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Source: http://www.cll.com/articles/article.cfm?articleid=26
2006 Cowan, Liebowitz & Latman, P.C.

What Is a Derivative Work ... (continued)

By David Goldberg and Robert J. Bernstein

September 19, 1996

On May 20, 1996, by sheer coincidence, federal courts in the Northern District of Illinois and the Central District of California each confronted unrelated cases presenting identical legal issues rooted in closely analogous factual scenarios, and reached diametrically opposite results. The California case, Greenwich Workshop, Inc., v. Timber Creations Inc.1 ("Greenwich Workshop") involved the sale of framed art reproductions which defendant cut out of plaintiff's books before matting, framing and reselling them. Because the books themselves were authorized publications which the defendant lawfully purchased at retail, defendant asserted a complete defense under the first sale doctrine, 17 U.S.C. 109(a), which permits purchasers to resell or otherwise dispose of any "copies" legally acquired from the author. Extending recent Ninth Circuit precedent, however, the district court held that the defendant's removal of the works from the plaintiff's books, combined with the matting and framing of the pictures, resulted in the creation and sale of "derivative works" rather than merely the resale of lawfully-acquired "copies," and therefore the first sale doctrine was not applicable to the defendant's actions.

The Illinois decision, Lee v. Deck the Walls, Inc.2 ("Lee") flatly rejected the reasoning of the Ninth Circuit cases relied on by the Greenwich Workshop court and held that a defendant's "mundane" epoxy mounting of plaintiff's notecards onto decorative ceramic tiles did not create derivative works. Thus, the sale of the tiles was permitted under the first sale doctrine. The Lee court explicitly recognized that it was not bound by the decisions of any other district court, or by the law of any circuit other than the Seventh. But for this geographic autonomy, however, the Lee decision could well have been otherwise, as the court acknowledged that the "facts and arguments" of Lee were "strikingly similar" to those cases previously decided in the Ninth Circuit.

The lesson is clear: when selling mounted art reproductions, as when selling anything at retail, the key is location, location, location. This column will examine the statutory and decisional background of the first sale doctrine, with particular emphasis on how the doctrine relates to the "two-tier" analysis which the Ninth Circuit has developed for determining whether a modified version of a work is a "derivative work." The column will then discuss the Greenwich Workshop and Lee cases as examples of the divergent approaches courts have taken to this question, and will conclude that the Ninth Circuit approach applied in Greenwich Workshop is unsupported by the statutory text.

Background: The Copyright Act

Section 109(a) of the Act provides:

Notwithstanding the provisions of Section 106(3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.

In its most basic terms, the first sale doctrine codified in this section permits anyone who acquires a legitimate copy of a work to resell, give away, lend, or otherwise dispose of that particular copy without violating the author's exclusive right under 106(3) to "distribute copies or phonorecords . . . to the public by sale or other transfer of ownership." There are special "anti-rental" provisions in 109 relating to sound recordings, video games and computer software, but for works of visual art such as those in Lee and Greenwich Workshop, the principal effect of 109(a) is to allow buyers to do more or less anything they want with their own particular copies.

Significantly, however, the buyer's dominion over his or her lawfully acquired copy is absolute only with respect to the author's right, under 106(3), to "distribute" the work.3 The author's other exclusive rights under 106, such as the rights of reproduction and public performance, remain enforceable against the purchaser. Thus, for example, lawful ownership of a piece of sheet music does not carry with it the right to make photocopies for the buyer's fellow musicians, nor does lawful ownership of a videocassette permit its possessor to exhibit the film publicly.

One of the author's other exclusive rights under 106, the right to prepare derivative works, also falls outside the scope of the buyer's first sale privileges. The statutory definition of "derivative work" in 101 of the Act is as follows:

A "derivative work" is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgement, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications, which, as a whole, represent an original work of authorship, is a derivative work.

Given the seeming vagueness of this definition, courts in a variety of contexts have had trouble applying it to particular facts to determine whether a slightly modified version of a prior work qualified as "derivative," or was merely an inexact "copy." The legal standard, however, is clear from the second sentence of the statutory definition: if a work consists of "modifications which, as a whole, represent an original work of authorship," it is a derivative work, and if it consists of modifications which do not, as a whole, constitute an original work of authorship, it is not a derivative work, but merely a copy. This reasoning has been followed consistently by the Second Circuit, most recently in Woods v. Bourne Co.,4 where the court confirmed that a work had to be "independently copyrightable" in order to qualify as a derivative work for purposes of defeating the author's right to terminate a previous license or assignment by the copyright owner.

The Ninth Circuit Is Contrary

In the Ninth Circuit, however, the requirement of independent copyrightability has apparently been relaxed where defendants, seeking to avail themselves of the first sale doctrine, have resold modified copies of plaintiffs' works. In these cases, even very slight modifications have been held sufficient to make the defendant's product a "derivative work" and thus ineligible for the first sale defense. In Mirage Editions, Inc. v. Albuquerque A.R.T. Co.,5 ("Mirage") the court held that removing images from plaintiff's art books, then fitting each image onto a sheet of black plastic material to create a narrow black margin around the work, and finally sealing the image to the plastic under a transparent plastic film, "amounts to the preparation of a derivative work. By borrowing and mounting the preexisting, copyrighted individual art images without the consent of the copyright proprietors . . . appellant has prepared a derivative work and infringed the subject copyrights."6 Another case in the district court of Alaska against the same defendant, Munoz v. Albuquerque A.R.T. Co.,7 ("Munoz") reached the same conclusion with respect to a slightly different mounting process which involved affixing the plaintiff's notecards to ceramic tiles with epoxy.

Neither Mirage nor Munoz addressed the question of whether the "derivative works" created by Albuquerque A.R.T. contained enough original authorship to be separately copyrightable, or whether the rule requiring copyrightable authorship should even be applied in the case of derivative works which are allegedly infringing. They simply concluded that the defendant's products were derivative works, stressing the broad language of the first sentence of the statutory definition ("any form in which a work may be recast, transformed," etc.) and ignoring the words of limitation ("original work of authorship") found in the second sentence.

While Mirage and Munoz thus decide the question without espousing a specific legal theory, the reasoning of the Ninth Circuit on this issue is clearly articulated in the well-known video game case, Galoob Toys, Inc. v. Nintendo of America, Inc.8 Although the Ninth Circuit affirmed that the audiovisual displays created by Galoob's Game Genie device were not infringing derivative works, it nevertheless said that the circuit does not in fact require an arguably infringing "derivative work" to meet the same fixation and originality requirements which 102 of the statute imposes on works entitled to copyright protection.9 In essence, the court in Galoob explained that a derivative work may infringe without itself being copyrightable under 102(a), either because it is not fixed in a tangible medium (as was the case with Galoob's modification of Nintendo video game screens), or because it does not contain independently copyrightable authorship (as with Albuquerque A.R.T.'s mounted artworks).

Taken together, Mirage, Munoz and Galoob thus establish a dual standard for derivative works: a party seeking to register copyright in a derivative work must demonstrate original authorship and fixation, but even an unoriginal and/or unfixed "derivative work" may constitute infringement. As Galoob summarizes, "It makes no difference that the derivation may not satisfy certain requirements for statutory copyright registration itself. A derivative work must be fixed to be protected under the Act . . . but not to infringe" (citations omitted, emphasis in original).10

Extending Ninth Circuit Precedent: Greenwich Workshop

Viewed against this doctrinal background, the district court decision in Greenwich Workshop did little more than extend the basic double standard of Mirage, Munoz and Galoob to a new set of facts. Timber Creations, the defendant, purchased multiple copies of books containing so-called "bookplates," or small-scale reproductions, of plaintiff's original watercolor paintings. In anticipation of possible unauthorized uses, the plaintiff's books contained a copyright warning which read in part, "[n]o part of this book may be reproduced, altered, trimmed, laminated, mounted or combined with any text or image to produce any form of [derivative] work."

Timber Creations ignored this warning and removed selected bookplates, glued them to matting, and placed the matted bookplates in glass-covered frames for resale. On cross-motions for summary judgment, the parties stipulated to restrict the litigation to the issue of whether defendant's framing of the bookplates resulted in the creation of derivative works.

To distinguish its glass-front framing process from the permanent mounting techniques condemned by the Ninth Circuit in Mirage and Munoz, Timber Creations relied heavily on a passage from the district court opinion in Munoz:

Placing a print or painting in a frame and covering it with glass does not recast or transform the work of art. It is commonly understood that this amounts only to a method of display. Moreover, it is a relatively simple matter to remove the print or painting and display it differently if the owner chooses to do so. Neither of these things is true of the art work affixed to a ceramic tile.

The defendant also argued that since it could legally prop the book open and display it in a rack, or remove individual pages and sell them unframed, there should be no logical basis on which to hold the selling of framed pages to be infringing. A slippery slope was also envisioned, at the bottom of which the courts would be forced to ban the sale of framed cartoon cels, record album covers, stamps and so on.

Judge Alicemarie Stotler rejected all of defendant's arguments without substantive discussion. The court found the infringement to be "particularly evident" in the fact that the defendant "recast" and "transformed" plaintiff's books by removing pages from them, and therefore the "matted and framed bookplates" infringed plaintiff's copyrights "in both the artwork and the book." By this reasoning, it would appear that the infringing act was not merely the mounting, framing and sale of the bookplates but the defacement and abridgement of the books in which they were originally published. Such reasoning borders on moral rights protection for book publishers, especially since the cannibalized remains of the books were not made available to the public, but it may have been the only way for the court to articulate its result without going down the slippery slope of banning other legitimate frame-shop activities. As to the defendant's argument that its framed bookplates were not derivative works because they lacked sufficient original authorship, the court did not offer a response, but merely cited to Mirage and Munoz, which themselves fail to address the issue.

Rejecting Ninth Circuit Precedent: Lee v. Deck the Walls

In Lee, a Glenwood, Illinois artist named Annie Lee brought an action in the Northern District of Illinois against Deck the Walls ("DTW"), a franchisor of retail art shops in the Chicago area. In facts almost identical to Munoz, DTW purchased 430 notecards from Lee's shop, on which were printed fifteen original artworks created and registered by Lee. DTW sent the cards to Albuquerque A.R.T., the same art-mounting service which lost in both Munoz and Mirage, and had the cards trimmed and mounted on ceramic tiles using the same epoxy process which Munoz condemned as an infringement. Lee sued for copyright infringement, breach of contract and unfair competition; she subsequently withdrew the contract claim and the court dismissed the unfair competition count.

At the outset of his decision on Lee's copyright claim, Judge Charles Norgle frankly acknowledged that the "facts and arguments" of Lee's case were "analogous" and even "strikingly similar" to those raised in Munoz and Mirage, but held that both of those decisions "were in error and reached a result contrary to established case law and the Copyright Act."11 First, while Munoz made much of the distinction between placing a work in a glass frame and permanently affixing it to a tile with epoxy, the court in Lee found any such distinction "unconvincing and without support." The focus, the court said, should be on the art work itself, not on the material on which the work was mounted or the ultimate use to which the tiles "lend themselves." The mode of affixation of the art work onto the mat or tile is insignificant. In addition, the eventual manner of display and "use" of a product is not dispositive of the instant inquiry; whether the ceramic tile is used as a wall decoration, a trivet, or floor tiles is not a variable which should be used to define a "derivative work" under the Copyright Act.12

The court added in a footnote, "[c]ertainly, Congress did not intend that courts look to the type of adhesive, whether it be Elmer's glue, Superglue or tape, to be the fact upon which a copyright infringement issue should be determined."

Second, the court in Lee based its decision on the specific issue about which Mirage, Munoz and Greenwich Workshop were utterly silent, i.e., whether the resulting product contained sufficient original authorship to qualify as a derivative work. On this question, the court squarely rejected the dual standard followed by the Ninth Circuit and held, citing the Second Circuit decision in Woods v. Bourne, that a derivative work must contain enough original authorship to be independently copyrightable.

Judged by this standard, the "mundane" act of affixing a notecard to ceramic tile "falls into the narrow category of works in which no creative spark exists." Thus, defendant "did not display any creativity in gluing Annie Lee's work onto the separate surface . . . Since the notecard is in the same `form' as Annie Lee's original work, it necessarily cannot be in a `form in which a work may be recast, transformed or adapted.' No intellectual effort or creativity was necessary to transfer the notecard to the tile. It does not meet the definition of a `derivative work.'"13

As support for this holding, the court noted that a work produced by the same tile mounting process was submitted for copyright registration by Albuquerque A.R.T., and the Copyright Office rejected the claim, stating:

[The] authorship described in . . . this application, "purchased notecard image deposited on tile and covered with epoxy," is not copyrightable.

The court also found support in a 1989 article on copyright economics by William Landes and Richard Posner, now Chief Judge of the Seventh Circuit Court of Appeals,14 and in a Texas district court opinion decided under the 1909 Copyright Act, C.M. Paula Co. v. Logan,15 which stressed that because each work of defendant "requires the purchase and use of an individual piece of artwork marketed by plaintiff," no infringement had occurred. The Lee court found this point relevant under the 1976 Act as well, noting that "for one hundred ceramic tiles, A.R.T. must purchase one hundred Annie Lee notecards." Accordingly, since "competition is not infringement, even in the market for highly expressive artistic works," the "ceramic tile mounting process utilized by A.R.T. cannot, as a matter of law, be found to violate the Copyright Act."16

Statutory Ambiguity

The divergent results in Lee and Greenwich Workshop stem from what some might perceive as a fundamental ambiguity in the statutory definition of the term "derivative work." The two sentences of the 101 definition appear to send the courts in opposite directions, with the first sentence susceptible of reaching any trivial deviation from the authorized copy and the second sentence requiring a standard of original authorship which, as the Supreme Court has held, may be low but is not nonexistent.17 The Ninth Circuit decision in Galoob comes closest to facing the problem head on, but stands on doubtful ground when it concludes that the copyright owner's exclusive right to prepare "derivative works" may be infringed by a product which the plaintiff himself could not protect as a "derivative work." If the plaintiff doesn't have the right to register a copyright in a trivial variation and call it a derivative work, then it does not seem unreasonable to conclude, as the Second Circuit does in Woods v. Bourne and the Illinois court does in Lee, that such a trivial variation does not qualify as a "derivative work" for any other purpose either. The second sentence of the statutory definition, requiring "modifications which, as a whole, represent an original work of authorship" appears to dictate this result, even if Galoob is correct in holding that the tangible fixation requirement of 102(a) does not apply to derivative works.

The statute and its legislative history do not provide a definitive answer, but the written record of the debates and discussions leading up to the 1976 revision serves as a reminder that the problem was apparent as soon as a concrete definition of "derivative work" was proposed. The following exchange between Edward A. Sargoy and Sidney Diamond, two deans of the copyright bar, occurred at a meeting held in New York on August 7, 1964:

SARGOY: Now as to "derivative work" and its definition, I did make the point before that . . . you may have derivative utilizations or appropriations which are intangible, and perhaps we could add that to this definition: "A `derivative work' or a `derivative utilization' is one based upon . . . " and so forth.

DIAMOND: I wasn't going to get into some of these details but it seems to be the spirit of the occasion, and some of these definitions raise fascinating little questions: the one Ed Sargoy just spoke about, for instance. With all due respect, I think he overlooks the fact that, if it is not fixed in tangible form, it cannot be a "work" and therefore it doesn't belong under the definition of "derivative work." Maybe [it] belongs in there someplace, to make clear that an intangible infringement can take place.18

The drafters of the 1976 Act did not accept Diamond's invitation to pursue this "fascinating little question," and in leaving the issue unresolved they inevitably raised a host of other questions which will continue to plague the courts for the foreseeable future.


Until more circuits reject the Ninth Circuit view, cautious copyright attorneys should therefore advise their clients that the application of the first sale doctrine and the definition of "derivative work" can be extremely erratic. Notwithstanding that the Ninth Circuit recently gave an expansive reading to the first sale doctrine in an importation context,19 its erroneous view of what constitutes a derivative work appears unlikely to give defendants the benefit of the doubt any time soon in dealing with artwork.

Copyright 1996 Cowan, Liebowitz & Latman, P.C.

Originally published in the New York Law Journal Copyright Column September 19, 1996.


1 832 F. Supp. 1210 (C.D. Cal. 1996).

2 925 F. Supp. 576 (N.D. Ill. 1996).

3 Section 109(c) also grants the owner of a lawfully-made copy the right to display his or her copy to the public, as by hanging a painting or poster in a public place. This right, which suspends the copyright owner's exclusive right of public display under 106(5), was not at issue in Greenwich, Lee or the other cases under discussion here.

4 60 F.3d 978, 993 (2d Cir. 1995). In Woods, a musical arrangement which the district court characterized as "mere cocktail pianist variations" on a pre-existing melody was held insufficiently creative to be a derivative work. See Robert J. Bernstein and Robert W. Clarida, "Woods": The Second Circuit, Music and Recording, N.Y.L.J. Sept. 15, 1995 at 3. The court cited numerous prior cases, and especially its seminal decision in L. Batlin & Sons, Inc. v. Snyder, 536 F.2d 486 (2d Cir.), cert. denied, 429 U.S. 587 (1976), which discussed the standard of originality in a derivative work.

5 856 F.2d 1341 (9th Cir. 1988), cert. denied, 489 U.S. 1018 (1989).

6 Id. at 1343.

7829 F. Supp. 309 (D. Alaska 1993), aff'd, 38 F.3d 1218 (9th Cir. 1994).

8 964 F.2d 965, 968 (9th Cir. 1992).

9 Section 102(a) establishes the statutory conditions for copyright protection: "Copyright protection subsists, in accordance with this title, in original works of authorship fixed in any tangible medium of expression. . . ."

10 Galoob, 964 F.2d at 968.

11 Lee, 1996 U.S. Dist. LEXIS 6845, at *7.

12 Id. at *11.

13 Id. at *15.

14 An Economic Analysis of Copyright Law, 18 J. Legal Studies 325, 355-56 (June 1989)("The `mechanical translation' of [a] figure into a new medium involves no expression.")

15 355 F. Supp. 189 (N.D. Texas 1973).

16 Lee, supra, at *20.

17 Feist v. Rural Tel. Serv. Co., 499 U.S. 340, 345 (1991).

18 1964 Revision Bill with Discussion and Comments, House Judiciary Committee Print, Sept. 2, 1965, at 217.

19 Denbicare U.S.A. Inc. v. Toys "R" Us Inc., 38 U.S.P.Q.2d 1865 (9th Cir. 1996).

* 2009 Cowan Liebowitz & Latman, P.C

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