In a case of first impression in the circuit courts, the U.S. Court of Appeals for the Second Circuit held that a co-owner of a copyright cannot unilaterally grant a retroactive license to cure infringement. Several district courts have upheld such licenses and many entertainment companies routinely obtain retroactive licenses from a single co-owner of a jointly copyrighted work to protect themselves from claims of infringement. But the Second Circuit has effectively ended this practice and has thrown into doubt the validity of existing retroactive licenses granted from a single co-owner of a copyrighted work.
The case involved the plaintiff songwriter’s claim that she co-wrote two songs that were recorded by defendant Mary J. Blige. Bruce Chambliss, the alleged co-writer and co-owner of the copyright in the songs, transferred ownership of the songs to defendant Bruce Miller and made the transfer retroactive to the time the songs were created. Miller then licensed the songs to the defendants. When the plaintiff filed suit for copyright infringement, the defendants argued that, as a result of the transfer agreements, Miller became a co-owner of the copyrights in the songs as of the date of the creation of the songs, and because the plaintiff cannot sue a co-owner of her copyright for infringement, her suit was barred against Miller and those to whom Miller had licensed the songs.
The district court granted summary judgment to the defendants on the copyright claims. Relying on earlier case law, the district court concluded that a retroactive written agreement between Chambliss and Miller defeated the plaintiff’s claims against Miller and the other defendants to whom he had licensed the songs.
The Second Circuit disagreed and vacated the district court’s decision. The court explained that copyright co-owners should be treated as tenants in common, meaning that each co-owner is entitled to equal undivided interests in the whole work. These interests include the right to sue for infringement. In addition, pursuant to basic contract principles, a co-owner may not convey the interests of his fellow co-owners without their express written consent nor can any owner convey more than he owns. The court reasoned that a rule permitting retroactive licenses or assignments would violate these basic tenets of contract and copyright law by essentially erasing the co-owner’s right to sue for infringement, which accrues when the infringement first occurs. Thus, the Second Circuit held that a license or assignment in a copyright can only act prospectively. The court also noted two reasons for disfavoring retroactive licenses: they lead to uncertainty and unpredictability in copyright ownership (“one could never know who the pool of authorized users or licensors of a copyright would be at any given time, because a retroactive transfer could always turn an infringer into a potential user or licensor, who would then have the ability to grant his own retroactive licenses or retransfer his new (retroactive) interest retroactively”), and they encourage infringement by allowing an infringer to “buy” his way out of an infringement suit by paying a single co-owner for a license or assigned copyright interest.