Twentieth Century Fox Film Corporation, a Delaware Corporation Sfm Entertainment Llc, a Delaware Limited Liability Company New Line Home Video Inc., a New York Corporation, Plaintiffs-Counter-Defendants-Appellees v. Entertainment Distributing, an Oregon Corporation Marathon Music & Video, an Oregon Corporation, Dastar Corporation, an Oregon Corporation, Defendant-Counter-Claimant-Appellant, Random House, Inc., Sued as Doubleday, a Division of Bantam Doubleday Dell Publishing Group, Inc., Counter-Defendant-Appellee. Twentieth Century Fox Film Corporation, a Delaware Corporation Sfm Entertainment Llc, a Delaware Limited Liability Company New Line Home Video Inc., a New York Corporation, Plaintiffs-Counter-Defendants-Appellees v. Entertainment Distributing, an Oregon Corporation Marathon Music & Video, an Oregon Corporation, Dastar Corporation, an Oregon Corporation, Defendant-Counter-Claimant-Appellant, Random House, Inc., Sued as Doubleday, a Division of Bantam Doubleday Dell Publishing Group, Inc., Counter-De
Docket: 04-55410
Court: Court of Appeals for the Ninth Circuit; November 17, 2005; Federal Appellate Court
Dastar Corporation appealed a district court ruling favoring Twentieth Century Fox Film Corporation, SFM Entertainment LLC, and New Line Home Video, which found Dastar liable for copyright infringement regarding General Dwight D. Eisenhower's book, *Crusade in Europe*. The court also awarded attorneys' fees and costs to the plaintiffs. The appeal was submitted to the Ninth Circuit following a bench trial, with the court considering the facts favorably towards the prevailing parties. The excerpt details Eisenhower's decision-making process regarding the publication of his wartime memoirs, emphasizing his initial reluctance to publish until persuaded by Doubleday's president Douglas Black and The New York Herald Tribune's vice-president William Robinson. They argued that contemporary historical accounts were often inaccurate, which ultimately convinced Eisenhower to publish his memoirs under the condition that all publishing rights be managed through a single agreement to avoid complexities. The Ninth Circuit affirmed the district court's judgment, upholding the copyright infringement finding and the cost awards.
Evidence indicates that General Eisenhower, initially hesitant, considered documenting his war experiences but felt uncertain about their significance. He attempted to draft a narrative primarily for personal satisfaction, viewing it more as an "experiment" rather than a commitment to publish. His decision to write memoirs solidified after meetings with Messrs. Black and Robinson and subsequent discussions with representatives from Tribune and Doubleday on December 30, 1947, where he accepted a publishing offer based on a "gentleman's agreement." Doubleday advised him on structuring the deal to potentially benefit from capital gains tax treatment instead of being taxed as ordinary income. After consulting the IRS, Eisenhower learned that by selling his rights after holding the manuscript for six months, he could qualify for favorable tax treatment. Consequently, he communicated to Doubleday the necessity of structuring their agreement accordingly, emphasizing the need for a tentative instrument rather than a formal contract. The district court found that Doubleday recognized the implications of this arrangement and that Eisenhower began writing the manuscript post-agreement on December 30, 1947. His writing process was intensive, averaging sixteen hours daily, aided by extensive support from Doubleday, including secretarial staff, researchers, and funding for maps and photos for the book.
The Doubleday editorial board met with General Eisenhower multiple times and provided significant feedback on his manuscript, which he completed on March 24, 1948. To secure favorable tax treatment from the IRS, Eisenhower formalized a December 1947 "handshake agreement" with a written contract on October 1, 1948, in which he sold the manuscript of his War Memoir, *CRUSADE IN EUROPE*, to Doubleday for an undisclosed sum. Following the agreement, Doubleday sold exclusive television rights to Fox, who registered the copyright and allowed the use of excerpts in a film version, which was produced in 1953. Fox later sublicensed video distribution rights to SFM Entertainment, which in turn sublicensed home video rights to New Line Home Video.
In 1995, Dastar produced a documentary titled *Campaigns in Europe*, which led to a lawsuit from Twentieth Century Fox Parties, claiming copyright infringement for using text from *CRUSADE IN EUROPE* without permission. Dastar counterclaimed and the case involved allegations under the Lanham Act and California unfair competition law. The district court ruled in favor of Twentieth Century Fox Parties on both claims, finding Dastar's copyright defense lacked merit and awarding attorneys' fees due to bad faith actions. Dastar's appeal confirmed the ruling on the Lanham Act but reversed the copyright decision, citing unresolved issues regarding the work-for-hire status. Following a Supreme Court ruling that reversed the Lanham Act claim, the case was remanded, and the court was instructed to dismiss that claim with prejudice. Although Dastar challenged the fee award, the appellate court upheld the costs but vacated the award for recalculation pending the resolution of the copyright claim.
The district court granted summary judgment in favor of Dastar, dismissing Twentieth Century Fox Parties' unfair competition claim. The only remaining issue was the copyright claim, which proceeded to a bench trial. During the trial, the court accepted numerous exhibits, including General Eisenhower's personal documents. Dastar did not present witnesses but relied on the documentary evidence and cross-examined Samuel Vaughn, an editor who collaborated with Eisenhower. The court ultimately ruled that Eisenhower's book constituted a work-for-hire, thus confirming Dastar's video infringed its copyright. Following the trial, the court addressed attorneys' fees, reaffirming its earlier decision to grant fees to Twentieth Century Fox Parties due to their victory. The court recalculated the fees based on new expenses and adjusted them after dismissing the Lanham Act claim. Dastar appealed both the ruling on copyright infringement and the fee award, but the appellate court affirmed the district court's decisions. The case involved the 1909 Copyright Act since the book was published before the 1976 Act's effective date. To prove infringement, Twentieth Century Fox Parties needed to show valid ownership and that Dastar copied original elements of the work. Dastar's defense argued that Doubleday lacked valid copyright due to an ineffective renewal attempt in 1975, asserting that Eisenhower's work could not be classified as work-for-hire since he was an independent contractor. The court rejected this argument.
The 1909 Act does not define "work made for hire" or "employer," stating merely that the term "author" includes an employer for works made for hire. Consequently, courts have shaped these definitions. Initially, the work-for-hire doctrine was applied strictly to traditional employer-employee relationships, but by the mid-1960s, it expanded to include less traditional arrangements where the hiring party had control over the work. Courts evaluate whether a work qualifies as made for hire by determining if it was created at the "instance and expense" of the hiring party. Established precedent within the circuit allows for independent contractors to create works-for-hire under these conditions. Dastar's claim that independent contractors cannot create works-for-hire contradicts this long-standing precedent, which affirms that such works qualify as long as they are produced at the commissioning party's instance and expense. The court is unpersuaded by Dastar's arguments suggesting that the Supreme Court's 1989 decision in CCNV undermines this precedent, noting that subsequent cases reaffirm the applicability of the work-for-hire doctrine to independent contractors.
The CCNV Court analyzed the "work-for-hire" doctrine specifically under the 1976 Copyright Act, noting that under the 1909 Act, courts typically presumed an implied agreement for copyright transfer from the commissioned party to the hiring party. Dastar contends that if rights are conveyed through an implied agreement, then the work cannot be classified as made for hire since, in such cases, the commissioning party inherently owns the copyright upon creation. This argument is rejected, aligning with the Second Circuit's stance. The Supreme Court's remarks regarding the 1909 Act are deemed non-binding dicta, not integral to its ruling on the 1976 Act. The court reaffirms that independent contractors can create works-for-hire if done at the commissioning party's instance and expense. The case examines whether General Eisenhower wrote "Crusade in Europe" at Doubleday's instance and expense, with the district court's legal conclusions reviewed de novo and factual findings for clear error. The court finds no clear error in the district court's factual determinations, affirming them. The "instance" test evaluates whether the employer was the motivating factor in the creation of the work, informed by the extent of the hiring party's control over the artist's work.
General Eisenhower's case exemplifies a scenario where the employer significantly motivated the author's work. Initially, Eisenhower rejected book offers until Doubleday and Tribune persuaded him to write his war account. He only began writing after December 30, 1947. The court found that Eisenhower, previously unwilling to write, produced the work at the publisher's behest, contrasting this with Self-Realization Fellowship Church, where works were deemed self-expressive and not works-for-hire due to the author's vow of poverty and lack of compensation claims. Dastar contended that Eisenhower's prior notes indicated independent creation; however, the district court deemed these preliminary efforts mere experiments, lacking substantial development before his agreement with Doubleday. The court concluded that Eisenhower's writing of "Crusade in Europe" was indeed induced by Doubleday. Furthermore, the evidence showed that Doubleday exercised significant supervisory control over the writing process, with extensive in-person meetings and editorial oversight, which reinforced the conclusion that the work was created at the publisher's instance. Complete control was not necessary; rather, a considerable degree of supervision indicated the work's commissioning context.
The district court's finding that General Eisenhower would not have authored the book without the encouragement of Doubleday and Tribune is upheld. Doubleday financed the entire project, paying Eisenhower a lump sum and covering all costs associated with drafting, including staff and production expenses for maps and photographs. No evidence indicates that Eisenhower incurred any expenses. Consequently, the court concluded that the work was produced at the instance and expense of Doubleday, establishing a presumption of work-for-hire, with copyright ownership residing with the commissioning party.
Dastar contends that the October 1, 1948, contract assigning rights to Doubleday contradicts the work-for-hire doctrine, arguing that if Doubleday held copyrights as work-for-hire, there would be no need for a subsequent assignment. However, the presumption can only be rebutted by clear evidence of the parties' intent to exclude work-for-hire status. The mere existence of the contract is insufficient for this rebuttal, as demonstrated in the Lin-Brook case, where a similar assignment failed to counter the presumption without additional context.
Dastar's only supporting evidence for a lack of work-for-hire intent is the IRS tax treatment of the book, which the court finds unconvincing. The 1947 agreement between Doubleday and Eisenhower indicates their intention to create a work-for-hire, as Eisenhower explicitly expressed a desire to avoid complex rights negotiations, seeking a straightforward arrangement for the publication.
The district court concluded that General Eisenhower and Doubleday intended a work-for-hire arrangement, which relieved General Eisenhower of concerns regarding copyright ownership of the book. The lack of a formal agreement in 1947 was primarily due to IRS tax requirements, as Doubleday wanted to avoid compromising capital gains treatment. There is no evidence that either party doubted Doubleday's ownership of the copyright or that General Eisenhower needed to legally transfer title for Doubleday to acquire it. Doubleday acted in accordance with its copyright ownership status, renewing the copyright in 1975 as a work-for-hire. The court found insufficient evidence to dispute the presumption that "Crusade in Europe" was a work-for-hire. Dastar's argument that Doubleday could only claim rights to materials created after February 8, 1948, was rejected; the court upheld the finding that an agreement existed on December 30, 1947, and affirmed that all published contents were properly copyrighted. Dastar admitted to unauthorized copying of substantial portions of the book for "Campaigns in Europe," and no grounds were found to reverse the infringement judgment. Dastar's claim regarding the scope of the remand trial was also dismissed, as the remand was intended to resolve the specific issue of General Eisenhower's intent regarding work-for-hire status. The district court properly conducted the trial and retained discretion under 17 U.S.C. § 505 to award reasonable attorneys' fees to the prevailing party, emphasizing that such awards should further the purposes of the Copyright Act.
In the case of Fantasy, Inc. v. Fogerty, several key factors influence a district court's decision to award attorney fees: frivolousness of the claims, the motivation behind them, objective unreasonableness of both factual and legal aspects, and the need to promote compensation and deterrence. A fee award is not considered an abuse of discretion unless it is based on misinterpretation of the law or erroneous factual findings. Courts generally require that reasons for fee awards be stated, and remand is warranted only if the record does not support the award.
In this instance, the appellate court found no abuse of discretion in the district court's fee award related to copyright claims, noting that the district court incorporated its earlier findings, thereby justifying its decision. The court also upheld the fee award to Twentieth Century Fox Parties for defending against Dastar's counterclaims, which were deemed sufficiently related to the original claims, as they involved a common core of facts.
Dastar's argument against the jurisdiction of the district court to award fees for defending against its prior appeal was rejected. The court referenced previous rulings that affirmed a party's right to recover fees for work contributing to the ultimate success of the lawsuit, regardless of intermediate failures. Thus, the appellate court affirmed the district court's decisions regarding fee awards.
The court affirmed the district court's decision to award attorneys' fees to the Twentieth Century Fox Parties for the previous summary judgment appeal, noting that it is common for litigants to face setbacks while pursuing overall victory. The court rejected Dastar's argument that only taxable costs under 28 U.S.C. § 1920 could be included in the attorneys' fee award, clarifying that 17 U.S.C. § 505 allows for the recovery of "full costs" at the court's discretion. The Supreme Court case Crawford Fitting Co. v. J.T. Gibbons, Inc. established that taxable costs are limited to those specified in § 1920, but the court here disagreed with interpretations that restrict § 505 to only those taxable costs. Instead, the court concluded that § 505 permits the awarding of non-taxable costs, emphasizing the necessity of giving meaning to every word in a statute. The ruling indicates that district courts have the authority to grant non-taxable costs under § 505, supporting the broader interpretation of the term "full costs."
The 1909 Copyright Act establishes that copyright lasts for 28 years from the first publication date, applicable regardless of whether the author’s name is disclosed. For posthumous works and various types of collective works, copyright can be renewed for an additional 28 years if a renewal application is filed within one year before the initial term ends. If not renewed, copyright expires after the initial 28 years. The document also notes that the Supreme Court's decision in CCNV discussed presumptions about copyright ownership, specifically regarding the work-for-hire doctrine, which expanded to include independent contractors in the last decade of the Act's effectiveness. Dastar's reference to a 1948 article about General Eisenhower's memoir was dismissed as hearsay by the district court, which was deemed appropriate. Additionally, the case of Dolman is mentioned, where the presumption of work-for-hire was successfully rebutted due to evidence of copyright assignments. In contrast, in this case, Doubleday registered itself as the copyright owner and maintained that the work was created as a work-for-hire, reinforcing the presumption of ownership. Dastar's arguments regarding tax treatment do not affect this presumption.
The 1909 Copyright Act pertains to the substantive protection of copyrights, but the Twentieth Century Fox Parties successfully sought attorneys' fees under Section 505 of the 1976 Act. This approach is not unprecedented; past cases, such as Magnuson v. Video Yesteryear, have similarly pursued fees under the 1976 Act despite infringement claims under the 1909 Act. Both acts offer similar provisions for awarding fees, yet the court does not evaluate whether the fee award should be considered under the 1909 or 1976 Act, as this issue was not raised on appeal. The court reviews the district court's fee award solely for abuse of discretion.
In dissent, Judge D.W. Nelson argues against the majority's interpretation that Eisenhower and Doubleday intended "Crusade in Europe" to be a "work-for-hire" under the 1909 Act. He contends that, given the legal context at the time, the parties did not intend for the work to be classified as such. Key evidence, including the nature of the contract, Eisenhower's tax treatment of the manuscript, and competitive offers from other publishers, supports the conclusion that Eisenhower sold a product rather than his services. The 1909 Act does not define "work-for-hire," and the judicial doctrine surrounding it evolved to include independent contractors only in the 1960s. Nelson argues that, based on the legal standards of 1948, the transaction between Eisenhower and Doubleday could not have constituted a work-for-hire arrangement, as it was understood to apply only to traditional employment relationships. Additionally, he criticizes the district court for relying on retrospective interpretations rather than considering all relevant evidence.
Evidence indicates that Eisenhower actively sought a publisher prior to his meeting with Doubleday, supported by notes from Robinson of the Tribune, which suggest Eisenhower was initiating the search rather than Doubleday seeking an author. Additional correspondence with Dick Simon of Simon & Schuster shows that Eisenhower began writing his memoirs over a year before engaging with Robinson. In 1947, Eisenhower communicated with his wife about his papers, suggesting he had long considered the financial potential of his writings for his family.
The majority's conclusion that Eisenhower would not have written without Doubleday's urging appears unsupported, as it relies heavily on selective testimonies and recollections from individuals not directly involved during the negotiations. The record contains significant evidence that contradicts the majority's view, which seems biased by hindsight.
The majority also asserts that neither the contract for "Crusade in Europe" nor the tax treatment of Eisenhower's income disproves the presumption of a work for hire. However, the contract explicitly states that Eisenhower sold and transferred the rights to his manuscript to Doubleday, indicating a sale rather than a work for hire arrangement. The contract's terms reflect a transfer of Eisenhower's common law copyright, which would not have been necessary had the work been created as a work for hire. This interpretation aligns with established precedent, where an assignment of copyright undermines the presumption of a work for hire if the rights are already owned by the employer.
Eisenhower's transfer of copyright to Doubleday raises questions about the nature of the agreement between them, especially since the manuscript was allegedly created at Doubleday's "instance and expense." If an oral agreement had already transferred ownership of the manuscript to Doubleday, the signed contract would serve no purpose, as Eisenhower would have had no rights to convey. The conclusion drawn is that the contract suggests the work was not intended as a "work for hire."
Moreover, the tax treatment of the proceeds from "Crusade in Europe" further challenges the characterization of Eisenhower as "hired" to write the book. Instead, the income was treated as a sale of an asset rather than personal income, indicating he was compensated for the finished product, not for writing services. The dissenting view argues that Eisenhower was motivated by his desire to write the book, regardless of publisher support, and that labeling the work as "for hire" could lead to an overly broad interpretation that contradicts the intent of the 1909 Copyright Act. The majority's attempt to differentiate this case from prior cases is deemed irrelevant, as Doubleday acknowledged Eisenhower as the author in the initial copyright registration without designating it as "for hire" until 1975.
