HR Management & Compliance

Scary Court Decision for Employers Creating Copyrighted Content

The creator of the original screenplay for the horror movie “Friday the 13th” could terminate his copyright grant and reclaim it, the U.S. Second Circuit Court of Appeals (which covers New York) recently decided. The outcome turned on the screenwriter’s employment status. If your business creates copyrighted material, read on to understand how the decision could affect you.

Facts

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In 1979, screenwriter Victor Miller wrote the Friday the 13th screenplay for film production company Manny, Inc. Released in 1980, the flick proved to be a blockbuster and a horror film classic. In 2016, Miller gave notice to Manny and a successor production company, Horror, Inc., purporting to terminate the copyright under the authority vested in authors by Section 203 of the Copyright Act and “reclaim” his rights to the screenplay.

In 2018, Manny and Horror, Inc., sought a declaration from the U.S. District Court for the District of Connecticut that Miller was an employee when he created the screenplay, which was therefore “a work for hire” owned by the production company from the outset and not subject to the author’s reclamation rights.To support their position, they pointed to Miller’s membership in the Writers Guild of America, East, Inc. (WGA) and Manny’s participation in the collective bargaining agreement with the WGA.

On the other hand, Miller argued he was an independent contractor when he wrote the screenplay for Manny. Therefore, he could lawfully terminate the screenplay rights claimed by Manny and Horror and, as the true author, reclaim his rights.

The district court sided with Miller and granted summary judgment (dismissal without a trial), finding he wasn’t an employee and making him the screenplay’s author who was entitled to terminate the rights of Manny and Horror, Inc. The court also found his termination notice to Horror wasn’t untimely. Manny and Horror appealed to the Second Circuit.

Copyright law controls employee analysis

The Second Circuit affirmed the district court’s decision. Using an agency analysis, the appeals court discounted the WGA facts presented by Manny and Horror and agreed with the district court that the original screenplay wasn’t specifically commissioned as a “work made for hire” under the original contract. Therefore, Miller wasn’t an employee at the time he wrote the screenplay, thus defeating the work-for-hire argument.

With respect to the relevant employee analysis, the Second Circuit applied the 13-factor test from the 1998 case Community for Creative Non-Violence v. Reid, 490 U.S. 730, 737 (1989) and noted:

  • Manny had only limited control over Miller’s creative process;
  • The production company relied on his skill, expertise, and creativity as a professional artist to write the screenplay;
  • It never provided him with employee benefits;
  • It never deducted payroll taxes, Social Security, Medicare, or other withholdings from his compensation; and
  • It had only limited rights to assign additional projects created by Miller after the screenplay was complete.

In sum, the Second Circuit found the majority of the relevant Reid factors supported Miller’s position. Horror, Inc. et al. v. Victor Miller, ___ F.3d ___ (2d Cir., 2021).

Takeaways

The Miller decision is horrific for businesses employing creative talent. Although the case focused on a classic horror film, the same analysis could apply to any company employing individuals who create written or digital content subject to the Copyright Act.

To protect creative work from the start, you should consider entering into an enforceable work-for-hire agreement or be prepared to establish a bona fide employment relationship existed under Reid. Consult with employment counsel on how to avoid the nightmare down the road.

Paul J. Sweeney is an attorney with Coughlin & Gerhart, LLP in Binghamton, New York. You can reach him at psweeney@cglawoffices.com or 607-723-9511.