'Game of Life' Copyright Fight Tests Who Owns Old Creative Works – Bloomberg Law

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By Kyle Jahner
A bid to wrest the copyright for “The Game of Life” away from Hasbro Inc. has grabbed the attention of creators of old-but-valuable works and companies that commissioned or bought them.
Game designer Bill Markham’s heirs say they have the right to reclaim the copyright to the classic game from Hasbro, but were thwarted by lower courts. So Markham Concepts Inc., backed by entertainment attorneys, an entertainment industry union, and public interest groups, has taken its battle against courts’ half-century-old reading of the 1909 copyright law to the U.S. Supreme Court.
Alteration of the rule could affect rights to creations ranging from old board games still on store shelves to comic characters and storylines still being exploited in blockbuster movies.
“Reversing the rule could lead to a lot of people coming out and invoking their rights,” copyright attorney Jason Bloom of Haynes and Boone LLP said. “That’s why it’s worth it to Hasbro to fight this pretty hard. They and others like them could have a lot of copyright interests at stake depending on the outcome.”
At issue is the “instance and expense” rule, which was crafted by circuit court decisions from the 1960s. The rule holds that an entity that provides the impetus and funding for an independent contractor’s creative work owns the copyright.
The rule gained new significance when the Copyright Act of 1976 created termination rights, which allow creators to conditionally reclaim copyrights they’d signed away decades earlier. The rights don’t apply to works made for hire.
The Supreme Court said in 1989 that the rule doesn’t apply to commissioned works under the revamped Copyright Act, but left the door open for a split by not addressing pre-1978 works. The Eleventh Circuit axed the rule altogether the next year, but the First Circuit, along with the Second and Ninth Circuits, have maintained that the rule still stands for old works.
Markham Concepts said the judge-created rule lacked valid legal underpinning from the start. It wants the high court to jettison it and set clear national guidelines for when a contractor has rights—guidelines that should be more favorable to the rights of hired creators.
Hasbro initially waived its right to argue against granting the petition, but the high court requested a response, due Feb. 22.
Some copyright attorneys say the justices shouldn’t discard what has become a half-century of precedent. Parties to entertainment contracts assume the rule has the weight of law when crafting deals, intellectual property attorney Aaron Swerdlow of Weinberg Gonser LLP said.
“If that changes it would really upend the economics of how products are made and compensated because the business risk-reward balance would change.” Swerdlow said.
Game developer Reuben Kalmer contracted Markham to create a prototype for “The Game of Life” and help him develop the rules. Milton Bradley bought the concept, and the 1960 game took off. Hasbro later acquired Milton Bradley.
Markham Concepts sued Hasbro in a 2015 bid to assert termination rights, which were designed to benefit creators of hugely successful works who may have lacked negotiating power when assigning rights. But courts said while Markham and his employees created the prototype, they did so at the “instance and expense” of Kalmer.
Markham’s heirs argued in their Supreme Court petition that the “instance and expense” rule was developed “through a process of judicial improvisation and precedent drift” without statutory or historical backing.
The rule stemmed from ambiguity in the Copyright Act of 1909. That law said the term “‘author’ shall include an employer in the case of works made for hire,” but never defined “employer” or works for hire. The Copyright Act of 1976 overhauled copyright law going forward and provided clearer definitions, but the old law still governs works created before 1978.
The Second Circuit’s 1939 decision in Yardley v. Houghton Mifflin Co. said a creator granted a benefactor an implied license, but not authorship, Marhkam’s heirs said. The Ninth Circuit in 1965 cited Yardley as it introduced the “instance and expense” phrasing in Lin-Brook Builders Hardware v. Gertler.
Lin-Brook was the first application of work-for-hire doctrine to commissioned works. The Second Circuit went further a year later by unambiguously saying the commissioning entity was legally the author, just as would be the case in a traditional employer-emplooyee relationship, Markham Concepts said.
In short, Markham’s heirs said, a 1930s case mitigating infringement liability risk for a work’s founder morphed into “an almost irrebuttable presumption that any person who paid for a work was the author.”
The high court rejecting the rule outright “is a nonstarter,” intellectual property attorney Ashima A. Dayal of Davis+Gilbert LLP said. Whatever its origins, the interpretation of the ambiguous law has been “the ground rule” for contract negotiations for decades, Dayal said.
“Yes it’s judicially created, but so is everything in common law,” Dayal said. “It has become, and it is, settled law.”
But public interest groups, the Screen Actors Guild-American Federation of Television and Radio Artists, Authors Guild, and the California Society of Entertainment Lawyers say upending status quo is exactly what the rule did in the first place.
The groups see the test as an “injustice” that has become “an impossible hurdle for creators,” as SAG-AFTRA put it in an amicus brief. It wrongly assumes the funding party bears all the risk in a work’s success, disregarding time and resources put in by the creator, who often lacks bargaining power, the groups say.
Swerdlow, though, said it makes sense that the funder and instigator of a project should own the copyright. The situation isn’t that different from a client paying a lawyer for an hour of work, said Swerdlow, who also said he’s not a fan of the concept of termination rights in general.
“Who would pay for content they don’t own?” Swerdlow said.
The case is: Markham Concepts Inc. et al. v. Hasbro Inc. et al., U.S., No. 21-711, Petition 11/10/21.
To contact the reporter on this story: Kyle Jahner in Washington at kjahner@bloomberglaw.com
To contact the editors responsible for this story: Renee Schoof at rschoof@bloombergindustry.com; Keith Perine at kperine@bloomberglaw.com
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