The Bundle of Rights: How Copyright Ownership Really Works
Introduction
On May 5, the U.S. Court of Appeals for the Eleventh Circuit issued a precedential decision in Great Bowery Inc. v. Consequence Sound LLC, a copyright case that involved a district court’s summary judgment ruling against the plaintiff on the ground of lack of standing. Concluding that “the district court’s understanding of copyright law was not quite right,” the Eleventh Circuit reversed that ruling and sent the case back to the district court for further proceedings.
As the Supreme Court observed in Google LLC v. Oracle Am. (2021), “unlike patents, which protect novel and useful ideas, copyright(s) protect expression but not the ideas that lie behind it. The Eleventh Circuit in Great Bowery began its analysis quoting Section 102(a) of the Copyright Act: “A copyright is a limited monopoly in an original work of authorship.”
Citing Section 106 of the Copyright Act, the Eleventh Circuit explained that the owner of a copyright generally has the exclusive rights to do and to authorize five things:
- Reproduce the copyrighted work
- Prepare derivative works based on the copyrighted work
- Distribute copies of the copyrighted work
- Perform the copyrighted work publicly
- Display the copyrighted work publicly
As further observed by the Eleventh Circuit, this “bundle of exclusive rights that comes with a copyright is divisible,” meaning that “any of the exclusive rights, including any subdivision of any of the rights specified in Section 106, may be transferred and owned separately.”
Facts and Procedural History: The Star Wars Photos
The works at issue in Great Bowery concern Star Wars-related photographs taken by Annie Leibovitz. In 2014, Leibovitz signed a written “Artist Agreement” with Trunk Archive, a business operated by the plaintiff Great Bowery, Inc. Pursuant to the Artist Agreement, Leibovitz granted to Trunk Archive “the exclusive worldwide right to license, market, and promote” certain images she had created. However, the Eleventh Circuit observed, “Ms. Leibovitz reserved the right to collaborate with or deliver any of those images to Robert Pledge and Contact Press Images for use in special projects or other endeavors she deemed of interest.”
In 2018, Leibovitz signed an “Authorization Letter” authorizing Great Bowery, doing business as Trunk Archive, to “act on her behalf in all matters relating to copyright infringement of my work.”
During the 2010s, Condé Nast invited Leibovitz to photograph the cast and crew of three Star Wars films for Vanity Fair Magazine. Each photo shoot was governed by an agreement between Condé Nast and AL Studio, LLC, on behalf of Annie Leibovitz. Each agreement contained a ‘Reservation of Rights’ clause stating that all rights with regard to the works not expressly granted were retained by the ‘Contributor’, defined as AL Studio, LLC, not Leibovitz herself.
In 2022, Great Bowery discovered that some of the Leibovitz Star Wars photos appeared in articles on consequence.net and brought a copyright infringement suit against Consequence Sound LLC and Consequence Media Group Inc. in the U.S. District Court for the Southern District of Florida.
Consequence moved for summary judgment, arguing that Great Bowery lacked standing to pursue its copyright infringement claim. The district court granted the motion, reasoning that “because Leibovitz retained for herself the right to use the photographs in collaborations with Robert Pledge and Contact Press Images, she did not grant Great Bowery an ‘exclusive’ license.” Therefore, the district court concluded that Great Bowery lacked standing under Section 501(b) of the Copyright Act. Great Bowery appealed that ruling to the Eleventh Circuit.
Section 106 Rights Can Be Separately Transferred
In discussing the “bundle of rights” nature of a copyright, the Eleventh Circuit observed that Section 501(b) “limits those who may bring a copyright infringement action to ‘legal and beneficial owners of an exclusive right under a copyright.’” The court explained that “to have statutory standing, a plaintiff does not need to be the owner of all the exclusive rights comprised in a copyright. It only needs to be the owner of that particular right which the defendant has allegedly infringed.”
Under Section 501(b), “an exclusive licensee is an ‘owner of an exclusive right’ and can sue for infringement of that right.” The Eleventh Circuit clarified that a transfer of such a right can occur regardless of whether it is phrased as a transfer or as a “grant of an exclusive license.” The effect is the same either way.
The Eleventh Circuit provided several examples illustrating how narrowly a copyright owner can transfer ownership of a Section 106 right:
“An exclusive license to a newsstand dealer to distribute a given edition of a given newspaper at a designated corner on a particular afternoon would convey to such dealer the ownership of such right, so that if another dealer were to distribute the same paper at the same time and place, the first dealer could sue the second for infringement of his distribution right.”
“The copyright holder of a musical could grant a theater the exclusive right to publicly perform the musical on Monday through Thursday, while retaining for itself the exclusive right to publicly perform the musical on Friday, Saturday, and Sunday. In that case, if a third party performed the musical on a Monday, only the theater could sue for infringement. If a third party performed the musical on a Friday, only the copyright holder could sue.”
“Suppose ‘A’ is the copyright holder of a painting. ‘A’ grants ‘B’ a nonexclusive license to make and sell prints of the painting in Florida. Then ‘A’ grants ‘C’ the worldwide exclusive license to reproduce the painting. ‘C’ now owns the exclusive right to reproduce the painting and can sue third parties who infringe that right. The fact that ‘B’ has permission to make prints in Florida does not change the status of ‘C’ as the owner of the reproduction right.”
Defendants Allowed to Challenge Standing Despite Restrictions Under Section 204(a)
Before applying the above principles to the district court’s summary judgment order, the Eleventh Circuit addressed an argument by Great Bowery that Consequence was not permitted to challenge Great Bowery’s standing, since both it and Leibovitz agreed that Great Bowery possessed standing pursuant to the Artist Agreement and Authorization Letter.
The Eleventh Circuit rejected this argument and held that Consequence could indeed challenge Great Bowery’s standing. In doing so, the court drew a distinction between challenging the adequacy of the Transfer Writings, which was not permissible under these facts, and challenging whether the Transfer Writings actually transferred the particular Section 106 rights at issue, which was permissible.
The Eleventh Circuit acknowledged that “because the grant of an exclusive license is a transfer of copyright ownership, an exclusive license is not valid unless it is in writing and signed by the owner of the rights conveyed or her agent.” The court also acknowledged the principle from Imperial Residential Design, Inc. v. Palms Dev. Grp. (11th Cir. 1995) that “where there is no dispute between the copyright owner and the transferee about the status of the copyright, it would be unusual and unwarranted to permit a third-party infringer to invoke Section 204(a) to avoid suit for copyright infringement.”
Because Leibovitz acquiesced to Great Bowery’s claim of ownership of the relevant Section 106 rights, Imperial Residential Design barred Consequence from challenging the sufficiency of the Transfer Writings under Section 204(a). Nevertheless, the Eleventh Circuit held that Leibovitz’s acquiescence did not relieve Great Bowery of its burden to prove standing to sue. Consequence could still argue that Great Bowery did not actually obtain a transfer of any relevant Section 106 rights under the Transfer Writings.
Additionally, the Eleventh Circuit noted that Consequence could explore whether state contract law bars consideration of the Authorization Letter pursuant to the “parol evidence rule,” which generally precludes consideration of extrinsic evidence to ascertain the intent of parties to an earlier agreement where the terms of that earlier agreement were clear and unambiguous.
The Eleventh Circuit’s Rationale for Reversing the District Court
The Eleventh Circuit held that “a nonexclusive license does not affect whether Great Bowery received an exclusive license, and that the particular language from the Condé Nast agreements was not material to whether Great Bowery is the owner of an exclusive right. The district court’s order granting summary judgment in favor of Consequence relied on a misunderstanding of the law. The Eleventh Circuit therefore vacated that order and remanded for further proceedings.”
The court also noted in a footnote that “to the extent the district court believed a copyright plaintiff must own an exclusive right that is identical to one of the Section 106 rights, that is not correct because the Section 106 rights are subdivisible.”
The Eleventh Circuit hinted that on remand, the district court will be expected to fully consider the parties’ arguments once the record is fully developed, including Consequence’s argument that “all rights in the photographs were retained by AL Studio and that there is no written transfer in the record of any rights in the photographs from AL Studio to Leibovitz or Great Bowery.”
Conclusion
Great Bowery provides an instructive framework for understanding how the individual rights making up a copyright bundle of rights can be separately transferred. It also clarifies the law from Imperial Residential Design by holding that although a nonparty to a transfer writing cannot challenge the legal sufficiency of that writing under Section 204(a) when the parties to the writing both agree to its sufficiency, the nonparty can still argue that the transfer writing did not actually transfer a Section 106 right relevant to the plaintiff’s claim of copyright infringement.
Finally, Great Bowery illustrates how an exclusive licensee can own a subdivided Section 106 right and thus possess standing to sue as to that right, even if another party possesses a nonexclusive license for another part of the same Section 106 right.
