U.S. Court of Appeal Decides A Copyright Interest Can Be Transferred Without Using the Word "Copyright"

In a copyright infringement suit, the U.S. Court of Appeals (7th Circuit) recently affirmed the District Court's grant of summary judgment to the defendant MetaTrans Logistics ("MetaTrans"). At issue was the copyright interest in a computer program first developed by the plaintiff, ITOFCA, which had been involved in various corporate transfers. MetaTrans claimed that it acquired copyright in the program in a bankruptcy proceeding; ITOFCA claimed that it still retained copyright in the program. In the "˜80s, ITOFCA developed the program to assist its owners with their rail and truck shipping services. The company later transferred most of its assets to ITOFCA Consolidators, Inc. ("ICI"). The asset agreement involved provided that "... ITOFCA desires to divest ITOFCA of all assets and operations involving freight forwarding services" and specifically "desires to transfer all of its assets, except a building at and cash assets...". Shortly afterwards, ICI filed for Chapter 11 protection. In bankruptcy proceedings, the court approved the sale of ICI's "right, title and interest in all patent, copyright and trade secret rights in and to all computer software and corresponding documentation developed or acquired by [ICI]...", to Amerifreight. Amerifreight in turn assigned the rights it had acquired to MetaTrans. Despite having notice of the proceedings, ITOFCA did not oppose the sale. Eight years later, ITOFCA registered copyright in the program. ITOFCA subsequently brought the copyright infringement suit against MetaTrans. The central issue in the action was whether the original asset transfer to ICI transferred the copyright in the program. If there had been a transfer, ITOFCA would be barred from bringing the complaint. In assessing the issue, Posner J. reasoned that the language of the original asset transfer demonstrated that the copyright interest in the program had been conveyed to ICI. According to Posner J., "the copyright statute is explicit that there must be a memorandum in writing for the sale of the copyright to be enforceable". However, the term "copyright" needs not be used in the agreement. Consequently, since the asset transfer agreement conveyed "all assets" apart from a building and cash, the copyright in the program had been transferred from ITOFCA to ICI. The bankruptcy proceedings, of which ITOFCA had notice, resulted in the transfer of copyright to Amerifreight, notwithstanding the fact that ICI's asset list had not explicitly listed it as an asset. For a copy of the decision, please visit: http://makeashorterlink.com/?Q2FB42BE3