Notable Copyright Developments of 2022

The past year brought several significant and important developments in copyright law...

The past year brought several significant and important developments in copyright law. From a new copyright tribunal to precedential court decisions, this article provides an overview of some of the more compelling copyright developments of 2022 and offers insight into what to expect going forward. 

Artificial Intelligence And Copyright

In February of 2022, the U.S. Copyright Office addressed the application of copyright to artificial intelligence (“AI”), specifically the level of human involvement required for copyright registration.  AI involves, generally, the use of computers and technology to generate and produce various media and content. 

In his application, Steven Thaler, an advocate for AI intellectual property rights, sought to register a two-dimensional artwork claim in the work titled “A Recent Entrance to Paradise.” The author was identified as the “Creativity Machine,” with Thaler listed as the claimant alongside a transfer statement: “ownership of the machine.” In his application, Thaler stated that the work “was autonomously created by a computer algorithm running on a machine” and that he was “seeking to register this computer-generated work as a work-for-hire to the owner of the Creativity Machine.”

The Copyright Office rejected his claim, concluding that copyright protection does not extend to non-human creations. The Copyright Office emphasized that courts interpreting the Copyright Act, including the U.S. Supreme Court, have uniformly limited copyright protection to creations of human authors. The Office similarly rejected Thaler’s “work-for-hire” argument, citing that a work-for-hire requires a binding contract in the form of either an employment agreement or work-for-hire agreement. “The ‘Creativity Machine’ cannot enter into binding legal contracts and thus cannot meet this requirement,” the Review Board explained. “Second, the work-for-hire doctrine only speaks to the identity of a work’s owner, not whether a work is protected by copyright.”

When the Copyright Office upheld its rejection, Thaler filed suit. According to the lawsuit, “The denial creates a novel requirement for copyright registration that is contrary to the plain language of the Copyright Act, contrary to the statutory purpose of the Act, and contrary to the Constitutional mandate to promote the progress of science.”  The court has yet to render a decision.

Copyright Office Launches Small Claims Court

The U.S. Copyright Office’s Copyright Claims Board (CCB) launched in 2022. The three-member tribunal is designed to serve as an alternative to federal court when resolving copyright disputes of low monetary value.

To bring a claim with the CCB, a claimant must either have a registration from the Copyright Office for the work(s) at issue, or have filed an application. The CCB is authorized to consider claims that do not exceed $30,000 and seek relief for infringement of one of the following: exclusive rights under the Copyright Act; declarations of noninfringement of an exclusive right; misrepresentations during the notice and counter-notice process of the Digital Millennium Copyright Act (DMCA); counterclaims related to the same transaction or occurrence that is the subject of the original claim; and legal or equitable defenses under copyright law or that are otherwise available.

The goal of the CCB is to make small copyright claims faster and less costly to resolve. Streamlined procedures include limited discovery and motions, as well as hearings exclusively conducted via video conferences. Participation by claimants is voluntary, and respondents may opt out of the CCB by providing written notice of their choice to opt out to the Board within 60 days of service of a notice and claim by the claimant.

SCOTUS Confirms Validity of Registrations Based on Honest Mistakes of Fact or Law

In Unicolors Inc. v. H&M Hennes & Mauritz LP, the U.S. Supreme Court clarified that making an innocent mistake of fact or law when filing a copyright registration application does not automatically mean an applicant will lose its intellectual property rights. The Court held that a copyright owner could still pursue a copyright infringement action even though it included inadvertent inaccurate information in its application. 

The alleged inaccuracy stemmed Unicolors’ filing of a single copyright application seeking registration for 31 separate works, despite Copyright Office regulations that provides that a single application may cover multiple works only if they were “included in the same unit of publication.” H&M maintained that Unicolors failed to satisfy this requirement because Unicolors had initially made some of the 31 designs available for sale exclusively to certain customers, while offering the rest to the general public.

The Ninth Circuit held that safe harbor under 17 U.S.C. § 411(b) excuses only good-faith mistakes of fact. However, the Supreme Court reversed.  In its 6-3 decision, the Court noted that “Lack of knowledge of either fact or law can excuse an inaccuracy in a copyright registration.”  Given the complexities of the Copyright Act, the Court’s decision is great news for copyright holder.

Singer Katy Perry Escapes Infringement Verdict

In Gray v. Hudson, the Ninth Circuit held that a repeating eight-note instrumental pattern or “ostinato” in Katy Perry’s song “Dark Horse” did not infringe the plaintiff’s “Joyful Noise” composition. The appeal court’s decision vacated a jury award of $2.8 million in damages. 

In reaching its decision, the Ninth Circuit emphasized that copyright law protects musical works only to the extent that they are original works of authorship. It went on to find that the ostinatos at issue consist entirely of “commonplace musical elements,” and that the similarities between them do not arise out of an original combination of these elements. Given that the Ninth Circuit handles a majority of copyright litigation involving musical copyrights, this decision will likely have important ramifications going forward.  Remember, the key to copyright is originality and original authorship. 

First Copyright Tattoo Trial

In Alexander v. Take-Two, an Illinois jury awarded a tattoo artists $4,000 after finding that World Wrestling Entertainment Inc. (“WWE”) and Take-Two Interactive Software Inc. (“Take-Two”) infringed her copyrights. Catherine Alexander sued WWE and Take-Two after the video game developer featured six of her copyrighted tattoo designs in its depiction professional wrestler Randy Orton in WWE 2K video games series.

The court determined on summary judgment that Alexander held valid copyrights for five of her six tattoo designs and that the defendants infringed them. The jury was left to decide the merits of the defendants’ affirmative defenses and award damages. While the jury rejected the defendants’ implied license and fair use defenses, it awarded Alexander a mere $3,750 in damages.  The jury rejecting her demand for a share of the video games’ profits.  While the jury verdict vindicates tattoo artists’ infringement claims, it also demonstrates that their low economic value may make them undesirable to pursue outside of the CCB.

Terminating Copyright Assignments

In Peretti v. Authentic Brands Group, the Second Circuit Court of Appeals addressed the termination of copyright assignments under 17 U.S.C. § 203, which provides for the right to terminate a grant executed by the author at any time during a five-year period beginning at the end of 35 years from the date of execution of the grant. Section 203 applies only to grants executed by the author on or after January 1, 1978. 

The dispute began when the heirs to songwriter and record producer Hugo Peretti sought declaratory judgment that they had validly terminated a 1983 grant of rights in the copyright to the hit song “Can’t Help Falling in Love,” which was copyrighted in 1961. In 1983, several years after the passage of the Copyright Act of 1976, Hugo Peretti, his wife, and his daughters signed a contract transferring their contingent rights and interests in the renewal term of the copyright of the composition to Authentic Brands Group’s predecessors-in-interest (the “1983 Assignment”). Hugo Peretti died before those renewal rights vested, and his heirs ultimately registered the renewal of the copyright in 1989. In 2014, Peretti’s heirs served a Notice of Termination on Authentic Brands Group purporting to terminate the 1983 Assignment under Section 203.

The district court dismissed the action, holding that the grant was not “executed by the author” under Section 203 and, thus, Peretti’s heirs had no statutory right to terminate the grant. The Second Circuit agreed, holding that while Hugo Peretti’s signature was affixed to the grant document at issue, the interests at issue are the contingent rights held and transferred to Authentic Brands Group’s predecessors-in-interest by Peretti’s heirs, the grant of which was not and can’t be executed by the author. The court reasoned that, while Hugo Peretti’s signature was on the 1983 Assignment, he could not have executed a grant transferring certain rights (such as those owned by his family members) because he did not hold such rights.  Instead, his signature on the grant document transferred only his own contingent right to the renewal term, which did not vest prior to his death. Because the rights transferred were the contingent rights held by his heirs, the grant was not “executed by the author.”

Copyright and Transformative Fair Use

The Supreme Court recently heard oral arguments in Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith, which has the potential to reshape how courts address transformative fair use. The suit involves paintings Andy Warhol made using photographs of rock star Prince, which taken by photographer Lynn Goldsmith.

The Andy Warhol Foundation for the Visual Arts, Inc. (“AWF”), successor to Warhol’s copyright in the Prince Series, has argued that the Prince Series made fair use of Goldsmith’s photograph. However, the Second Circuit concluded that the Prince Series was not “transformative” within the meaning of the first factor of the fair use doctrine because it retains the essential elements of its original source material.

In granting certification, the justices considered “Whether a work of art is ‘transformative’ when it conveys a different meaning or message from its source material (as this Court, the Ninth Circuit, and other courts of appeals have held), or whether a court is forbidden from considering the meaning of the accused work where it ‘recognizably deriv[es] from’ its source material (as the Second Circuit has held).”

The U.S. Copyright Office is also poised to make waves in 2023 as it begins studying how copyright law should be applied to emerging technology, including AI and non-fungible tokens. Congress requested a joint NFT study by the Copyright Office and the United States Patent and Trademark Office (USPTO) regarding issues of intellectual property law and policy arising from the use NFTs. The agencies are scheduled to conduct a series of roundtables in January.

Next Steps to Secure Your Rights

Given the rapid pace of copyright law developments, we encourage copyright owners, licensees, and others with copyright interests to be proactive in safeguarding your rights. Scarinci Hollenbeck’s Copyright Group actively works with individuals and businesses of all sizes to pursue, secure, and monetize copyrights and other intellectual properties. In doing so, we routinely counsel clients on how emerging issues may impact their interests, working to both overcome challenges and capitalize on opportunities.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Albert J. Soler, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.