In Case of First Impression, Third Circuit Says that Claim for Joint Authorship Accrues Upon “Express Repudiation”

Court finds that where a claimant should have known that an alleged co-author asserts sole ownership of copyright rights, the statute of limitations on the claim starts to run.

A recent decision from the U.S. Court of Appeals for the Third Circuit clarifies when the countdown starts for authors hoping to bring a declaratory judgment claim for joint authorship under the Copyright Act.  In Brownstein v. Lindsay, the Third Circuit held that an authorship claim arises and accrues when a plaintiff’s status as an author under copyright law has been “expressly repudiated” by a defendant, thus triggering the applicable three-year statute of limitations to assert a claim.  The decision also confirms the district courts’ lack of inherent power to cancel copyright registrations on their own accord. 

In 2010, plaintiff Peter Brownstein initiated an action against his former colleague and business partner, Tina Lindsay, seeking to solidify his position as a co-author of copyright in an ethnic identification system developed by Brownstein and Lindsay (the “LCID”).  In 1993, Lindsay began developing rules for categorizing names by ethnicity, based on a variety of factors, to assist in direct mailing initiatives for others.  These rules later became known as the Ethnic Determinate System (“EDS”).  Shortly thereafter, Lindsay enlisted Brownstein to turn her EDS rules into reality, by developing the computer code, dubbed the ETHN code, that would ultimately comprise the LCID.   Eventually, Lindsay and Brownstein formed Tap Systems, Inc. to monetize their LCID and, as part of their efforts, Lindsay unilaterally executed a series of software license agreements on behalf of Tap Systems, Inc.  Also around this time, Lindsay filed for and obtained two copyright registrations for her EDS rules.  In conjunction with the second registration, Lindsay submitted to the Copyright Office a “deposit copy” of the ETHN computer code.  Notably, both registrations identified Lindsay as the sole author, without any mention of Brownstein’s contributions.  While Brownstein admitted at trial that he received copies of both registration certificates for safekeeping, he claims he never reviewed them until after filing suit.

As the parties’ business relationship began to sour, Lindsay and Brownstein became involved in at least three litigations which spurred two settlement agreements (both signed by Brownstein), not to mention the instant action.  In 2009, Brownstein also took measures to protect his ETHN computer code by obtaining his own registration with the Copyright Office.  When Brownstein commenced the lawsuit in 2010, Lindsay counterclaimed seeking to cancel Brownstein’s ETHN registration.  When the dust from the trial settled, Lindsay moved for a judgment as a matter of law, contending that Brownstein’s declaratory judgment claim was time-barred and, in any event, that that there was no evidence in the record to support Brownstein’s co-authorship claim.  The district court agreed, granting Lindsay’s motion and ordering the cancellation of Brownstein’s copyright registration.  Both aspects were reversed on appeal.

Before reaching the ultimate question of whether Brownstein’s claim was timely, the Third Circuit was first tasked with reevaluating the record below, finding confirmation that Brownstein was, in fact, both a co-author and co-owner of the LCID.  First, Lindsay conceded that Brownstein co-authored the LCID through at least 1997.  Thus, to the extent any subsequent derivative works contained his contributions, Brownstein would have a right to share in any resulting proceeds.  Second, even if Lindsay engaged in activities that were adverse to Brownstein’s interest in the LCID, his copyright would remain undisturbed.  For instance, Lindsay’s copyright registrations in her name, alone, could not alter Brownstein’s status as a co-owner of copyright.  Neither did the fact that Lindsay submitted Brownstein’s ETHN as a deposit copy for her registration of the EDS rules.  Ultimately, the court found the LCID to be a joint work, in which both Lindsay’s EDS rules and Brownstein’s ETHN code were “irrevocably intertwined” and inseparable.  Thus, while Lindsay was entitled to grant nonexclusive licenses of the LCID, as tenants-in-common of the LCID, she maintained a duty to account to Brownstein, as a co-author and co-owner of the work.

Turning to the statute of limitations issue, the Third Circuit stated that a joint authorship claim accrues and the clock begins to run when an author “discovers or should have discovered with ‘due diligence’ that his rights have been violated.”  Following the Ninth Circuit, the Third Circuit held that in the case of a dispute between putative joint authors, a claimant is charged with knowledge of a potential violation when his claim is “expressly repudiated” by his co-author.   Accordingly, the three year statute of limitations to bring a declaratory judgment claim began the moment Lindsay expressly repudiated or communicated to Brownstein that he is not a co-author – or that she is the sole author of the LCID.

With this bright-line rule in mind, the Third Circuit turned to the facts at hand to determine whether any of Lindsay’s actions could be construed as an express repudiation of Brownstein’s co-authorship status.   As a legal and practical matter, Lindsay’s copyright registrations were insufficient to place Brownstein on notice.  To hold otherwise would require co-authors to monitor the copyright register for adverse registrations.  Next, the Third Circuit looked at Lindsay’s various licenses and the parties’ prior settlement agreements for indicia sufficient to give rise to an express repudiation.  In the court’s view, none of the agreements clearly provided Brownstein with the necessary “storm warnings” that his interests were in peril and thus, the district court’s decision was reversed and remanded for a determination by a jury as to whether any of Lindsay’s actions gave rise to an express repudiation.

Finally, the Third Circuit reserved the lower court’s decision to cancel Brownstein’s registrations, holding that while courts may invalidate an underlying copyright interest, they do not have any inherent or statutory authority to cancel a registration, which is an administrative function, reserved for the Register of Copyrights.

Brownstein serves as a cautionary tale for copyright claimants to be vigilant when it comes to protecting their ownership interest, particularly in the case of joint works with co-owners.  While a written agreement could have avoided years of litigation, an outright failure to take any action could result in the loss of an otherwise meritorious claim.