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Move-In Fee is not a Security Deposit — so says Steenes v. MAC Prop. Mgmt.

Written on August 4, 2014 by

When is an advance payment taken by a Landlord not a security deposit or prepaid rent?

The Illinois Appellate Court for the First District recently answered that question when it affirmed a finding that a non-refundable move-in fee was not a disguised security deposit or pre-paid rent.  Steenes v. MAC Property Management, LLC, et al., (2014 IL App (1st) 120719).

The decision joins a growing majority view among courts in other Midwestern states, and may have far-reaching impact on leasing practices of residential landlords in Illinois.  For landlords, the decision upholds lease terms that can be used without subjecting the landlord to harsh penalties for violating the complicated security deposit rules in Chicago and perhaps other communities.  For tenants, these lease terms avoid the burden of posting a security deposit and obtaining a return of the deposit when the tenant vacates the unit.

Steenes was a former residential tenant of property manager and landlord MAC Property Management, LLC (MAC).  The facts set forth in the appellate decision reveal that, during the application process, Steenes received a written “Welcome Statement” from MAC that listed the move-in date, listed required and nonrefundable fees, including payment in advance of a $350 “Move-in Fee,” and stated a rent concession of two month’s rent.  Steenes paid the Move-In Fee on time, signed the Lease, and moved in.

Steenes vacated the unit early and later filed a six-count complaint, of which three challenged the Move-In Fee.  Steenes asserted that MAC violated the City of Chicago Residential Landlord and Tenant Ordinance (RLTO), Chicago Municipal Code § 5-12-010 et seq. (amended Mar. 31, 2004), on the basis that the Move-In Fee was a security deposit or prepaid rent that was governed by the RLTO.

Defendants filed answers to some counts and moved to dismiss others, including the counts challenging the Move-In Fee.  Defendants argued, among other grounds, that the Move-In Fee was neither a security deposit nor prepaid rent, and thus that Steenes failed to sufficiently allege violations of the RLTO and the Illinois Consumer Fraud Act.

The trial court granted defendants’ motion to dismiss with prejudice under Section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 2010)).  The court ruled that (i) the RLTO does not prohibit the imposition of a move-in fee, (ii) the Amended Complaint did not allege facts that showed the Move-In Fee was actually prepaid rent or a security deposit, and (iii) the Amended Complaint did not allege facts that showed the requirement for advance payment of the Move-In Fee was an unlawful attempt to “skirt or get around” provisions of the RLTO regulating security deposits and prepaid rent.

Steenes filed an appeal after the defendants prevailed in mandatory arbitration on the remaining counts of the Amended Complaint.

The Appellate Court noted that it was required to construe provisions of the RLTO and to interpret terms of the lease.  The Court applied normal rules of statutory construction to the RLTO and normal rules of contract construction to the lease, and ruled that where terms of a lease are clear and unambiguous, the terms must be given effect as written and the meaning of the terms is a question of law.

The Appellate Court used the ordinary and popularly understood meaning of the term “security deposit,” and the definition of the term in the Illinois Security Deposit Return Act (765 ILCS 710/1 (West 2008)), and the Illinois Security Deposit Interest Act (765 ILCS 715/1 (West 2008)).  Each source describes a security deposit as monies deposited from a lessee to secure the payment of rent or for compensation for damage to property.  The Court contrasted this definition to the definition of a “fee,” as “[a] charge for labor or services, especially professional services.” Black’s Law Dictionary 629 (7th ed. 1999).

The Court rejected as conclusory Steenes’ arguments that the Move-In Fee must be a security deposit because the form lease had a provision stating that a security deposit had been paid, and because the move-in fee was illusory and without consideration.  The Court noted that the lease was a preprinted form and did not state any dollar amount as a security deposit amount or reference the Welcome Statement or Move-In Fee in the blank provided for this purpose.

The Court relied heavily on statements in the Welcome Statement, in particular that (i) the Move-In Fee was to be paid 5 days before the lease was executed, (ii) the Move-In Fee was nonrefundable, and (iii) the Move-In Fee was an amount less than one-half of the monthly rent.  The Court concluded that the Move-In Fee was a “charge” made in return for Steenes moving into the unit, to cover defendants’ resulting expense, time, and interruption of business related to the move.

The Court found no controlling authority in Illinois, but considered decisions from other states that the parties cited.  The Court noted that in virtually all of these decisions, the reviewing court ruled that non-refundable fees were not security deposits.  The sole exception was Pool v. Insignia Residential Group, 736 N.E.2d 507 (Ohio Ct. App.1999), cited by Steenes.  The Court distinguished Pool on its facts and also noted that Ohio cases decided after Pool have found certain nonrefundable fees not to be security deposits under the applicable landlord-tenant statute, including Stauffer v. TGM Camelot, Inc., No. CA2005-12-508, 2006 WL 1974612 (Ohio Ct. App. (July 17, 2006)). In Stauffer, the Ohio appellate court found a “onetime, nonrefundable fee given as consideration for the right to keep a pet in the apartment” was not a security deposit. Id. at *4.

The Court found the reasoning of the out-of-state cases to be persuasive.  The Court noted that Steenes agreed to pay and did pay the Move-In Fee with full knowledge that it was nonrefundable, and that neither the lease nor Welcome Statement stated that the Move-In Fee was part of any security deposit to be held in trust by defendants and returned to Steenes upon full performance of the lease.

The Court also rejected Steenes’ argument that the Move-In Fee was prepaid rent, on the basis that the Move-In Fee was not within the definition of rent or “any consideration, including any payment, bonus, benefits or gratuity, demanded or received by a landlord for or in connection with the use or occupancy of the premises,” as prepaid rent is defined in the RLTO, Chicago Municipal Code § 5-12-030(f) (amended May 12, 2010).

Practice Pointers:  Cross out security deposit provisions in form leases.  Provide a separate move-in fee receipt or welcome statement indicating the non-refundable advance payment move-in fee is consideration for expense, time, and interruption of business related to move-in, and that the fee is not a bonus, benefit, or gratuity demanded or received by the landlord for or in connection with the use or occupancy of the premises during the lease term.  Caution, the closer the move-in fee gets to one month’s rent, the more it looks like a security deposit or prepaid rent.

Supreme Court Ruling in Laches Case May Cause a Bustle in the Hedgerow

Written on July 3, 2014 by

I have rocked to the awesomeness of “Stairway to Heaven” for a long time.  Whenever I’m at a wedding, I try to get the band to play this Led Zeppelin classic.  Not since Czech composer Johann Stamitz (1717-1757) has a songwriter mastered the art of the crescendo as Jimmy Page did with “Stairway.”  And no lyrics can surpass Robert Plant’s mysterious tale of the lady who’s sure that all that glitters is gold.  I have often wondered, what do these lyrics really mean?  Based on some recent developments, I think I figured it out — they are about copyright infringement.

As a fan of the song, I was dismayed to learn that a lawyer from Philadelphia recently filed a copyright infringement suit against Led Zeppelin, claiming that the haunting strains of “Stairway” were copied from an instrumental song called “Taurus” by the band Spirit (1967-1979).  The song was written by the band’s guitarist, Randy California (who got his stage name playing with Jimi Hendrix in 1966).

In 1968-1969, before Page and Plant wrote “Stairway”, Led Zeppelin played at several concerts with Spirit where “Taurus” was performed, so Led Zeppelin clearly had the opportunity to hear it.  That is called “access” and is one of the elements necessary to prove copyright infringement.  The other requirement is to show substantial similarity of protectable elements of the work.

Is there substantial similarity between “Taurus” and “Stairway”?  You, reasonable reader, can be the judges of that.  The two songs are easy to find on the Internet.  I won’t hazard an opinion, but will simply note that the lyrics of “Stairway” portend something ominous about infringement — “And if you listen very hard/The tune will come to you at last/When all are one and one is all. . . .

Jimmy Page, when asked about the lawsuit, said it was “ridiculous.”  Yes, of course – he knew from the first line of verse five that there was nothing to worry about — “if there’s a bustle in your hedgerow, don’t be alarmed now.”

He was no doubt thinking about the equitable doctrine of laches, which holds that if a person is aware he has a claim but waits an unduly long time to assert it, then the claim is foreclosed.  Certainly the members of Spirit heard “Stairway” upon its releasein late 1970.  Randy California said in an interview published in 1997 that “Stairway” was a “rip-off” of his song.  But he never did anything about it.  Randy’s statement and ensuing inactivity were, of course, foreshadowed in the last line of verse three —  as one of “the voices of those who stand looking.”

Page may have thought that a supposed infringement that first occurred in 1970 could not be pursued in 2014, but “sometimes all of our thoughts are misgiven,” as he should have known from verse two.

Page was likely unaware of an important copyright case recently decided by the U.S. Supreme Court, Petrella v. MGM (May 19, 2014), that could have a significant impact on the “Taurus” litigation.  Petrella raised the question whether a claim for damages in a copyright infringement lawsuit brought within the Copyright Act’s three year statute of limitations could be barred by laches.  The Court held that it could not, even though the claim had been known for many years.

One might wonder how laches would come into play if the statute of limitations is only three years.  It would seem there could be no undue prejudicial delay if a suit has to be brought within three years of the date the cause of action “accrues.”  A copyright claim “accrues” when an infringing act occurs.  The claim against Led Zeppelin would have accrued when “Stairway” was first released in 1970.

But you must be careful, “‘cause you know sometimes words have two meanings.”  In copyright there is the “separate-accrual rule,” which holds that the statute of limitations runs separately from each violation.  In other words, each infringing act starts a new period.

The plaintiff in Petrella is the daughter of Frank Petrella, who wrote the screenplay to the 1980 movie “Raging Bull.”  After Petrella died, his daughter, Paula, obtained the renewal rights to the copyright in 1991.  Seven years later, Paula informed MGM that its continuing exploitation of the film infringed her copyright.  Paula repeatedly threatened to take action, but did nothing for nine more years.  In 2009, eighteen years after first asserting her claim against MGM, Paula filed suit seeking monetary and injunctive relief.  To conform to the separate-accrual rule, she sought relief only for acts occurring in or after 2006.

The district court dismissed the case on the grounds of laches, and the Ninth Circuit affirmed.  Petrella admitted that the reason she hadn’t filed suit earlier was because the film had not made money.

The Supreme Court ruled that Congress, by adopting a rule that allows a plaintiff to reach back only three years for damages, took account of the issue of undue delay.  For activity within that three-year period, “courts are not at liberty to jettison Congress’ judgment on the timeliness of suit.”  It held that laches “cannot be invoked to preclude a claim for damages brought within the three-year window.”

The Court did acknowledge that in extraordinary circumstances the laches doctrine might come into play in determining equitable remedies, such as injunctive relief, or in assessing the profits of the infringer attributable to the infringement.  As to the critique that this would allow plaintiffs to wait and see whether the infringing work makes money, the Court said “there is nothing untoward about waiting to see whether an infringer’s exploitation undercuts the value of the copyrighted work” or to see if the harm is too small to justify litigation.

The “Taurus” suit comes just as Led Zeppelin plans to re-release the album containing “Stairway” in a deluxe, remastered edition.  Under the reasoning of Petrella, even though “Stairway” was released 43 years ago, the plaintiff is not barred from a suit seeking damages resulting from infringements occurring during the past three years.

In light of Petrella, Led Zeppelin might want to consider engaging in settlement negotiations.  As “Stairway” wisely instructs, “Yes, there are two paths you can go by, but in the long run/There’s still time to change the road you’re on.”  Settlement efforts are always a good course of action.  I have no idea whether the parties will actually enter negotiations, but “it’s whispered that soon, if we all call the tune,/Then the piper will lead us to reason.”  After all these years, this is good news for Randy California’s estate.  The estate no doubt takes comfort from the fact that “a new day will dawn for those who stand long,/And the forests will echo with laughter.”

So the perplexing lyrics of “Stairway” have much to say about copyright litigation, but one mystery remains.  It is indisputably true that “There walks a lady we all know/ Who shines white light and wants to show /How everything still turns to gold.”  The only question is, for whom?  It definitely makes me wonder.

What Happens When Street Art Meets Private Property?

Written on May 27, 2014 by

We think of graffiti as ugly and annoying — gang symbols, names of taggers in cartoonish balloon letters, and crude drawings. But if that is all you can visualize when you think of graffiti, you should quickly search Google search for the name “5Pointz” and look at the images that pop up. You will see stunning examples of what some would call graffiti, but is more appropriately called “exterior aerosol art.”

5Pointz is a compound of large, empty factory buildings occupying an entire city block in Queens, New York. In the 90’s, the walls had become a magnet for unsightly graffiti until 2002, when a street artist named Jonathan Cohen approached the owner of the buildings, Gerald Wolkoff, with a novel proposal: instead of allowing the buildings to deteriorate into an inevitable urban eyesore, Wolkoff should let Cohen act as the curator of this graffiti museum. Wolkoff, who was supportive of the creativity of the art that adorned his buildings, agreed.

Under Cohen’s stewardship, 5Pointz became a “mecca for high-end works by internationally known aerosol artists.” Hundreds of artists participated, on wall space allocated by Cohen. It was controlled chaos. The overall results were amazing. The walls were filled with vibrant, colorful designs and large scale, lifelike portraits. 5Pointz became the repository of the largest collection of exterior aerosol art in the country.

So engaging was the art that covered virtually every inch of the huge complex (part of it rising five industrial stories high into the Queens cityscape) that 5Pointz became a tourist attraction. As many as 10 tour buses a day would visit the site. Cohen personally conducted hundreds of school tours each year, as well as corporate and VIP tours. 5Pointz appeared in the Time Out New York guide as “a New York must-see.”

Alas, on November 19th of 2013, the tour buses stopped. Though you can still see much of the artwork on the Internet, you won’t see it at 5Pointz. It has all been whitewashed. This is what happens when street art meets private property.

The story of the demise of 5Pointz is vividly told by Judge Frederic Block in Cohen v. G&M Realty (S.D.N.Y., November 20, 2013). The lawsuit was precipitated by the irresistible force called “Progress.” Though Wolkoff appreciated the aerosol art on his buildings, he decided to demolish the empty structures to allow for the construction of two apartment buildings that would provide about 1,000 residences. After several years of planning, Wolkoff received permission from the City Planning Commission in August, 2013.

A group of the artists hoped that the copyright law would come to their aid to preserve the art. They brought suit under the Visual Artists Rights Act (VARA), which prohibits the destruction of certain “works of visual art,” if the work is one of “recognized stature.”

Could this Act, which was essentially designed to protect works of fine art, be used to protect graffiti? Never before has a court confronted the issue of whether the work of an exterior aerosol artist is protected by VARA.

The artists asked the court to issue a preliminary injunction to prohibit the demolition of the building. Cohen and the other plaintiffs claimed that the aerosol art adorning the walls of 5Pointz falls squarely within the definition of “a work of visual art,” namely “a painting, drawing, print, or sculpture, existing in a single copy….” Nothing in the Act says the art must be on paper or canvas; nothing says that it cannot be on the exterior of a dilapidated building. VARA contains no prohibition on spray paint. As such, the court agreed that the aerosol art came within the scope of VARA.

The more difficult question was whether the paintings were of “recognized stature.” This element of VARA requires that a work must have “stature,” i.e., is viewed as meritorious, and that this stature is recognized by art experts, other members of the art community, or by some cross-section of society. The artists identified 24 specific paintings on the building that they contended met these standards.

Testimony of dueling art experts was presented. The defendant’s expert pointed out that for most of the works there were “no dissertations, no journal articles, no other scholarly mentions of the work,” and importantly “no Google results.” The plaintiff’s expert focused on the quality of the works and the significant public exposure. Scholarly discussion, he said, is the old way of looking at recognized stature. New media has changed the concept of being “recognized.”

Judge Block, who was born in Brooklyn, concluded that at least some of the works raised a legitimate claim to being of recognized stature, but the question required a full trial rather than just a preliminary injunction hearing.

The judge clearly appreciated the art and seemed disposed to agree with the artists on the merits of their VARA claim. He wistfully wrote that “our souls owe a debt of gratitude to the plaintiffs for having brought the dusty walls of [these] buildings to life.”

However, there remained a significant hurdle to the plaintiffs’ case, namely, the transitory nature of the art. The artists created the paintings knowing that the buildings would eventually be demolished. This tipped the balance of hardships in favor of the building owner. The court also found that the artists, aware that their aerosol art would one day be destroyed, did not suffer irreparable harm because if they ultimately prevailed they would be able to recover monetary damages under the Copyright Act. Dollars can be a potent salve, and the works can live on in other media. Reluctantly, the art-loving judge denied the injunction.

Within days after the court ruled, but before it had issued a written opinion, Wolkoff, “under cover of darkness,” painted over all the works at 5Pointz. Though the art is gone, the case lives on. Wolkoff still faces the possibility of monetary damages if the 24 works are found to be of “recognized stature” after a full trial.

When it approved the demolition of 5Pointz, the City Planning Commission required that 3,300 square feet of the exterior of the new apartment buildings be made available for art. Noting this fact, Judge Block sent a none too subtle message to Wolkoff suggesting that he make even more space available for street art and give Cohen permission to continue as curator. “For sure,” wrote Judge Block, “the Court would look kindly on such largesse when it might be required to consider the issue of monetary damages; and 5Pointz, as reincarnated, would live.” It would be good for the artists, good for New York City, and probably good for Wolkoff. It might not be prudent to ignore such a judicious suggestion.

Google Prevails in Fair Use Case Over Google Books

Written on April 24, 2014 by

Google’s unofficial slogan “Don’t be evil” sets a pretty low bar as a standard of corporate conduct. Maybe that’s why the company is so often the subject of criticism. The Google-haters are numerous and the complaints are strident: Google invades our privacy, it reads our e-mail, it allows censorship in China, it is unfair in its page rankings, it has inundated us with advertisements. One group of researchers reporting on the dangers of large search engines said “Google has become the main interface for our whole reality.” That is perhaps a bit of hyperbole, but there is no doubt that Google plays a crucial and pervasive role in our lives. Sometimes we hate the ones we depend on most.

Another criticism of Google is that it is a copyright infringer on a massive scale. The flashpoint for this charge was its announcement of the Google Book Project in 2004. Google, in partnership with several major university libraries, began scanning the entire collections of the books in these libraries. At present, Google has digitized over 20 million books cover to cover. The purpose for this prodigious project is to enable computerized searching of the entire text of the books. As lawyers, we are accustomed to doing full-text word searches of court decisions on Westlaw or Lexis, but the Google Book Project for the first time enables a user to search the entire contents of the libraries at Harvard, Stanford, Oxford, University of Michigan, and many others. The Book Project is a large stride toward Google’s ambitious corporate mission: “to organize the world’s information and make it universally accessible and useful.”

The obvious problem is copyright. While millions of the volumes in the Project are in the public domain, millions more are still protected by copyright. To seek permission to digitize every copyrighted book in the libraries would be a logistic impossibility. So Google addressed the problem in a bold and controversial way. Rather than seeking permission from publishers and authors to scan copyrighted books, Google scanned all the books and announced that if any copyright owner did not want its book included in the Project, Google would gladly remove it. In other words, authors and publishers could “opt-out” of the Project rather than “opting-in.” The broad protectionists of copyright were appalled, arguing that this turned copyright on its head. Copyright is an opt-in system, they said. By 2005, both the authors’ and publishers’ associations brought class action lawsuits for copyright infringement. The risk to Google of pursuing the Project was huge, but it persisted, relying on the fair use doctrine to justify its novel approach.

The basis for Google’s fair use defense is that it tailors the technology of the Book Project to accommodate, to a degree, the interests of copyright owners. Public domain books can be searched and viewed in their entirety. For copyrighted books, however, while the entire text is searched, only “snippets” of a few lines containing the search terms can be viewed. Some publishers allow Google to display more extended portions than snippets while not allowing the entire book to be viewed. Using Google Books to search for terms in a copyrighted book is like using an electronic index or electronic browsing.

For now, at least, Google can relax. In Authors Guild, Inc. v. Google, Inc., (S.D.N.Y., November 14, 2013), Judge Denny Chin ruled that the Google Book Project is a fair use and granted Google’s motion for summary judgment. The court pointed to several benefits of the Project. Most importantly, Google Books has become an essential tool for research, allowing scholars and other readers an efficient way to find books and information. For example, say an art historian wanted to know whether there was any connection between Marsilio Ficino, a Renaissance philosopher, and Agostino Chigi, a wealthy Renaissance patron of the arts. By plugging those names into Google Books’ search engine, the researcher immediately discovers at the top of the search results a book entitled “Influences: Art, Optics and Astrology in the Italian Renaissance,” published by the University of Chicago Press in 2013. The reader is able to browse the portions of the book where the search terms are found to see if the book is relevant. Because only excerpts are displayed, the researcher can’t read the entire book and can’t download any material from the book. To facilitate the immediate purchase of the displayed work, Google provides links to online book vendors.

This is how copyright law should work. The reader has access to books that may only be available at distant libraries and can easily find new information that would otherwise have been inaccessible to the reader. The publisher has already made a sale of the book to the library and might get another sale to the reader as well. The author gets her royalty on the sales. And Google has taken a small step toward its mission of making information universally accessible and useful. Judge Chin’s decision is an excellent example of a ruling that achieves the ultimate goal of copyright law — to promote the dissemination of knowledge and the advancement of learning, while also providing an economic benefit to the author.

A key consideration in a fair use assessment is whether the new work is transformative, that is, whether it merely supplants the original work, or whether instead it “adds something new with a further purpose or different character, altering the first with new expression, meaning or message.” Even though the copies Google made were verbatim, Judge Chin found that the use of the copyrighted works was “highly transformative.” The transformation comes through the digitization, which transforms the text into a comprehensive word index that enables searching. Using the digital text for searching and display of snippets is analogous to a search engine displaying copyrighted thumbnail images when providing results for a search of websites, a practice that has previously been held to be fair use in Perfect 10 v. (9th Cir. 2007).

The court also ruled that Google Books does not usurp the market for the original book. Google does not sell the digital scans. And, given the technological restrictions built into Google Books, it is unreasonable to think that readers would try to read an entire book via snippets. “To the contrary,” said the court, “a reasonable fact finder could only find that Google Books enhances the sales of books. Google provides convenient links to booksellers to make it easy for a reader to order a book.” Judge Chin is no doubt right about this. In fact, I hear that copies of “Influences: Art, Optics, and Astrology in the Italian Renaissance” are flying off the shelves.

Suit Unravels the Mystery of Sherlock Holmes’ Copyright

Written on March 20, 2014 by

We all know who Sir Arthur Conan Doyle is, but who is Leslie S. Klinger, and why is he suing the Estate of Conan Doyle? You might say Klinger leads a double life. He is an estate planning and tax attorney at Kopple & Klinger in Los Angeles. But he is better known as one of the world’s leading experts on Sherlock Holmes. He is the author of many scholarly works on Holmes, including an award-winning three volume annotated collection that has been called “the definitive exegesis of Holmes and his times.”

Why is this Holmes scholar suing the Estate of the beloved detective’s creator? It seems so irregular, yet the answer is obvious. Klinger is trying to free his hero from the shackles of copyright law.

Even though Holmes first appeared in 1887 in “A Study in Scarlet”, the Conan Doyle Estate continues to assert copyright in the character. The Holmes “canon” consists of 4 novels and 56 stories. Most of those works were published before the all-important year of 1923. Under copyright duration rules, any work published in the U.S. before 1923 is in the public domain because its copyright has expired. Only ten of the works (the “Ten Stories”) were first published in 1923 or later and are still protected by copyright.

Klinger is currently preparing a collection of original fictional stories that feature Sherlock and other characters that appear in the canon. As it had in the past, the Estate contacted Klinger and demanded that he enter a copyright license agreement, even though Klinger contends that all the characters and story elements in the proposed book appear in the pre-1923 works. Though Klinger had begrudgingly entered licenses with the Estate in the past, this time he refused. In the response, the Estate took a dastardly approach. According to Klinger, the Conan Doyle Estate threatened “if you proceed instead to bring out [the new collection] unlicensed, do not expect to see it offered for sale by Amazon, Barnes & Noble, and similar retailers. We work with those companies routinely to weed out unlicensed uses of Sherlock Holmes from their offerings, and will not hesitate to do so with your book as well.” This sounds like a tactic sprung from the mind of Professor Moriarty, who, according to Holmes, “had hereditary tendencies of the most diabolical kind.”

Not intimidated, Klinger brought a declaratory judgment action in the federal court in Chicago, seeking to clarify that all the characters and story elements from the pre-1923 works are in the public domain. Klinger v. Conan-Doyle Estate, Ltd, No. 13-cv-1226. Klinger has filed a motion for summary judgment and the Estate has responded.

I was anxious to see what ingenious defense the Estate would put forward to justify how it can demand copyright royalties for characters who were created 126 years ago. I was not disappointed. The Estate has proffered a most intriguing explanation as to why they still control Holmes, Watson, and company.

First, the Estate admits that the first fifty stories “are indeed in the public domain” — a prudent move since it is undeniable under the Copyright Act provisions on duration. The heart of the Estate’s argument lies, as it logically must, in the fact (also indisputable) that the Ten Stories are still protected by copyright. But to make this argument work, the Estate would have to show some incontrovertible nexus between the late copyrights and the early characters, since the early works are admittedly in the public domain. Put to the test, the Estate made an argument that only an English major could devise. The argument is that Holmes and Watson were not “complete” in the first fifty works; they continued to be developed in the copyrighted Ten Stories. In those later works, Sir Arthur added new aspects to each character’s background, and even changed Holmes’ outlook on the world, reflecting a gradual mellowing of his personality. Thus, we could not have known the real Holmes until the bitter end.

If the characters were only completed in the post-1922 stories, argues the Estate, then those characters are still protected. Klinger’s position would create multiple personalities out of Holmes — a public domain version and the true version. This, it argues, is a travesty and can’t be done: “Plaintiff suggests that Holmes and Watson can be dismantled into partial versions of themselves. But a complex literary figure can no more be unraveled without disintegration than a human personality.”

Ingenious, perhaps, but ultimately unsatisfying from a copyright perspective. This is copyright we’re talking about, not psychology. The problem with the Estate’s argument is that it would result in adding years onto the copyright life of the Mr. Holmes. Holmes was protected by copyright from the moment he appeared in a publication with a copyright notice. The law does not say that the copyright duration clock begins ticking only when a character is complete. How would we know whether or when a character is complete? Whose concept of “complete” controls? Is James Bond complete? How about Mickey Mouse? A copyright owner can continue developing a character and making derivative works throughout the entire term of the copyright in the original character. The notion that copyright duration is measured from the time a fictional character is complete seems unworkable. The result would be to keep a long-lived character in copyright far longer than the statute envisions.

The case of Silverman v. CBS, Inc. (2d Cir. 1989) provides a solution to the conundrums presented by this case. Silverman involved the characters of the old 1940’s radio show “Amos ‘n Andy,” which went on to become a television show in the 1960’s. The radio scripts had fallen into the public domain, but the television shows had not. When confronted with the issue of whether the characters were still protected by copyright, the court ruled that the original characters as delineated in the radio shows remained in the public domain. The copyright in the television episodes provided protection only for the increments of expression beyond what was contained in the early radio scripts.

That concept could readily be applied to the Holmes affair. Events and character first appearing in the Ten Stories would remain inviolate. But anything or anyone appearing in the first fifty works belongs to the public. There is a quid pro quo in copyright — certain exclusive rights are given to a copyright owner for a defined period of time, but once that period expires, the subject matter is free for the public to use as they wish. The Estate’s theory would provide it with extra years of copyright protection that were not part of the legislative bargain.

So perhaps Holmes does have a split personality for copyright purposes. But we can take solace in the fact that after 2022, when the last of the Ten Stories falls into the public domain, his malady will be cured and he will come together again as a whole person. In the meantime, we will leave it to the experts to speculate about what Holmes himself would think of all this.

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