From literary works and artistic creations to software code and architectural designs, copyright law grants creators the exclusive right to control how their works are used, reproduced, and distributed. In today's rapidly evolving business landscape, protecting these assets is more important than ever.

In a recent case, Enterprise Management Limited, Inc. v. Construx Software Builders, Inc. (2023), the Ninth Circuit Court of Appeals delved into the realm of copyright law in addressing an unanswered question regarding derivative works and the role of registration.

The Ninth Circuit's decision holds that a copyright owner's registration of a derivative work inherently encompasses the copyrighted elements of the original work, even if the original work wasn't individually registered.

In this article we explore this decision and its implications, as well as reiterating the importance of safeguarding creative assets through proactive copyright protection.

While copyright protection is automatic upon creation, registering works with the Copyright Office provides essential legal advantages, including the ability to enforce the copyright in court, the presumption of validity, and enhanced remedies in cases of infringement. Businesses should be proactive in registering their copyrighted materials to strengthen their legal position, particularly when working with evolving derivative works.

Derivative Works and Copyright Registration

One of the protected rights granted under copyright law is the exclusive right to create derivative works. Derivative works are creations that are built upon existing, copyrighted material, transforming, adapting, or reimagining the work in some way to bring forth something new.

The moment an original work is created and captured in a tangible form — whether it's written down, recorded, or otherwise fixed — it is automatically protected by copyright. This means that the creator holds the exclusive rights to reproduce, distribute, display, perform, and create derivative works based on their creation, regardless of registration status.

Registration, however, is a prerequisite to enforcing the copyright, i.e., by commencing a lawsuit, and serves as a public record of the work's existence and the creator's ownership, making it easier to prove ownership in case of legal disputes. Moreover, if registration is made within certain timeframes, it constitutes prima facie evidence of the work's validity and the facts stated in the registration certificate.

But what if a copyright owner can’t establish that the original work was registered? In Enterprise Management, the Ninth Circuit Court of Appeals grappled with the question of registerability when a derivative work included copyrightable elements of an unregistered original work.

Background

The dispute in question revolved around the alleged copyright infringement of two charts depicting organizational change created by Doctor Mary Lippitt and her company, Enterprise Management Ltd.

Lippitt, a renowned expert in organizational change, developed these charts as part of a series of comprehensive consulting presentation materials. The pivotal question before the court was whether the copyright for the charts had been properly registered, thus enabling the copyright owner to enforce the copyright by commencing a lawsuit for copyright infringement.

Lippitt had submitted her original chart to the Copyright Office as part of presentation materials in 1987. Subsequently, she refined and revised the chart, submitting a derivative version to the Copyright Office in 2000, and again in 2003. These registrations formed the basis of her claim against Steve McConnell and his company, Construx Software Builders, who were accused of infringing both the original and revised charts.

McConnell moved for summary judgment, which the district court granted in part and denied in part. The district court first ruled that Lippitt failed to show that she had registered the original chart because she did not present evidence that the chart was included in the original presentation materials registered by the first registration certificate. As part of routine practice the Copyright Office destroyed Lippitt’s original paper submission. Therefore, the district court granted summary judgment in McConnell's favor with respect to Lippitt's claim that McConnell infringed the original chart.

The district court then denied the motion for summary judgment with respect to Lippitt's claim that McConnell infringed the revised chart because Lippitt created a genuine issue of material fact as to whether McConnell had copied it, but the court issued a pretrial order precluding Lippitt from basing any argument on her alleged ownership of the copyright in the original chart, including any argument that McConnell infringed the revised chart by copying elements from the original chart. As a result, the jury returned a verdict for McConnell.

The Ninth Circuit's Decision

The Ninth Circuit tackled two pivotal issues in this case: first, whether Lippitt had properly registered the original chart, and second, whether a copyright owner who registers a derivative work also registers the elements of the original work included in the derivative work. The court's ruling on the latter issue holds significant implications for copyright law.

The court scrutinized the evidence presented by Lippitt and concluded that her detailed and consistent statements regarding the original presentation materials were sufficient to establish a genuine issue of material fact concerning the registration of the original chart. This finding marked a reversal of the district court's decision to grant partial summary judgment to McConnell on this issue.

Moreover, the Ninth Circuit's decision clarified the question regarding copyright of derivative works. The court held that when a derivative work incorporates copyrightable elements of an unregistered original work, the copyright owner's registration of the derivative work also registers the included elements of the original work. This ruling aligns with the decisions held by other circuits, notably the Second, Fourth, and Tenth Circuits, holding that registration of a derivative work effectively extends to the underlying elements of the original work.

Takeaways

The Enterprise Management decision carries several important takeaways for both businesses and legal practitioners.

First, while copyright protection is inherent upon creation, securing registration with the Copyright Office offers crucial legal benefits. It is advisable for businesses to take a proactive stance in registering their copyrighted materials to enhance their legal standing.

The court's ruling also clarifies the relationship between derivative works and copyright registration. Businesses creating derivative works should ensure that underlying copyrighted elements are properly registered to safeguard their rights, but in cases where this step may not be feasible, as demonstrated in Enterprise Management, remedies may still be attainable.