No. 08-1039

Supreme Court, U.S

! 1 2009OFFICE OF THE CLE~

IN THE

THOMAS STEINBECK AND BLAKE SMYLE,_Petitioners,

PENGUIN GROUP (USA) INC. ET AL.,Respondents.

On Petition for Writ of Certiorarito the United States Court of Appeals

for the Second Circuit

BRIEF IN OPPOSITON

WILLIAM M. HOHENGARTENJENNER & BLOCK LLP1099 New York Ave. NWSuite 900Washington, DC 20001(202) 639-6000

SUSAN J. KOHLMANNCounsel o£Reeord

JOSHUA A. BLOCKJENNER & BLOCK LLP919 Third AvenueFloor 37New York, NY 10022(212) 891-1600

Attorneys £or Estste Respondents

QUESTION PRESENTED

Whether the Second Circuit correctly held, inagreement with the Ninth Circuit, that the power toterminate pre-1978 copyright assignments under 17U.S.C. § 304 does not bar an author or his heirs fromrevoking a pre-1978 assignment and negotiating anew post-1978 assignment that provides the authorand his heirs with greater rights but is not subject totermination under § 304.

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TABLE OF CONTENTS

QUESTION PRESENTED ..........................................i

TABLE OF AUTHORITIES ......................................iiiSTATEMENT ..............................................................1REASONS FOR DENYING THE PETITION ..........16I. There Is No Circuit Split .....................................16II. The Test Employed By the Second and Ninth

Circuits Does Not "Turn Back the Clock" toFred _Fis_be~" ...........................................................24

III.At Most, the Petition Raises a Fact-BoundQuestion Concerning a Particular Contract .......27

IV.This Dispute Between Two Factions of theSteinbeck Family Is a Poor Vehicle forInterpreting § 304’s Termination Provisions ......30

CONCLUSION ..........................................................31

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TABLE OF AUTHORITIES

CASES

Automation By Design, Inc. v. RaybestosProducts Co., 463 F.3d 749 (7th Cir.2006) ..................................................................29

Broadcast Music, Inc. v. Roger Miller Music,Inc., 396 F.3d 762 (6th Cir. 2005) ......................4

Classic Media, Inc. v. Mewborn, 532 F.3d978 (9th Cir. 2008) .................... 16, 20, 21, 22, 23

Fred Fisher Music Co. v. M. Witmark &Sons, 318 U.S. 643 (1943) ...................................5

Marvel Characters, Inc. v. Simon, 310 F.3d280 (2d Cir. 2002) .............................................23

Mills Music, Inc. v. Snyder, 469 U.S. 153(1985) ..........................................................5-6, 25

Milne v. Stephen Slesinger, Inc., 430 F.3d1036 (9th Cir. 2005) ........................ 15, 16, 17, 18

Venegas-Hernandez v. Asoeiacion DeCompositores, Editores De MusieaLatinoamerieana (ACEMLA), 424 F.3d50 (1st Cir. 2005) ................................................4

Wharf (Holdings) Ltd. v. UnitedInternational Holdings, Inc., 532 U.S.588 (2001) ..........................................................29

STATUTES

17 U.S.C. § 201(d) ...................................................2

17 U.S.C. § 203 ..................................................6, 26

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17 U.S.C.

17 U.S.C.

17 U.S.C.

17 U.S.C.

17 U.S.C.

17 U.S.C.

17 U.S.C.

17 U.S.C.

17 U.S.C.

17 U.S.C.

17 U.S.C.

§ 304 ......................................................31

§ 304(c) ................................2, 5, 6, 12, 30

§ 304(c)(1) ............................................6, 7

§ 304(c)(2)(A) ...........................................6

§ 304(c)(2)(B) .........................................11

§ 304(c)(3) ................................................4

§ 304(c)(4)(A) ...........................................7

§ 304(c)(5) ....................................6, 15, 17

§ 304(c)(6)(C) ...........................................6

§ 304(d) .................................2, 10, 12, 30

§ 304(d)(1) .............................................11

Copyright Act of 1947, Pub. L. No. 80-281,61 Stat. 652 .........................................................3

Sonny Bono Copyright Term Extension Act,Pub. L. No. 105-298, 112 Stat. 2827(1998) .................................................................10

OTHER AUTHORITIES

Fed. R. Civ. P. 54(b) ..............................................13

H.R. Rep. No. 94-1476 (1976), as reprintedin 1976 U.S.C.C.A.N. 5659 ................... 15, 29, 30

Allison M. Scott, Oh Bother: Milne,Steinbeck, an,~ an Emerging Circuit Sp]itOver the ~Uienability of CopyrightTermination ~?ights, 14 J. of Intell. Prop.L. 357 (2007) .....................................................19

Sup. Ct. R. 10 ........................................................23

STATEMENT

1. This is primarily a dispute between twobranches of the Steinbeck family, not a disputebetween a publisher on the one hand and an author’sfamily on the other. Respondents are the estate ofJohn Steinbeck’s widow, Elaine Anderson Steinbeck,and members of John Steinbeck’s step-family (the"Estate Respondents").1 Petitioners are JohnSteinbeck’s son from a previous marriage, ThomSteinbeck, and a previously unknowngranddaughter, Blake Smyle.

John Steinbeck ("Steinbeck") married ElaineAnderson in 1950, and the couple lived together foreighteen years until Steinbeck’s death in 1968. Inhis will, Steinbeck bequeathed all his intellectualproperty rights, including his copyrights, to hiswidow Elaine. Pet. App. 3a. Steinbeck’s will alsonamed Elaine executor of his estate and empoweredher "with the fullest power and authority to deal inand with rights in literary properties, realizing thecomplexity and difficulty of exploiting the sameadvantageously and desiring that they shall beunhampered in any respect in turning to account therights therein and making or amending contractswith respect thereto." 2d Cir. J.A. 571.

Steinbeck also had two sons from a previousmarriage: Thom and John IV. In his will, Steinbeckleft Thom and John IV a sum certain of $50,000 each

1 Penguin Group (USA), Inc. ("Penguin") is also a respondentand is separately represented. The Estate Respondents includeall respondents other than Penguin.

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but excluded them from any other beneficialownership in his estate or his copyrights or otherintellectual property. Id. at 566-68.

John IV died in 1991. Pet. App. 29a. AlthoughJohn IV had no acknowledged children at the time ofhis death, Blake Smyle subsequently filed a claim inprobate court asserting that she was John IV’spreviously unknown and unacknowledged daughter(and, by extension, Steinbeck’s granddaughter). 2dCir. J.A. 242. Thorn and Blake are the Petitioners inthis action.

Elaine Steinbeck died in 2003. Pet. App. 4a. Inher will, Elaine passed all of her copyright interestsin both her own works and those authored bySteinbeck to the Estate Respondents: her daughter(Steinbeck’s step-daughter) and executor WaverlyScott Kaffaga; her sister (Steinbeck’s sister-in-law)Jean Anderson Boone; and her grandchildren(Steinbeck’s step-grandchildren) David Scott Farber,Anderson Farber Runkle, Jebel Kaffaga, and BaharKaffaga.

2. The Copyright Act generally allows authors totransfer their copyrights by will to whomever theauthor chooses. See 17 U.S.C. § 201(d) ("ownershipof a copyright ... may be bequeathed by will"); id.§ 304(c), (d) (statutory heirs’ power to terminate pre-1978 copyright assignments does not apply totransfers "by will"}. Notwithstanding this generalpolicy of testamentary freedom, however, theCopyright Act vests certain narrowly circumscribedinterests in so-called "statutory heirs," or persons

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named in the statute, regardless of the author’stestamentary intent. Steinbeck’s statutory heirsincluded not only his widow Elaine, but also his twosons, Thorn and John IV (or, if either son weredeceased, the son’s own offspring).

As statutory heirs, Thom and John IV eachobtained a contingent interest in the "renewal terms"for Steinbeck’s copyrights. The Copyright Act of1947, Pub. L. No. 80-281, 61 Stat. 652, which was ineffect at the time of Steinbeck’s death, provided aninitial copyright term of 28 years and a renewal termof an additional 28 years. If an author died beforethe initial copyright term expired, then the renewalterm automatically vested in the author’s "widow,widower, or children"--here, Elaine, Thom, and JohnIV. Id. § 24, 61 Stat. at 659.

At the time of his death in 1968, Steinbeck hadalready renewed the copyrights for thirteen of hisearlier works (the "Early Works"). Pet. App. 27an.12. Thus, full ownership over these thirteen EarlyWorks passed directly to Elaine in accordance withSteinbeck’s will. Id. at 27a-28a. But fifteen ofSteinbeck’s other works that were first published inor after 1942 were still in their initial copyright termwhen Steinbeck died and had not yet been renewed(the "Late Works"). Id. at 28a & n.13. TheCopyright Act thus vested joint ownership over therenewal terms of those fifteen Late Works jointly inElaine, Thom, and John IV. Elaine, Thom, and JohnIV agreed in 1974 that the royalty proceeds from thefifteen Late Works would be distributed with a 50%

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share to Elaine and a 25% share each to Thom andJohn IV. 2d Cir. J.A. 461.2

The renewal terms for the Late Worksrepresented a substantial windfall for Thom andJohn IV. Had Steinbeck lived a few years longer, hewould have renewed all the copyright terms himself,and 100% of the ownership rights of all of his workswould have passed to Elaine through his will. Butbecause Steinbeck died before he could renew thecopyright terms of the Late Works, Thom and JohnIV became co-owners of those works, includingseveral of Steinbeck’s best-known works such as Easto£Eden and The Pear]. Pet. App. 28a & n.13.

Unsatisfied with this substantial override ofSteinbeck’s will, Thorn and John IV sued Elaine in1981 to repudiate their 1974 agreement and seek aneven greater percentage of the royalties from theLate Works they co-owned with her. 2d Cir. J.A.461. The district court in that suit granted summaryjudgment to Elaine and upheld the validity of the1974 distribution a~eement. Ido Despite prevailing,

e The 1947 Act did not specify how shares of renewal rightsshould be allocated among statutory heirs, but more recentappellate decisions co~afirmed that, when a renewal term isautomatically vested jointly in an author’s surviving spouse andchildren, the spouse receives a 50% share of ownership and theremaining portion is divided among the children on a perstirpes basis. See Veneg~s-Hernandez v. Asociacion DeCompositore~, Editvres De Musica Latinoamericana(ACEMLA), 424 F.3d 50, 54-55 (lst Cir. 2005); Broad. Music,Inc. v. Roger Miller M,,~sic, Inc., 396 F.3d 762, 781-82 (6th Cir.2005).

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Elaine entered into a 1983 settlement agreementwith Thom and John IV in which she agreed toreduce her royalty share to one-third; in exchange,Thom and John IV agreed to execute irrevocablepowers of attorney in her favor vesting Elaine with"complete power and authority to negotiate,authorize and take action with respect to theexploitation and/or termination of rights in theworks of John Steinbeck in which John Steinbeck IVand Thom Steinbeck have or will have renewal ortermination rights." Id. at 466-68. To this day,Thom and John IV (or their heirs) continue to receiveenhanced royalty payments pursuant to the 1983settlement agreement. Pet. App. 29a n.15.

3. Thom and John IV received a second windfallwhen Congress created a new interest called"termination rights" as part of the Copyright Act of1976. 17 U.S.C. § 304(c). Congress designed thesetermination rights to respond to a specific problemthat had developed in the wake of this Court’sdecision in Fred Fisher Music Co. v. M. Witmark &Song, 318 U.S. 643 (1943), which held that authorsand family members could sell their contingentinterests in a copyright’s renewal term in advance,before the renewal term even began. Publishersexploited Fred Fisher to demand that authorsimmediately assign both the first and secondcopyright terms to the publisher when a work wasinitially published. Pet. App. 6a. "Thus, assigneeswere able to demand the assignment of both terms atthe time when the value of the copyrighted work wasmost uncertain." Mill~ Music, Inc. v. Snyder, 469

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U.S. 153, 186 (1985) (White, J., dissenting). Thetermination provisions added in the Copyright Act of1976 "were designed to correct this situation," id., byallowing authors and family members to repudiatethese "ill-advised and unremunerative grants thathad been made before the author had a fairopportunity to appreciate the true value of his workproduct," id. at 172-73 (majority opinion).

The termination rights in 17 U.S.C. § 304(c)enable authors and their families to cancel licensesand assignments made before 1978. When an authorhas died, the Copyright Act allocates the terminationrights among the author’s spouse, children, andgrandchildren. Id. § 304(c)(2)(A). If the holders of amajority percentage of the termination rights agreeto serve a termination notice, they can recapturerights granted in licenses and assignments madebefore 1978. Id. § 304(c)(1). Termination rights maybe exercised "notwi_thstanding any agreement to thecontrary." Id. § 304(c)(5). Those recaptured rightsare then automatically distributed in proportion tothe percentage of termination rights held by eachstatutory heir. Id. § 304(c)(6)(C).

There is no guarantee that statutory heirs will beable to exercise this termination right, becauseCongress placed fot~r critical restrictions on its use.First, the termination right applies only to licensesand assignments executed before 1978. Id. § 304(c).3

3 A separate provision, 17 U.S.C. § 203, creates differenttermination rights for agreements entered into after 1978.Petitioners do not contend that § 203 termination rights applyhere.

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Second, the termination right does not apply to anytransfers "made by will." Id. Third, the terminationright may be exercised only in specific time periods:during a "window" of time between 56 and 61 yearsafter the work was originally published, with serviceof the notice of termination between two and tenyears before the termination will take effect. Id.§ 304(c)(3), (4)(A). Fourth, the termination rightsmay be exercised only by agreement among holdersof more than 50% of the rights. Id. § 304(c)(1).

As with renewal rights, if Steinbeck had livedlong enough to exercise the termination rightshimself, he would have been able to transfer all ofthe recaptured rights to Elaine. But becauseSteinbeck died before any of his termination rightswere created, the Copyright Act allocated 50% of thetermination rights to Elaine, 25% to Thom, and 25%to John IV. Pet. App. 28a. These new terminationprovisions applied to all of Steinbeck’s works,including the thirteen Early Works owned entirelyby Elaine. Even though Elaine owned 100% of thecopyright over these Early Works, § 304(c) allocated25% of the termination rights to Thorn and John IV.As long as Elaine was alive, however, she held theother 50% of the termination rights and couldprevent notices of termination from being servedwithout her consent. Pet. App. 28a-29a.

4. In 1938, Steinbeck executed an agreementtransferring publication rights in all of his works toThe Viking Press. Id. at 2a. Viking subsequentlyassigned its rights under the 1938 Agreement toRespondent Penguin. Id. at 3a; see supra note 1.

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In 1994, Elaine negotiated two new agreementswith Penguin that cancelled and superseded allprevious licenses and secured significantly greaterreturns in exchange for the right to publish theSteinbeck works. Pet. App. 3a. At the time Elainenegotiated the two 1994 Agreements, the windowshad already closed t."or serving termination notices forSteinbeck’s three oldest works, Cup of Gold (© 1929),The Pastures of Heaven (© 1932), and To a GodUnknown (© 1933). But the windows for servingtermination notices were then open for all ofSteinbeek’s works created between 1935 and 1948,including the remaining ten Early Works and sevenof the Late Works. Pet. App. 27a n.12, 28a n.13.

Armed with the possibility that she would joinSteinbeek’s sons or their offspring in exercising their§ 304(e) termination rights as leverage in bargainingwith Penguin--and with knowledge of the immensepopularity and commercial success of many ofSteinbeek’s works--Elaine negotiated two newpublishing agreements that greatly enhanced thereturns to family members for all of Steinbeek’sworks. Id. at 3a-4a & n.1. One agreement coveredthe thirteen Early Works owned exclusively byElaine; the other agreement covered the fifteen LateWorks jointly owned by Elaine, Thorn, and John IV’sheirs. 2d Cir. J.A. 482, 498.

By their terms, the 1994 Agreements cancelledthe 1938 Agreement, Pet. App. 4a, and transferred toPenguin the publishing rights for the Early Worksand the Late Works, respectively, with significantlyimproved financial terms for the benefit of Elaine,

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Thom, and the heirs of John IV (who died in 1991).Pet. App. 3a-4a.4 For example, where the 1938Agreement provided for an annual royalty calculatedas a percentage of sales, the 1994 Agreementsguarantee minimum yearly payments of hundreds ofthousands of dollars, plus additional royalties abovethat amount based on yearly sales. Id.; 2d Cir. J.A.483-84, 499-500.

The two 1994 Agreements are inextricably relatedand cross-reference each other. They each requirePenguin to keep all of Steinbeck’s works in print,thereby enhancing the family’s opportunity to earnroyalties from less popular works that mightotherwise be taken out of print. The agreement forthe thirteen Early Works owned exclusively byElaine thus provides that Penguin must keep inprint not only those thirteen works, but also thefifteen Later Works "which are the subject of aseparate agreement with Elaine Steinbeck andThomas Steinbeck." 2d Cir. J.A. 493. Likewise, theagreement for the fifteen Later Works requiresPenguin to keep in print not only those works, butalso the Early Works "which are the subject of aseparate agreement with Elaine Steinbeck." Id. at509.

Elaine executed both agreements simultaneouslyon October 24, 1994. Pet. App. 3a-4a & n.1. Sheexecuted the first agreement for the thirteen Early

4 The 1994 Agreement for Steinbeck’s Early Works also covers awork authored by Elaine (Steinbeck: A Life in Letters), andboth Agreements include collections of certain Steinbeek worksas well.

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Works in her capacity as the 100% owner of thoseworks. She executed the second agreement for thefifteen Late Works both in her capacity as co-ownerof those works and using the irrevocable power ofattorney that Thorn and John IV had transferred toher as part of the 1983 settlement agreement. Id. at4a n.1. Thom then signed an acknowledgement, bothon his own behalf a:ad on behalf of the executor of theestate of then-deceased John IV, ratifying the 1994Agreement for t~Le Late Works, including theprovision explicitly referencing the companionagreement for the thirteen Early Works ownedseparately by Elaine. Id.; 2d Cir. J.A. 509, 514.

Thus, Elaine’s cancellation of the 1938 Agreementand renegotiation of improved terms from Penguinunder the 1994 Agreement covering the Early Workswas part of a single, interrelated transaction thatsignificantly benefited Petitioners through theirpartial interests in the Late Works. Thom hasreceived enhanced royalties for the past fifteen yearsfor Penguin’s continued publication of Steinbeck’sLate Works. Id. Blake also receives royalties fromthe 1994 Agreement for the Late Works under aconfidential settlement she entered into with otherheirs of John IV. Seeid. at 29a n.15.

5. Four years ’,after Elaine cancelled the 1938Agreement and executed the 1994 Agreements withPenguin, Congress enacted the Sonny BonoCopyright Term Extension Act, Pub. L. No. 105-298,112 Stat. 2827 (1998). As part of that enactment,Congress created new § 304(d), which opened asecond window for termination during the period

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between 75 and 80 years after a work was originallypublished. Because John IV died before § 304(d) wasenacted, the new termination rights were distributed50% to Elaine, 25% to Thom, and 25% to Blake. 17U.S.C. § 304(c)(2)(B), (d)(1). Like the terminationrights in § 304(c), the termination rights in § 304(d)apply only to agreements made before 1978.

6. This litigation began shortly after Elaine diedin 2003. In her will, Elaine passed all her copyrightinterests to her daughter, sister, andgrandchildren--the Estate Respondents in thisaction. Pet. App. 4a. But Elaine’s 50% share in thetermination rights could not be transferred by willand expired on her death. Thus, for the first time,Thorn and Blake held a majority of the terminationrights. Id.

With Elaine out of the picture, Thom and Blakequickly tried to recapture for themselves thepublishing rights for the Early Works ownedexclusively by Elaine’s heirs. Even thoughtermination rights apply only to agreements madebefore 1978, Thom and Blake served would-betermination notices purporting to terminate andrecapture the publishing rights for several of theEarly Works that Elaine reassigned to Penguin in1994, including Of Mice and Men and The Grape~ o£Wrath. Id. at 4a, 29a-32a. Thorn and Blakeapparently believe that if they are successful interminating Penguin’s publishing rights for theEarly Works, those rights will revert to Thom andBlake, not to the members of Steinbeek’s step-familywho have inherited the underlying copyrights. Thus,

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Thom and Blake are not seeking to use thetermination rights simply to recapture rights fromPenguin. Rather, their primary motivation is to usethe termination rights to override Steinbeck’s willand seize ownership over rights that passed toSteinbeck’s step-family by will. But see 17 U.S.C.§ 304(c), (d) (providing that termination rights maynot be used to terrainate assignments "by will"). Inshort, Thom and Blake seek to substantivelyreallocate ownersh!ip of rights in the Early Workswithin the Steinbeck family. 5

Thom and Blake then filed this lawsuit assertingan assortment of claims against the EstateRespondents and others. 2d Cir. J.A. 12-53.6 TheEstate Respondents asserted counterclaims seekinga declaratory judgment that the termination noticesserved by Thom and Blake were invalid because they

5 Whether the Copyright Act would actually permit one family

member to seize another family member’s publishing rights incontravention of the author’s will is far from clear. As noted,the termination provisi.ons do not apply to transfers made "bywill." 17 U.S.C. § 304(c), (d). It is therefore uncertain whetherthe termination rights may be used by Thom and Blake toeffectively nullify Steinbeck’s will and appropriate forthemselves the copyright interests that Steinbeck bequeathedto Elaine. Because the Second Circuit held that Petitioners’attempt to exercise the. termination rights failed in any event,the intrafamily-ownership issue has never been litigated in thiscase.6 The Petition in this. case concerns only claims related to

termination rights. In a recent decision dated March 31, 2009,the district court dismissed Thorn and Blake’s remainingclaims.

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purported to terminate an agreement made after1978. Pet. App. 10a.

Penguin also filed a separate action against Thomand Blake for a declaratory judgment holding thetermination notices invalid. Id. The district courtconsolidated the two actions for purposes of ruling onsummary judgment motions related to the validity ofthe attempted terminations. Id.

7. Ruling on cross motions for summaryjudgment, the district court upheld the validity of thetermination notices. In a one-paragraph discussionthat cited no legal precedent, the district courtconcluded that Steinbeck’s original 1938 Agreementwith Viking remained in effect and could therefore beterminated by Thom and Blake. ]d. at 32a-33a.Based on the incorrect premise that under the 1994Agreement for the Early Works Penguin did not "loseor gain any rights other than those originallygranted to it under the 1938 Agreement," M. at 33a,the district court held that the 1994 Agreement forthe Early Works did not replace the original 1938Agreement, which still remained in effect. Thus, thedistrict court held, Thom and Blake could use theirtermination rights to cancel assignments under thatpre-1978 agreement. Id.7

The Second Circuit reversed. Construing the1994 Agreement for the Early Works under NewYork contract law, the Second Circuit concluded thatthe intent of that agreement was to cancel and

7 The district court entered judgment on the termination claimsunder Fed. R. Civ. Po 54(b). 2d Cir. J.A. 942-44.

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revoke the 1938 A~,~eement with Viking. The courtexplained that "parties to an agreement canmutually agree to terminate it by expresslyassenting to its rescission while simultaneouslyentering into a new agreement dealing with thesame subject matter." Pet. App. 12a (citing Jone~ v.Trice, 202 A.D.2d 394, 395, 608 N.Y.S.2d 688, 688(2d Dep’t 1994)). Because the 1994 Agreement hadcancelled and replaced the 1938 Agreement, therewas no pre-1978 agreement left to be terminated.

The Second Circuit explained that the districtcourt erred both factually and legally in concludingthat the 1994 Agreement did not revoke the 1938one. As a factual raatter, the district court erred inasserting that the 1994 Agreement did notmaterially alter the 1938 Agreement with Viking.The 1994 Agreeme~Lt obligated Penguin to pay largerguaranteed advanced payments, modified thegeographic limits of the publication rights, andrequired Penguin to keep all the Steinbeck works inprint. Id. at 12a-13a. As a legal matter, the SecondCircuit held that the district court erred inconcluding that, because the 1938 Agreement hadnot yet expired in 1.994, it could not be revoked andrenegotiated. The Second Circuit explained that "[a]contract that remains in force may still beterminated and renegotiated in exchange for, amongother things, one party’s forbearance of her legalright, such as a statutory right to terminate aprevious grant of a copyright transfer or license." Id.at 13a (citing Tr,~n~-Orient Mar. Corp. v, St~r

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Trading & Mar. Ind., 925 F.2d 566, 573 (2d Cir.1991)).

The Second Circuit also rejected Thom andBlake’s argument that, if the 1994 Agreementindirectly prevented them from exercising theirtermination rights, it should be voided under theCopyright Act as an "agreement to the contrary." 17U.S.C. § 304(c)(5). The court noted that Congressspecifically intended that ’"parties to a transfer orlicense’ would retain under [§ 304(c) and (d)] thecontinued right to ’voluntarily agreed at any time toterminate an existing grant and negotiat[e] a newone."’ Pet. App. 18a-19a (quoting H.R. Rep. No. 94-1476, at 127 (1976), as reprinted in 1976U.S.C.C.A.N. 5659, 5743). Otherwise, Congress’screation of the termination right would havesubstantially restricted the ability of an author or hisheirs to renegotiate an assignment for better terms,except during the narrow window and under therigid conditions required for termination under§ 304. Id. at 18a-19a. Accordingly, the SecondCircuit explained, "provided that a post-1978agreement effectively terminates a pre-1978 grant,Congress did not manifest any intent for the earlieragreement to survive simply for purposes ofexercising a termination right in the future." Id. at19a (citing approvingly to Milne v. StephenSlesinger, Inc., 430 F.3d 1036 (9th Cir. 2005)). TheSecond Circuit concluded that, far from entering intoan "agreement to the contrary," Elaine had engagedin a renegotiation process that "appears to be exactlywhat was intended by Congress." Id. at 15a.

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REASONS FOR DENYING THE PETITION

I. There Is No Circuit Split.

In holding that the 1994 Agreements negotiatedby Elaine superseded Steinbeck’s pre-1978 licensegrant and thus prevented exercise of § 304termination rights with respect to such grant, theSecond Circuit adhered to precisely the same rule oflaw that the Ninth Circuit applied in Milne v.Stephen Slesinger, Inc., 430 F.3d 1036 (9th Cir.2005), and Classic .Media, Inc. v. Mewborn, 532 F.3d978 (9th Cir. 2008). In all three cases, the courtsasked whether a pre-1978 agreement was still ineffect. Where the pre-1978 agreement was still inplace, the courts held that termination rights couldstill be exercised. But when the pre-1978 agreementhad already been revoked and renegotiated, thecourts held that no pre-1978 agreement remained tobe terminated. All three decisions reflect aconsistent application of the same legal rule todifferent factual circumstances.

Far from creating a split with the Ninth Circuit,the Second Circuit’s decision closely parallels theNinth Circuit’s decision in Milne, which involved themerchandising rights for the "Winnie the Pooh"character created by Alexander Milne. Milnetransferred the merchandising rights in 1930 andthose rights were subsequently retransferred to theWalt Disney Company. Milne, 430 F.3d at 1039-40.When Congress enacted the Copyright Act of 1976,Milne had already died, and his son, ChristopherRobin Milne, recei_ved 100% of the newly created

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termination rights. Id. at 1040. Rather thandirectly exercise the termination rights, however, in1983 Christopher Milne negotiated a new agreementwith Disney for the merchandising rights, whichrevoked the original 1930 assignment andsimultaneously reassigned the same rights to Disneyin exchange for substantial additional royaltypayments. 430 F.3d at 1040-41.

In 2002, Christopher Milne’s daughter, Claire,attempted to terminate the 1983 assignment ofmerchandising rights to Disney. Id. at 1041. TheNinth Circuit held that Claire’s notice of terminationwas invalid because the 1930 Agreement had beenrevoked and superseded by the 1983 agreement,leaving no pre-1978 agreement for Claire toterminate under § 304. Id. at 1042-43. The NinthCircuit also rejected Claire’s argument that the 1983agreement negotiated by Christopher Milne shouldbe voided as an "agreement to the contrary." 17U.S.C. §304(c)(5). The court explained that,"[a]lthough Christopher presumably could haveserved a termination notice, he elected instead to usehis leverage to obtain a better deal for the PoohProperties Trust. His daughter, Claire, was abeneficiary of this new arrangement, and her currentdissatisfaction provides no reason to discredit thevalidity of the 1983 agreement and the rightsconferred thereby." 430 F.3d at 1045.

The facts in Milne closely parallel this case. LikeChristopher Milne, Elaine Steinbeck could havejoined with Steinbeck’s offspring to terminate theagreements with Penguin, but instead she

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"renegotiate[d] and cancel[ed] the 1938 Agreementwhile wielding the threat of termination." Pet. App.15a. The 1994 Agreement extinguished the 1930Agreement, leaving no pre-1978 agreement to beterminated. In lew;raging her termination rights fora more favorable deal, Elaine, like ChristopherMilne, engaged in a "renegotiation" process that"appears to be exactly what was intended byCongress." Id.

In an attempt 1~o distinguish Milne, Petitionersargue that--unlike Claire Milne--Thom and Blakereceived no benefit from the 1994 Agreementnegotiated by Elaine for the thirteen Early Works.As a purely factual matter, that is incorrect. The1994 Agreement for the thirteen Early Works waspart of an integrated deal that obtained similarlyfavorable terms with respect to the fifteen LateWorks that were partially owned by Thom and JohnIV. Supra at 8"10. Thom ratified the companionagreement for the Late Works and has benefitedfrom it for the past 15 years. Pet. App. 4a n.1. Blakehas also collected royalties from the companionagreement pursuant to an agreement she enteredinto with John IV’s heirs. Pet. App. 29a n.15.Further, as Petitioners’ own amiei point out, ClaireMilne did not receive the entire benefit ofChristopher Milne’s renegotiated contract withDisney--she benefited only indirectly through thePooh Properties Trust, which also benefited "variouscharities along with [Milne’s] family members." Prof.Br. 16 n.5.

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The parallels between this case and Mi]ne refutePetitioners’ assertion that the Second Circuit andNinth Circuits are somehow "intractably divided" onthis question. Pet. 11 (heading). Just the opposite istrue. Before the Second Circuit issued its decisionhere, the widespread assumption was that if itaffirmed the district court with a decision in favor ofThem and Blake, that would create a circuit splitwith Mi]ne that would require this Court’s review.See Allison M. Scott, Oh Bother: Milne, Steinbeck,and an Emerging Circuit Split Over the Alienabilityof Copyright Termination Rights, 14 J. of Intell.Prop. L. 357 (2007). Thus, in reversing the decisionof the district court in this ease, the Second Circuitdid not create a circuit split--it averted one.

Petitioners disregard Milne and instead arguethat the Second Circuit’s decision conflicts withanother Ninth Circuit ease, Mewborn. But Mewbornapplied precisely the same legal principles that theNinth Circuit applied in Milne and that the SecondCircuit applied in this ease. In this ease and inMilne, the courts concluded that the originalassignments had been revoked and superseded,leaving no pre-1978 agreement in place to beterminated. In Mewborn, however, the courtexamined a post-1978 agreement with very differentterms and, on that basis, concluded that the pre-1978agreement in that ease had never been revoked, sothat termination rights could still be exercised.Thus, Mewborn is simply an instance where thesame rule of decision was applied to different facts,resulting in a different outcome. That kind of fact-

2O

based difference obviously does not create a circuitsplit.

The plaintiff in ~l/Iewborn was Winifred Mewborn,the daughter of the author of the children’s bookLassie Come Home.. Mewborn, 532 F.3d at 980. In1976, Winifred Mewborn executed an agreementassigning to Classic Media all her motion picture,television, and radio rights in Lassie Come Home inexchange for a one-time payment of $11,000. Id. In1978, Mewborn signed a second agreement withClassic Media assigning additional merchandising,dramatic performance, recording, and publishingrights in Lassie Come Home. Id. at 980-81. Inexchange for assigning these additional rights,Mewborn received the nominal sum of $3,000. Id. at981. The second agreement did not purport torescind, revoke, or renegotiate the motion picture,television, and radio rights Mewborn had assigned in1976. Instead, the :second agreement stated that thenew rights were being assigned "in addition to" therights that Mewborn had previously assigned in1976. Id.

When Mewborn served a notice of termination in2005 to reclaim the rights she had assigned in 1976,Classic Media asserted that the termination noticewas invalid because the 1978 agreement hadsuperseded the 1976 one. Id. The Ninth Circuitrejected Classic Media’s argument and held, as amatter of fact, that while Mewborn could notterminate any o:[ the additional rights shetransferred in the 1978 agreement, Mewbornretained the ability to terminate the original rights

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she transferred in 1976. Id. at 989 & n.8. TheNinth Circuit explained that, "[u]nlike ChristopherMilne’s 1983 assignment, which expressly revokedthe earlier 1930 and 1961 assignments andsimultaneously re-granted the same rights,Mewborn’s 1978 Assignment explicitly stated that itgranted rights ’in addition to’ the rights granted inthe 1976 Assignment." Id. at 989. Accordingly,because the 1976 agreement remained in effect,Mewborn retained the ability to terminate rightstransferred pursuant to that agreement.S

In addition, the Ninth Circuit explained,"Mewborn’s predicament is a far cry fromChristopher Milne’s." Id. Christopher Milne hadused his termination rights as leverage to negotiate amore lucrative deal. In contrast, there was "noevidence in the record that Mewborn was even awareof her termination rights in March 1978," much lessthat she used them as negotiating leverage when she

s As background to its discussion of termination rights,Mewborn cited the district court’s decision in this case (whichwas then on appeal but had not yet been reversed) upholdingthe validity of Thom and Blake’s termination notices.Mewborn, 532 F.3d at 986. But Mewborn’s discussion wasbased on the district court’s erroneous £aetual conclusion that’"at no point did Penguin lose or gain any rights other thanthose originally granted to it under the 1938 Agreement."’ Id.at 986 (quoting Pet. App. 33a). On appeal, the Second Circuitruled that the district court’s factual statement was incorrectand that the 1994 Agreement did in fact replace the 1938Agreement with materially different terms. Pet. App. 12a’13a.Nothing in Mewborn indicates that the Ninth Circuit wouldhave reached a different result than did the Second Circuitbased on a correct understanding of the underlying facts.

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had received only the paltry additional payment of$3,000. Id.

All of the facts tlhat the Ninth Circuit relied on todistinguish Mewborn from MiIne also distinguishMewborn from this case. First, the 1994 Agreementsnegotiated by Elaine~like the agreement signed byChristopher Milne but unlike the agreement signedby Winifred Mewborn--expressly revoked and re-granted the pre-1978 assignment of rights. Pet. App.4a. Second, at the time Elaine negotiated the 1994Agreements, termination notices could have beenimmediately served for ten of the Early Works andseven of the Late Works. Supra at 8. LikeChristopher Milne, Elaine therefore held animmediate power to terminate that she leveraged tonegotiate a more :Favorable deal. Pet. App. 15a.Third, unlike Winifred Mewborn, who did notrenegotiate the pre-1978 grant for more generousterms, Elaine negotiated a far more lucrativeagreement guaranteeing minimum yearly paymentsof several hundreds of thousands of dollars andrequiring that all .~f Steinbeck’s works be kept inprint. Supra at 8-10. The Petitioners dismiss thesedistinctions as "unpersuasive," Pet. 14, but they areprecisely the same ~hctors the Ninth Circuit relied onto distinguish Milne from Mewborn.

Nor did Mewborn create a circuit conflict throughits discussion of whether the 1978 agreement in thatcase was an "agreement to the contrary." Becausethe Mewborn court found as a factual matter thatthe 1976 assignment remained in effect, the courtconcluded that if the 1978 agreement purported to

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assign Mewborn’s termination rights, such anassignment would be an "agreement to the contrary."Mewborn, 532 F.3d at 986. But Mewboa"z~ did nothold or even suggest that the 1978 agreement wouldhave been an "agreement to the contrary" if (like thepost-1978 agreements in this case and Mi]~o) it hadrevoked and renegotiated the pre-1978 assignment,thereby leaving nothing to terminate. Given thefacts of Mewbor~, any such suggestion would havebeen dicta. It also would have been contrary toMilne, which Mewborn pointedly did not overrule.Id. at 988. In fact, to the extent there might be anyconflict with Mewborn at all (which there is not), itwould be an intra-circuit conflict within the NinthCircuit that should be resolved by that court en bancif necessary. Such an intra-circuit conflict is not aproper basis for invoking this Court’s certiorarijurisdiction. See Sup. Ct. R. 10.9

9 Petitioners implicitly concede as much when they claim the

case law within the Ninth Circuit is "confused and fractured,"Pet. 16--which appears to be a euphemism for alleged (thoughnon-existent) intra-circuit splits. In that vein, Petitioners alsoclaim the decision below is somehow in tension with the SecondCircuit’s own earlier decision in Marvel Characters, Inc. v.Simon, 310 F.3d 280 (2d Cir. 2002). Pet. 17. The SecondCircuit in Marvel held that the author of Captain AmericaComics could terminate a 1940 publishing agreement withMarvel Comics notwithstanding a 1969 agreement the authorsigned that retroactively re-characterized the comic as a "workfor hire." The facts in Marvel bear no resemblance to this case.All the agreements in Marvel took place before 1978, so therewas unquestionably a pre-1978 grant in place to be terminated.And the author in Marvel had clearly not used his terminationrights as leverage to negotiate a more favorable agreement

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In short, the d:[fference between this case andMilne on the one hand and Mewborn on the other isthat Christopher Milne and Elaine Steinbeckcancelled and renegotiated pre-1978 licenses whileWinifred Mewborn did not. The Mewborn decisiondoes not call into question the basic premise that acopyright owner may use termination rights asleverage to cancel a pre-1978 agreement andnegotiate a new license with more favorable terms.There is no circuit split for this court to resolve--justdifferent cases reaching different outcomes byapplying the same legal rule to different underlyingcontracts.

II. The Test Employed By the Second and NinthCircuits Does Not ’Wurn Back the Clock" to Fa~d~-~’sher.

Effectively acknowledging that there is no circuitsplit, Petitioners’ amiei argue that both the SecondCircuit and the Ninth Circuit have misinterpreted§ 304, which in amieis view should prohibitcopyright owners from revoking and renegotiating

because the second agreement had been entered into in 1969,before those termination rights even existed. See Pet. App. 18a("Marvel concludes on:[y that backward-looking attempts torecharacterize existing grants of copyright so as to eliminatethe right to terminate under 304(c) are fobidden by 304(c)(5).There was no such atte~npt at recharacterization here"). In any

event, even if the decision below could not be reconciled with anearlier decision from the Second Circuit, that purported intra-circuit conflict would be no basis for this Court’s intervention.Petitioners’ reliance orL Marvel to support their petition forcertiorari simply underscores their inability to point to a truecircuit split warranting this Court’s review.

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pre-1978 agreements without formally servingtermination notices. Amiei admit that no appellatedecision, including MiIne and Mewborn, has everadopted that view. See Prof. Br. 15 (asserting that"[n]one of these decisions follow [sic] the cleardictates of the federal statute").1° But arnicinevertheless assert that the test unanimouslyadopted by the courts of appeals would "turn[] backthe clock to the Fisher regime, under whichpublishers could contractually block authors andtheir families from exercising copyright reversion."Prof. Br. 12.

These policy-based concerns are groundless. Theproblem created by the Fred Fisher decision was thatpublishers could use their superior bargaining powerto force unknown authors to assign their renewalrights at the time the works were first published,long before their value was known. See Mills Music,469 U.S. at 172-73 (referring to "ill-advised andunremunerative grants that had been made beforethe author had a fair opportunity to appreciate thetrue value of his work product"). But § 304 appliesonly to grants made before 1978. Thus, all thecopyrights implicated by § 304 are at least 30 yearsold, and the holders of termination rights for these

10 Indeed, amicus curiae Professor Nimmer served as counsel ofrecord to Claire Milne before the Ninth Circuit and in a petitionfor a writ of certiorari to review the Ninth Circuit’s decision.Prof. Br. 2. Amicis brief in support of Petitioners recapitulatesthe same arguments that the Ninth Circuit considered andrejected in Milne and that this Court found insufficient tojustify granting Milne’s petition for certiorari.

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copyrights already ihave had time to "appreciate thetrue value of [the] work product." Id. Instead ofallowing the holders of termination rights tocapitalize on that value, amic_~s proposed test wouldlock copyright holders into pre-1978 agreementsuntil the termination rights could be formallyexercised. Indeed, if the holders of terminationrights for a work were deadlocked--as occurred fordecades in this case until Elaine passed away--amieis theory would frequently have the perverseresult of freezing "ill-advised and unrenumerative"agreements in place. Id. The only beneficiaries ofamiHs proposed straitjacket would be publisherswho had extracted unfavorable terms from authorswhen the value of their works was unknown.

In recognition t:hat all copyrights implicated by§ 304 are already 30 years’ old, amiei assert that theSecond Circuit’s decision could have a broaderimpact on a different set of termination rights forpost-1978 assignments under § 203. But the lowercourts’ test--Is there a pre-1978 transfer in place tobe terminated?--cannot possibly implicatetermination rights under § 203 because that section,unlike § 304, is not limited to grants made before1978. Because § 203 does not require that a pre-1978 grant still be i:a effect, termination rights under§ 203 could be exercised even if the original granthas already been revoked and renegotiated. Nothingin the Second Circuit’s decision is to the contrary.

The Second Circuit’s decision will have no impacton new authors or on the separate terminationprovisions for post-l.978 grants in § 203. Annie, s dire

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predictions are fundamentally misplaced andcertainly provide no reason for granting certiorari.

III. At Most, the Petition Raises Fact’BoundQuestions Concerning a Particular Contract.

Every Court of Appeals to consider the issue hasheld that copyright owners may, in principle, negatea precondition for exercising termination rights byleveraging those rights to cancel and renegotiate apre-1978 agreement for more favorable terms. Thequestion before the Second Circuit was thereforewhether Elaine’s 1994 Agreement with Penguincancelled and superseded the pre-1978 agreement(as in Milne) or simply reaffirmed the previoustransfers leaving the pre-1978 agreement intact (asin Mewbo_rn). This is fundamentally a fact-boundquestion concerning a particular contract, not abroad question of statutory interpretationwarranting this Court’s review.

The 1994 Agreement with Penguin clearly andunambiguously stated that "this agreement, whensigned by Author and Publisher, will cancel andsupersede" all prior agreements for the Early Works,including the 1938 Agreement. Pet. App. 4a; 2d Cir.J.A. 507. Petitioners nevertheless assert that, as amatter of contract interpretation, the Second Circuiterred in concluding that the 1994 Agreement revokedthe 1938 Agreement and the termination rights thatwent with it because the 1994 Agreement ’"explicitlycontemplated the future exercise of terminationrights."’ Pet. 23 (quoting Pet. App. 10a). In supportof their contract interpretation, Petitioners point to

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section 9A of the 1994 Agreement, which gavePenguin the ability to claw back the enhancedpayments it made ;pursuant to the 1994 Agreementin the event that Elaine’s statutory terminationrights were ever exercised. Pet. 7.

The Second Circuit correctly held that section9A’s oblique reference to the future exercise oftermination rights "does not abrogate the 1994Agreement’s clear expression of intent to terminateall prior grants of a transfer or license in the subjectcopyrights." Pet. App. 14a. And because the 1994Agreement, as so construed under New York contractlaw, cancelled the 1938 Agreement, there was no pre-1978 agreement irL place for Thom and Blake toterminate. Id. at 12a-14a. Rather than evidencingintent to preserve termination rights, section 9Aunderlines that the parties intended to negotiate aquid pro quo whereby Penguin was agreeing to moregenerous payment terms in exchange for Elaine’sdecision to refrain from serving termination notices.Section 9A is thu~ akin to a £oree majeur clauseaddressing what would happen if, contrary to theexpectations of the parties, termination rightssomehow survived. As a matter of contractinterpretation, the Second Circuit correctly concludethat this belt-and-suspenders provision did notsomehow negate the 1994 Agreement’s express andunambiguous intent to "cancel and supersede" the1938 Agreement. /~t. at 4a, 14a.

Ultimately, Thorn and Blake’s petition boils downto an assertion that the Second Circuitmisinterpreted the 1994 Agreement in light of its

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section 9A. But, even if Them and Blake’sinterpretation of the 1994 Agreement and its section9A had merit, their Petition does not present aquestion of federal statutory interpretation, muchless a question on which the courts of appeals aredivided. The petition for writ of certiorari to reviewthis fact-bound question should be denied. 11

11 The fact that this dispute turns on state law rules of contractinterpretation further counsels against granting certiorari."Although the United States Copyright Act, 17 U.S.C. §§ 101"1332, grants exclusive jurisdiction for infringement claims tothe federal courts, those courts construe copyrights as contractsand turn to the relevant state law to interpret them."Automation By Design, Inc. v. Raybestos Prods. Co., 463 F.3d749, 753 (Tth Cir. 2006); c£ Wharf (Holdings) Ltd. v. UnitedInt’l Holdings, Inc., 532 U.S. 588, 596 (2001) (declining toreview 10th Circuit’s application of Colorado contract law, eventhough state law question would determine whether federalstatute applied to the contract). Petitioners’ amiei seek toelevate the petition above a state-law question of contractinterpretation by asking this Court to create a new federalcommon law of contract interpretation for renegotiatedcopyright licenses. Prof. Br. 13-14. But even if the renegotiatedagreement were interpreted under federal common law,Congress specifically stated that ’"parties to a transfer orlicense’ would retain under [§ 304(e) and (d)] the continuedright to ’voluntarily agree[] at any time to terminate an existinggrant and negotiat[e] a new one."’ Pet. App. 18a-19a (quotingH.R. Rep. No. 94-1476, at 127 (1976), as reprinted in 1976U.S.C.C.A.N. 5659, 5743). As a result, whether the 1994Agreement is interpreted in accordance with state law orfederal common law, a court must make an individualizeddetermination of whether the particular contract before it left apre-1978 agreement in place. That is a fact-bound questionthat does not warrant this Court’s review.

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IV.This Dispute Between Two Factions of theSteinbeck Family Is a Poor VehicleforInterpreting § 304’s Termination Provisions.

A final reason for declining exercise of thisCourt’s discretionary jurisdiction is the distinctiveintrafamily character of the dispute here. This isnot primarily a dispute between a publisher on theone hand and an author’s family on the other. It is adispute between two different factions of theSteinbeck family. Thom and Blake seek to use § 304not to obtain a mc,re lucrative publishing deal forSteinbeck’s family, but to undo Steinbeck’s will andseize for themselwes the copyright interests thatSteinbeck intended to transfer to different familymembers.

Thom and Blake’s efforts to use the terminationprovisions to override Steinbeck’s will and seizecopyright ownership from other members of theSteinbeck family are far afield from the central goalsCongress had in mind when it created the statutorytermination provisions. Congress created thetermination right to "safeguard[] authors againstunremunerative transfers," H.R. Rep. No. 94-1476 at124 (1976), as reprinted in 1976 U.S.C.C.A.N 5659,5740, not to privilege the author’s "blood heirs" overother family members. To be sure, Congressdesignated certain statutory heirs who could exercisetermination rights. But Congress also sought tohonor the author’s own decisions about how toallocate his or her inheritance by exemptingtransfers made by will from the terminationprovisions. 17 U.S.C. § 304(c), (d). Nothing in the

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legislative history suggests that Congress’s purposewas to create a birthright for biological offspring tonullify the author’s will and disinherit the author’sstep-family.

This idiosyncratic, fact-bound dispute presents anextremely poor vehicle for interpreting thecomplicated statutory provisions in 17 U.S.C. § 304and the interrelationship between rights recapturedby termination and rights inherited by will, whichcannot be terminated. Petitioners have not cited anyother decision involving the use of terminationnotices to nullify an author’s will or re-allocatecopyright ownership within an author’s family.Petitioners have certainly not identified a circuitsplit on this complex issue that might conceivablywarrant this Court’s review.

CONCLUSION

For the foregoing reasons, the petition for writ ofcertiorari should be denied.

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Respectfully submitted,

WILLIAM M. HOHENGARTENJENNER ~ BLOCK LLP1099 New York Ave. NWSuite 900Washington, DC 20001(202) 639-6000

SUSAN J. KOHLMANNCounsel of Record

JOSHUA A. BLOCKJENNER & BLOCK LLP919 Third Ave.Floor 37New York, NY 10022(212) 891-1600

Attorne~+ for Estate Respondents

April 17, 2009