Rights conferred by a U.S. Copyright registration are often referred to as a "bundle." Included are the rights to reproduce a copyrighted work; to prepare derivatives based upon the work; to distribute copies of the work; to perform the work; and to display the copyrighted work publicly. These rights are separable and can be sold, licensed or given away one at a time or all at once. The U.S. Copyright Act makes no distinction among the rights conferred and each is separately enforceable by its owner. Thus, if a party wants to acquire copyrights from another, it must make certain that it is acquiring all the rights it needs in order to use the copyrighted material for its intended purposes. Otherwise, a party may be unable to effectively use the copyrighted material.
Take the case of the upcoming film "Watchmen," which promises to be this spring's blockbuster action movie. "Watchmen" was first conceived as a graphic novel by Alan Moore and published by D.C. Comics. In 1986, Twentieth Century Fox (Fox) obtained an option to purchase D.C. Comics' rights in "Watchmen" and ultimately acquired same in 1990. Lawrence Gordon is an influential movie producer who wanted to make a film of "Watchmen." In 1991, Fox granted certain rights in "Watchmen" to one of Mr. Lawrence's production companies, but retained the right to distribute any film ultimately produced. In 1994, Fox and Gordon entered into an agreement called a "Turnaround Notice." This agreement essentially granted Gordon the right to acquire Fox's interest in the "Watchmen" film project for a set price.
Time went by and no film was produced. Gordon, holding the rights to produce a "Watchmen" film, worked on and off with developers, script writers and the like, but there was no broad interest in filming. At no time did Gordon or any of his companies exercise their right under the Turnaround Notice to buy-out Fox's rights in the project. Ultimately, Warner Bros. agreed to produce "Watchmen" with Gordon. The final production budget for the film is approximately $150 million. The film is set for a March 9, 2009 U.S. release distributed through Warner Bros. Ultimately hundreds of millions in box office receipts, DVD sales and merchandising are anticipated.
Fox brought suit against Gordon and Warner Bros., alleging, among other theories, copyright infringement. Fox claimed Gordon's failure to buy out its rights under the Turnaround Notice left Fox with the unfettered right to distribute any "Watchmen" film, and that distribution of the film by Warner Bros. constitutes infringement of Fox's rights. Though there has been no final resolution of the litigation and no formal ruling has issued yet, a U.S. District Court Judge in Los Angeles has issued an advisory opinion indicating he agrees with Fox's argument and unless Fox and Warner Bros. can come to some agreement in the next 90 days, the film's release may be delayed.
Though there are many very technical facts to consider and ultimate resolution of the case determines the interpretation of several complex Hollywood-specific contracts, the import is clear. Since copyrights are in the nature of a bundle of separable rights, when obtaining or selling copyrights, whether in the context of a film production agreement or from a freelance photographer, a party must make certain all relevant rights are obtained and documents relating to same are clear.
Vol. 53, June 2010