TCA Television Corp. v. McCollum

          Argued: June 23, 2016

         On appeal from a judgment entered in the Southern District of New York (Daniels, J.) dismissing an action for copyright infringement by the heirs of William "Bud" Abbott and Lou Costello, plaintiffs challenge the district court's determination, made as a matter of law on a Rule 12(b)(6) motion, that defendants' verbatim use of a portion of Abbott and Costello's iconic comedy routine, Who's on First?, in the recent Broadway play Hand to God, qualified as a non-infringing fair use. Defendants defend the district court's fair use ruling, and further argue that dismissal is supported, in any event, by plaintiffs' failure to plead a valid copyright interest. We here conclude that defendants' appropriation of Who's on First? was not a fair use, but, nevertheless, affirm the challenged judgment on defendants' alternative invalidity ground.

          Jonathan D. Reichman (Jonathan W. Thomas, on the brief), Kenyon & Kenyon LLP, New York, New York, for Plaintiffs-Appellants.

          Mark J. Lawless, Law Office of Mark J. Lawless, New York, New York, for Defendants-Appellees.

          Before: Jacobs, Calabresi, Raggi, Circuit Judges.

          REENA RAGGI, CIRCUIT JUDGE

         In this action for copyright infringement, plaintiffs, successors-in-interest to the estates of William "Bud" Abbott and Lou Costello, appeal from a judgment of dismissal entered in the United States District Court for the Southern District of New York (George B. Daniels, Jr., Judge) in favor of defendants, who include the producers of Hand to God and the play's author, Robert Askins. See TCA Television Corp. v. McCollum, 151 F.Supp.3d 419 (S.D.N.Y. 2015). Plaintiffs assert that the district court erred in concluding from the amended complaint that defendants' use of a portion of the iconic Abbott and Costello comedy routine, Who's on First?, in Act I of Hand to God was so transformative as to establish defendants' fair use defense as a matter of law. See Fed. R. Civ. P. 12(b)(6). Defendants here not only defend the district court's fair use determination but also argue that affirmance is warranted, in any event, by plaintiffs' failure to plead a valid copyright interest. The district court rejected that argument. See TCA Television Corp. v. McCollum, 151 F.Supp.3d at 430- 31.^[1]

         For the reasons explained herein, we conclude that defendants' verbatim incorporation of more than a minute of the Who's on First? routine in their commercial production was not a fair use of the material. Nevertheless, we affirm dismissal because plaintiffs fail plausibly to allege a valid copyright interest.

         I. Background

         The following facts derive from plaintiffs' amended complaint, incorporated exhibits, and documents susceptible to judicial notice. See Goel v. Bunge, Ltd., 820 F.3d 554, 559 (2d Cir. 2016) (acknowledging that, on motion to dismiss, courts may consider documents appended to or incorporated in complaint and matters of which judicial notice may be taken); Island Software & Comput. Serv., Inc. v. Microsoft Corp., 413 F.3d 257, 261 (2d Cir. 2005) (stating that court may take judicial notice of copyright registrations). For purposes of this appeal, we presume these facts to be true. See Anschutz Corp. v. Merrill Lynch & Co., 690 F.3d 98, 102 (2d Cir. 2012).

         A. Abbott and Costello's Who's on First? Routine

         Abbott and Costello were a popular mid-Twentieth Century comedy duo. One of their routines, commonly referred to as Who's on First? (also, the "Routine"), has become a treasured piece of American entertainment history.^[2]The Routine's humor derives from misunderstandings that arise when Abbott announces the roster of a baseball team filled with such oddly named players as "Who, " "What, " and "I Don't Know." A rapid-fire exchange reveals that "who's on first" need not be a question. It can be a statement of fact, i.e., a player named "Who" is the first baseman. Later parts of the routine reveal, after similar comic misunderstandings, that a player named "What" is the second baseman, and one named "I Don't Know" is the third baseman.

         B. Agreements Pertaining to Rights in the Routine

         The parties cite various contracts and copyright filings spanning more than 40 years as relevant to claimed rights in the Routine.

         1. Abbott and Costello's Agreements with UPC

         a. The July 1940 Agreement

         Abbott and Costello first performed Who's on First? in the late 1930s, notably on a 1938 live radio broadcast of The Kate Smith Hour. The Routine was published for purposes of federal copyright law when Abbott and Costello performed a version of it in their first motion picture, One Night in the Tropics ("Tropics").^[3]

         The team appeared in Tropics pursuant to a July 24, 1940 contract (the "July Agreement") with Universal Pictures Company, Inc. ("UPC"). The July Agreement guaranteed Abbott and Costello a minimum of five weeks' work at a pay rate of $3, 500 per week. In turn, Abbott and Costello (the "Artists") agreed to grant UPC (the "Producer") certain rights and to furnish it with certain items. We reproduce the relevant text here, adding bracketed signals and highlighting to distinguish various provisions:

[1] The Artists expressly give and grant to the Producer the sole and exclusive right to photograph and/or otherwise reproduce any and all of their acts, poses, plays and appearances of any and all kinds during the term hereof, and [2] further agree [a] to furnish to the Producer, without charge to it, the material and routines heretofore used and now owned by the Artists for use by the Producer in the photoplay in which they appear hereunder and for which the Producer shall have the exclusive motion picture rights, and [b] to record their voices and all instrumental, musical and other sound effects produced by them, and [c] to reproduce and/or transmit the same, either separately or in conjunction with such acts, poses, plays and appearances as the Producer may desire, and further [3] give and grant to the Producer solely and exclusively all rights of every kind and character whatsoever in and to the same, or any of them, perpetually, including as well the perpetual right to use the names of the Artists and pictures or other reproductions of the Artists' physical likenesses, and recordations and reproductions of the Artists' voices, in connection with the advertising and exploitation thereof.

J.A. 168-69.

         b. The November 1940 Agreement

         On November 6, 1940, only days before Tropics's public release, Abbott and Costello entered into a new multi-year/multi-picture agreement with UPC (the "November Agreement").^[4] That contract terminated the July Agreement without prejudice to, among other things, UPC's "ownership . . . of all rights heretofore acquired, " including those "in or to any . . . material furnished or supplied by the Artists." Id. at 162. In the November Agreement, Abbott and Costello agreed "to furnish and make available to the Producer all literary and dramatic material and routines heretofore used by the Artists either on the radio or otherwise and now owned by the Artists, " and acknowledged that "the Producer shall have the right to use said material and routines to such extent as the Producer may desire in connection with any photoplay in which the Artists render their services hereunder and in connection with the advertising and exploitation of such photoplay." Id. at 129. Abbott and Costello agreed that they would "not use or license, authorize or permit the use of any of the material and/or routines" so referenced "in connection with motion pictures" by others than UPC for specified times. Id. Nevertheless, they reserved the right to use materials and routines created by them (without the assistance of UPC writers) "on the radio and in personal appearances." Id. at 129-30.

         2. UPC Registers a Copyright for Tropics

         In November 1940, UPC registered a copyright for Tropics with the United States Copyright Office, which it renewed in December 1967. See id. at 36, 39-40.

         3. UPC Uses an Expanded Version of the Routine in The Naughty Nineties and Registers a Copyright for that Movie

         In 1945, Abbott and Costello performed an expanded version of Who's on First? in another movie for UPC, The Naughty Nineties. That version maintains the core of the Routine-with "Who" on first base, "What" on second, and "I Don't Know" on third-but several new players take the field: left fielder "Why, " center fielder "Because, " pitcher "Tomorrow, " catcher "Today, " and shortstop "I Don't Care."

         In June 1945, UPC registered a copyright for The Naughty Nineties with the United States Copyright Office, which it renewed in 1972. See id. at 37, 41- 42; Am. Compl. ¶ 45.^[5]

         4. The 1944 Copyright Registration for "Abbott and Costello Baseball Routine"

         In April 1944, a work entitled "Abbott and Costello Baseball Routine" was registered with the Copyright Office "in the name of Bud Abbott and Lou Costello, c/o Writers War Board." J.A. 114. The certificate indicates that this "Baseball Routine" was published on "March 13, 1944" in "'Soldier Shows, ' No. 19." Id.^[6] The record suggests that this registration was not renewed, prompting the Copyright Office to conclude that the work had entered the public domain in 1972, and, on that ground, to reject a 1984 application for a derivative work registration filed by the children of Abbott and Costello based on the 1944 registration.

         5. The 1984 Quitclaim Agreement

         Plaintiffs do not rely on the 1944 registration to support their copyright claim here. Rather, they claim to have succeeded to UPC's copyright interests in the Routine as performed in Tropics and The Naughty Nineties based on a quitclaim agreement dated March 12, 1984 (the "Quitclaim").

         In the Quitclaim, which was subsequently recorded with the Copyright Office, UPC's successor-in-interest, Universal Pictures ("Universal"), granted Abbott & Costello Enterprises ("A & C"), a partnership formed by the heirs of Abbott and Costello, ^[7] "any and all" of Universal's rights, title, and interest in the Routine. Id. at 45. Universal stated that it did so relying upon A & C's representation that it was "a partnership composed of the successors in interest to the late Bud Abbott and Lou Costello" and, therefore, "the owner of copyright in and to the Routine." Id. at 46.

         A & C dissolved in 1992, with 50% of its assets transferred to TCA Television Corporation, a California entity owned by Lou Costello's heirs, and the other 50% divided evenly between Bud Abbott's heirs, Vickie Abbott Wheeler and Bud Abbott, Jr. Wheeler would later transfer her 25% interest to a California partnership, Hi Neighbor, and Abbott, Jr. would transfer his 25% interest to Diana Abbott Colton. It is by operation of the Quitclaim and the referenced dissolution and transfer agreements that plaintiffs TCA Television, Hi Neighbor, and Colton now claim a copyright interest in Who's on First?.

         C. Hand to God

         As described in the amended complaint, Hand to God (the "Play") is "a dark comedy about an introverted student in religious, small-town Texas who finds a creative outlet and a means of communication through a hand puppet, wh[ich] turns into his evil or devilish persona." Am. Compl. ¶ 58. After two successful off-Broadway runs, Hand to God opened to critical acclaim on Broadway in the spring of 2015. Through press coverage, plaintiffs learned that Hand to God incorporated part of the Routine in one of its "key scene[s], " without license or permission. Id. at ¶ 63. While the Play was still in previews for its Broadway opening, plaintiffs sent defendants a cease and desist letter. Defendants' failure to comply with that request prompted this lawsuit.

         1. The Relevant Scene

         Plaintiffs allege that the Play infringes their copyright in the Routine by using its first part-that is, the part pertaining to first baseman "Who"-in Act I, Scene 2. In that scene, which occurs approximately 15 minutes into the Play, the lead character, "Jason, " and the girl with whom he is smitten, "Jessica, " have just emerged from the basement of their church, where they had been participating in a Christian puppet workshop. Jason tries to impress Jessica by using his sock puppet, "Tyrone, " to perform, almost verbatim, a little over a minute of Who's on First?. Jason plays the Bud Abbott role, while Tyrone assumes Lou Costello's character.^[8]

         When Jason somewhat bashfully concludes the "Who" part of the Routine, Jessica compliments him by saying, "That's really good, " and asks, "Did you come up with that all by yourself[?]" Suppl. App'x 21. When Jason answers, "Yes, " the audience laughs at what it recognizes as a lie. Id.; see Am. Compl. ¶ 64. The answer, however, triggers a different response from the puppet, which, seemingly of its own volition, calls Jason a "Liar, " and states that the comic exchange they just performed is "a famous routine from the [F]ifties." Suppl. App'x 21. Jason corrects Tyrone, stating that the sketch is from the "Forties." Id. Tyrone then insults Jessica, telling her that she would know the Routine's origin if she "weren't so stupid." Id. Jason and Jessica each order Tyrone to "shut up" to no effect. Id. at 22. Instead, as the scene continues, Tyrone vulgarly divulges Jason's physical desire for Jessica. Only after a seeming physical struggle with Tyrone is Jason able to remove the puppet from his hand and thereby end Tyrone's outburst. Jason tries to apologize to Jessica, but she quickly exits, leaving Jason-in the words of the stage direction- "[d]efeated by what he ca[]n't defeat." Id. at 24.

         The scene foreshadows darker and more disturbing exchanges between Jason and the puppet that will occur as the Play proceeds.

         2. Promotional Materials

         Plaintiffs allege that, in online promotional materials for the Play, defendants used a "video clip" of Jason and his puppet performing Who's on First? to "stoke interest" in and sell tickets for the Play. Am. Compl. ¶¶ 69, 89. These promotional materials are not part of the court record.

         D. District Court Proceedings

         On June 4, 2015, plaintiffs filed this action in the Southern District of New York, claiming both federal and common law copyright infringement. Defendants promptly moved to dismiss, arguing, inter alia, that (1) plaintiffs did not hold a valid copyright; (2) the Routine was in the public domain; and (3) Hand to God's incorporation of the Routine was sufficiently transformative to qualify as a permissible fair use, not prohibited infringement.

         On December 17, 2015, the district court granted defendants' motion to dismiss. It declined to do so on either of the first two grounds argued by defendants, concluding that, at the 12(b)(6) stage, plaintiffs had "sufficiently alleged a continuous chain of title" to the Routine to survive dismissal. TCA Television Corp. v. McCollum, 151 F.Supp.3d at 431. Instead, the court concluded that dismissal was warranted because defendants' use of Who's on First? in Hand to God was "highly transformative" and a non-infringing fair use. Id. at 434, 437.

         This appeal followed.

         II. Discussion

         A. Dismissal Was Not Properly Based on Fair Use

         1. Standard of Review

         We review de novo a judgment of dismissal under Fed.R.Civ.P. 12(b)(6), accepting all factual allegations in the amended complaint and its incorporated exhibits as true and drawing all reasonable inferences in plaintiffs' favor. See Concord Assocs., L.P. v. Entm't Props. Tr., 817 F.3d 46, 52 (2d Cir. 2016). The challenged dismissal here is based on the district court's determination that plaintiffs could not succeed on their copyright infringement claim because the Rule 12(b)(6) record established defendants' fair use defense as a matter of law.

         Our review of that decision is necessarily informed by certain basic copyright principles. First, the law affords copyright protection to promote not simply individual interests, but-in the words of the Constitution-"the progress of science and useful arts" for the benefit of society as a whole. U.S. Const. art I, § 8, cl. 8. As the Supreme Court has explained, copyright protection is based on the "economic philosophy . . . that encouragement of individual effort by personal gain is the best way to advance public welfare." Mazer v. Stein, 347 U.S. 201, 219 (1954). In short, the "monopoly created by copyright . . . rewards the individual author, " but only "in order to benefit the public." Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 546 (1985) (internal quotation marks omitted); see Fox Film Corp. v. Doyal, 286 U.S. 123, 127 (1932) ("The sole interest of the United States and the primary object in conferring the monopoly lie in the general benefits derived by the public from the labors of authors.").

         Second, and consistent with this public purpose, the law has long recognized that "some opportunity for fair use of copyrighted materials" is necessary to promote progress in science and art. Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 575 (1994); Iowa State Univ. Research Found., Inc. v. Am. Broad. Cos., 621 F.2d 57, 60 (2d Cir. 1980) (stating that fair use doctrine "permits courts to avoid rigid application of the copyright statute when, on occasion, it would stifle the very creativity which that law is designed to foster"). The doctrine of fair use, derived from common law, is now codified in the Copyright Act of 1976, Pub. L. No. 94-553, 90 Stat. 2541. See 17 U.S.C. § 107. That codification does not so much define "fair use" as provide a non-exhaustive list of factors to guide courts' fair use determinations. This affords the doctrine a certain "malleability" that can challenge judicial application. 4 Melville B. Nimmer & David Nimmer, Nimmer on Copyright (hereinafter "Nimmer") § 13.05, at 13-156 (Matthew Bender, rev. ed., 2016).

         Courts most frequently address a proffered fair use defense at summary judgment. See, e.g., Blanch v. Koons, 467 F.3d 244, 250 (2d Cir. 2006) (explaining that court may resolve fair use question at summary judgment if there are no genuine issues of fact); see also Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. at 560 (stating that appeals court may decide fair use where "district court has found facts sufficient to evaluate each of the statutory factors"). Nevertheless, this court has acknowledged the possibility of fair use being so clearly established by a complaint as to support dismissal of a copyright infringement claim. See Cariou v. Prince, 714 F.3d 694, 707 (2d Cir. 2013) (granting defendant partial summary judgment on fair use and citing approvingly to Brownmark Films, LLC v. Comedy Partners, 682 F.3d 687 (7th Cir. 2012) (rejecting argument that fair use could not be decided on motion to dismiss)).

         On de novo review here, we conclude that defendants' entitlement to a fair use defense was not so clearly established on the face of the amended complaint and its incorporated exhibits as to support dismissal.

         2. The Statutory Framework for Analyzing Fair Use

         In the preamble to 17 U.S.C. § 107, Congress states that "the fair use of a copyrighted work . . . for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research is not an infringement of copyright." As the words "such as" indicate, the listing is "illustrative and not limitative." 17 U.S.C. § 101; see Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. at 561. Four nonexclusive factors-incorporating common law traditions-are properly considered in "determining whether the use made of a work in any particular case is a fair use." 17 U.S.C. § 107. These statutory factors are as follows:

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted ...