To Kill A Copyright

The United States Court of Appeals for the Second Circuit addressed a dispute over derivative creative rights to a stage adaptation of To Kill A Mockingbird

These appeals concern two derivative works based on the Harper Lee novel, To Kill a Mockingbird. Under a 1969 grant from Lee, The Dramatic Publishing Company (“Dramatic”) developed a stage adaptation of To Kill a Mockingbird, which Lee agreed would be “the only one the amateur acting rights of which [Lee] will permit to be leased and/or licensed.” Joint Merits App’x at 175. Decades later, Lee terminated that grant and authorized the development of another stage adaptation of To Kill a Mockingbird; Atticus Limited Liability Company (“Atticus”) holds the rights to present and produce certain performances of that second adaptation.

Atticus brought suit in the United States District Court for the Southern District of New York, seeking a declaration that performances of that second stage adaptation do not infringe any copyright interest that Dramatic held in To Kill a Mockingbird under its 1969 grant from Lee. In response, Dramatic maintained that it continued to hold an exclusive license to stage certain adaptations of To Kill a Mockingbird, even after Lee’s termination of the 1969 grant, under a provision of the Copyright Act governing the use of derivative works after termination of a license granted to the creator of a derivative work. Dramatic also contended that Atticus’s acquisition of stage rights to its competing adaptation of To Kill a Mockingbird was invalid under the timing requirements of the Copyright Act, that Atticus’s claim accrued when Dramatic filed an arbitration against Harper Lee’s estate in 2019 and therefore was untimely, and that the result of that prior arbitration precluded Atticus’s request for declaratory relief.

The district court (Cote, J.) rejected Dramatic’s arguments, entered a declaratory judgment for Atticus, and subsequently awarded Atticus just over $200,000 in attorney’s fees. Dramatic appeals the district court’s judgment on the merits, and Dramatic and Atticus cross-appeal the district court’s award of attorney’s fees. We AFFIRM the district court’s judgment granting declaratory relief to Atticus, VACATE the district court’s award of attorney’s fees, and REMAND for the district court to further consider the fee application in light of this opinion.

The litigation followed an arbitration that Dramatic had won

After the arbitrator entered the award in favor of Dramatic, Atticus initiated this case in the Southern District of New York. In its complaint, Atticus alleged that the arbitrator’s ruling—“that authors such as Harper Lee have no right to terminate grants of exclusive rights under the Copyright Act”—was “contrary to the plain and unambiguous language of the Copyright Act’s termination provisions.” Joint Merits App’x at 27. Atticus sought a declaration that “Atticus and Sorkin have the right, in relation to [Dramatic], to present any and all SecondClass, Stock, Amateur and Ancillary Performances . . . of the Sorkin Play in the United States; and [that] any such productions of the Sorkin Play have not infringed and could not infringe any purported copyright interest [Dramatic] claims to hold to [To Kill a Mockingbird].” Id. at 29–30.

Dramatic moved to dismiss

The district court converted Dramatic’s motion to dismiss into a motion for summary judgment under Federal Rule of Civil Procedure 12(d), denied that motion, and granted Atticus’s cross-motion for summary judgment in part. In particular, the district court rejected Dramatic’s interpretation of the derivative works exception, reasoning that its reading “would thwart the plain language of the Copyright Act, rendering any exclusive license interminable.” Special App’x at 18. The district court also largely rejected Dramatic’s preclusion arguments, concluding that Atticus did not agree to be bound by any arbitration between the Lee estate and Dramatic, Atticus could not be bound by any preexisting legal relationship Atticus had with the Lee estate, and Atticus was not adequately represented by the Lee estate in the arbitration. However, the district court left open the possibility that Dramatic could establish, through discovery, that preclusion might apply on the theory that Atticus sufficiently controlled the Lee estate in the arbitration. Finally, the district court did not separately analyze Dramatic’s argument that the 2015 grant of non-first-class production rights was invalid under 17 U.S.C. § 304(c)(6)(D), instead noting that “for purposes of its claim preclusion argument Dramatic recognizes the validity of the 2015 Agreement.” Id. at 24 n.7. Later in its opinion, however, the district court reasoned that “it is unnecessary to resolve through this lawsuit the extent to which the Lee Estate granted Atticus rights through the 2015 Agreement” because “[t]hat [] issue is irrelevant to Dramatic: . . . if Dramatic’s rights are not exclusive, then it has no power to bar anyone from performing derivative works based on [To Kill a Mockingbird], other than . . . the Sergel Play.” Id. at 32.

Atticus won this one; cold comfort to Tom Robinson

The day after it denied Dramatic’s motion for summary judgment on its statute of limitations defense, the district court issued an order rejecting Dramatic’s preclusion defense in full and denying its request for additional discovery. Having disposed of Dramatic’s remaining arguments, the court entered the declaratory judgment for Atticus on August 1, 2023, and entered an amended judgment on August 28, 2023. That ended the parties’ dispute over the merits of Atticus’s declaratory judgment claim. The case lingered on, however, after Atticus moved to recover its attorney’s fees under the fee-shifting provision of the Copyright Act. The district court subsequently granted Atticus’s motion in part and awarded Atticus its fees incurred litigating the case after April 27, 2023—that is, after the district court’s first decision granting Atticus’s motion for summary judgment in part. Ultimately, the district court entered an order awarding Atticus $201,171.25 in attorney’s fees.

As to fees

In sum, we conclude that the district court did not abuse its discretion in determining that an award of fees was warranted due to the objective  unreasonableness of Dramatic’s statute of limitations and res judicata arguments. The district court erred, however, to the extent that it based its fee award in part on its findings that Dramatic had forfeited its statute of limitations defense and that Dramatic’s discovery unnecessarily prolonged the litigation. We further conclude that the district court did not abuse its discretion in declining to award Atticus’s fees incurred prior to April 27, 2023. We therefore vacate the fee award and remand for the district court to further consider the fee application in light of this decision. See, e.g., Kirtsaeng, 579 U.S. at 209–10; Universal Instruments Corp. v. Micro Sys. Eng’g, Inc., 799 F. App’x 43, 47 (2d Cir. 2020) (summary order). On remand, the district court may set forth its reasoning as to how the objective unreasonableness of Dramatic’s statute of limitations and res judicata defenses, along with any other permissible consideration, may support an award of fees.

Finally, Atticus requests, in passing, an award of attorney’s fees for this appeal, in an amount to be determined by the district court on remand. We exercise our discretion to deny this request. Although we conclude that the district court did not abuse its discretion in determining that a fee award was warranted because Dramatic’s statute of limitations argument was objectively unreasonable,  that was only one of four arguments advanced in the single merits appeal—one of which, as mentioned above, the district court permissibly found to be objectively reasonable so as to not warrant the imposition of fees.

(Mike Frisch)