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Cambridge Literary Properties, Ltd. v. W. Goebel Porzellanfabrik G.m.b.H. & Co. Kg., et al., USCA First Circuit

In a key decision addressing when there is federal question jurisdiction over copyright co-ownership disputes and whether state or the Copyright Act’s statute of limitations applies, even when a plaintiff only seeks state law remedies, the Court of Appeals for the First Circuit held that where the question of copyright co-ownership requires a determination of issues of original authorship or joint authorship, as opposed to merely determining contractual rights between co-owners, the ownership issue “arises under the Copyright Act,” thereby giving federal courts jurisdiction and making the claim subject to the Copyright Act’s three-year statute of limitations, even if a complaint does not expressly seek a declaration or an adjudication of co-ownership.

The plaintiff is an entity, formed and wholly-owned by a German lawyer, who claimed it was a co-owner of the U.S. copyright in a German book, Das Hummel-Buch, published in 1934. The book included artwork created by Sister Maria Innocentia Hummel (Berta Hummel) and poems by a Viennese poet, Margarete Seemann. Plaintiff obtained its purported rights in the copyright from Seemann’s heirs -- one in 1995 and another in 1999 -- and filed suit in 2000 in federal district court in Massachusetts against the current publisher of the book, whose rights in the U.S. copyright derived from Hummel. The plaintiff claimed that it was a co-owner of the U.S. Copyright in the book by virtue of its assignments of rights from the heirs of the alleged co-author, Seemann. Plaintiff did not expressly seek an adjudication of ownership of the copyright; instead it assumed ownership and sought an accounting and imposition of trust on past and future profits under state law. Without reaching the underlying merits of the case, the district court granted summary judgment to the defendants because the plaintiff’s claim was time-barred by the Copyright Act’s three-year statute of limitations.

The plaintiff argued that the Copyright Act’s statute of limitations did not apply to his complaint because it was simply a matter of an accounting between co-owners. The court disagreed, finding that a plaintiff must first establish that it is a co-owner of the copyright before seeking an accounting under state law. The complaint “attempts to evade the issue of whether [the plaintiff] has any ownership rights by simply asserting that [he] is a co-owner and then alleging that [he], as a co-owner, is entitled under state law to an accounting.” The court held that the plaintiff could not assert the state law claims for accounting without establishing that he is a co-owner and whether the plaintiff is a co-owner depends on the federal Copyright Act.

After holding that the plaintiff’s claim was subject to the Copyright Act’s statute of limitations, the court turned to the question of when the claims accrued. The court concluded that a claim by a joint author of the book (or its heirs or assignees) accrued at the latest in 1995, five years before the plaintiff filed suit. The court based this on the fact that by 1995 the plaintiff was aware of a repudiation of the co-author’s rights to the book because he negotiated a settlement with the book publisher in which the publisher acquired most of the rights in the book. The plaintiff was also aware that the heirs of the co-author did not receive any royalties from the book after 1973. Furthermore, public records in the U.S. Copyright Office showed that the copyright did not name the co-author as a joint author. Finally, the plaintiff and the heirs were aware that the defendant and its subsidiary were widely marketing and selling Hummel figurines based on the book and not receiving any royalties from these possibly derivative works.

Senior Judge Cyr dissented, explaining that the court’s ruling would unnecessarily expand jurisdiction of the federal courts whenever ownership of a copyright was not clearly established or stipulated by the parties.