Attorneys for a group of programmers asked the U.S. Supreme Court to review a decision which, if not reversed, could severely limit claims of initial copyright ownership by software programmers, artists, authors, translators, screenwriters, and movie and television studios in their creative work and inject substantial uncertainty regarding the transfer of copyright ownership and exclusive licenses.

“The decision of the U.S. Court of Appeals for the Seventh Circuit (Chicago) in Liu v. Price Waterhouse takes away substantial rights given to creators/authors and sellers of copyrightable works under the 1976 Copyright Act,” said intellectual property attorney Dean A. Monco of Wood, Phillips, Katz, Clark & Mortimer. Monco is collaborating with Supreme Court attorney and former Supreme Court clerk, Erik S. Jaffe, in petitioning the Supreme Court to hear the case.

In seeking Supreme Court review of the case, the petition argues that the Seventh Circuit’s decision “flagrantly contradicts the plain language of the Copyright Act and the holdings of this Court….If allowed to stand, the decision below will have a sweeping and destructive nationwide impact on copyright protection for authors….”

Monco stated: “The 1976 Copyright Act vested initial ownership of copyrighted works in the creators/authors, unless the parties signed a contract that the work was made for hire. Although it is undisputed that the software project in this case was not a work for hire, the Seventh Circuit held that initial copyright ownership vested in Price Waterhouse based on the ‘intent of the parties.’ This decision undermines the special statutory structure created by Congress in the 1976 Copyright Act to secure exclusive rights for creators/authors in their copyrightable works. This amounts to a reversion to pre-1976 standards.

“Also disturbing was the fact that the unsigned document allegedly transferring copyright ownership never mentioned the word ‘copyright.’ It only discussed the computer software code, not the copyright in the code.”

The case, Liu v. Price Waterhouse LLP (302 F.3rd 749), involved the creation of an authorized derivative work which greatly increased the operating speed of an original tax preparation software program owned by Price Waterhouse. The Court of Appeals held that the statutory requirement that copyright ownership in the derivative work be transferred by a signed written instrument was “inapplicable.”

“While this case involved the creation of a derivative software program, the ramifications of the Court of Appeals’ decision will negatively impact many industries,” Monco stated. “For example, movies and television shows are derivative works created from screenplays. In turn, screenplays in many cases are derivative works of novels and stage plays.

“Similarly, second and third generation video games and slot machines are derivative works. Other examples of derivative works include: toy action figures and video games created from movies and television shows; sound recordings of previously released records using different arrangements and instrumentations; and translations of books, movies and television shows from one language to another. In many of these cases, the derivative works are much more valuable than the original works.

“For people and companies that create and sell authorized derivative works, the Court of Appeals decision raises the possibility that ownership rights previously thought secure under the 1976 Copyright may be lost,” Monco warned. “Unless the Court of Appeals decision is reversed, transfers of copyright ownership or exclusive licenses based on the ‘intent of the parties’ will be determined by testimony and arguments rather than a signed writing. Copyright ownership of these valuable derivative works will be ‘in play’ as an issue much more often than it should be.”

The opposition brief and any amicus briefs requesting the Supreme Court to hear the case are due on or about March 17, 2003. Anyone needing further information may contact Dean Monco by telephone at (312) 876-1800 or by e-mail at damonco@woodphillips.com or Erik S. Jaffe at (202) 237-8165 or by e-mail at jaffe@esjpc.com.

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