Lost in the shuffle of the holidays was the U.S. Copyright Office’s adoption of a Final Rule clarifying the eligibility requirements for the Single Application, a simplified online registration option available to applicants who are both the sole author and owner of all rights in a single work that is not a work-for-hire.  Although the Single Application has been around since 2013, on December 16, 2017, the Copyright Office released a new version of the Single Application that included certain enhanced features designed to improve the user experience, increase the efficiency of the examination, and reduce the correspondence rate for these types of copyright claims. In tandem with the introduction of the revised Single Application, the Copyright Office announced that it would be amending the applicable regulations to, among other things, clarify the eligibility requirements for the Single Application.

The Final Rule, published on December 27, 2018 and effective January 28, 2019, clarifies, among other things, a key exception to the Single Application rules, permitting the Single Application to be used to register a single sound recording and the underlying musical work, literary work, or dramatic work, notwithstanding the fact that a sound recording and the work embodied in that recording are technically separate works under the framework of the Copyright Act.  To qualify under the exception, the applicant must: (i) be the sole author of both the sound recording and the work embodied in that recording; (ii) own the copyright in both works; and (iii) be the only performer featured on the recording.  The Final Rule also includes guidance on the manner in which the Single Application is to be signed and submitted, and eliminated the “short form” version of the application.

Copyright owners who qualify for the Single Application should familiarize themselves with this recent guidance, lest they will unnecessarily complicate a procedure intended to streamline the registration process.

One little-publicized part of the new tax law (Tax Cuts and Jobs Act of 2017) may negatively affect the value of some patents and other intellectual property.  It does so by changing the tax treatment of income from sales of “patents, models and secret formulas or processes” from capital gains to ordinary income.

Prior to the amendment of Tax Code Section 1221(a)(3), income from sales of (1) “patents, models and secret formulas or processes,” (2) held by the IP creator, (3) for more than one year, was taxed at the capital gains rate.  This resulted in lower tax than the ordinary income tax rate that applied to other types of IP, such as copyrights, literary, musical, and artistic compositions.  Congress has now taken this tax advantage away.

The change in the law affects those that sell or license IP in the “primary market” only —in other words, the original creators of the IP.  It generally does not affect those that have paid to own the IP, including the IP creators’ employers.

There still remains an exception under Tax Code Section 1235 providing for lower tax on sales and licensing of all rights to patents, secret formulas and trade names (but only these types of IP).  For other types of IP, adjustments in sale prices and license royalties will need to compensate for the higher tax under the new law.

Our tax and IP groups can help you assess the new law’s impact on these valuable assets.

It’s been a busy week for copyrights in the entertainment world.

For years, copyright mavens have enjoyed startling people with the news that Happy Birthday to You is copyright-protected.  On Tuesday, a federal court in Los Angeles cast doubt on that copyright lore by holding that the copyright claimant, Warner/Chappell Music, Inc., does not, in fact, own the copyright to the song.  The rights to the melody – which first appeared in the song, Good Morning to All – passed into the public domain long ago.  Warner/Chappell claimed, however, that Happy Birthday’s lyricists transferred the rights to the words to its predecessor in the 1930s.  The court found no evidence to support that claim and found Warner/Chappell has no rights in the song.  The court did not decide that no one owns the rights to the lyrics, but no other claimant has been identified.  Presumably the suit will celebrate its next birthday in the Court of Appeals.

Batman, however, had a better week.  On Wednesday, a federal Court of Appeals held that the Batmobile qualifies for copyright protection and that the defendant, who built full-sized Batmobile replicas, is liable for copyright infringement.  The decision is not as straightforward as it may seem.  Copyright law does not protect every element in a book, television series, or movie.  The court’s decision turned on its conclusion that the Batmobile is a character in the Batman works with particular traits, known in its own right for crime-fighting, “sleek and powerful characteristics” to help Batman fight villains.

The Happy Birthday decision, in Marya v. Warner/Chappell Music, Inc., Docket No. 2:13-cv-04460 (Central District of California), may be accessed through PACER (for those with an account).  The Ninth Circuit’s Batmobile decision, in DC Comic v. Towle, Docket No 13-55484, is linked here.