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IP/Entertainment Case Law Updates

16 Casa Duse, LLC v. Merkin

In matter of first impression, Second Circuit affirms ruling that director does not own copyright interest in film that he directed, because his creative contributions were inseparable from and integrated into film.

Robert Krakovski, the principal of the film production company 16 Casa Duse, LLC, purchased the rights to a screenplay titled Heads Up and asked Alex Merkin to direct the film. Krakovski then hired a cast and crew for the film, and each cast and crew member (other than Merkin) signed an Independent Contractor Agreement with Casa Duse. Krakovski sent Merkin a work-for-hire agreement providing that Casa Duse would own all rights in the film, and although he asked Merkin several times to sign the agreement, Merkin never did so. Production of the film began, notwithstanding the absence of a written agreement signed by Merkin. After filming concluded, Krakovski gave Merkin a hard drive containing the film’s raw footage so Merkin could prepare an initial edit of the film. At that point, Merkin signed a media agreement under which he could edit the footage but could not license, sell or copy the footage without Casa Duse’s permission.

Krakovski began submitting Heads Up to film festivals, and scheduled a screening at the New York Film Academy (NYFA). He also made a deposit of $1,956.58 at a restaurant for a reception following the screening. On the date of the screening, the NYFA canceled the screening because Merkin’s attorney, Maurice Reichman, had sent it a cease-and-desist notice. Because the event was canceled, Krakovski lost his restaurant deposit.

Casa Duse sued Merkin and Reichman, seeking a judgment declaring that it was not liable to Merkin for copyright infringement, and that Merkin did not own a copyright interest in the film. The district court granted a temporary restraining order and preliminary injunction enjoining Merkin from interfering with Casa Duse’s use of the film.

Casa Duse moved for summary judgment on its claims and its requests for fees and sanctions. Merkin cross-moved for summary judgment and asked the district court to vacate the preliminary injunction and strike Casa Duse’s fees and sanctions request. The district court declined to vacate the injunction and granted summary judgment to Casa Duse on all claims, along with fees against Merkin and sanctions against Reichman. The district court also dismissed all of Merkin’s counterclaims except for his claim for breach of contract, which Merkin agreed to voluntarily dismiss without prejudice. (Read our summary of the district court’s decision here.) The district court entered final judgment, awarding Casa Duse (1) $1,956.58 in damages resulting from Merkin’s interference with the NYFA screening event; and (2) $185,579.65 in attorneys’ fees and costs, of which Merkin and Reichman would be jointly and severally liable for $175,634 and Reichman would be solely liable for the remaining $9,945.65. Merkin and Reichman appealed.

The Second Circuit noted that the case presented a question of first impression in the Circuit: May a contributor to a creative work whose contributions are inseparable from and integrated into the work maintain a copyright interest in his or her contributions alone? The court answered the question in the negative.

The court first addressed the competing copyright claims. Merkin argued that the district court erred in concluding that he could not copyright his creative contributions to the film, and that he lacked a copyright ownership interest in the “raw film footage.” Casa Duse countered that the individual contributions to a film, such as direction, are not themselves subject to copyright protection, and that Casa Duse retained sole copyright ownership of the final film and the film’s raw footage. The parties agreed that Merkin was not a “joint author” or “co-author” of the film under the Copyright Act, and that Merkin’s efforts could not be deemed a “work made for hire,” which would have precluded Merkin’s copyright infringement claims.

The Second Circuit concluded that copyright protection does not subsist in creative contributions to a work that are inseparable from the work itself. The Copyright Act’s definitional terms and legislative history supported the conclusion that Merkin’s contributions to the film did not themselves constitute a “work of authorship” amenable to copyright protection. Although the Act does not define “works of authorship,” it does list examples of categories of “works of authorship,” which do not include non-freestanding constituent parts of a work. The court also relied upon the Ninth Circuit’s en banc decision in Garcia v. Google, Inc., which held that an actor did not own a copyright interest in her performance in a completed film, because such a theory of copyright law would result in a “legal morass” making “Swiss cheese of copyrights.” According to the Second Circuit, filmmaking is a collaborative process that typically involves artistic contributions from large numbers of people, including producers, directors, screenwriters, actors, designers and cinematographers. Although these various contributors can contribute original artistic expressions that are arguably fixed in the medium of film footage, this alone is not sufficient. Authors are not entitled to copyright protection except for the “works of authorship” they create and fix, which does not include non-freestanding contributions to an integrated work.

The Second Circuit next considered the parties’ competing copyright claims with respect to the raw film footage. It agreed with the district court that Casa Duse was the “dominant author” of the film, based on Casa Duse’s decision-making authority over production of the film, its purchase of the underlying screenplay, and its work-for-hire agreements with the cast and crew. The record did not reflect any developments that occurred between the creation of the raw film footage and Casa Duse’s attempts to create a finished product that would alter the analysis as to the raw footage. Therefore, Casa Duse, not Merkin, owned the copyright to the finished film and its prior versions.

Addressing Casa Duse’s claim for tortious interference with business relations under New York law, the Second Circuit disagreed with the district court, concluding that the undisputed material facts required judgment in Merkin’s favor. To support its claim, Casa Duse was required to show that Merkin’s conduct amounted to a crime or an independent tort, or that he engaged in the conduct solely for the purpose of inflicting intentional harm. Casa Duse failed to show that Merkin acted for a wrongful purpose, or used dishonest, unfair or improper means. The Second Circuit also rejected as insufficient Casa Duse’s argument that Merkin acted with a willful blindness to the factual and legal realities of his position.

Finally, the Second Circuit held that the district court did not err in awarding fees and costs to Casa Duse and imposing sanctions against Reichman.

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