin and publication. The reliance on the issuance of copyright certificates by the U.S. Copyright Office to support the work-for-hire doctrine is deemed weak, as such certificates do not determine the applicability of this doctrine or ownership issues. Patry's brief highlights that the principle of national treatment under the Berne Convention does not dictate which country's law to apply but mandates equal treatment for foreign and domestic authors. Additionally, U.S. obligations under the Berne Convention are to be fulfilled through domestic law, and the Convention's provisions do not alter authorship rights. The excerpt also references provisions related to the enforcement and interpretation of the Berne Convention and the handling of "restored works."
Ownership of restored works in the public domain due to noncompliance with U.S. copyright law is vested in the author or initial right-holder as determined by the law of the work's source country, according to 17 U.S.C. 104A(b). This provision may illustrate the general conflicts approach to copyright ownership rather than serving as an exception. The law of the country of origin is deemed relevant only for initial ownership, without addressing assignments of rights. The Berne Convention indicates that ownership of cinematographic works is governed by the legislation of the country where protection is claimed, which could imply different interpretations for other works. The preferred interpretation is that the provision for films did not intend to imply anything regarding other works.
Newcity's attempt to equate the rights of a newspaper and an author with co-authors' rights is challenged by Russian copyright law, which recognizes joint ownership only for works resulting from collaborative efforts. The absence of joint authorship or contractual agreements generally means that exclusive rights belong solely to the author. An arbitration court ruling in a related case awarded exclusive rights to a newspaper for reprinted articles but failed to consider relevant provisions of Russian copyright law. The complaint alleges rights held by the newspapers in their publications and claims copying of various items from the plaintiffs' works. During trial, plaintiffs emphasized that the creative appearance of the copied text is a central argument, despite objections raised by the defense regarding the lack of such allegations.
Authors of articles, by submitting them to newspaper publishers, likely granted an implied non-exclusive license for the publishers to use those articles in compilations. This license does not allow publishers to sue in the United States for infringement of the articles themselves. The District Court must consider, upon remand, the potential relief for Heslin Trading Ltd., publisher of the Russian language comic magazine Balagan, regarding ownership interests under Israeli law that may have been infringed by Kurier's copying under U.S. law. The District Court did not address these ownership interests previously. During the appeal, a motion from Al J. Daniel, Jr. to intervene in support of the judgment was submitted to protect a charging lien as former counsel for the plaintiffs. This motion is denied but may be renewed in the District Court on remand.
