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Screenwriter’s copyright returns from the dead - Labor law doesn’t control work-for-hire determination

April / May 2022 IP Newsletter

Employee or independent contractor? The answer is critical for a variety of rights, and multiple tests have been developed under employment law. But, in Horror, Inc. v. Miller, the U.S. Court of Appeals for the Second Circuit affirmed those tests aren’t determinative when it comes to copyright issues.

A frightful dispute

Victor Miller writes novels, screenplays and teleplays. In 1976, he began working with Sean Cunningham, a producer, director and writer of feature films. Cunningham is the general partner of Manny Company (Manny), which produces and distributes films. In a five-year period, despite the two collaborating on five movies, Miller’s role with respect to Manny Company was hardly clear.

In 1979, in the wake of the success of the movie “Halloween,” Miller and Cunningham agreed to work on the screenplay for another horror movie. After they signed the Writers Guild of America’s standard form contract, Miller developed the idea for “Friday the 13th” and, over time, completed the final draft of the screenplay, working closely with Cunningham. Miller, however, received the sole “written by” credit as screenwriter. The movie was a massive hit and led to 11 sequels.

Manny assigned its rights in the film and screenplay to the predecessor of Horror Inc., which had financed the project, in 1980. Horror registered the copyright. Horror was listed as the film’s made-for-hire author, and Miller was credited for the screenplay.

In 2016, Miller invoked his termination rights to reclaim copyright ownership and served notice on Manny and Horror. The two companies sued him, seeking a declaration that Miller was Manny’s employee when he wrote the screenplay, making it a work for hire for which the employer holds the rights. Miller counterclaimed, seeking a declaration to the contrary.

If Miller was an employee, Manny owns the screenplay, and Miller had no termination rights. But, if he was an independent contractor (and other conditions are satisfied), Miller was entitled to terminate Manny’s and its successors’ rights and reclaim his copyright ownership of the screenplay.

The trial court found that Miller didn’t prepare the screenplay as a work for hire; he was the author and could terminate Manny’s and Horror’s rights. They appealed.

The bloody truth

The district court reached its conclusion by applying the so-called Reid factors, a framework established by the U.S. Supreme Court for determining whether an individual is an employee or an independent contractor for purposes of copyright. The factors are based on the law of agency.

On appeal, the companies argued that the trial court shouldn’t have applied the Reid factors. Rather, they claimed, the court should accept the finding of the National Labor Review Board that screenwriters are employees of production companies under the National Labor Relations Act. The Second Circuit, however, rejected the notion that Miller’s employment status should be determined under labor or employment law, not agency law.

The appellate court proceeded to weigh the Reid factors. Of the 13 nonexclusive factors, it focused on the five “core considerations that will almost always be relevant” and that courts give more weight. These factors generally are highly relevant to the true nature of the employment relationship:

  1. The hiring party’s right to control the manner and means of creation,
  2. The skill required of the hired party,
  3. The provision of employee benefits,
  4. The tax treatment of the hired party, and
  5. Whether the hiring party has the right to assign additional projects to the hired party.

Considering the close working relationship between Miller and Cunningham, the appellate court found that the control factor tipped “marginally” in favor of the companies’ contention that Miller was an employee. The other factors, however, all favored a finding that he was an independent contractor.

Miller used his expertise and creativity to write the screenplay. Manny didn’t provide benefits or withhold taxes. And it hired Miller solely to write the “Friday the 13th” screenplay.

The chilling conclusion

As this case makes clear, employers that wish to rely on work-for-hire arrangements to secure copyrights can’t rely on sweeping labor law tests for worker status. The Copyright Act uses a much more restrictive definition of employment.

Sidebar: Union membership doesn’t affect copyright protections

The companies in Horror, Inc. v. Miller (see main article) alternatively asserted that the screenplay writer’s union membership should be considered as an additional Reid factor. As the U.S. Court of Appeals for the Second Circuit noted, the companies essentially argued that, because the screenwriter community expected to be treated as employees for collective bargaining purposes, they also expected to be treated as employees for copyright purposes.

The court found that any such community expectations reflected only the writers’ understanding of labor law and their desire to use that regime to their advantage in an industry where they typically have little individual bargaining power. While the screenplay writer’s union membership might play a role in shaping his relationship with the companies and convey certain protections under labor law, it didn’t affect the court’s analysis of the Reid factors for copyright purposes. The lower court, therefore, didn’t err in refusing to treat union membership as a separate factor.

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