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Complainant is Cantor Fitzgerald Securities of New York, United States of America (US), represented by Kilpatrick Stockton LLP, United States.
Respondent is DNS Admin of Torrance, California, United States of America.
The disputed domain name <cantorasia.com> (the “Domain Name”) is registered with eNom.
The Complaint was filed with the WIPO Arbitration and Mediation Center (the “Center”) on May 20, 2010. On May 20, 2010, the Center transmitted by email to eNom a request for registrar verification in connection with the disputed domain name. On May 20, 2010, eNom transmitted by email to the Center its verification response confirming that Respondent is listed as the registrant and providing the contact details. The Center verified that the Complaint satisfied the formal requirements of the Uniform Domain Name Dispute Resolution Policy (the “Policy” or “UDRP”), the Rules for Uniform Domain Name Dispute Resolution Policy (the “Rules”), and the WIPO Supplemental Rules for Uniform Domain Name Dispute Resolution Policy (the “Supplemental Rules”).
In accordance with the Rules, paragraphs 2(a) and 4(a), the Center formally notified Respondent of the Complaint, and the proceedings commenced on May 31, 2010. In accordance with the Rules, paragraph 5(a), the due date for Response was June 20, 2010. Respondent did not submit any response. Accordingly, the Center notified Respondent's default on June 26, 2010.
The Center appointed Christopher S. Gibson as the sole panelist in this matter on June 29, 2010. The Panel finds that it was properly constituted. The Panel has submitted the Statement of Acceptance and Declaration of Impartiality and Independence, as required by the Center to ensure compliance with the Rules, paragraph 7.
Complainant is a provider of global financial and technology services, with approximately 1,400 employees and offices in more than 30 locations around the world.
Complainant owns numerous United States federal trademark registrations, including three on the Principal Register of the United States Patent and Trademark Office (USPTO) for CANTOR, used alone, for financial or brokerage services: US Reg. Nos. 2,682,690; 2,895,713; and 3,170,687 (stylized). Complainant also owns United States registrations for composite marks that incorporate CANTOR including: CANTOR FITZGERALD, CANTOR DIRECT, CANTOR MARKET DATA, CANTOR GAMING, CANTOR GAMING & DESIGN, CANTOR FITZGERALD MORNING NEWS, CANTOR FITZGERALD EBS, and CANTOR G3 VISION.
Complainant also owns registrations for its CANTOR marks in the Asia-Pacific Region, including People's Republic of China and Japan. The registrations in China include CANTOR (Reg. No. 6147037) in Class 38; CANTOR (Reg. No. 6147039) in Class 9; CANTOR FITZGERALD (Reg. No. 6147022) in Class 38; and CANTOR FITZGERALD (Reg. No. 6147040) in Class 9. The registrations in Japan include CANTOR (Reg. No. 5243277) in Classes 9 and 38; CANTOR (Reg. No. 5236016) in Classes 36 and 42; CANTOR FITZGERALD (Reg. No. 4785136) in Classes 9 and 36; CANTOR FITS (Reg. No. 4899619) in Classes 9, 36, 38, and 42; and CANTOR ONLINE (Reg. No. 4554356) in Classes 36 and 38. Complainant owns numerous trademark registrations for CANTOR marks in the European Union and other countries throughout the world, including Canada, Argentina, Brazil, Norway, Switzerland, Australia, and New Zealand.
Complainant and its affiliates own and use a number of Internet domain names for web sites that include the mark CANTOR, including, <cantor.com> and <cantorasiamorningnews.com>, as well as country-specific web sites such as <cantor.co.uk> (redirecting web traffic to “www.cantor.com”) and <cantorindex.co.uk>. Complainant uses the domain name <cantorasiamorningnews.com> in connection with financial services. The web site located at <Cantorasiamorningnews.com> offers a centralized collection of current financial news from multiple sources such as, by way of example, the Wall Street Journal, Bloomberg, and BBC News.
Complainant and its affiliates have promoted and offered financial products and services in Asia under the CANTOR marks. Complainant's subsidiaries or affiliates in Asia include Cantor Fitzgerald (SAR of China, Hong Kong) Capital Markets Limited and Cantor Fitzgerald (Singapore) Capital Markets Limited in Asia. In 2008, Cantor Fitzgerald (Hong Kong) established a Thailand Representative Office in Bangkok.
The Domain Name was registered by Respondent on October 21, 2009. The web site to which the Domain Name resolves includes content in Chinese in connection with advertising and the marketing of products and services unrelated to Complainant and its financial products and services.
Complainant contends that, as a result of its substantial marketing, advertising, and promotional efforts and activities in connection with its CANTOR marks, they have obtained significant fame in the financial realm, and the marks have acquired a high degree of public recognition and distinctiveness as symbols of the source of quality services offered by Complainant, and embody valuable reputation and goodwill belonging exclusively to Complainant.
Complainant maintains that Respondent's registration of the Domain Name, well after Complainant used, widely promoted, and registered its CANTOR marks, can hardly be attributed to a coincidence. While Respondent uses the Domain Name in connection with the advertising or marketing of products and services unrelated to Complainant, Complainant urges that Respondent has used the Domain Name in an attempt to direct Internet traffic to its web site for its own profit, and to free ride on the goodwill associated with Complainant and its products and services. Such parasitic registration and use of Complainant's name and marks are unmistakable evidence of the fact that Respondent can have no rights or legitimate interest in the Domain Name and has registered and used the Domain Name in bad faith.
Complainant states that the Domain Name is nearly identical and is confusingly similar to Complainant's well known CANTOR marks, as it incorporates the mark CANTOR exactly and in its entirety. The mere addition of the word “asia” is of no import and fails to alleviate confusion, particularly in light of Complainant's ongoing activities in Asia. The Domain Name therefore appears to be a localized sub-set of the CANTOR mark and is likely to be confused with it. Indeed, given that Cantor's affiliated business entities have offices in Asia and have conducted business there for years, the addition of “Asia” to Complainant's CANTOR name and mark adds to the confusing similarity between the Domain Name and Complainant's marks—suggesting to web users that the Domain Name is related to Complainant and its affiliates operating in Asia.
Furthermore, Complainant contends that by adopting the Domain Name incorporating the identical CANTOR mark and simply adding a geographic designation, Respondent is attempting to capitalize on Complainant's marks and name. Respondent is clearly hoping to mislead consumers into believing that the Domain Name is affiliated with Complainant to attract Internet users to Respondent's web site for Respondent's commercial gain. Given Complainant's extensive use of the CANTOR name in combination with other terms, the renown of the CANTOR marks, the fact that Complainant's affiliated entities operate in multiple cities in Asia, and the fact that Complainant owns and uses the domain name <cantorasiamorningnews.com>, consumers who see the Domain Name will reasonably believe that it is related to Complainant. Consumers who search the Internet for Complainant or its financial services by using Complainant's CANTOR name and mark may be directed to the Domain Name, thereby creating a likelihood of confusion. For all these reasons, Complainant maintains that the Domain Name is identical or confusingly similar to its CANTOR marks.
With regard to any rights or legitimate interests of Respondent, Complainant urges that because its adoption and extensive use of its CANTOR marks predate the first use of the Domain Name, the burden is on Respondent to establish rights or legitimate interest in the Domain Name. However, Complainant's marks are well-known and widely recognized, so there can be no rights or legitimate use by Respondent. Instead, based on the widespread recognition of Complainant's marks and Complainant's business presence in Asia for years, Respondent's registration and use of the Domain Name shows opportunistic bad faith.
In any event, Complainant states that Respondent cannot demonstrate or establish rights or legitimate interests in the Domain Name. There is no relationship between Complainant and Respondent giving rise to any license, permission, or other right by which Respondent could own or use any domain name incorporating Complainant's CANTOR marks. Respondent has never been given any permission to register or use the Domain Name. Complainant does not sponsor or endorse Respondent's activities in any respect and has not provided its consent to Respondent's use and exploitation of the CANTOR marks in the Domain Name and on its affiliated web site. Moreover, Complainant states, upon information and belief, that the Domain Name is not a nickname of Respondent or in any other way identified with or related to a legitimate interest of Respondent.
Complainant maintains that Respondent is neither using the Domain Name in connection with a bona fide offering of goods or services nor making a legitimate noncommercial or fair use of the Domain Name. Because Complainant's CANTOR marks are well-known and Respondent has no rights in them, the only reason why Respondent could have wanted to register and use a domain name incorporating the CANTOR name and mark was that Respondent knew of the CANTOR marks and wanted to use CANTOR in the Domain Name in order to profit from the traffic generated by the notoriety of Complainant and its name and marks, and not for any legitimate noncommercial or fair use purpose. Respondent appears to have blatantly attempted to mislead consumers by using Complainant's name and mark in the Domain Name so as to capitalize on initial interest confusion created by the similarity of the Domain Name with Complainant and its services. Respondent is using the Domain Name to drive Internet traffic to its web site in order to offer products and services completely unrelated to Complainant. Such use of the Domain Name based on Complainant's marks to promote services unrelated to Complainant and to trade upon the goodwill associated with Complainant and its marks is not a legitimate interest or use.
Finally, Complainant alleges that Respondent has registered and is using the Domain Name in bad faith for commercial gain and to benefit from the goodwill associated with Complainant. Respondent's bad faith registration of the Domain Name is established by the fact that the Domain Name completely incorporates Complainant's CANTOR mark, was acquired long after Complainant's marks became well-known in the financial world, and is unrelated to Respondent's trade name, product names, or any business interest connected to Respondent. Respondent's bad faith is also established by the likelihood that Internet users will mistakenly believe that the Domain Name and web site are connected with Complainant and its offices or affiliates in Asia and Complainant's products and services offered in or focusing on Asia.
In sum, the fact that Respondent has targeted Complainant is obvious from the notoriety of Complainant's CANTOR marks and from Respondent's own bad faith conduct. Respondent could only have registered a domain name so confusingly similar to Complainant's marks to capitalize on the valuable goodwill associated with those marks. Based on all of the above, Complainant argues that Respondent's sole interest in the Domain Name is to profit unlawfully from it.
The Respondent did not reply to Complainant's contentions.
Paragraph 4(a)(i) of the Policy is satisfied when a complainant is able to prove two necessary elements: first, that the complainant has rights in a trademark or service mark, and second, that the domain name in dispute is identical or confusingly similar to the trademark or service mark on which the complainant relies.
Here, the Panel finds that Complainant's has established rights in trademarks registered in the United States, China and Japan including CANTOR, CANTOR FITZGERALD, CANTOR FITS, CANTOR ONLINE, CANTOR DIRECT, CANTOR MARKET DATA, CANTOR GAMING, CANTOR FITZGERALD MORNING NEWS, CANTOR FITZGERALD EBS, and others. Complainant therefore has established trademark rights, in particular, in jurisdictions that are relevant given the jurisdiction where Respondent is located (i.e., the United States, according to registration records), as well as the jurisdiction at which the Domain Name may be targeted (i.e.,, China, given that the content on the web site is in Chinese).
The Panel also finds that the Domain Name is confusingly similar to Complainant's CANTOR marks. The Domain Name differs from the CANTOR mark only in that a descriptive geographic term has been added, along with the generic top-level domain “.com”. Given Complainant's goodwill and reputation, established not only in the United States but also in Asia where Complainant's affiliated business entities have conducted business for years, the addition of “asia” to Complainant's CANTOR name and mark does not diminish, but rather adds to the confusing similarity between the Domain Name and Complainant's marks. See Avon Products, Inc. v. Jongsoo Lee, WIPO Case No. D2001-0272 (“The domain name adopts that famous mark with the addition of the geographic designation ‘korea.' The domain name therefore appears to be a localised [sic] sub-set of the famous mark and is likely to be confused with it”); Telemundo Network Group LLC v. LaPorte Holdings, WIPO Case No. D2005-0966 (finding that addition of geographically descriptive term “Puerto Rico” added to confusing similarity where Complainant operated in Puerto Rico).
Accordingly, the Panel finds that Respondent's Domain Name is confusingly similar to Complainant's CANTOR marks, and therefore the condition of Paragraph 4(a)(i) of the Policy is fulfilled.
The Panel observes that Respondent is not affiliated or related to Complainant in any way, nor does it appear that Respondent is generally known by the Domain Name or authorized by Complainant to use the CANTOR trademark. See Telstra Corporation Ltd. v. Nuclear Marshmallows, WIPO Case No. D2000-0003 (respondent had no rights or legitimate interests to use domain name because respondent was not licensed or otherwise permitted to use complainant's trademark). As discussed above, the CANTOR marks are well-known and widely used by Complainant in the financial services sector, and Complainant's rights in its marks predate Respondent's registration of the Domain Name. The Panel finds that the Domain Name is so confusingly similar to Complainant's distinctive CANTOR mark, that Respondent could not reasonably pretend it was intending to develop a legitimate activity. Instead, the use of the Domain Name appears to be taking advantage of the goodwill and reputation in Complainant's marks and does not represent a use in connection with a bona fide offering of goods and services, or use for any legitimate noncommercial or fair use purpose. See Pfizer Inc v. Juan Gonzales, WIPO Case No. D2004-0589; Chanel Inc. v. Cologne Zone, WIPO Case No. D2000-1809; National Collegiate Athletic Association and March Madness Athletic Association, L.L.C. v. Mark Halpern and Front & Center Entertainment, WIPO Case No. D2000-0700.
In the light of the above analysis, Complainant has established prima facie evidence that none of the circumstances establishing rights or legitimate interests apply. As stressed by many UDRP decisions, in such a case the burden of proof shifts to Respondent to rebut the evidence. See Carolina Herrera, Ltd. v. Alberto Rincon Garcia, WIPO Case No. D2002-0806; International Hospitality Management – IHM S.p.A. v. Enrico Callegari Ecostudio, WIPO Case No. D2002-0683; see also WIPO Overview of WIPO Panel Views on Selected UDRP Questions, paragraph 2.1. Respondent, however, has provided no response and thus no evidence to carry its burden. In this respect, some UDRP panels have considered that a failure by a respondent to submit a response is itself at least an implied acknowledgement by the respondent that it has no rights or legitimate interests in a disputed domain name. See e.g., Pavillion Agency, Inc., Cliff Greenhouse and Keith Greenhouse v. Greenhouse Agency Ltd., and Glenn Greenhouse, WIPO Case No. D2000-1221 (finding that respondents' failure to respond can be construed as an admission that they have no legitimate interest in the domain names). In any event, the Panel has reviewed the record in this case and finds nothing therein that would suggest that Respondent has any rights or legitimate interests in the Domain Name. Accordingly, because Respondent failed to submit an answer to the Complaint, and given that the allegations of the Complaint prima facie do not raise any substantial doubts, the Panelist accepts as true the allegations set forth in the Complaint and holds that Respondent has no rights or legitimate interests in respect of the Domain Name.
Accordingly, the Panel finds that Complainant has satisfied the requirements of paragraph 4(a)(ii) of the Policy.
“In the present case, the Panel finds that, since Complainant's trademark is well-known throughout the world, it is very unlikely, if not nearly impossible, that, when Respondent registered the Domain Name, it was not aware that it was infringing on Complainant's trademark rights. The Panel therefore concludes that the Respondent has registered the Domain Name in bad faith.” Nike, Inc. v. B. B. de Boer, WIPO Case No. D2000-1397.
The same analysis applies here. See also Kabushiki Kaisha Toshiba d/b/a Toshiba Corporation v. Liu Xingdong, WIPO Case No. D2003-0408; Ansell Healthcare Products Inc. v. Australian Therapeutics Supplies Pty, Ltd., WIPO Case No. D2001-0110; The Body Shop International plc v. A-Team/ Lasse Nygaard, WIPO Case No. DAS2003-0001; Bartercard Ltd & Bartercard International Pty Ltd . v. Ashton-Hall Computer Services, WIPO Case No. D2000-0177.
Moreover, it appears that Respondent has been using the Domain Name to drive Internet traffic to its web site in order to advertise and/or offer products and services unrelated to Complainant. In this way, Respondent is capitalizing on the initial interest confusion created by the similarity of the Domain Name with Complainant's name and marks. Respondent's bad faith is established by the likelihood that Internet users will mistakenly believe that the Domain Name and the site to which it resolves are connected with Complainant and its offices or affiliates in Asia and its products and services offered in Asia.
This is evidence of Respondent's bad faith registration and use of the Domain Name under paragraph 4(a)(iii) of the Policy for which, due to the lack of any response from Respondent, there is no attempt at any rebuttal.
For all the foregoing reasons, in accordance with paragraphs 4(i) of the Policy and 15 of the Rules, the Panel orders that the Domain Name <cantorasia.com> be transferred to Complainant.


posted March 26, 2013 by Devlin Hartline.
Today’s guest post comes from Copyhype contributor Devlin Hartline. Cross-posted on the Law Theories blog.
Love them or loathe them, notorious copyright enforcer Righthaven presents an interesting question of law: Does Righthaven, the assignee of a copyright plus the accrued causes of action, have standing to sue for past infringements if it grants back to its assignor, Stephens Media, an exclusive license to exploit the copyright? The district courts that have considered this question have all found that such an arrangement does not leave Righthaven with an ownership interest sufficient to have standing. I think they’re wrong.
Last month, Righthaven finally had its day before the Ninth Circuit when it participated in oral arguments in two of its appeals (audio available here). 1The Ninth Circuit joined two of Righthaven’s appeals for purposes of oral arguments: Righthaven v. Hoehn and Righthaven v. DiBiase. These appeals almost didn’t happen. Back in late 2011, a district court granted a motion to appoint a receiver made by one of Righthaven’s defendants, Wayne Hoehn. The court ordered Righthaven’s intellectual and tangible property to be assigned to the receiver so that it could be sold to partially satisfy Hoehn’s judgment against Righthaven. Despite the fact that the receivership was explicitly for this limited purpose, 2The motion that was granted provides the following summary: “Defendant Wayne Hoehn (‘Hoehn’), through his attorneys, brings this motion seeking this Court to order the appointment of a receiver to which Plaintiff Righthaven LLC (‘Righthaven’) shall assign all of its intellectual property and other intangible property, which the receiver shall auction in order to partially satisfy Hoehn’s judgment and writ of execution entered against Righthaven. (Docs. # 44, 59)”; Hoehn also sought that “all objects, items, or other property belonging to Righthaven should be delivered to the Receiver for auction,” though it was “presumed that Righthaven owns little tangible property of material value.” the receiver had more grandiose plans. When she found out that Righthaven CEO Steven Gibson was planning to appeal Hoehn’s victory, the receiver reported to the district court that she had taken over the company, fired Gibson, and fired the counsel Gibson had lined up to prosecute the appeal.
Having won that small victory in the district court, Righthaven’s fate is now being decided by a panel of the Ninth Circuit. The legal question presented on the standing issue is actually a rather straightforward and simple application of the law. Yet, I believe that every court that has so far addressed the issue has approached it in the wrong way. I think the blame lies mainly with Righthaven’s poor briefing of the somewhat metaphysical doctrine of copyright ownership, but I think the judiciary’s unfamiliarity with the issues has played a role as well. In this article, I’ll explain why I think the Righthaven standing issue is simple and why I think Righthaven has standing to sue for past infringements.
In the Ninth Circuit, where the Righthaven appeals are being prosecuted, the Silvers v. Sony case controls the standing analysis. In the district court, the plaintiff, Nancey Silvers, claimed that the defendant, Sony Pictures, had infringed the copyright in a television movie she had written on a work-for-hire basis with the production company Frank & Bob Films. 6See Silvers v. Sony Pictures Entm’t, Inc., Order Granting in Part and Denying in Part Defendant’s Motion to Dismiss, No. 00-cv-6386, 2001 WL 36127624 (C.D. Cal. Jan. 25, 2001). Since Silvers had no ownership interest in the copyright by way of her work-for-hire contract, 7See 17 U.S.C.A. 201(b) (West 2013) (“In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright.”). Frank & Bob Films assigned to her the accrued causes of action so that she could pursue the alleged infringement on her own. Sony argued that Silvers was not a “legal or beneficial owner” under the Act and thus had no standing to sue. 8See 17 U.S.C.A. § 501(b) (West 2013) (“The legal or beneficial owner of an exclusive right under a copyright is entitled . . . to institute an action for any infringement of that particular right committed while he or she is the owner of it.”).
Silvers, on the other hand, cited the copyright treatise Nimmer on Copyright which at the time provided that “the assignee of an accrued infringement cause of action has standing to sue without the need to join his assignor, even if the latter retains ownership of all other rights under the copyright.” 9Silvers, 2001 WL 36127624 at *1 (quoting Nimmer on Copyright § 12.02[B]) (internal quotations omitted). The district court, citing Nimmer, the text of the Act, and public policy, sided with Silvers, holding that she had standing to sue even though owning only the accrued causes of action: “Where the cause of action has already accrued, though, the claim is akin to a vested right, and the Court sees no reason why a copyright holder, like any other property owner, would not have the ability to assign that right.” 10Id. at *2.
Nothing in the statute prohibits the legal or beneficial owner of the exclusive right under copyright from assigning an accrued cause of action for infringement of that right. Such an assignment is like assignment of any other chose in action under contract theory. Nothing in the language of the statute prohibits or restricts an assignee of an accrued infringement cause of action from bringing a copyright infringement action. 13Id. at 1208.
Unhappy with its defeat before the district court and the appellate panel, Sony petitioned for and was granted a rehearing en banc. 14See Silvers v. Sony Pictures Entm’t, Inc., 370 F.3d 1252 (9th Cir. 2004). There, the en banc majority reversed the district court, holding instead that an assignee of accrued causes of action who has no other legal of beneficial ownership in the copyright has no standing to sue for past infringements. 15See Silvers v. Sony Pictures Entm’t, Inc., 402 F.3d 881 (9th Cir. 2005).
The legal or beneficial owner of an exclusive right under a copyright is entitled . . . to institute an action for any infringement of that particular right committed while he or she is the owner of it. 1617 U.S.C.A. § 501(b) (West 2013).
The majority reasoned that, under the plain language of the statute, one must be a “legal or beneficial owner” of the exclusive right at issue in order to have standing to sue. The court deduced that since an accrued cause of action is not one of the listed rights in Section 106, its holder is not a “legal or beneficial owner” of the copyright unless she also has some other ownership interest in it. The majority went on to examine the legislative history of the Act, patent law, and opinions from other circuits to conclude that “[t]he bare assignment of an accrued cause of action is impermissible under 17 U.S.C. § 501(b). Because that is all Frank & Bob Films conveyed to Silvers, Silvers was not entitled to institute and may not maintain this action against Sony” for the alleged infringement. 17Silvers, 402 F.3d at 890.
It should be noted that the majority did not see a problem with assigning an accrued cause of action, finding the practice to be consistent with the Copyright Act and its constitutional purpose. Moreover, the majority provided the rationale for allowing such transfers: “When one acquires a copyright that has been infringed, one is acquiring a copyright whose value has been impaired. Consequently, to receive maximum value for the impaired copyright, one must also convey the right to recover the value of the impairment by instituting a copyright action.” 18Id. at 890 n.1 Thus, it was not the assignment of the accrued causes of action that posed a problem for the majority. The problem was, in the majority’s opinion, that such an assignee was not also a “legal or beneficial owner” entitled to institute an action under Section 501(b) of the Act.
Personally, I think the majority’s analysis is rather poor—while purporting to prevent a circuit split, 19See id. (“[T]he creation of a circuit split would be particularly troublesome in the realm of copyright.”). the majority in fact only caused one. 20See Prather v. Neva Paperbacks, Inc., 410 F.2d 698 (5th Cir. 1969); Eden Toys, Inc. v. Florelee Undergarment Co., Inc., 697 F.2d 27 (2d Cir. 1982); ABKCO Music, Inc. v. Harrisongs Music, Ltd., 944 F.2d 971 (2d Cir. 1991). I’ll sketch out some of the basic problems with the decision here, but the topic is complicated and rightfully deserving of its own post. The majority was correct to note that an accrued cause of action is assignable. Such was the case under the 1909 Act as it is now under the 1976 Act. This comports with the common law view generally that an accrued cause of action for a property tort is itself a property interest that is freely assignable. 21See, e.g., City of Cincinnati v. Hafer, 49 Ohio St. 60, 66 (1892) (“Mere personal torts die with the party, and are not assignable; but where the action is brought for damage to the estate, and not for injury to the person, personal feelings, or character, and the right of action survives to the personal representative, it may be assigned so as to pass an interest to the assignee.”); Comegys v. Vasse, 26 U.S. 193, 213 (1828) (“In general, it may be affirmed, that mere personal torts, which die with the party, and do not survive to his personal representative, are not capable of passing by assignment; and that vested rights ad rem and in re, possibilities coupled with an interest, and claims growing out of, and adhering to property, may pass by assignment.”); 6A C.J.S. Assignments § 43 (“A chose in action or claim, whether arising in tort or contract, is generally assignable, as a chose in action is personal property.”). The twist added to this general rule by the majority is that it read Section 501(b) as mandating that the accrued causes of action must be accompanied by an ownership interest in the copyright, else the holder is not a “legal or beneficial owner” with statutory standing to sue under the Copyright Act.
The majority misreads Section 501(b). On its face, the statute appears to say that an accrued cause of action is not assignable since it authorizes the “legal or beneficial owner . . . to institute an action for any infringement of that particular right committed while he or she is the owner of it.” But, as the majority itself demonstrates, courts do not interpret it this way. Instead, the statute is read to mean that a cause of action accrues to whomever is the “legal or beneficial owner” at the time the cause of action accrues. Once the cause of action accrues to the “legal or beneficial owner,” it becomes a vested property interest that can be assigned to another, as the majority rightly concedes. What the majority misses is that such an assignee has standing to sue because he is a “legal or beneficial owner” of the underlying exclusive right, even if he is conveyed no other ownership interest in it.
There’s two different ways to look at this. The first is to realize that an assignee stands in the shoes of his assignor. 22See, e.g., 6 Am. Jur. 2d Assignments § 134 (“Although an assignee acquires the rights of the assignor, including the right to enforce the assigned obligation, he or she does not sue in his or her own right, but stands in the shoes of the assignor.”); RTC Commercial Loan Trust 1995-NP1A v. Winthrop Mgmt., 923 F.Supp. 83, 88 (E.D. Va. 1996) (“[I]t is a fundamental maxim of common law that the assignee stands in the shoes of the assignor . . . .”). The courts allow the assignee to take on his assignor’s position, so that if the assignor was the “legal or beneficial owner” at the time the cause of action accrued, the assignee steps into his shoes and can claim to have been such an owner as well. The second way to look at this is to recognize that an owner of an accrued cause of action is himself a “legal or beneficial owner” in his own right since an accrued cause of action is an in rem property interest in the underlying exclusive right. Not only can he claim his assignor’s ownership status as it relates back to when the cause of action accrued, he can claim his own ownership status for the purpose of standing.
This is demonstrated in the case law. The general rule is that, unless a copyright assignment expressly includes the accrued causes of action, an assignee of a copyright—even one who obtains otherwise full legal and equitable ownership—is not also transferred the accrued causes of action and does not have standing to sue for past infringements. 23See, e.g., ABKCO Music, Inc. v. Harrisongs Music, Ltd., 944 F.2d 971, 980 (2d Cir. 1991) (“Thus, a copyright owner can assign its copyright but, if the accrued causes of action are not expressly included in the assignment, the assignee will not be able to prosecute them.”); Giddings v. Vision House Prod., Inc., 584 F.Supp.2d 1222, 1229 (D. Ariz. 2008) (“Copyright assignments do not include accrued causes of action unless they are expressly included in the assignment.”); 3-12 Nimmer on Copyright § 12.02 (“[O]nly the grantor, not the grantee, has standing to sue for pre-grant infringement, even if the action is filed after the grant has been executed.”). Instead, the assignor, who no longer holds any other ownership interest in the copyright, is alone permitted to sue for past infringements. 24See, e.g., Skor-Mor Products, Inc. v. Sears, Roebuck & Co., 1982 WL 1264 (S.D.N.Y. May 12, 1982) (“Similarly, it is the assignor, not the assignee, who has standing to sue for infringing acts which occurred prior to the assignment of copyright.”); ABKCO Music, Inc. v. Harrisongs Music, Ltd., 944 F.2d 971, 980 (2d Cir. 1991) (“Rather, the assignee is only entitled to bring actions for infringements that were committed while it was the copyright owner and the assignor retains the right to bring actions accruing during its ownership of the right, even if the actions are brought subsequent to the assignment.”); M.J. Golden & Co. v. Pittsburgh Brewing Co., 137 F.Supp. 455, 457 (D. Pa. 1956) (“[E]ven though there has been a sale of the copyright this does not prevent the owner at the time of the alleged infringement from suing for previous damages it alleges to have sustained while it was the owner.”). Under the majority’s logic, this should not be possible since it reasons that a party who holds only the accrued causes of action and no other ownership interest is not a “legal or beneficial owner” under Section 501(b). The majority conspicuously fails to address this point.
Nor does the majority address another wrinkle in the doctrine which provides that a copyright owner who otherwise parts with legal and equitable ownership of an exclusive right, while retaining the right to receive royalties from its future exploitation, has standing to sue for later occurring infringements of that right. 25See, e.g., Cortner v. Israel, 732 F.2d 267, 271 (2d Cir. 1984) (“When a composer assigns copyright title to a publisher in exchange for the payment of royalties, an equitable trust relationship is established between the two parties which gives the composer standing to sue for infringement of that copyright. Otherwise the beneficial owner’s interest in the copyright could be diluted or lessened by a wrongdoer’s infringement.”) (internal citations omitted). Under the majority’s reasoning, since the right to receive royalties is not an enumerated right under Section 106, such a rightholder would not have standing to sue. But Congress clearly intended otherwise by explicitly providing in the legislative history of the Act that such a party would be a “beneficial owner” of the underlying exclusive right with standing to sue for its infringement. 26See H.R. Rep. No. 1476, 159 (“A ‘beneficial owner’ for this purpose would include, for example, an author who had parted with legal title to the copyright in exchange for percentage royalties based on sales or license fees.”). The simple explanation for this is that, like the holder of the accrued causes of action, the holder of the right to receive royalties has an in rem interest in the exclusive right that makes him the “legal or beneficial owner” of it.
While the majority was perhaps correct to note that Section 501(b) limits standing to sue to only a “legal or beneficial owner” of the underlying exclusive right, it somehow missed the jurisprudential gloss that such ownership may relate back in time to that of his assignor’s ownership, such as with an assignee of an accrued cause of action, or may include one who otherwise has no present legal or beneficial ownership interest, such as with an assignor of all legal and beneficial ownership who retains the accrued causes of action or retains the right to receive royalties. Thus, the question is not, as the majority perceived it, whether he currently controls the exploitation of the exclusive right. The question is whether he holds an in rem ownership interest in the exclusive right, whether via the “shoes” of his assignor or in his own right.
The majority’s reasoning makes other critical mistakes, such as misinterpreting the legislative history and misreading the case law from other circuits. But for better or for worse, Silvers is the law in the Ninth Circuit and a holder of an accrued cause of action has no standing to sue unless he also holds some other legal or beneficial ownership in the underlying exclusive right.
Stephens Media hereby transfers, vests and assigns the work depicted in Exhibit A, attached hereto and incorporated herein by this reference (the “Work”), to Righthaven, subject to Stephens Media’s rights of reversion, all copyrights requisite to have Righthaven recognized as the copyright owner of the Work for purposes of Righthaven being able to claim ownership as well as the right to pursue past, present and future infringements of the copyright in and to the Work.
By itself, the Copyright Assignment conveys ownership of the underlying exclusive rights and the accrued causes of action to Righthaven, which under the majority opinion in Silvers would grant Righthaven standing to sue for past infringements. In fact, district courts that looked at only the Copyright Assignment had no trouble finding that it granted Righthaven standing to sue. 27See, e.g., Righthaven LLC v. Dr. Shezad Malik Law Firm P.C., No. 10-cv-0636, 2010 WL 3522372, *2 (D. Nev. Sept. 2, 2010) (Hunt, C.J.) (“Furthermore, the assignment in question (which Plaintiff has attached to its opposition) clearly assigns both the exclusive copyright ownership, together with accrued causes of action, i.e., infringements past, present and future. While Courts have denied standing to bring an action on an accrued claim where just the copyright is owned or just the cause of action has been assigned, where there is an assignment of both the copyright, and any accrued causes of action, the courts have held that the assignee of both can bring an action even for infringing activities which occurred before the assignment. Thus, in this instance, Plaintiff has standing to sue, even for an infringement which preceded the assignment, because that right was specifically assigned with the exclusive assignment of the copyright itself.”) (internal citations omitted). Thus, it is with the addition of the SAA to the Copyright Assignment that the Righthaven standing issue arises.
Despite any such Copyright Assignment, Stephens Media shall retain (and is hereby granted by Righthaven) an exclusive license to Exploit the Stephens Media Assigned Copyrights for any lawful purpose whatsoever and Righthaven shall have no right or license to Exploit or participate in the receipt of royalties from the Exploitation of the Stephens Media Assigned Copyrights other than the right to proceeds in association with a Recovery.
Other sections of the SAA have received notice too, such as Section 5 which provides that Righthaven is to split recoveries minus costs with Stephens Media and Section 8 which provides Stephens Media with a reversionary right in the copyrights assigned to Righthaven, but Section 7.2 is the one that’s caused the most fuss.
The first serious blow to Righthaven came in the Democratic Underground case, wherein Chief Judge Roger Hunt noted that the SAA was “highly relevant to Righthaven’s standing in this and a multitude of other pending Righthaven cases.” 28Righthaven LLC v. Democratic Underground, LLC, 791 F.Supp.2d 968, 971 (D. Nev. 2011) (Hunt, C.J.). In his opinion, the SAA “expressly denies Righthaven any rights . . . other than the bare right to bring and profit from copyright infringement actions.” 29Id. at 972. He reasoned that under Section 7.2 of the SAA, Righthaven received no other ownership interest in the underlying exclusive rights: “The plain and simple effect of this section was to prevent Righthaven from obtaining, having, or otherwise exercising any right other than the mere right to sue as Stephens Media retained all other rights.” 30Id. (italics in original).
As to Righthaven’s argument that the SAA did not alter its standing under the clear import of the Copyright Agreement, Chief Judge Hunt quipped: “This conclusion is flagrantly false—to the point that the claim is disingenuous, if not outright deceitful. The entirety of the SAA was designed to prevent Righthaven from becoming an owner of any exclusive right in the copyright . . . .” 31Id. at 973 (italics in original; internal quotations omitted). He then held that under the majority opinion in Silvers, Righthaven, as the holder of only the accrued causes of action, did not have standing to sue: “In reality, Righthaven actually left the transaction with nothing more than a fabrication since a copyright owner cannot assign a bare right to sue after Silvers.” 32Id.
Six days after Chief Judge Hunt issued his seminal opinion in Democratic Underground, the district court in the Hoehn case followed suit, finding that the “carveouts” in the SAA “deprive Righthaven of any of the rights normally associated with ownership of an exclusive right necessary to bring suit for copyright infringement and leave Righthaven no rights except to pursue infringement actions . . . .” 33Righthaven, LLC v. Hoehn, 792 F.Supp.2d 1138, 1146 (D. Nev. 2011) (Pro, J.). The day after that, Chief Judge Hunt issued an opinion in the DiBiase case, finding again that the SAA left Righthaven without “the exclusive rights necessary to maintain standing in a copyright infringement action,” and incorporating his opinion in Democratic Underground by reference. 34Righthaven, LLC v. DiBiase, No. 10-cv-01343, 2011 WL 2473531, *1 (D. Nev. June 22, 2011) (Hunt, C.J.). It is these opinions in the Hoehn and DiBiase cases that form the basis of Righthaven’s appeals before the Ninth Circuit.
Much like the majority in Silvers failed to recognize that the holder of only the accrued causes of action is a “legal or beneficial owner” of the underlying exclusive right, so too have the district courts that have analyzed the Righthaven standing issue failed to recognize that Righthaven has an ownership interest in the underlying exclusive rights in addition to the accrued causes of action. As discussed above, the Copyright Assignment grants to Righthaven ownership of the underlying exclusive rights plus ownership of the accrued causes of action. The SAA supplements the Copyright Assignment, and it provides that “Stephens Media shall retain (and is hereby granted by Righthaven) an exclusive license” to exploit the exclusive rights and to keep the royalties to itself. The mistake made by the district courts is interpreting this simultaneous retention by (or license back to) Stephens Media as divesting Righthaven of whatever ownership interests in the underlying exclusive rights that the Copyright Assignment may have granted it.
The Copyright Assignment and SAA instead should be read as dismembering the ownership such that Righthaven became the legal owner and Stephens Media remained the beneficial owner of the underlying exclusive rights. The key to understanding the Righthaven standing issue is to recognize that legal ownership of an exclusive right can be held by one in trust for another who is a beneficial owner. In such a trust relationship, the legal owner holds legal title while the beneficial owner holds equitable title to the underlying exclusive rights. 35See, e.g., Black v. Henry G. Allen Co., 42 F. 618, 621 (C.C.S.D.N.Y. 1890) ([T]here is no restriction upon the power of the proprietor to assign or transfer, in equity, an exclusive right to use the copyrighted book in a particular manner or for particular purposes upon such terms and conditions as may be agreed upon. In such case the legal title remains in the proprietor; and a beneficial interest, to the extent which is agreed upon, vests in the other party, who has acquired an equitable right in the copyright, and who will be properly styled an assignee of an equitable interest.”) (internal quotations omitted); Bisel v. Ladner, 1 F.2d 436 (3d Cir. 1924) (“The legal title to a copyright vests in the person in whose name the copyright is taken out. It may, however, be held by him in trust for the true owner . . . .”); Manning v. Miller Music Corp., 174 F.Supp. 192, 195 (S.D.N.Y. 1959) (“[T]he courts recognize that legal title to a copyright may be in one person and equitable title in another. Thus, one may be a ‘proprietor’ of a copyright if he holds legal title, though equitable title may be in another wither expressly or as trustee ex malificio.”) (internal citations omitted); Silverman v. Sunrise Pictures Corp., 273 F. 909, 914 (2d Cir. 1921) (“There is nothing in the nature of copyright forbidding a separation between the legal and equitable titles; one may hold in trust for others . . . .”); Arachnid, Inc. v. Merit Indus., Inc., 939 F.2d 1574, 1578 n.3 (Fed. Cir. 1991) (discussing patents) (“Equitable title may be defined as the beneficial interest of one person whom equity regards as the real owner, although the legal title is vested in another.”) (internal quotations omitted); Matter of Southmark Corp., 49 F.3d 1111, 1117-18 (5th Cir. 1995) (“In a trust relationship, by contrast, the law actually divides the bundle of rights in the property; the trustee holds legal title while the beneficiary possesses an equitable title or property interest.”). The Copyright Assignment and SAA simply transferred to Righthaven legal title to the underlying exclusive rights and the accrued causes of action, while Stephens Media retained or was simultaneously granted back—it matters not which way you look at it since both achieve the same result—the equitable title to the underlying exclusive rights.
The whole point of the Copyright Assignment and SAA was to comply with the dictate in Silvers. Righthaven was not assigned only the accrued causes of action, but it was assigned legal title to the underlying exclusive rights as well. Thus, as the legal owner of the underlying exclusive rights and the accrued causes of action, Righthaven has standing to sue for past infringements under the rule declared by the Silvers majority. The very purpose of the Copyright Assignment and SAA was to give both legal title and the accrued causes of action to Righthaven while Stephens Media kept the equitable title for itself. The parties did exactly what Silvers said to do.
Contrary to Chief Judge Hunt’s quip that Righthaven’s representation about the SAA was “flagrantly false—to the point that the claim is disingenuous, if not outright deceitful,” I think Righthaven’s claim that the SAA did not affect its standing was correct. The reason is simple: The SAA did not divest Righthaven of the legal title or the accrued causes of action that it had been granted in the Copyright Assignment. To be sure, the SAA established in the underlying exclusive rights both in personam contractual rights and in rem property interests, but none of those equitable interests changed the fact that Righthaven still held its legal interests and the accrued causes of action. 36See, e.g., Marrone v. Washington Jockey Club of Dist. of Columbia, 227 U.S. 633, 636 (1913) (“A contract binds the person of the maker, but does not create an interest in the property that it may concern, unless it also operates as a conveyance.”); Matter of Southmark Corp., 49 F.3d 1111, 1117-18 (5th Cir. 1995) (“At the outset, it is important to distinguish generally between two types of ‘equitable interests.’ In a contractual (or debtor-creditor) relationship, the creditor may possess an ‘equitable claim’ to property actually owned by the debtor, but there is no division of ownership or title in the property at issue; the debtor is entirely free to dispose of the property as he sees fit. In a trust relationship, by contrast, the law actually divides the bundle of rights in the property; the trustee holds legal title while the beneficiary possesses an equitable title or property interest.”).
The district courts that have looked at the Righthaven standing issue have misconstrued the difference between an assignment, which typically transfers both legal and equitable title, and an exclusive license, which transfers only equitable title. 37See, e.g., Presley’s Estate v. Russen, 513 F.Supp. 1339, 1350 (D.N.J. 1981) (“An assignment passes legal and equitable title to the property while a license is mere permission to use. Assignment is the transfer of the whole of the interest in the right while in a license the owner retains the legal ownership of the property.”). The difference is critical. Courts are familiar with the concept of an exclusive licensee, and an entire body of federal common law has developed around this type of ownership interest. But antiquated concepts, such as the idea that an exclusive licensee holds equitable title, tend to get lost—though some remnants appear in the 1976 Act. For example, Section 301(a) preempts “all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 . . . .” 3817 U.S.C.A. § 301(a) (West 2013) (“On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103, whether created before or after that date and whether published or unpublished, are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.”). This presupposes the existence of both legal and equitable rights in a copyright.
Another example is Section 501(b)’s provision that a “legal or beneficial owner” has standing to sue. Courts often indicate that both legal owners and exclusive licensees have standing under this section, but they don’t make the connection that the legal titleholder is the “legal owner” while the exclusive licensee, who holds equitable title, is the “beneficial owner.” Back before the merger of law and equity, whether one’s title was legal or equitable mattered significantly since only the legal owner could institute an action in a court of law. Equitable owners, such as an exclusive licensee, had to bring suit in a court of equity. 39See, e.g., Ted Browne Music Co. v. Fowler, 290 F. 751, 753 (2d Cir. 1923) (“The owner of the equitable title is not a mere licensee [i.e., a nonexclusive licensee], and he may sue in equity, particularly where the owner of the legal title is an infringer, or one of the infringers, thus occupying a position hostile to the plaintiff.”); Cortner v. Israel, 732 F.2d 267, 271 (2d Cir. 1984) (“Prior to the adoption of the 1976 Copyright Act, 17 U.S.C. §§ 101, 501(b), the beneficial owner, in order to have standing to sue the infringer, was required to join the owner of the copyright as a defendant, alleging that the latter had refused after demand to sue.”); Buck v. Virgo, 22 F.Supp. 156, 157 (W.D.N.Y. 1938) (“The rights of a licensee under a copyright do not depend upon legal title. A licensee has no right to sue in his own name for infringement. The reason for the necessity of joining the owner of the copyright as plaintiff is that the owner has the legal title. This he holds in trust for the licensee.”) (internal citations omitted); Stephens v. Howells Sales Co., 16 F.2d 805, 806 (S.D.N.Y. 1926) (“[A] licensee cannot bring suit for infringement of the copyright under which he holds his license in his own name; this for the reason that the copyright is, technically speaking, indivisible, the legal title remaining in the licensor and the licensee having merely an equitable title.”). The merger of law and equity did away with the procedural, but not the substantive, differences between the two. 40See, e.g., Stainback v. Mo Hock Ke Lok Po, 336 U.S. 368, 382 n.2 (1949) (“Notwithstanding the fusion of law and equity by the Rules of Civil Procedure, the substantive principles of Courts of Chancery remain unaffected.”); Railex Corp. v. Joseph Guss & Sons, Inc., 40 F.R.D. 119, 123 (D.D.C 1966) (“Initially, it should be mentioned that F.R.C.P. Rule 2 abolishes only the procedural distinctions but not the substantive distinctions between law and equity. The substantive distinctions between legal and equitable rights and remedies are still applicable in the Federal Courts, particularly with regard to the constitutional right to trial by jury ‘in suits at common law’ declared by the Seventh Amendment.”). It was not until the 1976 Act that legal and equitable ownership interests were put on an equal footing for certain purposes, but—and this is crucial—they still remain distinct types of ownership interests.
A “transfer of copyright ownership” is an assignment, mortgage, exclusive license, or any other conveyance, alienation, or hypothecation of a copyright or of any of the exclusive rights comprised in a copyright, whether or not it is limited in time or place of effect, but not including a nonexclusive license. 4117 U.S.C.A. § 101 (West 2013).
Thus, an assignment and an exclusive license are both a “transfer of copyright ownership.” What kind of ownership is transferred, the statute doesn’t say. The answer, developed in the case law that Section 101 merely ratified, is rather simple. Generally speaking, an assignment transfers legal and equitable title while an exclusive license transfers only equitable title. Both are a “transfer of copyright ownership,” as noted by Section 101, but the ownership interests transferred are different. Section 501(b) tells us this difference matters not in at least one significant way since both the “legal or beneficial owner” has standing to sue. The combined purpose of Sections 101 and 501(b) in the 1976 Act was to put an equitable titleholder, such as an exclusive licensee, on an equal footing with his licensor, the holder of legal title, for purposes of standing to sue. Much like the merger of law and equity had eliminated some of the procedural differences between legal and equitable ownership, the 1976 Act eradicated some of the substantive differences between the two as well.
That a licensor has a different type of ownership interest than his exclusive licensee was made clear in Gardner v. Nike, 42Gardner v. Nike, Inc., 279 F.3d 774 (9th Cir. 2002). an opinion out of the Ninth Circuit from 2002. There, Nike had granted an exclusive license to Sony Music, and the issue was whether Sony Music could then transfer its exclusive license to Gardner. The district court held that an exclusive licensee could not transfer his ownership interest to another without his licensor’s permission, and the Ninth Circuit agreed. The appellate panel relied on Section 201(d)(2) of the Act which provides that the owner of any particular exclusive right is entitled “to all of the protection and remedies accorded to the copyright owner” under the Act. 4317 U.S.C.A. § 201(d)(2) (West 2013) “Any of the exclusive rights comprised in a copyright, including any subdivision of any of the rights specified by section 106, may be transferred as provided by clause (1) and owned separately. The owner of any particular exclusive right is entitled, to the extent of that right, to all of the protection and remedies accorded to the copyright owner by this title.”). Thus, reasoned the court, an exclusive licensee is vested with only the same “protections and remedies,” but not the same rights, as his licensor. If an exclusive licensee actually had legal ownership of the underlying exclusive right, his ability to transfer his interest to another would not be so saddled. Gardner v. Nike proves that exclusive licensees are not legal owners—at least in the Ninth Circuit where Righthaven is prosecuting its appeals.
There’s another layer that’s worth a mention. While Section 301(a) sounds in the general common law of property by referring to “legal or equitable rights,” Section 501(b) sounds in the general common law of trusts by referring to a “legal or beneficial owner.” The analogy to trust law is deliberate, for it was noted long ago that the licensor-exclusive licensee relationship is just like that of a trustee-beneficiary, with one holding legal title in trust for the other who is an equitable or beneficial owner of the property. 44See, e.g., Littlefield v. Perry, 88 U.S. 205, 223 (1874) (discussing patents) (“A court of equity looks to substance rather than form. When it has jurisdiction of parties it grants the appropriate relief without regard to whether they come as plaintiff or defendant. In this case the person who should have protected the plaintiff against all infringements has become himself the infringer. He held the legal title to his patent in trust for his licensees. He has been faithless to his trust, and courts of equity are always open for the redress of such a wrong. This wrong is an infringement.”); Indep. Wireless Tel. Co. v. Radio Corp. of Am., 269 U.S. 459, 468-69 (1926) (discussing patents) (“If the owner of a patent, being within the jurisdiction, refuses or is unable to join an exclusive licensee as coplaintiff, the licensee may make him a party defendant by process, and he will be lined up by the court in the party character which he should assume. . . . This would seem to be in accord with general equity practice. . . . A cestui que trust may make an unwilling trustee a defendant in a suit to protect the subject of the trust.”) (internal citations omitted). Trust law and copyright law have obviously gone their separate ways, but the analogy between the two remains and is at times instructive. It’s just not often that it’s mentioned anymore, much less so that it matters like it does here with Righthaven.
[L]egal and equitable interest in a copyright may be held separately. As cases pre-dating the 1976 Copyright Act make clear, a copyright may constitute a proper trust res, with the trustee holding legal title to the copyright and the settlor retaining equitable title. The 1976 Copyright Act did not change this, but rather codified the notion that both the equitable, or “beneficial,” owner of a copyright and the legal owner have standing to sue for infringement. 48Id. at 325 (internal citations omitted).
Judge Sotomayor went on to analyze the assignment under New York state trust law, looking at whether it created an express or constructive trust such that the trustee-assignee’s subsequent transfer of his interest to a third party was subject to the assignor’s equitable interest in the trust. I think the soundness of this approach is dubious, as federal common and statutory law trumps state law when it comes to copyright ownership. The problem with analyzing copyright ownership under state trust law is that then concepts such as a good faith purchaser for value get injected into what is otherwise a federal common law scheme. The en banc Federal Circuit has rejected such an approach with patents, 49See Rhone Poulenc Agro, S.A. v. DeKalb Genetics Corp., 284 F.3d 1323, 1328 (Fed. Cir. 2002) (“In short, because of the importance of having a uniform national rule, we hold that the bona fide purchaser defense to patent infringement is a matter of federal law. Because such a federal rule implicates an issue of patent law, the law of this circuit governs the rule.”). and I think the same logic applies with equal force to copyrights. Copyright ownership issues should be decided applying federal copyright law which, while analogous to state trust law in some ways, is not the same thing.
So where does that leave us? Based on the oral arguments before the Ninth Circuit panel, things do not look good for Righthaven. One judge queried which party, Righthaven or Stephens Media, a prospective user of the copyright should approach for permission. Since it isn’t Righthaven, the judge implied, it means that Righthaven doesn’t really own the copyright and therefore does not have standing to sue. But this line of questioning misses the fact that there’s two types of ownership interests in a copyright, legal and equitable. A prospective user would contact the party who holds the equitable title to the exclusive right that he wishes permission to use since only that party controls the use of that right. But it should not be forgotten that legal ownership may reside in another—and that appears to be the case here with Righthaven.
1. ↑ The Ninth Circuit joined two of Righthaven’s appeals for purposes of oral arguments: Righthaven v. Hoehn and Righthaven v. DiBiase.
4. ↑ See, e.g., In re Pittsburgh & L.E.R. Co. Sec. & Antitrust Litig., 543 F.2d 1058, 1064 (3d Cir. 1976) (“A party denied standing to sue, or to intervene, or to object, may obviously appeal such a determination. The question of standing does not go to whether or not the appeal should be heard, but rather to its merits.”).
6. ↑ See Silvers v. Sony Pictures Entm’t, Inc., Order Granting in Part and Denying in Part Defendant’s Motion to Dismiss, No. 00-cv-6386, 2001 WL 36127624 (C.D. Cal. Jan. 25, 2001).
7. ↑ See 17 U.S.C.A. 201(b) (West 2013) (“In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright.”).
8. ↑ See 17 U.S.C.A. § 501(b) (West 2013) (“The legal or beneficial owner of an exclusive right under a copyright is entitled . . . to institute an action for any infringement of that particular right committed while he or she is the owner of it.”).
9. ↑ Silvers, 2001 WL 36127624 at *1 (quoting Nimmer on Copyright § 12.02[B]) (internal quotations omitted).
10. ↑ Id. at *2.
11. ↑ See Silvers v. Sony Pictures Entm’t, Inc., Order Granting Defendants’ Motion for Interlocutory Appeal, No. 00-cv-6386, 2001 WL 36127626 (C.D. Cal. Mar. 29, 2001).
12. ↑ Silvers v. Sony Pictures Entm’t, Inc., 330 F.3d 1204, 1206 (9th Cir. 2003).
13. ↑ Id. at 1208.
14. ↑ See Silvers v. Sony Pictures Entm’t, Inc., 370 F.3d 1252 (9th Cir. 2004).
15. ↑ See Silvers v. Sony Pictures Entm’t, Inc., 402 F.3d 881 (9th Cir. 2005).
16. ↑ 17 U.S.C.A. § 501(b) (West 2013).
17. ↑ Silvers, 402 F.3d at 890.
19. ↑ See id. (“[T]he creation of a circuit split would be particularly troublesome in the realm of copyright.”).
20. ↑ See Prather v. Neva Paperbacks, Inc., 410 F.2d 698 (5th Cir. 1969); Eden Toys, Inc. v. Florelee Undergarment Co., Inc., 697 F.2d 27 (2d Cir. 1982); ABKCO Music, Inc. v. Harrisongs Music, Ltd., 944 F.2d 971 (2d Cir. 1991).
21. ↑ See, e.g., City of Cincinnati v. Hafer, 49 Ohio St. 60, 66 (1892) (“Mere personal torts die with the party, and are not assignable; but where the action is brought for damage to the estate, and not for injury to the person, personal feelings, or character, and the right of action survives to the personal representative, it may be assigned so as to pass an interest to the assignee.”); Comegys v. Vasse, 26 U.S. 193, 213 (1828) (“In general, it may be affirmed, that mere personal torts, which die with the party, and do not survive to his personal representative, are not capable of passing by assignment; and that vested rights ad rem and in re, possibilities coupled with an interest, and claims growing out of, and adhering to property, may pass by assignment.”); 6A C.J.S. Assignments § 43 (“A chose in action or claim, whether arising in tort or contract, is generally assignable, as a chose in action is personal property.”).
22. ↑ See, e.g., 6 Am. Jur. 2d Assignments § 134 (“Although an assignee acquires the rights of the assignor, including the right to enforce the assigned obligation, he or she does not sue in his or her own right, but stands in the shoes of the assignor.”); RTC Commercial Loan Trust 1995-NP1A v. Winthrop Mgmt., 923 F.Supp. 83, 88 (E.D. Va. 1996) (“[I]t is a fundamental maxim of common law that the assignee stands in the shoes of the assignor . . . .”).
23. ↑ See, e.g., ABKCO Music, Inc. v. Harrisongs Music, Ltd., 944 F.2d 971, 980 (2d Cir. 1991) (“Thus, a copyright owner can assign its copyright but, if the accrued causes of action are not expressly included in the assignment, the assignee will not be able to prosecute them.”); Giddings v. Vision House Prod., Inc., 584 F.Supp.2d 1222, 1229 (D. Ariz. 2008) (“Copyright assignments do not include accrued causes of action unless they are expressly included in the assignment.”); 3-12 Nimmer on Copyright § 12.02 (“[O]nly the grantor, not the grantee, has standing to sue for pre-grant infringement, even if the action is filed after the grant has been executed.”).
24. ↑ See, e.g., Skor-Mor Products, Inc. v. Sears, Roebuck & Co., 1982 WL 1264 (S.D.N.Y. May 12, 1982) (“Similarly, it is the assignor, not the assignee, who has standing to sue for infringing acts which occurred prior to the assignment of copyright.”); ABKCO Music, Inc. v. Harrisongs Music, Ltd., 944 F.2d 971, 980 (2d Cir. 1991) (“Rather, the assignee is only entitled to bring actions for infringements that were committed while it was the copyright owner and the assignor retains the right to bring actions accruing during its ownership of the right, even if the actions are brought subsequent to the assignment.”); M.J. Golden & Co. v. Pittsburgh Brewing Co., 137 F.Supp. 455, 457 (D. Pa. 1956) (“[E]ven though there has been a sale of the copyright this does not prevent the owner at the time of the alleged infringement from suing for previous damages it alleges to have sustained while it was the owner.”).
26. ↑ See H.R. Rep. No. 1476, 159 (“A ‘beneficial owner’ for this purpose would include, for example, an author who had parted with legal title to the copyright in exchange for percentage royalties based on sales or license fees.”).
27. ↑ See, e.g., Righthaven LLC v. Dr. Shezad Malik Law Firm P.C., No. 10-cv-0636, 2010 WL 3522372, *2 (D. Nev. Sept. 2, 2010) (Hunt, C.J.) (“Furthermore, the assignment in question (which Plaintiff has attached to its opposition) clearly assigns both the exclusive copyright ownership, together with accrued causes of action, i.e., infringements past, present and future. While Courts have denied standing to bring an action on an accrued claim where just the copyright is owned or just the cause of action has been assigned, where there is an assignment of both the copyright, and any accrued causes of action, the courts have held that the assignee of both can bring an action even for infringing activities which occurred before the assignment. Thus, in this instance, Plaintiff has standing to sue, even for an infringement which preceded the assignment, because that right was specifically assigned with the exclusive assignment of the copyright itself.”) (internal citations omitted).
28. ↑ Righthaven LLC v. Democratic Underground, LLC, 791 F.Supp.2d 968, 971 (D. Nev. 2011) (Hunt, C.J.).
29. ↑ Id. at 972.
30. ↑ Id. (italics in original).
31. ↑ Id. at 973 (italics in original; internal quotations omitted).
33. ↑ Righthaven, LLC v. Hoehn, 792 F.Supp.2d 1138, 1146 (D. Nev. 2011) (Pro, J.).
34. ↑ Righthaven, LLC v. DiBiase, No. 10-cv-01343, 2011 WL 2473531, *1 (D. Nev. June 22, 2011) (Hunt, C.J.).
35. ↑ See, e.g., Black v. Henry G. Allen Co., 42 F. 618, 621 (C.C.S.D.N.Y. 1890) ([T]here is no restriction upon the power of the proprietor to assign or transfer, in equity, an exclusive right to use the copyrighted book in a particular manner or for particular purposes upon such terms and conditions as may be agreed upon. In such case the legal title remains in the proprietor; and a beneficial interest, to the extent which is agreed upon, vests in the other party, who has acquired an equitable right in the copyright, and who will be properly styled an assignee of an equitable interest.”) (internal quotations omitted); Bisel v. Ladner, 1 F.2d 436 (3d Cir. 1924) (“The legal title to a copyright vests in the person in whose name the copyright is taken out. It may, however, be held by him in trust for the true owner . . . .”); Manning v. Miller Music Corp., 174 F.Supp. 192, 195 (S.D.N.Y. 1959) (“[T]he courts recognize that legal title to a copyright may be in one person and equitable title in another. Thus, one may be a ‘proprietor’ of a copyright if he holds legal title, though equitable title may be in another wither expressly or as trustee ex malificio.”) (internal citations omitted); Silverman v. Sunrise Pictures Corp., 273 F. 909, 914 (2d Cir. 1921) (“There is nothing in the nature of copyright forbidding a separation between the legal and equitable titles; one may hold in trust for others . . . .”); Arachnid, Inc. v. Merit Indus., Inc., 939 F.2d 1574, 1578 n.3 (Fed. Cir. 1991) (discussing patents) (“Equitable title may be defined as the beneficial interest of one person whom equity regards as the real owner, although the legal title is vested in another.”) (internal quotations omitted); Matter of Southmark Corp., 49 F.3d 1111, 1117-18 (5th Cir. 1995) (“In a trust relationship, by contrast, the law actually divides the bundle of rights in the property; the trustee holds legal title while the beneficiary possesses an equitable title or property interest.”).
36. ↑ See, e.g., Marrone v. Washington Jockey Club of Dist. of Columbia, 227 U.S. 633, 636 (1913) (“A contract binds the person of the maker, but does not create an interest in the property that it may concern, unless it also operates as a conveyance.”); Matter of Southmark Corp., 49 F.3d 1111, 1117-18 (5th Cir. 1995) (“At the outset, it is important to distinguish generally between two types of ‘equitable interests.’ In a contractual (or debtor-creditor) relationship, the creditor may possess an ‘equitable claim’ to property actually owned by the debtor, but there is no division of ownership or title in the property at issue; the debtor is entirely free to dispose of the property as he sees fit. In a trust relationship, by contrast, the law actually divides the bundle of rights in the property; the trustee holds legal title while the beneficiary possesses an equitable title or property interest.”).
37. ↑ See, e.g., Presley’s Estate v. Russen, 513 F.Supp. 1339, 1350 (D.N.J. 1981) (“An assignment passes legal and equitable title to the property while a license is mere permission to use. Assignment is the transfer of the whole of the interest in the right while in a license the owner retains the legal ownership of the property.”).
38. ↑ 17 U.S.C.A. § 301(a) (West 2013) (“On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103, whether created before or after that date and whether published or unpublished, are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.”).
39. ↑ See, e.g., Ted Browne Music Co. v. Fowler, 290 F. 751, 753 (2d Cir. 1923) (“The owner of the equitable title is not a mere licensee [i.e., a nonexclusive licensee], and he may sue in equity, particularly where the owner of the legal title is an infringer, or one of the infringers, thus occupying a position hostile to the plaintiff.”); Cortner v. Israel, 732 F.2d 267, 271 (2d Cir. 1984) (“Prior to the adoption of the 1976 Copyright Act, 17 U.S.C. §§ 101, 501(b), the beneficial owner, in order to have standing to sue the infringer, was required to join the owner of the copyright as a defendant, alleging that the latter had refused after demand to sue.”); Buck v. Virgo, 22 F.Supp. 156, 157 (W.D.N.Y. 1938) (“The rights of a licensee under a copyright do not depend upon legal title. A licensee has no right to sue in his own name for infringement. The reason for the necessity of joining the owner of the copyright as plaintiff is that the owner has the legal title. This he holds in trust for the licensee.”) (internal citations omitted); Stephens v. Howells Sales Co., 16 F.2d 805, 806 (S.D.N.Y. 1926) (“[A] licensee cannot bring suit for infringement of the copyright under which he holds his license in his own name; this for the reason that the copyright is, technically speaking, indivisible, the legal title remaining in the licensor and the licensee having merely an equitable title.”).
40. ↑ See, e.g., Stainback v. Mo Hock Ke Lok Po, 336 U.S. 368, 382 n.2 (1949) (“Notwithstanding the fusion of law and equity by the Rules of Civil Procedure, the substantive principles of Courts of Chancery remain unaffected.”); Railex Corp. v. Joseph Guss & Sons, Inc., 40 F.R.D. 119, 123 (D.D.C 1966) (“Initially, it should be mentioned that F.R.C.P. Rule 2 abolishes only the procedural distinctions but not the substantive distinctions between law and equity. The substantive distinctions between legal and equitable rights and remedies are still applicable in the Federal Courts, particularly with regard to the constitutional right to trial by jury ‘in suits at common law’ declared by the Seventh Amendment.”).
41. ↑ 17 U.S.C.A. § 101 (West 2013).
42. ↑ Gardner v. Nike, Inc., 279 F.3d 774 (9th Cir. 2002).
43. ↑ 17 U.S.C.A. § 201(d)(2) (West 2013) “Any of the exclusive rights comprised in a copyright, including any subdivision of any of the rights specified by section 106, may be transferred as provided by clause (1) and owned separately. The owner of any particular exclusive right is entitled, to the extent of that right, to all of the protection and remedies accorded to the copyright owner by this title.”).
44. ↑ See, e.g., Littlefield v. Perry, 88 U.S. 205, 223 (1874) (discussing patents) (“A court of equity looks to substance rather than form. When it has jurisdiction of parties it grants the appropriate relief without regard to whether they come as plaintiff or defendant. In this case the person who should have protected the plaintiff against all infringements has become himself the infringer. He held the legal title to his patent in trust for his licensees. He has been faithless to his trust, and courts of equity are always open for the redress of such a wrong. This wrong is an infringement.”); Indep. Wireless Tel. Co. v. Radio Corp. of Am., 269 U.S. 459, 468-69 (1926) (discussing patents) (“If the owner of a patent, being within the jurisdiction, refuses or is unable to join an exclusive licensee as coplaintiff, the licensee may make him a party defendant by process, and he will be lined up by the court in the party character which he should assume. . . . This would seem to be in accord with general equity practice. . . . A cestui que trust may make an unwilling trustee a defendant in a suit to protect the subject of the trust.”) (internal citations omitted).
45. ↑ A. Brod, Inc. v. SK&I Co., L.L.C., 998 F.Supp. 314 (S.D.N.Y. 1998).
46. ↑ Id. at 318.
47. ↑ Id. at 320.
48. ↑ Id. at 325 (internal citations omitted).
49. ↑ See Rhone Poulenc Agro, S.A. v. DeKalb Genetics Corp., 284 F.3d 1323, 1328 (Fed. Cir. 2002) (“In short, because of the importance of having a uniform national rule, we hold that the bona fide purchaser defense to patent infringement is a matter of federal law. Because such a federal rule implicates an issue of patent law, the law of this circuit governs the rule.”).
First off, great analysis of the issues and a wonderful read.
This applies to both the transfer issues and the fair use issues. I’m the first to admit that I’m not a Righthaven fan, but it seemed as if judges were going out of their way to nail them and ignoring both the law and the precedent, which is easy to do with something as complex and judgment-based as copyright.