It may take two to tango, but it takes far more than two to make a film, television show, or music video. It is show business, after all. The rolling credits at the end of Denzel Washington’s motion picture Fences or an episode of the hit television show Game of Thrones exemplify the vast number and diverse array of participants involved in the creative process. From makeup artists to background dancers to even the boom mic operator, any set will undoubtedly be filled with various creative contributors. The credits may fail to accurately portray, however, the frequency at which individuals in the entertainment industry step outside of their designated roles. A background dancer may suggest new choreography or a film consultant can rewrite entire scenes, partaking in the collaborative process in non-stereotypical ways and influencing the direction or even the outcome of the work. This fluidity has freed the entertainment industry from having to stick to the script, allowing the creative process to thrive in an unbound, collaborative environment.
While such flexibility has fueled Hollywood for decades, it has also led many entertainment industry participants to litigate claims over the authorship rights to various creations. Recent litigation has explored this exact issue: who is an author of the work for the purposes of copyright law? In this capacity, the law of intellectual property plays a formidable role in the entertainment industry because of its ability to either grant or deny authorship status to creators. Aalmuhammed v. Lee exemplifies the ambiguity surrounding which contributors can walk away with authorship rights. In this case, a film consultant that presented evidence that he independently wrote at least two entire scenes, translated Arabic into English for subtitles, and participated in editing tried to gain copyright to the motion picture, but was unable to do so because he was not found to be a joint author to the work. In coming to this decision, the Ninth Circuit articulated a three-factor test to determine whether an individual qualifies as a joint author to a work. However, as this note will show, this test has proven to be inconsistently applied throughout the courts, leading both to confusion and a lack of direction when providing guidelines for determining authorship.
In this Note, I argue that the joint authorship test established by the Ninth Circuit is problematic, particularly with respect to the entertainment industry. Part I addresses the current copyright law landscape regarding authorship following Aalmuhammed. Part II showcases the recent inconsistent and ambiguous applications of the Aalmuhammed test, specifically of the audience appeal factor, as applied to different types of entertainment content, including screenplays, songs, and music videos. Part III introduces the interplay between intellectual property rights and entertainment industry employment law. Part IV discusses how the Aalmuhammed test is inconsistent with the modern operation of the entertainment industry. It argues that the application of the test yields negative effects on entertainment industry employment and unions. Part V offers resolutions to this problem by discussing various proposals for reform. This Note concludes that the Ninth Circuit’s Aalmuhammed test is not only incompatible with the functions of the entertainment industry, but also detrimental to employment in the industry, further demonstrating the need for reform.
Beginning in 1991, Warner Brothers along with Spike Lee and his production companies, entered into a contract to make the film Malcom X, based on the book The Autobiography of Malcom X. Lee served as the director, co-writer, and co-producer of the film. The film’s leading actor, Denzel Washington, played Malcom X. Washington sought out Jefri Aalmuhammed to assist with the role specifically because Aalmuhammed had previously made a film about Malcom X, and was known to be well-informed and knowledgeable about the leader’s life.
Aalmuhammed subsequently sought a copyright with the U.S. Copyright Office. The Office issued him a “ Certificate of Registration,” but noted there were conflicting previous registrations of the film. On November 17, 1995, he filed suit against Spike Lee, Lee’s production companies, and Warner Brothers alleging a variety of claims: breach of implied contract, quantum meruit, unjust enrichment, and federal and state unfair competition claims. Lee sought declaratory relief and an accounting under the Copyright Act. Most of these claims were dismissed under a motion to dismiss or on summary judgment. In February 2000, the Ninth Circuit heard argument in the case. The court heard the copyright claim, the quantum meruit claim, and the unfair competition claim.
The court first addressed Aalmuhammed’s joint authorship claim. To determine whether the motion picture qualified as a joint work, the court looked to the definition and language of “ joint work” in the Act. It concluded that for a work to qualify as a joint work it must: 1) be a copyrightable work; 2) by two or more “ authors;” 3) the authors must intend their contributions to be merged into inseparable or interdependent parts of a unitary whole; and 4) each author is required “ to make an independently copyrightable contribution” to the disputed work.
Turning to case law to shed further light on the discussion of who an author may be, the court cited the Supreme Court’s decision in Burrow-Giles Lithographic Co. v. Sarony. In Burrow-Giles, the Court expanded the concept of authorship to include a photographer who exercised a sufficient degree of control over the subject of his photograph. The Court’s support for this decision included various English authorities and the Founding Fathers of the Constitution. Ultimately, the Ninth Circuit concluded that an “ author” is “ the person to whom the work owes its origin and who superintended the whole work, the ‘master mind.’” Applying this definition to a film, the Aalmuhammed court finds that an author is limited “ to someone at the top of the screen credits, sometimes the producer, sometimes the director, possibly the star, or the screenwriter – someone who has artistic control.” And, lastly, the Aalmuhammed court relied on Thomson v. Larson, a Second Circuit decision in which it was affirmed that Larson, a playwright, did not intend joint-authorship with Thomson, the dramaturg for the Broadway musical Rent. The absence of both decision-making authority and billing as a co-author led the Second Circuit to find that the work was not joint.
In applying these factors, the court first found that Aalmuhammed did not superintend the work, and instead, Warner Brothers and Lee controlled it. Comparing Aalmuhammed to the dramaturg in Thomson, they found that Aalmuhammed may have made useful recommendations, but the film may not have benefited from them unless Lee chose to accept them. Secondly, they concluded that there were no objective manifestations of intent to be co-authors among any of the parties involved. The court did not address the third factor.
The court grounded its decision to withhold authorship from Aalmuhammed in policy concerns. According to the court, granting authorship to the plaintiff in this scenario would frustrate the constitutional goal to “ promote the progress of Science and useful Arts.” The court feared that the threat of losing sole ownership of the work itself may incentivize authors to insulate themselves throughout the creative process. As a result, the overall decrease in collaboration could thereby impoverish the arts in terms of both quantity and quality.
Moreover, adopting Aalmuhammed’s broader definition of joint authorship would allow many other contributors to deprive the sole authors of proper title. Specifically, “ research assistants, editors, and former spouses, lovers and friends would endanger authors who talked with people about what they were doing, if creative copyrightable contribution were all that authorship required.” From the court’s point of view, the fear of being stripped of absolute title thus becomes even more prevalent, and consequently, the urge to resist collaboration as well.
The judicial system is no stranger to the issue of joint authorship in the entertainment industry. In applying the Aalmuhammed test, however, lower courts have reached inconsistent results when considering various kinds of entertainment works, such as screenplays, songs, and music videos. In dealing with frequent litigation surrounding the joint authorship issue, courts have turned to the Ninth Circuit’s Aalmuhammed decision for guidance. The third factor of the Aalmuhammed joint work analysis, the audience appeal factor, poses particular issues with respect to entertainment works in that it is applied inconsistently and ambiguously to screenplays, songs, and music videos.
In Richlin v. MGM, for example, the same court that crafted the audience appeal factor admitted that “ it is nearly impossible to determine how much of [a] Motion Picture’s audience appeal and success can be attributed to the [Screenplay].” The Ninth Circuit suggested that a film’s success might be attributed to a number of factors other than the screenplay itself, such as the actor’s “ legendary comedic performance,” the composer’s “ memorable score,” or the director’s “ award-winning direction.” Despite acknowledging that there were various creative contributions, none of which could have independently and solely drawn in the audience, the court still found that the audience appeal factor favored the screenwriter plaintiffs seeking copyright of the film, because without their original screenplay, the motion picture would not exist. Ultimately, the analysis surrounding the audience appeal factor proved moot, as the court found that the first two factors weighed heavily in favor of the defendant, Metro-Goldwyn-Mayer Pictures, Inc., thereby outweighing the third factor entirely.
The treatment of the third factor in Richlin is problematic in three ways. First, many motion pictures stem from or are a derivative of a screenplay or book. Without the original writing, the motion picture, in many instances, would cease to exist. The conclusion that the audience appeal and success of a work can be attributed to the screenplay simply because the motion picture was derived from it represents an analytical gap in that it forecloses the recognition of any other valuable creative contributions. By limiting its reasoning to this logic, the Ninth Circuit set a standard in which the audience appeal factor of the Aalmuhammed joint work analysis may favor the party who contributed to the original work and seeks rights as a joint author. This approach circumvents the third factor analysis entirely, where the court would ordinarily need to compartmentalize the various creative contributions, such as those of the writers, actors, composers, and directors, to determine which are responsible for the majority of the audience appeal.
Second, had the court performed a proper audience appeal analysis, they would have been met with a burdensome task that could result in divergent results given the subjective interpretations of motion pictures and what factors contribute to their success. The Ninth Circuit, acknowledging that this analysis would be “ nearly impossible,” instead decided that concluding one could not exist without the other is sufficient.
Third, Richlin represents a case in which the first two factors weighed in favor of the defendants’ claim that the parties were not joint authors. The court left no guidance for a case in which the first two factors weigh in favor of the plaintiff seeking to establish joint authorship. In such a situation, it remains unclear if the third factor would be determinative or continue to carry little or no weight at all. The court also failed to explain whether a more thorough analysis, like the one the Ninth Circuit avoided, should take place. And although the Ninth Circuit qualified in Aalmuhammed that the factors could not be boiled down to an exact formula, the court’s reasoning in Richlin leaves a great deal of ambiguity for litigants and courts to confront in future disputes.
There have been inconsistent ways of analyzing the audience appeal factor in the context of songs as well. For example, in Eli Brown, III v. Michael C. Flowers, the plaintiff and defendant had formed a partnership called Hectic Records. Flowers and Brown recorded hundreds of demo R&B songs together, where Brown, in his role as sound engineer and producer, “ added riffs and beats,” thus “ establishing tempo, ambiance, echo, reverberation, treble, bass, frequency, gain, bandwidth, distortion, and equalizing.” Flowers, a songwriter, then traveled to New York and New Jersey to market the songs he and Brown recorded, including “ I Wish,” a track that Brown had engineered and produced. The song was picked up by singer Carl Thomas, who re-recorded the song and released it on an album that eventually went platinum. The partnership later dissolved, and, according to Brown, Flowers “ applied for and received copyright registrations for these recordings” and “ subsequently licensed these recordings to other artists, who, in turn, made re-recordings.” Brown then filed suit against Flowers under the Copyright Act of 1976, alleging that the recordings were joint works and he thus had copyright in them as well. The Fourth Circuit ultimately affirmed the district court’s dismissal of Brown’s federal copyright claim, finding he did not meet the requisite author requirement.
Although he found joint authorship for Brown, Judge Gregory extracted from the ambiguity surrounding the Aalmuhammed audience appeal factor in ways that other courts may not. For example, despite attempting to apply an objective approach to the analysis, Judge Gregory generalized and promulgated stereotypes about the specific type of work at issue. In doing so, his analysis ran counter to the purpose of the audience appeal factor. His conclusion that the appeal of R&B songs is attributable in large measure to the songs’ “ underlying riffs and beats,” neglects the subjective analysis owed to creative works of music. For example, the song at issue could depart from the expectation or standard that R&B songs are successful because of those specific features. Judge Gregory does not constitute nor represent the “ audience” and their views of the song. The vocalist on the song, for example, could be the sole reason the audience is drawn to the piece. Thus, while Judge Gregory did recognize Brown’s right, he did so in a way that did not provide for sufficient flexibility in the analysis that such creative works of entertainment are owed.
In Ford v. Ray, a claim for joint authorship was dismissed based on the Aalmuhammed test. In this case, Ford, the plaintiff, collaborated with Ray, the defendant, on an album where Ford “ independently created a handful of drum tracks, called ‘beats,’ that he thought would make a good foundation for hip hop songs” as well as “ provided ‘scratching’ for the chorus of the song and a solo.” Ray’s role was to choose which of the beats would be used for Sir-Mix-a-Lot’s Grammy award-winning song, “ Baby Got Back.” Ray, without Ford’s knowledge, filed copyright registrations for some of the songs they worked on together, identifying himself as the sole author. Ford subsequently filed suit alleging the works were “ joint works” and that he was the co-author.
In employing the Aalmuhammed three-factor test, the United States District Court for the Western District of Washington found that the first two factors – that the author must superintend the work by exercising control and the putative co-authors must make objective manifestations of a shared intent to be co-authors – weighed in favor of Ray, and thus concluded that Ford was not a co-author. In acknowledging the audience appeal factor, the court stated that Ford “ fail[ed] to allege facts from which one could conclude that his contributions account for the appeal of ‘Baby Got Back.’” The court sought more information such as “ how much of the music was [Ford’s] creation and how much was edited, programmed, and altered by [Ray].” They found the fact that Ray used one of Ford’s “ drum tracks ‘as the basis for the song’ and incorporated [Ford’s] scratching” insufficient. Relying on the complaint, the court concluded that Ford had made no contribution to the lyrics nor did he have any control over the music after handing it over to Ray. In coming to this conclusion, the court acknowledged that the audience appeal factor remains “ something of an unknown” to the analysis and granted the dismissal based solely on the first two factors.
Brown and Ford are thus paradigmatic of how the Aalmuhammed test, particularly the audience appeal factor, has been interpreted, analyzed, and implemented inconsistently when applied to songs.
In Eagle Rock Entertainment, Inc. v. Coming Home Productions, Inc., the Central District of California faced an ownership dispute over “ Guns, God and Government,” a live concert video album filmed during shock rock musician Marilyn Manson’s controversial 1999-2000 world tour. Both parties claimed to have produced the video by contributing to the editing and production of it. The court found the parties to be joint authors by analyzing the audience appeal factor and relying on Morrill. Unlike in Morrill, however, the court did not specifically address which aspects contributed to the visual appeal or the composition and performance of the music. Thus, the court seemed to employ the same standard to measure audience appeal differently in that it specifically sought out and emphasized an extra element in one music video, but did not require or address it in the other.
The Aalmuhammed test proves significant even outside of the courtroom, where its application has a direct impact on the livelihoods of those who participate in the entertainment industry. Recent examples in pop culture reflect the close link between intellectual property rights and employment. Take Steven Jan Vander Ark, for example, the Harry Potter fanatic who sought to publish an encyclopedia featuring the many characters, settings, and overall magic of J.K. Rowling’s popular book series. Rowling and Warner Brothers Entertainment sued Vander Ark seeking to enjoin the publication of the book alleging it infringed their copyrights given the substantially similar, if not equivalent, nature of the content. While Rowling walked away victorious, Vander Ark was left sobbing on the stand stating that Rowling’s public denunciation of his book “ had ostracized him from the ‘Harry Potter community.’” Why was Rowling, a prominent, successful author of a world-famous series, so keen on stopping one author—or more properly labeled, a fan—from producing a Harry Potter encyclopedia? And why was Vander Ark left so concerned about his reputation among other Harry Potter fans?
Intellectual property rights hold so much force in the realm of entertainment employment that even renowned authors like J.K. Rowling are adamant about protecting them. As of November 2018, the U.S. media and entertainment industry is a $735 billion market, representing a third of the global industry. In 2017, the arts, entertainment, and recreation industry employed 2,370,160 people. Duncan Crabtree-Ireland notes that “ [a]lmost all workers in the entertainment industry . . . are dependent on intellectual property law (and particularly copyright) for their livelihoods.” Overall, the interplay between intellectual property and employment is a unique one in entertainment, where intellectual property rights serve as a policing mechanism to ensure that parties are rewarded for original works of authorship by establishing standards and thresholds for artists to qualify for the benefits of employment.
Despite the significant effect of intellectual property rights on employment opportunities, practices within the entertainment industry often make it difficult to determine the appropriate allocation of rights. First, the industry is inherently filled with intangible content that without proper regulation could be subject to taking. Furthermore, technological developments have augmented the means through which audiences consume content, and facilitated the dissemination of entertainment content throughout the consumer marketplace. Cynthia Baron explains this phenomenon, noting how the “ increasing convergence of film and new media ‘has simultaneously increased the availability of film and turned it into part of a data stream where images become information that is simply passing through.’” In this capacity, “ film has also become part of the flow,” blurring and stretching the origins of the content farther away from the original artist or author.  As a result, it becomes a challenge to pinpoint the original source or author of a work, leaving the claimant to intellectual property rights with a daunting task. Justice Scalia voiced similar concerns in Dastar Corporation v. Twentieth Century Fox Film Corporation, stating “ without a copyrighted work as the basepoint, the word ‘origin’ has no discernable limits” and “ figuring out who is in the line of ‘origin’” would prove difficult. The high transaction costs for identifying and crediting sources may serve to decrease, or even paralyze, creative cultural production.
[T]he entertainment industries exist on ideas turned into deals. When an idea is ‘hot,’ immediate action is desired. Parties rush to agree, and, in the process, desire at times outraces common sense. The ‘deal,’ as it turns out, is strictly verbal, or there are scattered memos but no single, final, formal written agreement. If the production proceeds as envisioned . . . [t]here is no problem because the idea becomes a deal that produces a success, and everyone is happy.
As a result of the quick pace of deal-making, oral contracts have replaced written agreements as the primary means of memorializing deals. The industry reliance on oral contracts—often referred to as the “ handshake deal”—reflects the priority of completing projects on time. This priority, in turn, comes at the expense of fleshing out the full details of an employment agreement, which can suppress workers’ efforts to obtain credit for their contribution. If two parties orally and mutually agree to certain terms of a relationship or a course of conduct, the agreement becomes enforceable regardless of whether or not a written agreement was signed. Main Line Pictures, Inc. v. Basinger, one of the pivotal cases involving oral contracts in Hollywood, epitomizes the ubiquity and enforceability of oral contracts in the film industry.
In 1990, Main Line Pictures asked actress Kim Basinger to star in the movie “ Boxing Helena.” On several occasions, Basinger orally agreed to star in the film. A year and a half later, Main Line learned through rumors that Basinger no longer intended to act in the film as she had agreed to do. Main Line subsequently filed a complaint alleging breach of an oral and written contract. The jury concluded that Basinger had breached her oral contract with Main Line and awarded them damages. On appeal, the California Court of Appeals took note of and gave credence to the practice of oral contracts in entertainment, explaining “ because timing is critical, film industry contracts are frequently oral agreements based on unsigned ‘deal memos.’” Even though this case was later reversed on a technicality and settled, it reiterates the control and influence of oral contracts in the industry.
Entertainment industry employees are heavily reliant on the recognition of intellectual property rights for employment opportunities. Industry practices, however, make it difficult to determine who can claim those rights. As will be discussed further, authorship can directly affect the salaries, royalties, and overall benefits associated with recognition. In addition to the numerous barriers these participants have to overcome, such as the implications of intangible property, the dominance of oral contracts, or the “ invisible labor” theory, the Aalmuhammed test only exacerbates the difficulties creators in entertainment must face.
The creative process is anything but streamlined and Hollywood’s productions are no exception. While certain structures and processes exist as guidelines, deviation occurs far more often than in other industries. Many factors inherent to the filmmaking process lead to situations in which contributors take on roles outside of their designated responsibilities, such that even in the case of a formal written contract, departures from official roles are frequently made. Thus, while the credits to a film may describe the job titles that participants in the creative process held, they should by no means convey the message that the producer, for example, stuck solely to the responsibilities with which a producer is conventionally associated. The overall creative process behind filmmaking involves many people who played a role, small or large, in the creation of the film.
The three-factor test articulated in Aalmuhammed to determine joint authorship, however, does not adhere to the highly collaborative nature of the filmmaking process, nor to the widespread custom of creative collaboration in entertainment in general. One of the underlying reasons the test is incompatible with the contemporary practices of entertainment is that it is extracted from antiquated sources and thus has proven incongruous in the modern industry. The Ninth Circuit heavily rooted its analysis of “ author” in tradition, citing cases from 1884, Eisenstein, Chaucer, and the Founding Fathers. Instead, the Court should have drawn from these sources with greater generality to maintain an appropriate balance between tradition and innovation. For example, the court could have taken the idea of the writer as the “ person behind the pen” and applied it more liberally to the context at issue. While Aalmuhammed may not have been the physical person holding the pen and writing the screenplay, he did write entire scenes as well as much of the dialogue that was incorporated into the final product.
Such an interpretation misses the broad and open-ended recognition of collaborative creativity that Congress intended. Undue emphasis on singular control (“ the . . . mastermind”) is antithetical to the very nature of joint authorship, which is an intrinsically collaborative exercise. The nature of a collaborative enterprise is such that at times different authors will exercise more control than the others over the work. To require a contributor to exercise equal “ inventive” control in order to be a joint author is therefore unrealistic. Second, under the control standard, it is impossible for contributing authors to know in advance whether they are exercising sufficient control over the unitary work while making their individual contributions. The joint authorship doctrine thereby becomes unpredictable, defeating the “ paramount goal” of the 1976 Act.
The Ninth Circuit also mistakenly assumed that the factors apply neutrally to all subject matter. The reliance on the Gilbert and Sullivan example assumes that a songwriter and film consultant have made equal contributions throughout the creation of the work and to the final product in identical ways. The creative process behind the song that Gilbert and Sullivan wrote, however, is extremely simplified and not representative of the creation of a motion picture. Similarly, the court relied on Thomson and assumed that the process of creating a Broadway musical mimics that of a motion picture. Another assumption undergirding the Ninth Circuit’s opinion is that the creative process for one motion picture is the same for all other motion pictures. The function and operation of creative practices within the industry are far from uniform, and to assume so was a dangerous judicial mistake.
The test is also incompatible with the “ above the line” versus “ below the line” distinction in entertainment, which plays a primary role in monitoring the types of relationships formed during the creative process. Those in Hollywood who are “ above the line” are recognized as the creative talent or financial supporters of a project. The people “ below the line,” on the other hand, hold the technical and behind-the-scenes positions. In particular, the audience appeal factor of the test clashes with the first factor because the audience appeal of a film, more often than not, is owed to the “ above the line” personnel such as the A-list stars like Meryl Streep or Emma Stone, who “ would not qualify under the court’s ‘inventive or master mind’ test.” Instead, the director of the film is usually credited and recognized as the mastermind of the film. If these famous participants are unable to secure copyright interests in a work under such a test, it is further unlikely that a person who is “ below the line” and part of the “ invisible labor” that goes into a film, would either. Despite the frequency with which the Aalmuhammed test is employed by numerous courts when discussing various entertainment works, the test has proven inapplicable to certain categories within the modern entertainment industry.
The inability of the Aalmuhammed test to adapt to the entertainment industry’s practices yields unintended consequences on employment. Generally, joint authorship is an important intellectual property right that may play a part in establishing whether or not an individual can obtain future employment opportunities. If an individual meets the requirements to qualify as a joint author, then she will be able to register and obtain a copyright in the work. This further enables her to receive future benefits associated with the copyright, such as the opportunity to be involved with any sequel or a work tangentially related to the original work. This will then increase her exposure, and therefore her potential to garner greater recognition or reputation in the industry. Being known as a joint author may also signify to other creators her potential as a collaborator for future projects, thereby opening the door to future employment opportunities. Without recognition of joint authorship, a co-author may be deprived of the employment opportunities arising from or incidental to copyright ownership.
There are several more specific ways in which the Aalmuhammed test is unable to best serve the interests of those seeking employment and those currently employed in the entertainment industry. First, the audience appeal factor disincentivizes participants from contributing to a work because it does not adhere to the fluidity of the creative process. This is evidenced in Ford, where the plaintiff did not provide enough evidence upfront that his contributions throughout the creative process impacted the audience appeal of the work. Creators may therefore take additional precautions external to the creative process itself in order to abide by the types of inquiries a court may make upon reviewing whether an artist contributed enough to qualify for authorship rights. The creative process is a lengthy one, involving a broad spectrum of contribution ranging from the first spark of creativity to the final product. Drafts, shot suggestions, lighting changes, deletions, and many other steps that blur the process frequently occur. Requiring or expecting parties involved in the music creative process, for example, to memorialize agreements and document material information at all stages of production is a large burden, especially given the prevalence of oral contracts in the entertainment industry. The difficulty of proving specific contributions after the fact arguably discourages collaboration between creators, and, as a consequence, may adversely affect the labor market within the industry as well.
Even for smaller scale projects in entertainment, employers normally will be able to fulfill positions needed for a music video or a film because prospective creators are eager for their “ big break” in Hollywood and would not normally pass down a shot at fame. Those with established reputations such as Steven Spielberg and Quentin Tarantino, then, are able to maintain the upper hand in terms of bargaining power (and the subsequent copyrights), making it much more difficult for individuals to make a name for themselves. Different hiring structures or novel approaches to the distribution of responsibility will not be implemented as a result of the cemented status quo and monopoly over employment. Opportunities for employment growth and diversification are thus decreased in ways that harm those trying to break into the industry.
Third, as a consequence of increased litigation over co-authorship claims, courts have experimented with different approaches to applying the Aalmuhammed standard, resulting in inconsistent results and ambiguity for jobseekers and employers alike. As a result, proper fair notice is not offered to those who would benefit from awareness of the requirements of co-authorship under the Aalmuhammed test. This lack of prospectivity with respect to authorship rights will have a detrimental effect on entertainment industry employment because those who are hiring will not know what protocol or processes to put in place regarding the allocation of degree of control and distribution of responsibilities. That courts may or may not accord proper weight to the audience appeal factor leaves entertainment industry employers with little guidance for dealing with the co-authorship issue and avoiding potential lawsuits over joint authorship claims.
Similarly, creators or authors will lack the necessary guidance for understanding whether or not they have to direct their contributions in a way that will affect the audience appeal of the work. One major incentive a participant to a project may have in agreeing to provide services is the potential recognition he or she could gain as a result of being listed as a co-author to a work. The incentive may be lost among the confusion caused by the unclear rules and judicially constructed obstacles blocking the path to legal recognition of joint authorship. Both parties involved may then lose the incentives needed for a successful employment relationship, thus decreasing the potential for collaborative creation.
Fourth, a false impression has been created that any standard other than the Aalmuhammed test will result in the overbroad dissemination of copyrights. This, in turn, makes those with more bargaining power overprotected while they employ others. In Garcia v. Google, for example, the Ninth Circuit relied on Aalmuhammed when addressing Google’s argument that an actress hired to say a few lines in a film posted on YouTube did not qualify as a joint author to the work. The court cited Aalmuhammed for the proposition that a work cannot be defined based on “ some minimal level of creativity or originality” because such a definition “ would be too broad and indeterminate to be useful.” Further, the court noted that “ its animating concern” in Aalmuhammed was that such a definition of “ ‘work’ would fragment copyright protection for the unitary film . . . into many little pieces” where anyone might qualify as an author. The Google court feared this would make “ Swiss cheese of copyrights.” The court similarly stated that “ treating every acting performance as an independent work would not only be a logistical and financial nightmare, it would turn cast of thousands into a new mantra: copyright of thousands.” The Ninth Circuit took a risk-averse approach, fearing that any alternative to the Aalmuhammed test may open the floodgates to copyright claims of joint authorship by every cast and crew member that worked on a film. By establishing Aalmuhammed as the only alternative to a world in which joint authorship claims run amok, the desire to keep Aalmuhammed as the standard is increased, as are concurrently, the limits on employment.
The Aalmuhammed test may also yield detrimental effects on employment by indirectly diluting the efficacy of entertainment unions to adequately represent workers. Specifically, the inability of the test to properly identify rights may lead to union strikes which, as has happened in the past, could cause networks to restructure their employment processes such that opportunities for post-production creation will be limited.
One of the unions in the entertainment industry that may be negatively affected by this phenomenon is the Writers Guild of America West (WGAW). The WGAW “ is a labor union composed of the thousands of writers who write the television shows, movies, news programs, documentaries, animation, videogames and new media content that keeps audiences constantly entertained and informed.” The Guild covers the rights of writers with respect to derivative works, specifically “ minimums, residuals, credits, pension and health contributions, separated rights, and more.” Strikes are an effective union bargaining tactic. Normally, union members strike in an effort to convince or coerce employers to change their employment practices and conditions. Common wisdom may suggest that the potential of the Aalmuhammed test to strip authors of the rights and recognition they deserve might encourage members of the WGAW, for example, to strike. However, striking in response to being denied recognition rights can harm union members’ prospects for future employment.
[R]ather than embrace the mass collaborative approach to television explored during the Lost moment, the ‘big three’ networks appear to have bolstered their traditional bureaucratic fortresses to maintain singular control over all aspects of the broadcast business. In particular, ABC fired several of the principal executives involved in the Lost franchise and reabsorbed many of the functions that the Lost writers had performed in collaboration with the network’s programming, marketing, licensing, and merchandising divisions. Since 2011, the big three have reverted to more conventional programming choices (reality shows, sit-coms, episodic dramas), reasserted control over their licensed properties (computer games, novels, board games, and the like), and expanded their in-house digital marketing divisions to create and manage digital promotions tied to their series — all, it seems, in an effort to maintain stricter controls over their industry in the post-strike environment.
The treatment of the producers for the hit television show Heroes further demonstrates how networks have responded to the post-production creative boom in unfavorable ways. In 2007, the show’s producers proposed to network executives the formation of a “ transmedia team” to be tasked with managing the continuity of any extensions of the show’s narrative as it expanded beyond its traditional television medium and format through the creation of bonus material made available on other media platforms. The responsibilities of this team would be divided into three main roles: “ merchandising,” “ coordinat[ing] all narrative mobilizations of the property across comics, the Internet, and the like,” and “ work[ing] with the stars of the series to secure their participation in promotions and content made for these new media.” However, the network ultimately dismissed the proposed model for maintaining narrative continuity and fidelity. This is a paradigm example of what Derek Johnson classifies as the “ contradiction between singular authorship and the decentralized creativity of networked production cultures.” Regrettably, it appears that participants who seek alternative means of employment are only met by rejection.
Operating as an obstacle to the recognition of judicial rights and providing limited guidance on creators’ legal rights, the Aalmuhammed test arguably contributes to a growing dissatisfaction among entertainment industry unions. The outcome has been debilitating in certain instances. Although some minimums or residuals may be established in the short-term, networks may put up more barriers in response to such proposed changes in the long-term, as exemplified by the Lost strike and the doomed Heroes proposal. Given the weaker bargaining position of union members, big networks are well-placed to structure their operations in a manner that promotes their interests, much to the detriment of entertainment creators. Union mobilization would be disrupted and potentially paralyzed if networks take advantage of the Aalmuhammed test protections. Employee creators would struggle to avail themselves of joint authorship status under the three-factor Aalmuhammed test, especially in the emerging context of derivative supplemental and promotional content designed to “ keep the story alive” as it migrates across consumption platforms. Creators would be hard-pressed to show that they contributed to the original story, that all relevant parties manifested mutual intent to be co-authors, and that they contributed to audience appeal.
Writers are also directly burdened by the adverse effects the Aalmuhammed test has on entertainment unions. Given the monopolization of the creative process, writers may struggle to obtain a writing credit for projects they worked on despite their sizable contributions. The WGA has a system in which “ any writer whose work represents a contribution of more than 33% of a screenplay shall be entitled to screenplay credit. One exception exists for original screenplays in which any subsequent writer or writing team must contribute 50% to the final screenplay.” In order to determine whether a writer meets this threshold, an arbiter is brought in to consider various elements of their contribution to the work at issue, including dramatic construction, original and different scenes, characterization or character relationships, and dialogue. Each work is looked at independently and there are no formulas an arbiter must use. The WGA, in contrast to the Aalmuhammed test, approaches the authorship analysis with much needed flexibility.
In Hollywood, receiving a writing credit signifies the writer’s accomplishment and can bolster her reputation. A writing credit is an important touchstone of the writer’s professional development because as “ writers move from project to project, a career is created as people move from credit to credit.” Further, a writing credit “ facilitates the assessment of talent in a high-velocity labor market” and provides “ residuals . . . [to] . . . compensate writers during periods of slack employment, thus keeping their human capital in the industry.” One way in which a residual provides better compensation to writers is through the allocation of a credit bonus, which is “ a provision of an individual hiring contract stating that the writer will receive a bonus if the writer is determined to get screen credit.” By minimizing the writer’s ability to legally establish co-authorship, the Aalmuhammed test may have adverse economic repercussions on writers by minimizing their ability to gain writing credit and its associated benefits.
Overall, the Aalmuhammed test-or-nothing approach creates obstacles to joint authorship status and future employment opportunities for creative contributors.
That brings the analysis to the next question: what should be the standard by which joint authorship is determined?
Professor Balganesh et al. recommend implementing a test that analyzes the contributions made and the “ mutual intent among the collaborators that they be joint authors,” rather than focusing on the control element of the work. Such inquiry as to mutual intent will only arise when the “ parties have not expressly contracted ownership.” This approach would allow “ all principal creative collaborators in the production of a motion picture, sound recording, or other collaborative work” to “ qualify as joint authors”. While the professors qualify that this would not result in every single contributor being granted joint authorship, this standard remains problematic with respect to the entertainment industry. For example, agreements to take on certain roles often do not go as far as establishing a mutual intent to be joint authors given the time constraints of production on set and the prevalence of oral contracts.
Professor Christopher Jon Sprigman proposes another systematic approach that imposes a default rule that parties may contract around to reach the idealized authorship relationship. In practice, a default rule would establish which party would automatically be granted joint authorship status. Sprigman further suggests making the default rule “ painful” so that the parties, in objecting to it, will have to provide information about which contributors they would prefer to credit with joint authorship status. Parties have the ability to opt-out of the default rule and can negotiate against the background of clear rules. While this proposal offers an organized, approachable solution, it may not pair well with the elasticity and flexibility of the creative process. Specifically, there may not be time to engage in the contracting, nor would there be widespread knowledge of a default rule one would need to contract out of in the first place. Further, it places the parties in a situation where a negotiation, or at least a discussion, would have to take place from the outset. This may disincentivize collaboration, as creators may wish to avoid the trouble and cost of bargaining over authorship ex ante.
the hiring party’s right to control the manner and means by which the product is accomplished, the skill required, the source of the instrumentalities and tools, the location of the work, the duration of the relationship between the parties, whether the hiring party has the right to assign additional projects to the hired party, the extent of the hired party’s discretion over when and how long to work, the method of payment, the hired party’s role in hiring and paying assistants, whether the work is part of the regular business of the hiring party, whether the hiring party is in business, the provision of employee benefits, and the tax treatment of the hired party.
The proposed solution, then, is to have the employers tailor the course of employment to fit the Reid factors such that the person hired would affirmatively qualify as an employee. Employers would arguably use this strategy when they could anticipate a potential copyright claim. As evidenced by the fluctuations inherent to the entertainment industry in both hiring and throughout the creative process itself, predicting copyright claims or even framing the employment relationship to adhere to the Reid factors is, for the most part, too difficult to execute.
While more compatible with the functions and operations of the modern entertainment industry, a case-by-case analysis lacks the guidance courts may seek when addressing such joint authorship issues. Stripping courts of judicial guidance on the one hand, and rote application of an obsolete and poorly designed three-part test on the other, are both not ideal. Instead, a middle-ground approach should be adopted in order to provide the courts with necessary assessment tools and background knowledge, while still allowing them the freedom to embrace the fluidity they may encounter in the various fact patterns presented.
First, guidelines should be tailored to the subject or content at issue, whether it takes the form of films, television shows, musicals, music videos, or the like. Tests with distinct factors may be developed for the various kinds of content, as long as they allow for the flexibility inherent to the entertainment industry and permit creators to freely roam within its carefully crafted boundaries. For example, a test for motion pictures could account for creative contributions by film consultants by analyzing the quantum of control they exercised over the film. Under such a test, a court may determine that if Aalmuhammed had rewritten or had a significant impact on more than one half of the total scenes, then he should have been awarded joint authorship status. Musical works, too, should be analyzed in ways that account for more than stereotypical elements that are considered by a court to make a “ rap” song popular or a “ country” song identifiable. Instead, an objective approach should be implemented whereby the stereotypes that Judge Gregory had relied on in Flowers are removed.
Another player that can improve the current framework surrounding joint authorship is Congress. Congress can amend the Copyright Act in ways that provide guidance not just to judges, but also to the creators themselves. For example, the Section 101 definition of “ joint work,” as well as the Copyright Act in general, currently lack a definition of “ author.” Congress can narrowly revise the Copyright Act to account for idiosyncratic works to which there are many contributors, by qualifying that “ an author, particularly in creative works in which many different collaborators contribute, may not necessarily fit the ideal or traditional characteristics one would normally associate with the title.” Such a revision would clarify overbroad or vague language, while also loosening the standards to which collaborators may have felt previously bound. Such guidance could function as the proper notice collaborators should be able to rely on, thus diminishing any reluctance on the part of would-be collaborators to enter into a collaborative creative relationship, reducing the likelihood of authorship battles erupting, and ultimately improving the overall efficiency of the entertainment industry.
The judicial system’s current treatment of those who seek vindication of their claims for joint authorship paints a rather bleak picture: one where enthusiastic creators like Steven Jan Vander Ark are reduced to tears on the stand. Vander Ark is joined by film consultants like Aalmuhammed, screenwriters like Richlin, sound engineers like Brown, and band members like Morrill who put their trust in the legal system to secure their authorship rights as creative contributors after their fellow collaborators denied them the credit and benefits they deserve. To their dismay, the Ninth Circuit’s three-part test to determine whether an individual qualifies as a joint author to a work was unaccommodating with respect to both the major creative roles they played as well as the modern functions of the entertainment industry.
Entertainment has proven to be one of the most booming industries in society today, providing high quality content in unprecedented ways across the globe. Yet while the industry continues to grow, the legal framework for the authorship question remains stuck in the past. Poorly suited for the expanded marketplace for collaboration and unchanged in the face of widespread innovative media technologies, the Ninth Circuit’s obsolete test hinders, rather than furthers Congress’s explicit constitutional duty to promote the growth of the arts. This paradox, where the judicial system’s treatment of authorship ultimately disincentivizes authors, the very people expected to create, heightens the necessity for reform. To improve employment in the modern entertainment industry and further the policy goals of copyright law, the Ninth Circuit’s test must no longer serve as the governing standard for evaluating joint authorship rights.
The judicial system must play its role in granting and reinforcing the allocation of intellectual property rights so that those who are deserving of credit in the creative process can do so without worrying about having their contribution minimized. This is a call to action for the courts to recognize its role in creating barriers to employment in the entertainment industry and craft more appropriately tailored authorship tests to better accommodate those who are employed and who seek to be employed in the entertainment industry. A more carefully articulated framework can be implemented to strike a fair balance between infinite copyrights on the one hand and a monopoly over copyrights on the other. It is not solely up to the courts; Congress must amend the Copyright Act to overcome the inherent vagueness underlying the statutory definition of “ author” as well. These reforms have been advanced by scholars and creators alike. In a multibillion dollar industry where success is highly correlated with authorship rights, it is simply too costly to leave the Vander Arks of the world stripped of their rightful legal protection.
*J.D. Candidate, New York University School of Law, 2019; B.A., Communication Studies, Northwestern University, 2016. The author would like to thank Professor Day Krolik and the JIPEL Notes Program participants: Jared Greenfield, Vincent Honrubia, Chloe Kaufman and James Yang.
 Aalmuhammed v. Lee, 202 F.3d 1227 (9th Cir. 2000).
 See generally, 17 U.S.C. §§ 101 et seq. (2012).
 H.R. Rep. No. 94-1476, at 120 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5736.
 Aalmuhammed v. Lee, 202 F.3d 1227, 1229 (9th Cir. 2000).
 Burrow-Giles Lithographic Co. v. Sarony, 111 U.S. 53, 54 (1884).
 Aalmuhammed, 202 F.3d at 1233.
 Thomson v. Larson, 147 F.3d 195, 207 (2d Cir. 1998).
 Aalmuhammed, 202 F.3d at 1234.
 See, e.g., Complaint at 1, Horror, Inc. v. Victor Miller, No. 3:16-cv-01442 (D. Conn. Aug. 24, 2016) (Victor Miller, the author of the screenplay Friday the 13th, issued termination notices to the film’s producers to notify them that he was reclaiming his copyright in the original screenplay); Ron Dicker, Filmmaker Says ‘Stranger Things’ Creators Stole His Ideas in New Lawsuit, Huffington Post (Apr. 4, 2018, 10:39 AM), https://www.huffingtonpost.com/entry/stranger-things-suit-duffer-brothers_us_5ac4b7b7e4b093a1eb20d34c (Charlie Kessler filed suit against Matt and Ross Duffer alleging they stole his ideas for a sci-fi series called “ Montauk” in their popular Netflix series “ Stranger Things”).
 See, e.g., Complaint at 4, Brittle v. Time Warner, Inc., No. 3:16-cv-00908-JAG (E.D. Va. Nov. 11, 2016) (Gerald Brittle sued Time Warner and other entertainment company defendants over the exclusive motion picture rights to the film The Conjuring based on the book he wrote called The Demonologist).
 Complaint, Frank Ocean v. Om’Mas Keith, No. 2:18-cv-01383 (C.D. Cal. Feb. 20, 2018) (Musical artist Frank Ocean brought a declaratory action of copyright non-ownership against music producer Om’Mas Keith, who claimed that he had co-written musical compositions with Ocean for the singer’s album titled Blonde).
 Aalmuhammed, 202 F.3d at 1234. (“ [T]he audience appeal of the work must turn on both contributions and the share of each in its success cannot be appraised.”) (internal quotation marks omitted).
 Richlin v. Metro-Goldwyn-Mayer Pictures, Inc., 531 F.3d 962, 970 (9th Cir. 2008).
 Aalmuhammed v. Lee, 202 F.3d 1227, 1235 (9th Cir. 2000).
 Brown v. Flowers, 196 F. App’x 178, 184 (4th Cir. 2006).
 Id. at 191 (Gregory, J., concurring in part and dissenting in part).
 Ford v. Ray, 130 F. Supp. 3d 1358, 1359 (W.D. Wash. 2015).
 Morrill v. Smashing Pumpkins, 157 F. Supp. 2d 1120 (C.D. Cal. 2001).
 Id. at 1125 (internal quotation marks omitted).
 Eagle Rock Entm’t, Inc. v. Coming Home Prods., Inc., No. CV 03-571 FMC(AJWx), 2004 WL 5642002, at *1 (C.D. Cal. Sept. 1, 2004).
 See generally, Harry Potter Wish List, http://hpwishlist.warnerbros.com/ (last visited Nov. 11, 2018) (providing an example of an extrinsic encyclopedia and fan-site dedicated to J.K. Rowling’s book series).
 John Eligon, Rowling Wins Lawsuit Against Potter Lexicon, N.Y. Times, Sept. 8, 2008, at B3.
 Warner Bros. Entm’t Inc. v. RDR Books, 575 F. Supp. 2d 513 (S.D.N.Y. 2008).
 Media and Entertainment Spotlight: The Media and Entertainment Industry in the United States, Selectusa, https://www.selectusa.gov/media-entertainment-industry-united-states (last visited Nov. 11, 2018).
 May 2017 National Industry-Specific Occupational Employment and Wage Estimates, Sector 71: Arts, Entertainment, and Recreation, U.S. Dep’t of Lab., https://www.bls.gov/oes/current/naics2_71.htm.
 Duncan Crabtree-Ireland, Labor Law in the Entertainment Industry Supplemental Payments, Intellectual Property Rights, and the Role of Unions, 31 Ent. & Sports L. 4, 4–5 (2014).
 Cynthia Baron, The Modern Entertainment Marketplace, 2000-Present, in Acting 144 (Claudia Springer & Julie Levinson eds., 2015) (quoting author Stephen Keane).
 William T. Bielby & Denise D. Bielby, Organizational Mediation of Project-Based Labor Markets: Talent Agencies and the Careers of Screenwriters, 64 Am. Soc. Rev. 64, 66 (1999).
 Gary M. McLaughlin, Oral Contracts in the Entertainment Industry, 1 Va. Sports & Ent. L.J. 101, 119 (2001).
 See Jay M. Spillane, Lawsuits Over "Handshake Deals" Are As Old As the Entertainment Industry (and Can Be Easily Avoided), 11 Ent. & Sports L. 15, 16 (1993).
 Main Line Pictures, Inc. v. Basinger, No. B077509, 1994 WL 814244, at *1 (Cal. Ct. App. Sept. 22, 1994).
 See Mihaela Mihailova, Collaboration Without Representation: Labor Issues in Motion and Performance Capture, 11 Animation: An Interdisciplinary J. 40, 46 (2016).
 Dean Goodman & Edwin Chan, Natalie Portman Leaps to Oscar for ‘Black Swan’, Reuters.com (Feb. 27, 2011, 11:20PM), https://www.reuters.com/article/us-oscars-bestactress-idUSTRE71R19920110228.
 Mihailova supra note 101, at 46.
 Brief of Amici Curiae Professors Shyamkrishna Balganesh et al. Supporting Neither Party, Garcia v. Google, Inc., 786 F.3d 733 (9th Cir. 2015) (No. 12-57302), at 17.
 See generally Homer Croy, How Motion Pictures Are Made, (Goemaere Press 2009) (1918) and J.S. Rudsenske, Music Business Made Simple: A Guide to Becoming a Recording Artist, (J.P. Denk ed. 2004).
 See generally Jack Viertel, The Secret Life of the American Musical: How Broadway Shows Are Built (Sarah Crichton Books 2017) (2016).
 See generally James R. Martin, Create Documentary Films, Videos, and Multimedia: A Comprehensive Guide to Using Documentary Storytelling Techniques for Film, Video, the Internet and Digital Media Nonfiction Projects (Real Deal Press 2010); Croy, supra note 111.
 See Gail Resnik & Scott Trost, All You Need to Know About the Movie and TV Business 36-37 (Simon & Schuster 1996).
 Balganesh et al., supra note 107, at 14.
 See generally Cynthia Littleton & Brian Steinberg, Disney to Buy 21st Century Fox Assets for $52.4 Billion in Historic Hollywood Merger, Variety (Dec. 14, 2017 4:04 AM), http://variety.com/2017/biz/news/disney-fox-merger-deal-52-4-billion-merger-1202631242/.
 Garcia v. Google, Inc., 786 F.3d 733, 736 (9th Cir. 2015).
 Id. at 742 (quoting Aalmuhammed v. Lee, 202 F.3d 1227, 1233 (9th Cir. 2000)).
 See generally What is the Writers Guild of America West?, WGA, http://www.wga.org/the-guild/about-us/faq#general1 (last visited Nov. 11, 2018).
 See Denise Mann, The Labor Behind the Lost ARG: WGA’s Tentative Foothold in the Digital Age, in Wired TV: Laboring Over an Interactive Future 118, 124 (Denise Mann ed., 2014).
 A mobisode is an episode of television intended for viewing on a mobile device. See generally Scott Ruston, Televisual Narratives in the Palm of Your Hand, Understanding Mobisodes, Producing Television, Spring 2008, https://cinema.usc.edu/assets/054/10994.pdf.
 Mann, supra note 126, at 118.
 See Derek Johnson, Authorship Up for Grabs: Decentralized Labor, Licensing, and the Management of Collaborative Creativity, in Wired TV: Laboring Over an Interactive Future 32, 40–41 (Denise Mann ed., 2014).
 See Writers Guild of America, Screen Credits Manual 16 (2010), http://www.wga.org/contracts/credits/manuals/screen-credits-manual#4 (defining the term “ writer”).
 Catherine L. Fisk, The Role of Private Intellectual Property Rights in Markets for Labor and Ideas: Screen Credit and the Writers Guild of America, 1938-2000, 32 Berkeley J. Emp. & Lab. L. 215, 250 (2011).
 Balganesh et al., supra note 107, at 15-16.
 Christopher Jon Sprigman, Remarks for Advanced Copyright Class at New York University School of Law (Spring 2018).
 17 U.S.C. § 101 (2012).
 Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 751-52 (1989).
 Garcia v. Google, Inc., 786 F.3d 733, 742 (9th Cir. 2015).
 Anemona Hartocollis, Sued by Harry Potter’s Creator, Lexicographer Breaks Down on the Stand, N.Y. Times, Apr. 16, 2008, at B1.
» Is the Copyright Act Inconsistent with the Law of Employee Invention Assignment Contracts?


text:
RAFAEL J. ROXAS AND THE HEIRS OF EUGENIA V. ROXAS, INC., PETITIONERS, VS. HON. ARTEMIO S. TIPON, IN HIS CAPACITY AS PRESIDING JUDGE OF THE REGIONAL TRIAL COURT OF MANILA, BRANCH 46, F. U. JUAN CORPORATION, AND FERNANDO U. JUAN, RESPONDENTS.
RAFAEL J. ROXAS, GUILLERMO ROXAS AND MA. EUGENIA VALLARTA, PETITIONERS, VS. HON. ARTEMIO S. TIPON, IN HIS CAPACITY AS PRESIDING JUDGE OF THE REGIONAL TRIAL COURT OF MANILA, BRANCH 46, F. U. JUAN CORPORATION AND FERNANDO U. JUAN, RESPONDENTS.
The subject of this petition for review on certiorari is the Decision dated 14 August 2003 of the Court of Appeals in CA-G.R. SP No. 67384 and CA-G.R. SP No. 73187 which affirmed the orders of Judge Artemio S. Tipon of the Regional Trial Court (RTC) of Manila, Branch 46 in Civil Case No. 01-99671 relating to an audit of corporate books and declaration of contempt of court.
That Roxas and HEVRI had squandered the funds of the corporation, as well as its assets to the detriment of its stockholders.
In their Answer, petitioners averred that they were under no legal obligation to furnish respondents copies of the corporation’s financial statements and minutes of stockholders’ and Board of Directors’ meetings; that they had not been remiss in the filing of its General Information Sheets (GIS) and Audited Financial Statements with the government agencies concerned; that no dividends were declared or paid because corporate funds have been, and continue to be, used for rehabilitation and upgrading works; that the Amended Petition did not state facts with sufficient particularity which tend to show that Roxas has been mismanaging HEVRI. Petitioners counterclaimed for damages.
Pursuant to Supreme Court Administrative Circular AM No. 00-11-03 dated 21 November 2000 in implementation of the provisions of the law transferring jurisdiction from SEC to the RTC, the case was transferred to the RTC of Manila, Branch 46.
The Court orders that an audit of the books of the Corporation be conducted. However before the Court will enforce the same the respondents are given until August 1, 2001 to file their comments/oppositions, after which this incident will be deemed submitted for resolution.
The [private respondents herein] allege that respondent Rafael J. Roxas is making unauthorized and fraudulent disbursements of corporate funds and the former wants the latter restrained from further managing the respondent corporation.
The best way the court can determine whether there is a ground for the issuance of a temporary restraining order or preliminary injunction is to be informed of what is the real score in the financial status of the corporation. What could be a better way of knowing whether there are unauthorized and fraudulent disbursements than an audit of the books? The respondents should not fear an audit if they have nothing to hide.
WHEREFORE, the Financial Catalyst, Inc. of Unit 1107 Jollibee Plaza, Emerald Avenue, Ortigas Center, Pasig City 1605 Philippines is hereby designated to audit the books of Heirs of Eugenia V. Roxas, Inc.
The Financial Catalyst, Inc. is requested to inform the court within seventy-two (72) hours from receipt of this order if it accepts the designation. Should it accept the designation, it should start the audit immediately.
The president, vice president, corporate secretary, treasurer and other officers of the Heirs of Eugenia V. Roxas, Inc. are directed to cooperate with the auditing firm and to provide all the necessary support to accomplish its duty.
The [private respondents herein] are hereby directed to make an initial deposit with the Clerk of Court the sum of FIFTY THOUSAND PESOS (P50,000.00) to cover the expenses audit. It is understood that the expenses of audit shall be taxed as cost against the losing party or parties.
All the aforementioned orders of the RTC were assailed before the Court of Appeals in CA G.R. SP No. 67384. On 16 July 2002, the Court of Appeals issued a TRO enjoining RTC from implementing the questioned orders.
When petitioners refused to allow Financial Catalyst, Inc. to audit their books, the RTC declared Guillermo Roxas, Ma. Eugenia Vallarta and Roxas in contempt of court and issued a warrant for their arrest on 19 August 2002. Said Order was also challenged before the Court of Appeals in CA-G.R. SP No. 73187.
Thereafter, the Court of Appeals resolved to consolidate the two (2) petitions.
RESOLVES to hold a formal trial to enable the said defendants to defend themselves at a hearing scheduled on Friday, the 28th day of June, 2002 at 8:30 A.M. at Room 460, City Hall, Manila, Philippines.
Petitioners moved for the cancellation of the hearing, which motion was denied.
A motion for reconsideration was filed but it was denied on 29 October 2003, hence the instant petition.
Petitioners assert that the RTC effectively ruled that a stockholder’s right to inspection and to financial information include the absolute right to cause the conduct of an audit. Petitioners insist that the trial court should have examined the audited financial statements first before ordering another audit. By declaring that an audit be conducted, petitioners claim that the trial court effectively granted private respondents’ prayer for inspection and examination of the books of accounts of HEVRI without hearing or trial. Also according to petitioners, the appointment of an independent auditor was not even specifically prayed for in the Amended Petition. Petitioners take exception to the ruling of the Court of Appeals that an audit will determine the financial status of the company. Petitioners aver that gross mismanagement, as alleged by private respondents, is a factor that must be proved by hard and convincing evidence. Finally, petitioners challenge the validity of the contempt order issued against them. Petitioners contend that the trial court did not motu propio initiate the contempt proceedings but it was prompted by private respondents through a motion for the issuance of a show cause order, thereby disregarding Section 4, Rule 71 of the Rules of Court.
Private respondents justified the order of audit by the RTC to determine the presence or absence of mismanagement and pursuant to Rule 32 of the Rules of Court. They also maintain that the directive to conduct an audit does not amount to a prejudgment of the case. Anent the citation for contempt, private respondents assert that petitioners’ whimsical disregard of the authority of the trial court exemplified by the unreasonable and unjustified refusal to comply with the directed audit constitute indirect contempt of court.
WHEREFORE, premises considered, the Court orders the DISMISSAL of this case. The incident on the creation of a Management Committee is likewise denied for being moot and academic.
As culled from the RTC Order and subsequent to the dismissal of the petition before the Court of Appeals, the RTC created a Management Committee on 15 March 2004. The trial court ordered the depositary banks of petitioners to freeze the latter’s deposit. These Orders were also questioned before the Court of Appeals which issued a TRO restraining the Management Committee from taking over the management and administration of HEVRI. On 8 April 2005, the RTC issued an Omnibus Order which: 1) constituted the Interim Caretaker Committee; 2) granted defendants request for ocular inspection; 3) held in abeyance implementation of the audit; 4) required the former Management Committee to render its report, and set the schedule for the reception of defendants’ evidence on the creation of the Management Committee. Thus, an Interim Caretaker Committee was constituted.
In dismissing the case for dissolution, the trial court ruled that it lacked jurisdiction to entertain an action for dissolution considering that said action lies within the exclusive jurisdiction of the SEC. The trial court explained that only cases enumerated under Section 5 of Presidential Decree No. 902-A were transferred to the RTC. SEC’s power to suspend, revoke or terminate the franchise or certificate of registration of corporations is found in Section 6. Assuming that the RTC has jurisdiction to try the case, it pointed out that only one of the grounds cited by private respondents constitute a possible ground for involuntary dissolution, i.e., failure to comply with the SEC’s reportorial requirements. This possible infraction was rectified by the belated filing of the 1991-1995 GIS after the filing of the Amended Petition.
The trial court also held that there is no factual basis to hold Roxas liable for misappropriation; that Roxas is not the proper party impleaded in the Amended Petition because he was no longer the President of HEVRI at the time of filing; and that HEVRI cannot be ordered to declare dividends because the prerogative lies with the Board of Directors.
Finally, the RTC declared moot and academic the issues of the inspection of books in view of the takeover of the books by the previous Management Committee; and creation of the Management Committee which has lost it legal basis to exist because the Court has no jurisdiction over the main action.
Essentially, only two (2) issues must be resolved – the validity of the audit and the consequent indirect contempt citation.
The first issue has been rendered moot and academic with the dismissal of the principal action for dissolution. The directive for audit and the designation of Financial Catalyst, Inc. as the auditor, both incidents to the main action, have already lost their bearing. An issue or a case becomes moot and academic when it ceases to present a justiciable controversy, so that a determination of the issue would be without practical use and value. In such cases, there is no actual substantial relief to which the petitioner would be entitled and which would be negated by the dismissal of the petition.
(b) Disobedience of or resistance to a lawful writ, process, order or judgment of a court, x x x.
Contempt of court is defined as a disobedience to the Court by acting in opposition to its authority, justice and dignity. It signifies not only a willful disregard or disobedience of the court’s orders, but such conduct which tends to bring the authority of the court and the administration of law into disrepute or in some manner to impede the due administration of justice. Contempt of court is a defiance of the authority, justice or dignity of the court; such conduct as tends to bring the authority and administration of the law into disrespect or to interfere with or prejudice parties-litigant or their witnesses during litigation. The asseverations made by petitioners to justify their refusal to allow inspection or audit were rejected by the trial court.
It may be noted that a person may be charged with indirect contempt by either of two alternative ways, namely: (1) by a verified petition, if initiated by a party; or (2) by an order or any other formal charge requiring the respondent to show cause why he should not be punished for contempt, if made by a court against which the contempt is committed. In short, a charge of indirect contempt must be initiated through a verified petition, unless the charge is directly made by the court against which the contemptuous act is committed.
The RTC initiated the contempt charge. In the Order dated 9 January 2002, petitioners were directed to appear in court and to show cause why they should not be held in contempt of court for their refusal to allow Financial Catalyst, Inc. to audit the books of HEVRI. Petitioners filed an urgent motion for reconsideration claiming that said order was the subject of a pending petition before the Court of Appeals and that they can only be cited for contempt by the filing of a verified petition. The RTC denied the motion and reiterated in its Order on 26 April 2002 explaining that it chose to initiate the contempt charge.
The RTC acted on the basis of the unjustified refusal of petitioners to abide by its lawful order. It is of no moment that private respondents may have filed several pleadings to urge the RTC to cite petitioners in contempt. Petitioners utterly violated an order issued by the trial court which act is considered contemptuous. Thus, in Leonidas v. Judge Supnet, the MTC’s order to the bank to show cause why it should not be held in contempt, was adjudged as a legitimate exercise of the MTC’s judicial discretion to determine whether the bank should be sanctioned for disregarding its previous orders. Independently of the motions filed by the opposing party, it was the MTC which commenced the contempt proceedings motu proprio. No verified petition is required if proceedings for indirect contempt are initiated in this manner, and the absence of a verified petition does not affect the procedure adopted.
Sec. 8. Imprisonment until order obeyed. - When the contempt consists in the refusal or omission to do an act which is yet in the power of the respondent to perform, he may be imprisoned by order of the court concerned until he performs it.
However, the foregoing notwithstanding, the warrant and the contempt proceedings that preceded it were all similarly mooted by the dismissal of the main petition for dissolution of HEVRI. Given the mootness of the issues of inspection and audit, the very orders refused to be obeyed by petitioners, the citation of contempt and its consequences necessarily became moot.
WHEREFORE, this petition is hereby DECLARED MOOT and ACADEMIC. The warrant of arrest issued by the Regional Trial Court of Manila, Branch 46, against Guillermo B. Roxas, Ma. Eugenia Vallarta and Rafael B. Roxas is hereby LIFTED.
Carpio, (Chairperson), Brion, Sereno, and Reyes, JJ., concur.
 Penned by Associate Justice Danilo B. Pine with Associate Justices Buenaventura J. Guerrero and Renato C. Dacudao, concurring. Rollo, pp. 50-62.
 Private respondent Fernando Juan was added as party-plaintiff.
 Presided by Judge Benjamin D. Turgano. Id. at 688-706.
 Reorganization of the Securities and Exchange Commission with Additional Powers and Placing the said Agency under the Administrative Supervision of the Office of the President.
 Romero II v. Estrada, G.R. No. 174105, 2 April 2009, 583 SCRA 396, 404.
 Lu Ym v. Atty. Mahinay, 524 Phil. 564, 572 (2006) citing Heirs of Trinidad de Leon Vda. de Roxas v. Court of Appeals, 466 Phil. 697, 711-712 (2004).
 Mallari v. Government Service Insurance System, G.R. No. 157659, 25 January 2010, 611 SCRA 32, 51.

matches: V. V. V. v. v. v. v. v.


Nathaniel Smith, an inmate confined at the Allenwood United States Penitentiary, White Deer, Pennsylvania (USP-Allenwood), filed this pro se petition for writ of habeas corpus pursuant to 28 U.S.C. § 2241. Named as Respondent is the USP-Allenwood Warden. Service of the petition was previously ordered.
Petitioner states that he was arrested in the State of Maryland on February 17, 2010. On February 26, 2010, Smith was sentenced to a five (5) year term of incarceration by a Maryland state court for possession of marijuana. The pending petition indicates that additional state charges against were nolle prossed in favor of federal prosecution.
Petitioner asserts that after he began serving his state sentence on April 30, 2010, he was transferred to federal custody for brief periods of time during the subsequent months.
On November 17, 2010, Petitioner entered a guilty plea to a charge of possession of a firearm by a convicted felon in the United States District Court for the District of Maryland. On March 21, 2011, Smith was sentenced in federal court to an aggregate 89 month term of imprisonment with credit for time served commencing February 17, 2010.
Smith's present action does not challenge the legality of either his state or federal convictions. Rather, Petitioner contends that the Bureau of Prisons (BOP) acted improperly by seeking the issuance of an amended federal sentence because it concluded that Petitioner was afforded an excessive amount of pretrial sentence credit. See Doc. 1-1, p. 1. Pursuant to that request, the District of Maryland issued an amended sentencing judgment which reduced the pretrial sentence credit Smith was originally awarded. As a result, Petitioner maintains that he is improperly being required to spend an additional 464 days in prison.
Respondent counters that since the time spent by Petitioner in state custody was credited towards service of his state sentence, Smith is not entitled to double credit for that period of time.
Title 28, United States Code § 2241, vests the federal district courts with jurisdiction to grant a writ of habeas corpus to persons in custody in violation of the Constitution, laws, or treaties of the United States. 28 U.S.C. § 2241(c)(3). Habeas corpus review under § 2241 “allows a federal prisoner to challenge the ‘execution' of his sentence.” Woodall v. Federal Bureau of Prisons, 432 F.3d 235, 241 (3d Cir. 2005). Review is available “where the deprivation of rights is such that it necessarily impacts the fact or length of detention.” Leamer v. Fauver, 288 F.3d 532, 540 (3d Cir. 2002).
Federal habeas relief is available only “where the deprivation of rights is such that it necessarily impacts the fact or length of detention.” Leamer v. Fauver, 288 F.3d 532, 540 (3d Cir. 2002). Since Petitioner is alleging that the BOP failed to properly calculate his federal sentence, this matter is properly asserted under § 2241. It is also noted that there is no contention by Respondent that Petitioner has not exhausted his administrative remedies or that his action was untimely filed.
According to undisputed exhibits provided by both Petitioner (Doc. 1-1) and the Respondent, on March 2, 2007, Petitioner was granted supervised release from service of a 36 month term imposed by the District of Maryland following his conviction for being a felon in possession of a firearm. Smith's supervised release was revoked three separate times over the next few years. On August 3, 2009, Smith was released from federal custody and placed on supervised release for a two year period.
On February 17, 2010, Petitioner was arrested by state authorities in Montgomery County, Maryland on multiple charges including armed robbery, kidnaping, and assault. The charges were eventually nolle prossed in favor of federal prosecution.