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February 17, 1993

COMMITTEE ON THE STATUS OF WOMEN, d/b/a Project Respect, Defendant.


The opinion of the court was delivered by: MILTON I. SHADUR

In part this case poses the frequently litigated question of who owns the copyright when an organization engages someone to create or to rework materials in a copyrightable way that suits the organization's needs, but does not define--in writing-whether the compensated creator is an employee or an independent contractor. *fn1" At stake are competing policies--policies that on the one hand support those whose work (and often creativity) brings a vision to life, as against on the other hand supporting the organizations without whose funds and supervision (and perhaps creativity) the final product might never have come to fruition. As is often the case when such an issue arises, the concept of joint authorship may also be in play.

 What sets this case apart from most other copyright cases that involve work-made-for-hire and joint-authorship questions is the interaction of a federal agency regulation that seeks to give the government rights when its funds are used to develop a copyrightable work. As it turns out, this opinion must decide whether (absent a written agreement) an organization that has received government funds and permission to reprint a work--even though neither it nor the government owns the copyright--may compete with the copyright owner by printing and distributing copies of the work that would otherwise have to be purchased from the owner.

 This action began when Coleen Mast ("Mast") and Respect Incorporated ("Respect," treated as a singular collective noun) lodged an eight-count Complaint against Committee on the Status of Women ("Committee") that sought relief for a number of alleged violations of Respect's rights. This Court's January 2, 1992 memorandum opinion and order (the "Opinion," 781 F. Supp. 1358 *fn2" ) has granted summary judgment dismissing Counts III and VI, leaving open the Complaint's claims asserting copyright infringement (Count I), service mark/trademark infringement (Count II), common law unfair competition (Count IV), Lanham Act violations (Count V) and fraud in the inducement of a contract (Count VII), as well as a request for an accounting (Count VIII).

 Each party now moves under Fed.R.Civ.P. ("Rule") 56 for a partial summary judgment in its favor limited to Count I's copyright claim. More accurately, what has been placed at issue currently is liability on that claim--neither side has sought to quantify the damages if Respect prevails. For the reasons stated in this memorandum opinion and order, Respect's motion is granted and Committee's is denied.


 As in their filings that led to the Opinion, the parties' submissions are factually far broader than proves necessary to hit the current motions' target. *fn4" This section will therefore set out only those facts that are both necessary to give the uninitiated a quick overview of the case and germane to the copyright issues now at hand. Some pertinent facts not contained in this section are found later in the text.

 Both Respect and Committee are proponents of sexual abstinence education as an element of school curricula. To that end each has been involved in development of a program called "Sex Respect" (sometimes referred to here simply as "the program") for use in schools--a program that included three books entitled Sex Respect: The Option of True Sexual Freedom: a teacher's manual, a parent's manual and a student workbook (collectively "the books").

 But despite their shared convictions on the promulgation of sexual abstinence education, discord has frequently marked the relationships among those involved in this case--not only the current litigants but others with whom they have dealt. What follows is a recital of the development and disintegration of alliances between the early beginnings of the abstinence education concept and the administration of the later-obtained federal grant.

 Sex Respect was initially developed as a program by Mast, who taught it for years before she entered into negotiations with Committee. By 1985 Committee (through its President Kathleen Sullivan ("Sullivan")) had become involved and advised Mast that federal funds might be secured to develop use of the program in public schools. Mast, desiring to work further on the program and to disseminate it more widely, met--through Sullivan--Douglas Hofmeister ("Hofmeister"), head of publishing company United Communications of America, Inc. ("UCA"), to explore commercial reproduction of the teaching materials.

 On July 8, 1985 Committee submitted a grant application to the Office of Adolescent Pregnancy Programs of the United States Department of Health and Human Services ("HHS"). Because the then administration policy was consistent (if not indeed a hand- in-glove fit) with abstinence education, on September 30, 1985 HHS (through Jo Ann Gasper ("Gasper"), the HHS official administering the funds) awarded Committee a three year grant of over $ 275,000 in federal funds to carry out a pilot expansion of the program in selected public schools. HHS conditioned the grant in part on the submission, for suggestions and pre-approval, of drafts and final versions of all printed materials developed with grant funds.

 Meanwhile, on July 29, 1985 Mast and UCA had entered into a publishing contract under which UCA agreed to publish the workbook, a teacher handbook and a parent handbook. Mast assigned to UCA the exclusive right to publish the three works as well as the copyrights themselves. Mast began to write the books in August 1985.

 On October 15, 1985 Mast and Committee entered into an oral personal services agreement (an agreement that Opinion at 1362-65 has held unenforceable under Illinois law). Then after Mast had delivered her manuscripts to UCA, it began to produce the books, some of which Committee ordered.

 Mast and UCA later had a falling-out that resulted in litigation separate from this case. That litigation (and the settlement that ensued) provided Mast with renewed control over the manuscripts and Respect with the assigned copyrights to the books. Hence beginning in January 1986 Committee ordered books directly from Respect.

 Each party now claims entitlement to a judgment as a matter of law on Count I's copyright issues. Analysis of their respective rights requires an initial determination of copyright ownership, to be followed by a decision on whether--if it does not own the copyrights--Committee has been legitimately authorized to reproduce and distribute the books without making any payment to Respect.

 Copyright Ownership

 There is no doubt that the books are copyright-protectable, though Respect needlessly devotes significant space to that subject in its memorandum. To resolve the question of who owns the copyrights, this opinion must explore the two already-mentioned subjects of work made for hire and joint authorship. *fn5"

 1. Work Made For Hire

 Respect and Committee--having failed to define their relationship in writing--disagree vehemently on whether (assuming for present purposes that Mast received compensation from Committee for writing the books *fn6" ) Mast was an employee or an independent contractor. Committee goes so far as to say that "Mast's assertion that she is entitled to judgment that she was not a . . . work for hire is not only baseless, but is close to the Rule 11 precipice." As support for its position, Committee emphasizes that Mast received a salary and that Committee withheld taxes.

 But on the facts of this case, that in terrorem argument and its invocation of Rule 11 are dead wrong. Instead that bootless threat exemplifies the old saw that those who live in glass houses should not throw stones. On all the evidence, this Court has concluded that no reasonable factfinder could accept Committee's argument that Mast was an employee in the context of 17 U.S.C. § 101(1), *fn7" the definitional "work made for hire" provision of the Copyright Act of 1976 ("Act").

 Copyright ownership "vests initially in the author or authors of the work" (Act § 201(a)), and the owner has the exclusive right to reproduce, distribute or display the copyright-protected work (Act § 106). But under the Act's "work made for hire" concept, an organization accused of copyright infringement not only has a valid defense but actually owns the copyright if it proves that the allegedly infringed-on materials were "prepared by an employee within the scope of his or her employment" (Act § 101(1), defining work made for hire as that phrase is employed in Act § 201(b)). Alternatively the organization may also own the copyright of a work developed by a nonemployee (1) if the parties have agreed in writing that the work should be deemed a work made for hire and (2) if the work falls within the categories set forth in the statutory definition of that term (Act § 101(2)).

 Community for Creative Non-Violence v. Reid, 490 U.S. 730, 104 L. Ed. 2d 811, 109 S. Ct. 2166 (1989) ("CCNV") teaches that the legal status (that is, employee v. independent contractor) of the compensated party--an issue decided by referring to common law agency principles *fn8" (see CCNV at 750-51, followed in a different context in Nationwide Mut. Ins. Co. v. Darden, 117 L. Ed. 2d 581, 112 S. Ct. 1344, 1348 (1992))--determines how the work-made-for-hire provisions operate. If the creator is found to be an employee, Act § 101(1) applies and the organization that engaged him or her owns the copyright, unless of course a written agreement to the contrary exists (Act § 201(b)). If however the creator was an independent contractor, Act § 101(2) applies. *fn9" Under that provision the organization owns the copyright only if the work fits within one of ...

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