The Fine Print

A Case In Point

Consider a case decided in 1995 by the U.S. Court of Appeals for the 2nd Circuit. A national magazine developed a relationship with a freelance artist in which the artist would submit paintings on a regular basis and, nearly every month, one of his paintings would appear in the magazine. This went on for 10 years. At first, the editors would describe how they wanted to illustrate a particular article, but over time, they allowed the artist to submit whatever he wanted to paint because his style so suited the publication. There was no contract signed in advance, but each check had a statement stamped on the back that said by signing, the artist was acknowledging payment in full and assigned all rights, title and interest in the item (which was then described) to the magazine. In later years, the checks specifically stated that by endorsing the check, the artist was agreeing that the painting was work-for-hire and that the publisher owned all rights, including the copyright.

After the artist's death in 1984, his widow obtained rights to his artwork, had posters and fine art reproductions made, and made $23 million from their sale. The publisher filed suit, hoping to be declared sole owner of the copyright of all the artist's paintings that had appeared in the magazine. When the publisher then started selling reproductions of the artwork that had appeared in the magazine, the widow countersued for copyright infringement.

The case wound through the courts for five years. The publisher argued that the statements on all the checks effectively transferred ownership of the copyrights. The court disagreed concerning all the checks that did not use the word "copyright." Perhaps, the court noted, the artist intended only a one-time transfer of rights. The case was decided in favor of the widow, allowing her to keep the copyright on 100 paintings, plus the millions of dollars to be made from the sale of reproductions. The publisher could have avoided the lawsuit if it had entered into a written agreement with the artist when commissioning the works and made sure the agreement stated that the copyright was transferred.

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This article was originally published in the June 1998 print edition of Entrepreneur with the headline: The Fine Print.

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