People often assume lawyers just use “form books” for contracts. I’m sometimes asked questions like: Don’t you just have a form for that? Can’t you just send me the standard form agreement? Can you quickly look over this agreement I did myself on the internet?
The fact is that virtually every contract involves unique circumstances. In the case of copyright transfers and licensing, contractual language can be critical. Under the Copyright Act, a written and signed document is required to transfer ownership of a copyright or to transfer exclusive rights to a copyright.
A recent case from the Fifth Circuit Court of Appeals demonstrates the pitfalls of an ambiguously drafted copyright transfer.
In that case, Alvert Music, a publishing company, claimed ownership of the composition copyright to various songs, including “Whoomp! (There It Is).”
Alvert sued DM Records, claiming DM Records had infringed Alvert’s copyright. DM Records claimed that Alvert couldn’t sue because Alvert had transferred the copyrights to a third party, Bridgeport Music, and thus, Alvert didn’t own the copyrights.
In 2004, Avert had executed a “Short Form Copyright Assignment” covering the compositions at issue which stated:
In consideration of the sum of One Dollar ($1.00) and other good, valuable, and adequate consideration, the receipt and sufficiency of which is acknowledged, the undersigned does hereby sell, assign, transfer, and set over to Bridgeport Music, Inc., its respective successors and assigns, fifty percent (50%) of his interest now owned or subsequently procured in the universe-wide copyright in and to the following musical composition(s) set forth in Exhibit A attached hereto, and all of the universe-wide right, title, and interest of the undersigned, vested or contingent, therein and thereto, including all claims for infringement of the copyrights whether now or hereafter existing, for the maximum terms of copyright, including any extensions and/or renewals thereto, throughout the universe.
DM Records argued that Alvert no longer owned the copyright because of the language stating that Alvert had transferred to Bridgeport “all of the universe-wide right, title, and interest of the undersigned, vested or contingent, therein and thereto, including all claims for infringement of the copyrights whether now or hereafter existing, for the maximum terms of copyright.” The lower court agreed and threw out Alvert’s case.
However, Alvert appealed and argued that it still owned 50 percent of the copyright because of the language stating that Alvert transferred to Bridgeport “fifty percent (50%) of his interest now owned or subsequently procured in the universe-wide copyright in and to the . . . musical composition.” The Court of Appeals agreed with Alvert and reinstated Alvert’s case.
While the two clauses in the assignment contract seemingly conflicted with each other, the Court of Appeals reasoned that the proper reading of the two clauses is that clause cited by DM Records operates as a clarification of the 50% interest assigned in the clause cited by Alvert.
While the decision of the Court of Appeals doesn’t indicate whether the assignment language was from a form book or specifically drafted for Alvert’s particular circumstances, the fact is that the assignment language resulted in litigation that was reviewed by two courts and undoubtedly cost the parties significant time and money.
Just imagine the multiple ways the assignment language could have been made clearer and the whole mess could have been avoided.
The bottom line is that you should always be careful before preparing and entering into any legal document. Contractual language may seem insignificant at the time, but as this case demonstrates, even the simplest language can become very significant when a dispute arises.
Beware of taking shortcuts, as some shortcuts can result in significant consequences, including significant expenses. Before you sign, please be sure to have your legal counsel review any important legal document.
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