Let this be a lesson to anyone producing creative works who decides to deem them a “collection.” Examples of this might include: musicians releasing an album, writers compiling essays or short stories into a single book, and visual artists placing multiple works in a single compendium.
Even if your intention is to release a group of individual works together, you always want to register them for copyright separately.
Why? Because, where copyright infringement is concerned, the difference between a collection and several individual works could cost you a lot of money.
Case-in-point: Sullivan v. Flora, Inc.
Infringement for Using Copyrighted Work Outside the Scope of the License Agreement
This recent news story begins in a complicated way… and then gets more complicated, so bear with me.
It all started when Flora, Inc. wanted to have animated graphic advertisements created for some of its products. They retained a man named Joseph Silver, who then subcontracted the work to an artist named Amy Sullivan.
Her job was to create illustrations to be used for the ads. She did so, producing 33 images that Silver animated into two motion graphics. Sullivan then agreed to an exclusive license with Flora. They were allowed to use her illustrations in ad campaigns for two of their products: Flor-Essence and 7 Sources.
So far, so good. Copyright law is working as intended. The company pays to use the artwork they need, and the artist receives agreed-upon compensation.
Unfortunately, Sullivan soon discovered that Flora was using her work beyond the scope of their agreement. In other words, they were infringing on her copyright. She quickly submitted two copyright applications for two “illustrated collections” which divided the 33 individual illustrations into two applications and obtained two copyright registrations. She then sued Flora for copyright infringement in the Western District of Wisconsin.
Two Collections of Illustrations or 33 Individual Illustrations?
Here is where things took a complex turn.
Flora has not even attempted to argue against the accusation that they infringed upon Sullivan’s copyright. Rather, their fight has been focused on the argument that they should only be held accountable for two copyright violations rather than 33 – because Sullivan only registered two copyrights for the collections.
Initially, the district court found that Sullivan’s manner of registration meant that each set of illustrations should be treated as a single work. However, Sullivan challenged this, and the court requested a supplemental briefing.
Meanwhile, Flora made two arguments:
1) Sullivan could only legally receive one award per registration, and
2) The “independent economic value test” applied, whereby the court is asked to look at evidence to determine whether or not the individual illustrations had “distinct and discernable value” to Sullivan.
Ultimately, the district court sided with Sullivan, using the definition of “collective work” to find that each of the illustrations were “separate and individual works… assembled into a collective whole.” She was entitled to separate statutory damage awards for each illustration used outside the scope of the licensing agreement.
When the case went to trial, the jury found in favor of Sullivan. When the damages for each illustration were tallied up, she won an award in the amount of $3.6 million.
Not So Fast….
Unsurprisingly, Flora appealed after being ordered to pay such a high amount. The Court of Appeals for the Seventh Circuit took up the case. They focused even more on the question of independent economic value and, after determining that the record on appeal was insufficient for them to evaluate this question, vacated the district court’s decision and remanded the case back to the District Court.
Back at District Court, Flora’s request to reopen discovery was denied, and the court granted summary judgment in Sullivan’s favor – essentially saying their earlier verdict was correct without engaging in a debate.
Again, with $3.6 million on the line, Flora appealed to the Seventh Circuit again. The Seventh Circuit agreed with the district court’s decision not to reopen discovery… but rejected summary judgment. They argued that the lower court should have allowed both sides to present evidence to a jury regarding the economic value of the individual illustrations.
Again, the case was remanded, and that is where it currently stands. This time, however, the Seventh Circuit is specifically requiring the district court to hold trial on the pivotal issue that has been at the heart of this case from the beginning: Should Sullivan’s illustrations be considered two compilations or 33 separate works for purposes of determining statutory damages?
Which Way Is the Court Leaning?
How will the court rule? If their past decisions are any guide, the district court seems far more likely to side with Sullivan. However, since they have never directly addressed this issue, it is difficult to say for sure.
One thing that is sure – it is a ruling that could have lasting ramifications for both creators registering their works and businesses looking to license the works. Might be wise to spend the extra money on separate copyright registrations for each work, so in the long run you don’t have to argue over the independent economic value of individual works that are part of a collection.