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IP/Entertainment Case Law Updates

Horror Inc. v. Miller

Second Circuit holds that screenwriter Victor Miller acted as independent contractor when writing screenplay for 1980 horror film Friday the 13th and had right to recapture copyright in screenplay, affirming district court’s grant of summary judgment.

The central issue in this case arising from the screenplay of the landmark 1980 horror film Friday the 13th is whether, for Copyright Act purposes, the film’s screenwriter, Victor Miller, acted as an employee or as an independent contractor for the film production company Manny Inc. when Miller wrote the screenplay. The Second Circuit held that Miller acted as an independent contractor and could therefore exercise his statutory termination right to recapture the copyright in the screenplay, affirming the district court’s grant of summary judgment in Miller’s favor in the declaratory judgment action brought by Manny’s successors in interest. 

Victor Miller is a professional writer who since 1974 has been a member of the Writers Guild of America, East (WGA), a labor union representing film and television writers. Manny was formed by Sean S. Cunningham to produce and distribute motion pictures and was a signatory to the WGA’s Minimum Basic Agreement, a collective bargaining agreement governing WGA writers and signatory employers. In 1979, Cunningham contacted Miller about producing a horror film and they agreed that Miller would write the screenplay for the film. Manny and Miller then executed a two-page document based on a WGA standard form, which provided that Manny would “employ [Miller] to write a complete and finished screenplay for a proposed motion picture” in exchange for two lump-sum payments. 

Over the course of two months, Miller wrote a treatment for the film, as well as first and second drafts of the screenplay. Miller and Cunningham worked closely together to develop the two documents, “bouncing ideas off one another” at each other’s homes. Miller usually wrote in the morning, not because Cunningham dictated his work hours but because he was a “morning person.” Cunningham had no right to assign Miller additional projects beyond writing the screenplay discussed in the contract. Miller ultimately developed the screenplay into its final form and received sole “written by” credit as the film’s screenwriter.

In 1980, Manny assigned its rights in the film and screenplay to Georgetown Productions Inc. Georgetown registered the related copyrights, describing the film as a “work made for hire” and listing “Georgetown Productions, Inc.” as the film’s author. Later, Georgetown conveyed to Horror Inc. the rights to the screenplay and the film. In 2016, Miller sought to reclaim his copyright ownership of the screenplay by invoking his right to terminate prior copyright transfers under Section 203 of the Copyright Act, a right available to authors within certain time windows. In response, Manny and Horror sought a declaratory judgment that Miller wrote the screenplay as a “work for hire” and, therefore, that Miller had no termination rights to exercise. The district court granted summary judgment to Miller, finding that the screenplay was not a work for hire and that Miller’s termination notice was timely. (Read our summary of the district court’s decision here.) Manny and Horror then appealed to the Second Circuit.

To determine whether Miller could exercise the right of termination, the Second Circuit addressed whether Miller’s screenplay for Friday the 13th was a work for hire. Under copyright law, the creator of a work is presumptively the work’s author and owner, but works for hire present an exception to this general rule. With regard to works for hire, “the employer or other person for whom the work was prepared is considered the author” and the original creator has no corresponding termination right.

The Copyright Act defines two separate categories of works for hire: (1) works made by an employee within the scope of his or her employment and (2) specially commissioned works subject to an express agreement that they will be treated as works for hire. The companies conceded that Miller’s screenplay does not qualify as a “specially commissioned work”; therefore, the core issue is whether Miller was writing as an employee within the scope of his employment. To answer that question, the court considered 13 factors set forth by the Supreme Court in its 1989 decision Community for Creative Non-Violence v. Reid.

Plaintiffs advanced three arguments as to why Miller should be considered an employee. First, the definition of the term “employee” as understood in the context of labor law should determine the analysis of the employer-employee relationship under the Copyright Act. Second, the district court should have considered the WGA collective bargaining agreement as an additional factor in the Reid analysis. Third, balancing the Reid factors requires assigning “great weight” to Miller’s membership in a union, the WGA. The Second Circuit found none of these arguments persuasive.  

First, the court held that, under copyright law, the definition of “employee” is grounded in the common law of agency, as outlined in Reid, and that there is no sound basis for using labor law to override copyright law goals, as the two regimes serve different purposes. In Reid, the Supreme Court assembled a framework to help determine whether an individual acted as an employee or as an independent contractor under copyright law, explaining that courts should rely on the general common law of agency. Reid identified 13 non-exhaustive factors: (1) the hiring party’s right to control the manner and means by which the work is accomplished; (2) the skill required to create the work; (3) the source of the instrumentalities and tools; (4) the location of the work; (5) the duration of the relationship between the parties; (6) whether the hiring party has the right to assign additional projects to the hired party; (7) the extent of the hired party’s discretion over when and how long to work; (8) the method of payment; (9) the hired party’s role in hiring and paying assistants; (10) whether the work is part of the regular business of the hiring party; (11) whether the hiring party is in business; (12) the provision of employee benefits; and (13) the tax treatment of the hired party.

The court made clear that the Copyright Act and the National Labor Relations Act serve altogether different purposes and focus on different economic sectors. The Copyright Act uses a more restrictive definition of employment, aimed at limiting the contours of the work-for-hire determination in order to protect authors. Under labor and employment law, on the other hand, the concept of employment is broader and is geared to support workers and their collective bargaining interests, safety rights and pay rights. The court reasoned that adopting plaintiffs’ proposed approach would mean that Miller’s employment status for copyright purposes would be dictated by labor law and not the common law of agency, which would directly conflict with Reid. Furthermore, the Second Circuit’s earlier decision in Eisenberg v. Advance Relocation & Storage, Inc. highlighted that determining an agency relationship is context-specific and that different statutory schemes implicate different considerations. The court therefore concluded that Miller’s status as a WGA member and Manny’s status as a WGA signatory do not, in and of themselves, establish an employment relationship between the two for Copyright Act purposes.

Second, the court declined to consider the WGA collective bargaining agreement as an additional and separate Reid factor, reasoning that this argument was just another attempt to shift Reid’s analytic focus from agency law to labor law. That Miller’s employee status as a screenwriter under the WGA entitled him to certain protections under labor law does not preclude him from being considered an independent contractor under copyright law. 

Finally, the court applied the Reid factors to the circumstances presented, focusing on five Reid factors that, under Second Circuit precedent, should be given more weight as highly probative: (1) the hiring party’s right to control the manner and means of creation; (2) the skill required of the hired party; (3) the provision of employee benefits; (4) the tax treatment of the hired party; and (5) whether the hiring party has the right to assign additional projects to the hired party. After weighing the factors, the court concluded as a matter of law that Miller worked as an independent contractor when he produced the screenplay.

The court made the following findings. First, the right-to-control factor tipped slightly in plaintiffs’ favor because Cunningham appeared to exercise at least some control over the drafting process. Cunningham tutored Miller on the elements of horror films, worked in proximity with him and rejected certain ideas. Second, the skill factor weighed in Miller’s favor because Miller used skills that he developed while he was a graduate student and Cunningham relied on Miller’s expertise to craft the screenplay. Generally, in copyright cases involving professional creative artists, the skill factor weighs strongly in favor of independent contractor status. Third, the employee-benefits factor weighed heavily in Miller’s favor because Manny did not provide Miller with any traditional employee benefits. Fourth, the tax-treatment factor weighed in Miller’s favor because Miller asserted that Manny never withheld any taxes from his compensation and plaintiffs failed to offer any evidence disputing that statement. Fifth, the additional-projects factor weighed in Miller’s favor because the evidence made plain that Manny hired Miller only to write the screenplay for a single movie and nothing in their agreement gave Manny the right to assign Miller any additional projects. This factor is instructive because an independent contractor’s engagement is more likely to be project by project, whereas an employee would typically be assigned additional, distinct projects during the engagement. 

As for the remaining Reid factors, the court found that the engagement’s brief duration, Miller’s lump-sum payment, Miller’s working from home and Miller’s freedom in scheduling his work hours all weighed in favor of Miller’s status as an independent contractor. At the same time, the facts that Miller is a screenwriter and that Manny’s line of business was the production of screenplays weighed in favor of finding that Miller was an employee. On balance, because the court found that the factors decisively indicated that Miller was an independent contractor, he had the power to terminate plaintiffs’ rights in the screenplay. Although Georgetown had designated the screenplay as a “work made for hire” in its copyright registration, that designation merely gave rise to a rebuttable statutory presumption that it was a work for hire. Miller had successfully rebutted that presumption.

The final issue before the court was whether Miller’s authorship claim was brought promptly within the Copyright Act’s three-year statute of limitations. The court noted that an author need not bring suit until there has been an express repudiation of his claim to ownership of the work. The court held that the copyright ownership notice, which read “© Copyright 1979 Sean S. Cunningham Films, Ltd. All Rights Reserved” did not provide Miller with notice that Manny intended to repudiate his authorial role, since authorship is distinct from copyright ownership. For example, as here, an author retains termination rights even if he is no longer the copyright owner. Furthermore, Georgetown’s copyright registration form, which identified Georgetown as the film’s author, did not trigger the authorship claim’s accrual either because Miller did not have reasonable notice that Georgetown filed the registration as an employer for hire. Therefore, the court concluded that Miller’s authorship claim was timely. 

Summary prepared by Tal Dickstein and Brandon Zamudio

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