Bruce D. Epperson

The Guild of Fashion Designers appealed to the Supreme Court, which affirmed Judge Hand’s decision upholding the Federal Trade Commission. However, it made it clear that it didn’t think much of his lengthy analysis. The Court reverted back to the trial court’s original logic: the Guild did not contest the FTC’s finding of collusion, so any legal analysis ended there. It was especially disdainful of Hand’s crazy ideas about dress designs being intellectual property and his musings on what “publication” meant. It waived this away with a quick dismissal: “nor can the unlawful combination be justified upon the argument that systematic copying of dress designs is itself tortuous, or should be. . . whether or not given conduct is tortuous is a question of state law, under our decision in Erie Railroad Co. v. Tompkins.

Believe it or not, this would prove to be the one of single the most important sentences in the history of American sound recording law. That’s why Judge Graffeo’s opinion in Capitol Records v. Naxos IV reads so strangely. For Graffeo, it never was a copyright case; it was an Erie v. Tompkins case. What does that mean?

To learn the answer, let’s return to New York City, 1940. Judge Hand is hearing arguments in the Paul Whiteman case four days after he heard Fashion Originators. Whiteman and the NAPA had won in the district court with a decision that strongly recognized a musician’s rights in his or her sound recording; a right independent of the musical composition.

Hand overturned that decision. He accepted the lower court’s sound recording argument, but only as a hypothetical. Even if it did exist, he announced, it ended with the sale of the record through publication. The “not for commercial use” label was irrelevant, because it was merely an attempt to control the use of a good after the point of sale, which was illegal.

Hand drew an analogy: assume the issue was the composer’s rights to sheet music, with Whiteman distributing copies to the public that had “cannot be used for public performance” printed at the top. Could he reasonably expect to limit its use to home parlors? No. What, then, made his performer’s rights so different from his composer’s rights? If the act of publishing sheet music threw open its use to the public, except for rights given him through the Copyright Act, why were Whiteman’s “common-law” rights as a conductor any different?

But his ruling contained two contradictions. First, given Hand’s own example, when Whiteman published his sheet music, he did it to gain the protection of the Copyright Act. By publishing a phonograph record, he received—nothing. Because it wasn’t eligible for copyright, there was no exchange of investiture for statutory copyright. There was only one path—divestiture. Hand saw this, and picked it anyway, because he preferred it to the alternative:

We see no reason why the same acts that unconditionally dedicate the common-law copyright in works copyrightable under the Act, should not do the same in the case of works not copyrightable. Otherwise it would be possible . . . to have the advantage of dissemination of the work at large, and to retain a perpetual, though partial, monopoly in it.

Again, it went back to the Fashion Originators’ case:

The fact that they [records] are not within the act should make no difference. Indeed, it is argued that . . . there is a perpetual common-law copyright in works not copyrightable under the act; we have answered that argument in Fashion Originators Guild and need not repeat what we said.

Now the second contradiction: the Progress Clause says that only “writings” can be protected under copyright. Who has the power to define a “writing”? Congress. Once something is deemed to be a “writing”, who determines if it will be pulled under copyright protection? Congress. If it’s not covered, whose laws prevail? State law. And for the purposes of common-law copyright, who gets to decide if something is “published”? According to Hand, federal law.

That is the Erie v. Tomkins dilemma.

To be continued…