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Thursday, November 05, 2009

Ind. Decisions - 7th Circuit issues one Indiana opinion, and one interesting copyright decision

The Indiana case is U.S. v. Kevin R. Schhultz (ND Ind., CJ Miller), a 9-page opinion. Judge Bauer writes:

Kevin Schultz was convicted of being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1). On appeal, he challenges his conviction. We affirm.

On February 25, 2005, Schultz pleaded guilty to one count of trafficking in counterfeit telecommunications instruments, in violation of 18 U.S.C. § 1029(a)(7), an offense punishable by fine and/or imprisonment not to exceed ten years. Schultz was sentenced to two years probation, with the first six months to be served on home detention.

On December 7, 2007, pursuant to a search warrant, federal agents searched Schultz’s residence and found a 12-gauge Remington shotgun and ammunition in the attached garage. Thereafter, a two-count indictment was filed against him: Count One for violating 18 U.S.C. § 922(g), which makes it unlawful for one convicted of a crime punishable of a term exceeding one year to possess a firearm (“felon-in-possession”); and Count Two for making a false statement regarding his ownership of the shotgun, in violation of 18 U.S.C. § 1001.

Schultz filed a motion to dismiss the indictment and a motion to suppress both the shotgun and his statements; the district court denied both motions. Thereafter, a bench trial was held on stipulated facts for Count One; and the government moved to dismiss Count Two. The district court found Schultz guilty and sentenced him to eighteen months of imprisonment, to be followed by three years of supervised release.

The coyright case is Schrock v. Learning Curve International (ND Ill.), a 27-page opinion by Judge Sykes that begins:
HIT Entertainment (“HIT”) owns the copyright to the popular “Thomas & Friends” train characters, and it licensed Learning Curve International (“Learning Curve”) to make toy figures of its characters. Learning Curve in turn hired Daniel Schrock, a professional photographer, to take pictures of the toys for promotional materials. Learning Curve used Schrock’s services on a regular basis for about four years and thereafter continued to use some of his photographs in its advertising and on product packaging. After Learning Curve stopped giving him work, Schrock registered his photos for copyright protection and sued Learning Curve and HIT for infringement.

The district court granted summary judgment for the defendants, holding that Schrock has no copyright in the photos. The court classified the photos as “derivative works” under the Copyright Act—derivative, that is, of the “Thomas & Friends” characters, for which HIT owns the copyright—and held that Schrock needed permission from Learning Curve (HIT’s licensee) not only to make the photographs but also to copyright them. Because Schrock had permission to make but not permission to copyright the photos, the court dismissed his claim for copyright infringement.

We reverse. We assume for purposes of this decision that the district court correctly classified Schrock’s photographs as derivative works. It does not follow, however, that Schrock needed authorization from Learning Curve to copyright the photos. As long as he was authorized to make the photos (he was), he owned the copyright in the photos to the extent of their incremental original expression. In requiring permission to make and permission to copyright the photos, the district court relied on language in Gracen v. Bradford Exchange, 698 F.2d 300 (7th Cir. 1983), suggesting that both are required for copyright in a derivative work. We have more recently explained, however, that copyright in a derivative work arises by operation of law—not through authority from the owner of the copyright in the underlying work— although the parties may alter this default rule by agreement. See Liu v. Price Waterhouse LLP, 302 F.3d 749, 755 (7th Cir. 2002). Schrock created the photos with permission and therefore owned the copyright to the photos provided they satisfied the other requirements for copyright and the parties did not contract around the default rule.

We also take this opportunity to clarify another aspect of Gracen that is prone to misapplication.

Posted by Marcia Oddi on November 5, 2009 11:44 AM
Posted to Ind. (7th Cir.) Decisions