Part III, No. 2: Larry Gardner & the Missing 25% Copyright Ownership Interest

This really is the last part of my annotated final exam that I gave to my Vanderbilt Law copyright class last term. I decided to split the long essays into two parts because of: length issues. Feel free to start at the beginning, or return to the first long-essay topic, or even jump somewhere in between.

Anyway, here is my homage to/satire* of the Harry Potter novels, inspired partly by Rich Burlew’s Larry Gardener and the Angry Half-Orc. Only I’d never kill Harry off like that. I’ll defend books 1-3 to the end, no matter how badly mangled the Latin is, and I’ll defend the series as a whole to a lesser extent (except book 5—never book 5).

* Very post-modern, no? It’s a parody of Harry Potter, in which the parody is, in-topic, “straight,” and there’s also (1) an in-topic “parody” (well, is it really? You decide.) and (2) an in-topic “straight” rip-off of the “straight” original, which really a parody of the real original. Between you and me, I think I’d rather watch Georgina Henderson.

Lurking behind this fact pattern is the danger of uncontrolled co-owners of valuable copyrights. Doerr ends up getting a raw deal, but at least that was her own doing. By sheer luck, Doolittle gets a pretty nice deal, since Nightmare made a huge amount of money and has to account for 75% to Doolittle. But what if Doerr had merely licensed the copyright to Nightmare? Nightmare would still be protected (but it wouldn’t be able to enforce the copyright, which is suboptimal), but it would Doerr who would have to account to Doolittle. Thus, Doerr’s bad deal would become Doolittle’s bad deal (and Doerr’s deal would become even worse). If there were a lawsuit, Nightmare might be in the odd position of arguing against its own ownership of Doerr’s 25% interest.

The students split about 60-40 against finding Larry Has Got a Big Staff is a parody, and split 50-50 on whether Georgina Henderson infringes. Personally, I think the answers are: no and no, but what do I know?

Oh, when you visualize the “angry unicorn,” try to visualize this. Actually, don’t.

-2-

Deborah Doolittle was a starving single mother in 1999 when she sat down and penned Larry Gardner and the Wizard’s Staff. Although Doolittle is a U.S. citizen, she set the novel in Great Britain. It was about an English eight-year-old orphan, with an odd birthmark, forced to live with his vile relatives, who treat him horribly, but who is whisked away to a special school for sorcerers, called Mugworts.

One arrives at Mugworts via a magical train. Mugworts is very much like an English public school, with “houses” that compete against each other, including an exciting and dangerous game played on flying broomsticks. Larry makes friends with a boy who is incompetent at magic but of a respected sorcerous lineage, and with a girl who excellent at magic but of no sorcerous lineage. Larry himself discovers that his own lineage is mixed—also that he is somehow a special actor in a greater struggle between good and evil (which also explains the birthmark). Larry makes friends with several other employees and teachers who are at the margins of Mugworts’ hierarchy, such as the gameskeeper, who naturally raises all manner of fantastic beasts. Larry is not so well liked by the faculty, who regard him as entitled and/or dangerous—with the exception of the headmaster, who subtly aids Larry in his endeavors, even as Larry flouts certain school rules.

The plot of Larry Gardner and the Wizard’s Staff revolves around the three friends’ attempt to recover the Wizard’s Staff, which is hidden somewhere on Mugworts’ grounds. Larry desires the staff because it will help him learn more about his real parents, but the main villain also desires it for his own nefarious ends. To keep the staff out of the main villain’s hands (or tentacles or whatever), the faculty of Mugworts has hidden the staff at the end of a series of diabolical and deadly traps: a club-wielding giant; a massive game of checkers, which will stomp the unwary if one is “jumped”; and a self-aware magician’s hat that casts any number of violent spells. With his friends’ aid and many injuries, Larry reaches the staff, just in time to confront, and defeat, the main villain’s powerful lackey, who was disguised as one of the teachers. After saving the day, some of the teachers decide Larry isn’t so bad, but others become embittered against him.

In a sub-plot of Larry Gardner and the Wizard’s Staff, Larry and the gameskeeper enter a nearby enchanted forest in search of “magic mushrooms.” Before they find any, the gameskeeper is gored by an angry unicorn (he survives), and Larry would have been killed except he was rescued by a pretty nymph who appears to be exactly his age (though she is immortal). She reveals much secret information about Mugworts, the ongoing struggle between good and evil, Larry’s place in that struggle, a tantalizing morsel about his parents, and the nature and importance of the Wizard’s Staff. Because of her apparent knowledge regarding his parents, Larry becomes obsessed with seeing her again. He tries to enter the enchanted forest again later in the book but is chased out (to somewhat comic effect) by the same angry unicorn.

Between 1999 and 2008, Doolittle will write a total of seven Larry Gardner novels, one for each year that he attends Mugworts. With each book, Larry learns a bit more about his parents and comes closer to playing a decisive role in the battle between good and evil. Larry makes new friends and new enemies. He also loses an important ally when the headmaster is killed (it’s all somehow part of a wider plan). Also, a love-triangle develops between Larry, the nymph (who appears to age along with Larry) and an equally pretty classmate.

The book was not very popular. Even so, it came under some criticism from fans of a previous series by Wynne Davies about a “school for wizards,” which included a sport played on broomsticks, a “chosen-one” type of main character, his friendship with two contrasting schoolmates, a secretive headmaster, and a war of good and evil wizards, which included some of the teachers. Davies has made it clear, however, that she regards these elements not to be “hers” but available to fantasy artists everywhere.

Doolittle’s agent is Molly Doerr. Doerr really believed in in Larry Gardner and worked very hard to promote the novels, with only mild success. She also tirelessly shopped the novels to movie studios and game designers, with no success. Doolittle didn’t have enough money to pay Doerr, so instead, in 2007, she transferred a 25% interest in the copyright of every novel to Doerr (including future novels). The transfer was properly documented by a signed writing.

Finally, in 2010, Doerr had success: a movie studio, Nightmare Studios, expressed interest. Doerr sold her interest in the copyrights to the novels to Nightmare Studios for $100,000, which was much more than she thought she’d ever receive (and much more than what Doolittle owed her). Unfortunately, the stress of constantly starving was too much for Doolittle, and she went a little mad and had to be hospitalized. Nightmare Studios was unable to contact her, even with Doerr’s help, and never reached any kind of agreement with her.

To make the movie, Nightmare Studios hired a well-known producer, Gene Scott. Under the contract between Scott and Nightmare Studios, Scott was explicitly authorized to make a movie based on Larry Gardner and the Wizard’s Staff, and the resulting movie was to be a “work made for hire.” Because Scott believed Nightmare Studios owned the copyright to the novel, he did not insist on an indemnity clause.

To adapt the novel, Scott turned to Ann Rowls. In the contract between Scott and Rowls, Rowls was authorized to produce a screenplay based on the novel and that the resulting screenplay would be a “work made for hire,” to be owned by Nightmare Studios. The contract was otherwise silent about licensing and copyright ownership. Rowls duly wrote a screenplay based on Larry Gardner and the Wizard’s Staff. In doing so, she naturally consulted with Scott, who wrote no lines of dialogue but did provide advice about ordering of scenes. She departed from the novel in one major respect: she cut the entire sub-plot involving the angry unicorn and nymph. Any important plot points revealed by the nymph in the novel were placed in the mouths of other characters and sprinkled throughout the movie.

Scott then hired Joan Brooks to direct the movie, which was to be called The Adventures of Larry Gardner, Part I: The Secret of the Wizard’s Staff (“The Adventures”). Brooks followed Rowls’ script pretty faithfully, but she made all decisions about camera angles, lighting and so forth, as well as directing the actors’ performances. In her agreement with Scott, she was specifically authorized to direct the movie and that the resulting movie would be a “work made for hire,” owned by Nightmare Studios.

The movie was released in December 2011. To say it was a huge success is an understatement. It broke all box office records and has achieved a following similar to Star Wars. Nightmare Studios immediately made plans to turn the remaining Larry Gardner Novels into movies, at rate of one every other year.

Based on the success of The Adventures, Ronald Ray-gun (a pen name, obviously) produced a short film that he termed “a parody” of the movie. Ray-gun’s work is called Larry Has a Big Staff. Larry Has a Big Staff tracks the plot of the movie, but Larry and his friends are rather older (but still school-aged), and every event is given a ribald and/or sexual flavor, and most names are changed (including Mugworts, which is called Warthogs instead). Also, Ray-gun’s film spends much less time on Larry’s miserable pre-Mugworts life. His friends do not search for a Wizard’s Staff—Larry is given the staff on the train, and the staff’s powers appear limited to gaining the admiration of girls. Larry Has a Big Staff isn’t very funny, and almost everyone agrees it’s in very poor taste. Although no sex is depicted, just lots of nudity and sexual puns and jokes, sex is clearly implied. It was never shown in theaters, but Ray-gun made it available on an online video hosting service operated by Puerile Humour, LLC. Both Doolittle and Doerr are outraged by Larry Has a Big Staff, but Nightmare Studios really doesn’t care about it.

Puerile Humour is generally aware that a good deal of its content is unauthorized, but much, if not most, of it (like Larry Has a Big Staff) is authorized. Puerile Humour prefers to host original content and works fairly hard to discourage unoriginal content. Before one can upload a video to Puerile Humour’s site, one must represent that one has the necessary authorization to upload the content. Puerile Humour offers subscribers two levels of access: ordinary access, which is free, and “premium access,” which costs a monthly fee but gives the subscribers “advance screenings” of content, higher quality streaming, and freedom from online advertising. Puerile Humour also makes money from advertising. Its written terms of use informs subscribers that they will be banned from using the site if they attempt to upload more than two videos that turn out to be unauthorized, and it has, in fact, banned subscribers for violating that policy. Puerile Humour also has an employee whose job it is to receive, respond to and act on takedown notices, and to track and remove unauthorized uploads.

In 2012, Nightmare Studio’s competitor, Daygelding Studios, made a movie called Georgina Henderson and the Philosopher’s Stone. In that movie, the protagonist is a pretty American teen-aged girl with a strand of bright violet hair that she can never, ever dye a normal color and has difficulty hiding. She lives with her parents in a boring middle-class existence in a bland suburb. Because of her hair, she suffers mild teasing by her peers at school (her name doesn’t help). She is whisked off to “Mother Gowdy’s Institute for Higher Magicks” via a magic jumbo jet. At the school, she makes friends with a somewhat snobby girl who is proud of her magical heritage (and who is perfectly competent at magic) and a scruffy boy who is naturally gifted at magic but was nearly homeless when he was taken to the school. Georgina learns that she is a “chosen one,” on whom the fate of the magical world hinges, and that the main villain wishes to subvert her to his side. Though she loves her new existence at the school, certain injustices that she witnesses (usually directed at her scruffy friend) make her reconsider her allegiances. She also becomes attracted to a handsome centaur who is a fellow student and lives out of doors in specially-designed stables. The plot of the movie revolves the recovery of a Philosopher’s Stone, which is greatly desired by the main villain because it will help him dominate the world. It is hidden on school grounds by the faculty for reasons just and unjust, and it is protected by three barriers: a dragon, a complex mechanical lock, and a mirror that shows the viewer what he or she most desires. Georgina is tricked by the main villain’s powerful lackey, who has been impersonating one of the teachers, into recovering the stone. With the help of her snobby and scruffy friends (who learn to look past appearances and like each other), Georgina recovers the Stone. Georgina, fortunately, sees through the deception in time to withhold turning over the stone to the lackey. However, when the lackey reasons with her and appeals to her sense of justice, she nearly hands the stone over voluntarily. As she wavers, her centaur friend appears and explains the villain’s true nature. The lackey tries to dispute the centaur’s account by belittling the centaur personally, but this only ends up making Georgina angry. She refuses to turn over the Stone but destroys it instead. The lackey attacks Georgina and her friends, and they are very nearly defeated when the school’s faculty shows up and saves the day. The faculty members come to understand how certain of the students have been mistreated and resolve to reform the school. Georgina and her centaur friend embrace and say something witty.

Georgina Henderson and the Philospher’s Stone was distributed by Daygelding Studios to a number of first-rate cinemas, including a chain operated by Zyzzy Cinemas, Inc. Pursuant to Zyzzy Cinema’s contract with Daygelding Studios, Daygelding Studios agreed to indemnify Zyzzy Cinemas against any intellectual-property claims.

Doolittle has since recovered from her bout of madness, but she remains reclusive and doesn’t like to communicate with the outside world much, not even with Doerr. However, last week, Doerr managed to contact Doolittle and explain about the success of The Adventures, the awfulness of Larry Has a Big Staff, and the Daygelding Studio’s “rip-off.” Doolittle contacted you immediately and tells you she wants to sue “everyone” except Doerr. You’ve managed to read the novels, watchThe Adventures, sit through Larry’s Got a Big Staff and enjoy Georgina Henderson and the Philosopher’s Stone; and you’ve interviewed Doerr and done some online research, enough to learn all of the foregoing facts. It is now time to report to Doolittle.

Assume you are in a circuit that follows UMG Recordings, Inc. v. Shelter Capital Partners LLC (the “Veoh” case), not Viacom Int’l, Inc. v. YouTube, Inc. Assume also that your circuit uses the “holistic” approach for determining infringement.

A. For each the following individuals and entities, assess the strength of Doolittle’s claims, if any, against the individual or entity, taking into account any defenses. If you don’t think Doolittle has a claim against one of the individuals or entities, briefly explain why not. In the case of Puerile Humour, what else do you need to know before you can definitively assess claims against it?

Nightmare Studios, Gene Scott, Ann Rowls, Joan Brooks, Ronald Ray-gun, Puerile Humour, Daygelding Studios, and Zyzzy Studios.

COMMENT: The key to this section is, again, to have the courage of your convictions. You learned that owners of even a part of a copyright—such as the 25% interest that Doolittle gave to Doerr—had the right to exploit the copyright, so long as they accounted to the other owners. If you kept this principle in mind, this section is actually not very difficult. If you don’t, then it was a double-whammy: you lost points and you wasted time. Because of the double-whammy, I decided to give credit for your analysis, even if it wasn’t necessary. A lot of people said that Nightmare needed at least a 50% ownership interest to exploit the copyright. That’s not so: any interest gives you the right to exploit. (The only time a majority interest matters is in the exercise of termination/recapture rights.)

Now, about that 25% interest in the novels that Nightmare appears to end up with. While it’s 100% clear that Doolittle transferred that 25% interest to Doerr (because the fact patter pretty much says so), it’s not so clear that Doerr actually transferred it to Nightmare. That’s because the fact pattern doesn’t say there was a writing. There were a few ways to address this. First was to assume that Nightmare was too sophisticated to have made such a mistake. That was perfectly acceptable. Second was to point out that it probably didn’t make much of a difference as far as liability was concerned. If Doerr didn’t transfer the interest, then she certainly licensed it. Further (as a few pointed out), she was Doolittle’s agent. Either way, Nightmare—and all the folks downstream—are protected. It’s also fair to say that the license includes the right to sub-license to the extent necessary to get a movie made, since that’s the point of the transaction.

(A side note that has nothing to do with the exam: whether Doerr successfully transferred the interest or merely licensed it could make a huge difference to Doolittle and Nightmare. Nightmare might prefer to have merely licensed the books, if it could tolerate the inability to enforce the copyright, since the license would be non-exclusive.)

So, if Nightmare owns the 25%, or has a license to it, then it’s not liable to Doolittle for infringement, but for accounting. The same thing with regard to Scott, who has an explicit license from Nightmare. Rowls and Brooks are only slightly more nuanced. They don’t have explicit licenses, and they weren’t dealing with Nightmare directly, but Scott is pretty clearly Nightmare’s agent here.

What if you mistakenly decided that Nightmare had no right—either through ownership or license—to make the movie? Then obviously Nightmare is in trouble. But so are Scott, Rowls and Brooks. The fact that their efforts are contributions to a work made for hire isn’t a defense. “Innocent infringement” will help for statutory damages, but that’s not a defense, either.

It’s easy to get side-tracked by what Scott, Rowls and Brooks added or left out, but the beauty of the adaptation right is that you don’t really need to get into the gory details. If we were interested in Nightmare’s rights, it might matter. But since we’re only interested in Doolittle’s, it doesn’t.

The key to dealing with Ray-gun is to analyze whether his work is a parody or not. It’s a close question—does Ray-gun’s work really comment on the books or the movie?—and people fell out about 50-50 on the issue. If you decide it’s a parody, then the fair-use factors get turned on their heads so that a finding of fair use is almost assured. If not, the factors would seem to work against Ray-gun (though not everyone agreed).

The key to dealing with Puerile is to recognize the role the DMCA safe harbors will play. Puerile has general knowledge of infringing activity, but the fact patter was clear that Shelter Capital applied. Under Shelter Capital, general knowledge is never enough to defeat the safe harbor. Many people thought that the infringement should have been obvious to Puerile, but that’s irrelevant. Puerile has no duty to make sure that the uploaded work is licensed, or a parody, etc.

Of course, you also need to quickly analyze whether Puerile is liable in the first place. As far as secondary liability is concerned, you should point out that Puerile can’t be liable unless Ray-gun is. After that, vicarious liability is pretty easy and quickly established.

There is no “key” to dealing with Daygelding. You just needed to perform a good infringement analysis. There were lots of facts to deal to help your analysis, and most people didn’t take full advantage. Again, this was a close call: people came out about 50-50. Remember that you were limited to the “ordinary observer” test—or, more preicsely, the “discerning ordinary observer” test, since there was a mixture of infringing and non-infringing material. Here is where you introduce the comments made by Wynne Davies, which is pretty good evidence of what constitutes scenes-á-faire, etc.

Regarding Zyzzy, its liability is tied to Daygelding’s. If Daygelding is liable, then surely so is Daygelding (for public performance). The indemnification clause is nice but it’s not a defense.

B. During your phone conversation with Doerr, Doerr expressed disappointment about her deal with Nightmare Studios, given how much money The Adventures made. She asked you if there was anything she could do about the deal. You told her that you don’t represent her. But if you could answer her question, what would you tell her?

COMMMENT: All you can tell Doerr is that she made a bad deal. A few imaginative people brought up the possibility of exercising termination rights, even as they acknowledged that such rights won’t come up for quite some time. Even fewer people realized that she’s not eligible to exercise termination rights because she’s not the author.

C. Do Scott, Rowls or Brooks have copyright claims against anyone? If so, state against whom they do. If not, explain why not.

COMMENT: Brooks has no claim because she’s not technically an author. Her contribution is clearly a work made for hire. Remember that motion pictures are one of the categories of works eligible for such treatment.

Rowls’ situation is slightly more nuanced. She wrote a screenplay. She didn’t make a movie, and screenplays aren’t one of the works eligible to be works made for hire (outside the employment context, of course). Scott would have been smarter to include a written transfer in his agreement with her, just to be sure. Still, it was part of the process of making a motion picture, and the statutory language is “as part of a motion picture,” so perhaps it fits in that category after all. More important, the adaptation right is involved here, and the ownership of an adaptation may be invested in the owner of the underlying work by contract (in my mind, this is something of an exception to written-transfer and “work made for hire” rules), which is what happened here.

Scott’s contributions, if any, are pretty clearly part of a work made for hire. It’s frankly not clear if he contributed anything copyrightable.

Thanks for reading!