Schrock v. Learning Curve Int’l, No. 08-1296 (7th Cir. Sep. 9, 2009)
On November 5, the Court of Appeals for the Seventh Circuit reversed and remanded a decision of the District Court for the Northern District of Illinois, which had ruled that copyright for a derivative work requires permission from the underlying copyright holder to be valid. The district court’s ruling was based on reasoning in Gracen v. Bradford Exchange, 698 F.2d 300 (7th Cir. 1983). The Seventh Circuit instead held that a valid copyright in a derivative work is created by “operation of law” and not by authority of the copyright owner in the underlying work, unless a contract dictates otherwise. Additionally, the court held that there is no heightened standard of originality for copyright protection in a derivative work.
The Exclusive Rights Blog provides an overview of the case. Rebecca Tushnet's 43(B)log criticizes the circuit court for not explicitly overturning Gracen and asserts photographs of copyrighted material should not be treated as derivative works.
The dispute in Schrock concerned photographer Daniel Schrock’s copyright infringement allegation against Learning Curve Int’l and HIT Entertainment (HIT). HIT owns the copyright in the “Thomas & Friends” train characters. HIT licensed the right to create and distribute “Thomas & Friends” toys to Learning Curve. Learning Curve hired Schrock to take pictures of the toys for marketing purposes. Years later, the company ceased using Schrock’s professional services but continued to use his photographs in promotional materials. Schrock subsequently registered his photographs for copyright protection and sued Learning Curve and HIT for copyright infringement. The doctrinal issue in this case arose from the district court’s finding that Schrock’s photographs were derivative works, thereby triggering the requirement of permission from the underlying copyright holder under Gracen.
However, the Seventh Circuit held that the district court had misread Gracen. The Seventh Circuit admitted that the permission-to-copyright dicta in Gracen was incorrect because it contravenes the copyright protection requirements as provided in 17 U.S.C. §102(a) of the Copyright Act (“copyright protection subsists . . . in original works of authorship fixed in any tangible medium”). The court acknowledged that parties effectively may alter these rights through contract. Because the record did not include the contracts among Schrock, Learning Curve, and HIT, the court remanded to the district court for further proceedings.
The circuit court also clarified that the “substantially different from the underlying work” language in Gracen does not impose a high standard of originality for copyright protection in a derivative work, but rather reiterates the notion that derivative works must have a “nontrivial distinguishable variation” from the underlying work in order to be granted copyright protection. This requirement applies both to Schrock’s photographs (a derivative work of the toys) and Learning Curve’s promotional materials (a derivative work of the original photographs).
Schrock aligns copyright law in the Seventh Circuit with the requirements for copyright protection provided in the Copyright Act. However, the scope of the holding is uncertain as it is not possible to determine how the “nontrivial distinguishable variation” requirement for copyrightable derivative works will be applied to works outside the realm of photography.