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…

Bruce D. Epperson

The district court’s holding in RCA Mfg. Co. v. Whiteman is really a rather extraordinary one. It asserts that musical performers have always had a property right in the skill and creativity that goes into their performances, but that because it could not be captured, and thus rendered into any kind of commodity, the question of how it should be treated as property was moot. Thus, the issue is not whether there is a performers’ right to the sound recording, merely, how it should be recognized by the courts.

The court also went on to agree with the Waring courts that the restriction label “for home use only” resulted in a limited distribution of the record. The radio station appealed, and the case ended up in the courtroom of the brilliant, quirky judge Learned Hand.

Judge Hand was a legal genius. He would often spot issues that were still way over the horizon, conflicts of law that would not ripen for another ten or twenty years. Unfortunately, in his haste to get there, he would dash past the current issues of the case with a wave of the hand, often mashing two or three thoughts together in a single point or skipping a step or two in the logic of his opinion.

In mid-July, 1940, three days before he rendered his opinion in the Whiteman case, Hand issued an opinion in a seemingly unrelated case, Fashion Originators Guild v. Federal Trade Commission. The Guild was set up to protect dressmaker’s patterns, to stop what they called “style piracy.” The FTC charged them anti-trust collusion. At the hearing, the Commission, having established that the dressmakers were acting in concert to keep non-members from poaching their designs, refused hear their defense that they were protecting a legitimate and defensible property right. Once collusion was established, claimed the FTC, the case was over.

Judge Hand rejected this, and in essence performed the second half of the FTC’s inquiry hearing himself. He quickly determined that the Guild members did have a intellectual property rights in their dress designs. It was not covered by federal copyright, so fell within the common-law of the state of New York. Most of the analysis revolved around whether the dress designs were “published” and thus divested to the public. “We have been unable to discover any case which squarely presented this situation,” lamented Hand, “that is, in which intellectual property, not covered by the copyright act then in existence, was challenged because of its ‘publication.’”

Hand went all the way back to the 1774 Donaldson v. Beckett case. The House of Lords, in the second of their three votes, had decided that in the absence of the Statute of Anne, the publication of a work did not cut off its author’s common-law copyright. The implication of this was that common-law copyright was either: 1) perpetual until cut off forever by statutory common-law copyright (the majority view); or 2) absolutely perpetual, but temporarily replaced by statutory copyright until its term expired; at which point common-law copyright was revived (i.e. “the cupcake theory”).

Hand rejected the entire House of Lords vote, at least as it applied to American law. He objected that any perpetual state common-law copyright, that did not mandate divestment upon publication defeated the purposes of the “limited times” restriction of the Progress Clause. This was, in essence, tantamount to arguing that when a thing fell within the Constitutional definition of a writing, but Congress chose not to include it within statutory copyright, it couldn’t be published without entering the public domain. That’s because publication divested it of its common-law copyright status, but it had no statutory copyright status to pass into. That left one glaring hole in the chain of legal reasoning. If a writing was outside of federal copyright law, why should it be subject to that same law’s definition of “publication”?

To be continued…

Bruce D. Epperson

In 1935, Waring had sent a copy of a recording of “Lullaby of Broadway” to the Register of Copyright, seeking to apply for the rights to the “personal interpretation” of the song. The copyright office rejected the application, writing Waring that “there is not and never has been any provision in the [Copyright] Act for the protection of an artist’s personal interpretation or rendition of a musical work.” The next battle was to go after the radio stations that Waring, Paul Whiteman, Guy Lombardo, and  the other NAPA members believed were forcing them, in Waring’s words, “to compete against ourselves for free every night.”

Waring’s contract with Victor, stated that the label of each record was to carry the notation “Not licensed for radio broadcast.” Radio station WDAS, a Philadelphia station, purchased a Waring record and broadcast it, paying the required ASCAP fee. Waring sought an injunction under Pennsylvania state law to block the further broadcast of his records, asserting that he had “property rights in their [the band’s] artistic interpretation” that was independent of the composition, and thus not covered by the ASCAP system. “Does the performer’s interpretation of a musical composition constitute a product of such novel and artistic creation as to invest him with a property right therein?” asked the court.

The answer was “yes.” The court said that a musical composition is, by itself, an incomplete work, and that the performer “contributes by his interpretation something of novel intellectual or artistic value,” so has created a thing to which he or she is entitled to as a property right. Waring had successfully climbed the first two steps: he had proved: (1) creative contribution constitutes a valid intellectual property; and (2) his ownership of the band, a Pennsylvania corporation, gave him legitimate title to that property.

But was this property right lost through publication? Recall the distinction between “limited” and “general” publication. Prior to 1912, some courts had said that producing an as-yet unpublished play constituted a “limited” publication, and that rivals could stage competing productions, but could not produce printed versions. In 1912, the Supreme Court quashed this, stating that live performances did not constitute publication at all. But there is also another sense in which “limited” publication occurs.

Because they were marked “Not licensed for radio broadcast,” it was clear that Waring’s intent was to restrict their distribution to a defined audience. Thus, the publication was not sufficiently general to divest Waring of his rights in its sound recording. Two years later, Waring repeated his success, this time in a North Carolina court. This case was even stronger, as it involved a transcription disc from one of the Ford shows, marked “To be used only on the Ford Motor Program.” Bolstered by these successes, NAPA decided to go for the big prize: New York State.

NAPA member Paul Whiteman was picked to go up against station WNEW in RCA Mfg. Co. v. Whiteman. The facts were virtually identical to the Waring Pennsylvania case. The district court held for Whiteman, explaining that:

Prior to the advent of the phonograph, a musical selection once rendered by an artist was lost forever, as far as that particular rendition was concerned. It could not be captured and played back again by any mechanical contrivance then known. Thus the property right of the artist, pertaining as it did to an intangible musical interpretation, was in no danger of being violated. During all this time the right was always present, yet because of the impossibility of violating it, it was not necessary to assert it. (emphasis added)

To be continued…