Unwanted Plaque(s): Are Plaque Companies Misappropriating Your Copyrighted Material?

In the Press · August 17, 2015

Congratulations!  Your publication has just run a successful awards program honoring local businesses.  Advertising dollars are rolling in, and your readers are engaged.

Then the phone calls come.

Award winners are complaining about the $250.00 bill that accompanied the award plaque from your company. Only problem – you didn’t send the plaque or the invoice.

Our media clients have called us with the same issue before and it’s an unfortunate reoccurrence.  In an attempt to maximize profit, plaque companies reuse and redistribute portions of your publication by either ripping pages and placing the work on a plaque, or digitally reproducing your content without your permission.  So what can you do?

Case-law sends mixed signals, but a 2013 decision from a federal Court of Appeals gives publishers arguments to help stop the plaque-makers.

The Plaque Business Legal Theory

For years, plaque companies have defended claims of infringement under what is called the “first sale” doctrine of copyright law.  For years, this defense has proved difficult, and expensive, to counter.

The first sale doctrine is codified at 17 U.S.C. §109(a) which provides:

Notwithstanding the provisions of Section 106(3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.

For example, if an artist sells a postcard, the purchaser of the postcard can re-sell the postcard without artist permission, even though the copyright law grants authors of copyrighted works the exclusive right to distribute their own work.

 When pressed, the plaque companies rely on one court decision in the Ninth Circuit.  In the case of Lee v. A.R.T. Company , an artist alleged copyright infringement against a postcard company when the company purchased postcards and mounted the cards on decorative tiles.  The Ninth Circuit agreed with the postcard company that such action was not copyright infringement.  Lee v. A.R.T. Company , 125 F.3d 580 (1997).  The plaintiff alleged that the bonding of the art onto the ceramic tiles was a violation of the copyright holder’s exclusive right to create derivative works, and thus, falls outside of the “first sale” doctrine exemption.

Specifically, under 17 U.S.C. §101, a “derivative work” is defined as:

…a work based on one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound records, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed or adapted.  A work consisting of editorial revisions, annotations, elaborations or other modifications which, as a whole, represent an original work of authorship, is a derivative work.

The lower court in Lee had determined that simply applying an epoxy resin to bond the art to the tile does not create a derivative work, any more than re-framing a painting would create a derivative work.  Essentially, the lower court found that the mounting process cannot create a derivative work because the change of the work “as a whole” is not sufficiently original to support a copyright.[1]  Lee disagreed and claimed the mounting created an original and distinct derivative work.

The Court of Appeals chose not to engage in this originality discussion. Rather, the court focused on whether or not the mounted work was derivative as either an art reproduction or as a work that has been recast or adapted.   The court focused on the extent to which the original work was transformed. Citing examples such as the framing of a work, the court reasoned that the works of art were not transformed in the slightest by simply being mounted onto the tile.  The court said that adopting the plaintiff’s position may make simple tourists and art collectors criminals if they chose to frame or otherwise mount original pieces of art that they had purchased.

Attacking the First Sale Argument

Until 2013, attacking the “first sale” doctrine proved difficult with little to no persuasive judicial opinions to debunk the “first sale” defense.  In fact only one case in the country supported the idea that mounting original pieces of art may violate the copyright holder’s rights to create derivative works.  See Mirage Editions, Inc. v. Albuquerque A.R.T. Co., 856 F.2d 1341 (1988).

In the Mirage case, images were removed from a book and then printed onto ceramic tiles. According to the court, by removing the individual images from the purchased book and placing them on tiles, the defendant has transformed the images by incorporating them into the tile-preparing process.  The Mirage court stated:

We recognize that, under the “first sale” doctrine as enunciated at §17 U.S.C. 109(a)… appellant can purchase a copy of [a copyrighted work] and subsequently alienate its ownership in that book. However, the right to transfer applies only to the particular copy of the book which appellant has purchased and nothing else. The mere sale of the book to the appellant without a specific transfer by the copyright holder of its exclusive right to prepare derivative works, does not transfer that right to appellant. The derivative works right, remains unimpaired and with the copyright proprietors… As we have previously concluded that appellant’s tile-preparing process results in derivative works and as the exclusive right to prepare derivative works belongs to the copyright holder, the “first sale” doctrine does not bar the appellees’ copyright infringement claims

Adding strength to the Mirage court theory, on July 24, 2013, a decision in the Fourth Circuit appeared to breathe new life into the theory that a derivative work is created by mounting copyrighted material onto plaques and that the “first sale” doctrine is an inadequate defense.  See Rosebud Entertainment LLC v. Professional Laminating, LLC, 958 F.Supp.2d 600 (2013).  In a fact pattern that closely resembles the actions of most plaque companies today, Rosebud Entertainment (“Rosebud”), a magazine publisher, claims that the defendant, Professional Laminating LLC (“PLL”), was taking covers of Baltimore magazine’s “Top Doctors” edition and mounts the covers onto plaques to sell to the doctor awardees.  PLL countered with the usual defense of the “first sale doctrine” and a “fair use” defense.

PLL’s “first sale” argument is similar in nature to that made in the Lee case: the plaques are not independent works of art, but rather consist of the exact work placed on a different background, and thus have not been transformed in a material fashion.  PLL argues that they simply re-sold the copies of the works.  Rosebud counters by asserting that PLL transformed “…a magazine into a commemorative product through tearing, laminating and framing of the magazine’s cover onto a plaque inscribed with a recognition of the doctor featured in the magazine.”

In deciding the first sale issue, the Rosebud Court explicitly acknowledges the existence of the Lee decision and another similar 11th circuit decision,  Allison v. Vintage Sports Plaques, 136 F.3d 1443 (11th Cir. 1998) (holding that a defendant may purchase trading cards and then frame the cards by mounting them between transparent acrylic sheet and wooden board).  The court, however, is not persuaded by such decisions.  The court distinguishes with such holdings as follows:

Here, unlike in Allison and Lee, the Defendants have done more than add surrounding materials to Rosebud’s Works; instead, they significantly altered the Works by physically separating the magazine covers from the magazines and cutting the cover pages to fit the wooden boards… Because of these alterations to the original Works, the first sale doctrine does not apply to any of the Defendants’ products—including those that contained original pages.

As a result, the court specifically precluded the defendant from raising the “first sale” defense at trial, providing a new weapon to attack the plaque companies’ theory.

The one caveat, however, is as follows: the Rosebud court left open the question, for trial, as to whether or not the use by PLL is to be considered a “fair use.”  The court completed a preliminary analysis of the four prongs of a fair use defense as follows:

  1. Purpose and Character – weighs against a fair use finding (commercial purpose of use by the defendant).
  2. Nature of Work – the need to disseminate factual works weighs in favor of a finding of fair use. The Rosebud court suggested that the material was a mix of factual and creative content, however, it seems closer to factual.    The combination of educational and factual components of the work along with the fact that the works were published weigh in favor of a fair use finding.
  3. Amount of Work Used – the court found that the use of just covers and small pieces of the magazine would weigh in favor of fair use. This reasoning is troubling as the court seems to take a quantitative approach rather than a qualitative approach as to the “amount” of the work used, which is not the correct approach.  The cover and the material that accompanies the “Top Doctors” magazine may go to the “heart” of the feature, no matter the quantity of the material taken.
  4. Effect on the Market – the court made no conclusion on this issue.

Whether the “fair use” defense will ultimately be the argument to replace the “first sale” argument by plaque companies remains to be seen.  The good news, however, is that the courts are finally debunking the “first sale” defense that plaque companies have grown to love – which will aid publishers to combat unwanted solicitations of its advertisers and consumers.

If you would like assistance need more information about  please contact the author of this alert, Peter J. Caruso II, at 617 456 8034 or pcaruso@PrinceLobel.com.