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Lee v. A.R.T. Co.

United States Court of Appeals for the Seventh Circuit

February 10, 1997, Argued ; September 18, 1997, Decided

No. 96-2522


 [***1154]   [*580]  Easterbrook, Circuit Judge. Annie Lee creates works of art, which she sells through her firm Annie Lee & Friends. Deck the Walls, a chain of outlets for modestly priced art, is among the buyers of her works, which have been registered with the Register of Copyrights. One Deck the Walls store sold some of Lee's notecards and small lithographs to A.R.T. Company, which mounted the works on ceramic tiles (covering the art with transparent epoxy resin in the process) and resold the tiles. Lee contends that these tiles are derivative works, which under 17 U.S.C. § 106(2) may not be prepared without the permission of the copyright proprietor. She seeks both monetary and injunctive relief. Her position has the support of two cases holding that A.R.T.'s business violates the copyright laws. Munoz v. Albuquerque A.R.T. Co., 38 F.3d 1218 (9th Cir. 1994), affirming without published opinion 829 F. Supp. 309 (D. Alaska 1993); Mirage Editions, Inc. [**2]  v. Albuquerque A.R.T. Co., 856 F.2d 1341 (9th Cir. 1988). Mirage Editions, the only full appellate discussion, dealt with pages cut from books and mounted on tiles; the court of appeals' brief order in Muoz concludes that the reasoning of Mirage Editions is equally applicable to works  [*581]  of art that were sold loose. Our district court disagreed with these decisions and entered summary judgment for the defendant. 925 F. Supp. 576 (N.D. Ill. 1996).

Now one might suppose that this is an open and shut case under the doctrine of first sale, codified at 17 U.S.C. § 109(a). A.R.T. bought the work legitimately, mounted it on a tile, and resold what it had purchased. Because the artist could capture the value of her art's contribution to the finished product as part of the price for the original transaction, the economic rationale for protecting an adaptation as "derivative" is absent. See William M. Landes & Richard A. Posner, An Economic Analysis of Copyright Law, 17 J. Legal Studies 325, 353-57 (1989). An alteration that includes (or consumes) a complete copy of the original lacks economic significance. One work changes hands multiple times, exactly what § 109(a) permits, so it may lack [**3]  legal significance too. But § 106(2) creates a separate exclusive right, to "prepare derivative works", and Lee believes that affixing the art to the tile is "preparation," so that A.R.T. would have violated § 106(2) even if it had dumped the finished tiles into the Marianas Trench. For the sake of argument we assume that this is so and ask whether card-on-a-tile is a "derivative work" in the first place.

"Derivative work" is a defined term:

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125 F.3d 580 *; 1997 U.S. App. LEXIS 25238 **; 44 U.S.P.Q.2D (BNA) 1153 ***; Copy. L. Rep. (CCH) P27,686

Annie Lee and Annie Lee & Friends Company, Inc., Plaintiffs-Appellants, v. A.R.T. Company, also known as Albuquerque A.R.T. Company, Defendant-Appellee.

Prior History:  [**1]  Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 94 C 4606. Charles R. Norgle, Sr., Judge.

Disposition: Affirmed.


derivative work, mounting, tile, frame, Edition, artists, transformation, painting, exclusive right, displaying, sentence, rights

Copyright Law, Scope of Copyright Protection, Collective & Derivative Works, Derivative Works, General Overview