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Effects Associates. v. Cohen (1990) - 908 F.2d 555 (9th Cir. 1990)

Rule:

There is a narrow exception to the writing requirement of 17 U.S.C.S. § 204 which provides that all transfers of copyright ownership must be in writing; 17 U.S.C.S. § 101 defines transfers of ownership broadly, but expressly removes from the scope of § 204 a "nonexclusive license."

Facts:

Defendant Larry Cohen wrote, directed and executive produced "The Stuff," a horror movie with a dash of social satire. In the course of producing the movie, Cohen asked Effects Associates, a small special effects company, to create footage to enhance certain action sequences in the film. In a short letter dated October 29, 1984, Effects offered to prepare seven shots, the most dramatic of which would depict the climactic explosion of the Stuff factory. Cohen agreed to the deal orally, but no one said anything about who would own the copyright in the footage. Cohen was unhappy with the factory explosion Effects created, and he expressed his dissatisfaction by paying Effects only half the promised amount for that shot. Effects made several demands for the rest of the money (a little over $ 8,000), but Cohen refused. Nevertheless, Cohen incorporated Effects's footage into the film and turned it over to New World Entertainment for distribution. Effects then brought this copyright infringement action, claiming that Cohen (along with his production company and New World) had no right to use the special effects footage unless he paid Effects the full contract price. The district court granted summary judgment to Cohen, holding that Effects had granted Cohen an implied license to use the shots.

Issue:

Did Effects grant Cohen an implied license to use the shots in question, thereby justifying the grant of summary judgment to Cohen?

Answer:

Yes.

Conclusion:

The Court noted that 17 U.S.C.S. § 204(a) invalidated the transfer of ownership of a copyright unless it was in writing but that there was a narrow exception for implied licenses. The Court agreed with the judgment below that Effects had given Cohen an implied nonexclusive license to use the special effects footage. Although Cohen had not paid in full, the Court stated that this was not a condition precedent to the finding of an implied license. Therefore, the Court affirmed the grant of summary judgment by the federal court but noted that Effects was free to bring a state law claim for breach of contract.

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