Wal-Mart Execs Behaving Badly: Who Owns the Videos?

Paul Caron brought an interesting piece in yesterday’s Wall Street Journal to my attention: Candid Camera: Trove of Videos Vexes Wal-Mart. The story: about 30 years ago, Wal-Mart hired a small video production firm to record meetings of Wal-Mart’s executives, as well as speeches, shareholder meetings, sales presentations, and the like. The video recording outfit kept all its tapes, never overwriting them with new material. As a result, over the years the firm accumulated a massive library of video recordings documenting life inside Wal-Mart — including some footage of executives saying and doing things they surely later wished hadn’t been recorded.

Two years ago, the retail giant and the video recording firm parted ways. Now, to Wal-Mart’s understandable chagrin, the video firm has offered to open its archives — for a fee — to all sorts of people who take a rather dim view of Wal-Mart: plaintiffs’ lawyers, labor organizations, documentary filmmakers, and the like, many of whom have already paid substantial amounts for damning clips from the video firm’s archives.

From the article:

Wal-Mart isn’t pleased. “It’s difficult to understand how the company could now sell to third parties the material we paid it to produce on our behalf,” says a Wal-Mart spokeswoman. “Needless to say, we did not pay Flagler Productions to tape internal meetings with this aftermarket in mind.” She adds that the company is “reviewing our legal options.”

Let’s review those legal options along with them, shall we?

Under Section 201(b) of the Copyright Act, “In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright.” So far, it sounds pretty good for Wal-Mart! If the videos were “works made for hire,” then Wal-Mart (the “person for whom the work was prepared”) owns the rights, unless the parties agreed otherwise in writing.

But that’s about the end of the good news for Wal-Mart. The exceedingly complicated definition of “work made for hire” in section 101 of the statute gives two alternatives, neither of which looks promising (emphasis mine):

A “work made for hire” is—

(1) a work prepared by an employee within the scope of his or her employment; or

(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.

I think we can safely rule out option #1, works created by employees within the scope of their employment. The Supreme Court ruled in CCNV v. Reid, 490 U.S. 730 (1989), that in using the terms “employee” and “scope of employment,” Congress meant to incorporate “the conventional master-servant relationship as understood by common-law agency doctrine,” id. at 740. In a passage that has vexed copyright students ever since, the Court continued:

In determining whether a hired party is an employee under the general common law of agency, we consider the hiring party’s right to control the manner and means by which the product is accomplished. Among the other factors relevant to this inquiry are the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party’s discretion over when and how long to work; the method of payment; the hired party’s role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party.

Id. at 751–52. Reid didn’t qualify as an “employee” under this standard because his relationship with CCNV was that of an independent contractor hired to do a particular job — he wasn’t put on CCNV’s payroll, didn’t receive employment benefits, and so forth. Without knowing more, I’d surmise that much the same was likely true of Wal-Mart’s relationship with the video recording firm. So Wal-Mart likely won’t be able to characterize the videos as works created by an employee within their scope of employment.

That leaves option #2, which converts some works created by non-employees (i.e., independent contractors) into “works made for hire.” There are two prerequisites here: (a) subject matter, and (b) written instrument. The videos probably pass the subject matter test; they’d likely be considered “audiovisual works” under the statute. What about the “written instrument” part of the test? Did Wal-Mart and the video recorder agree in writing that the videos would be works made for hire, owned by Wal-Mart? According to the WSJ story (emphasis mine):

The production company’s founder and former owner, Mike Flagler, says he was hired on a handshake in the 1970s …

Corporate records typically are closely controlled through legal contracts that restrict access and use. Mr. Flagler says he never signed a contract with Wal-Mart for the production or video work. Flagler Productions says that that arrangement left ownership and control of the films with it.

Flagler has a good point. Under cases like Effects Associates v. Cohen, 908 F.2d 555 (9th Cir. 1990), copyright in video footage ordinarily attaches in the first instance to the person who fixed it in a tangible medium. To divest Flagler’s company of the copyright in its footage, Wal-Mart needs to show that it was a “work made for hire” — which is going to be problematic either under option #1 (because the video firm wasn’t an “employee”) or option #2 (because the parties had no written agreement) of section 101′s “work made for hire” definition.

What’s left for Wal-Mart here? Perhaps they could try to show, as the plaintiff successfully did in Lindsay v. RMS Titanic, 52 U.S.P.Q.2d 1609 (S.D.N.Y. 1999), that a Wal-Mart exec was really directing the videography — that it was Wal-Mart, not Flagler’s company, that was really choosing camera angles and composing the shots. If Flagler’s camera operators are just mechanically implementing creative decisions that are actually being made by Wal-Mart itself, Wal-Mart would have a correspondingly stronger claim to authorship of the disputed footage. The Hail-Mary play would be a right of publicity claim grounded in the rights of Wal-Mart’s execs to control uses of their own likenesses, but with the possible exceptions of Sam and Hillary, most of the Wal-Martites (Wal-Marters? Wal-Martians?) shown in the videos are going to have trouble establishing their celebrity bona fides. According to the WSJ story:

In a Jan. 14 letter to Flagler, Marshall S. Ney, a lawyer for Wal-Mart, said the retailer has “claims to rights in the video library” and the film transcripts. Mr. Ney didn’t return calls for comment, and Wal-Mart’s spokeswoman declined to elaborate.

I’ll bet.

3 Responses to “Wal-Mart Execs Behaving Badly: Who Owns the Videos?”

  1. Heh, now thats a great little read. You should have just started with “the video deal was sealed with a handshake” and gone on to “ouch, try again” ;)

    I can still envision all kinds of claims that could be raised depending on how the material is used (from tortious interference with contractual relationships to possibly defamation based on omission, or even possibly business disparagement, etc) But as far as the copyright is concerned, it seems likely that Walmart is just out of luck.

  2. Interesting case, but I’m not so sure that this ends the analysis.

    1. What about trade secret law? Wal-Mart can quite easily argue that these meetings were secret, have value to the company that can be exploited to its detriment if generally known, etc. The film company was an agent, and even on a handshake the 30 year relationship without any divulgence shows that the reasonable expectations were that these films would not be made public.

    2. The audiovisual analysis/cases describe above don’t really talk about the photographer. Effects Associates, for example, was about special effects footage where the creative work was done by the plaintiff. Same with Reid. Here, the photographer is providing a tiny amount of the audiovisual work – the filming. How do we know there was enough creativity in the fixation to make the photographer an “author?” What if the camera was put on a tripod and started? These are important questions. See, e.g.
    Easter Seal Soc. for Crippled Children & Adults, Inc. v. Playboy Enterprises, 815 F.2d 323, 337 (5th Cir. 1987).

    3. Indeed, under the analysis above, the individual camera operator – not the company – might very well be the “co-author.” It would depend on the agreements between camera operator and the company.

    4. Wasn’t ownership different pre-1978? That might be an issue for the early tapes – Nimmer (5.03) cites a bunch of cases that says the default pre-1978 is that the commissioning party owns the audiovisual work.

    5. Even if the photographer owns the copyright agreement, I have to believe that the handshake agreement was “you film us and give us the media” in which case the photographer would not be entitled to own the media even if the copyright is owned. That might limit what Wal-Mart can do with it, but that doesn’t mean that the photographer can do what he wants with the media.

  3. Great points Michael… Hadn’t even thought about the trade secret aspect of the recordings. Also, not sure of the case law pre 78 on work for hire, so worth looking into for those materials for sure. But also, whether all of the pre 78 formalities were complied with as well. Everyone may be out of luck with regard to those works depending on the facts.

    Without knowing more facts about how these cameras were placed, and how the filming was conducted, but assuming that there was some miniscule modicum of selection and arrangement on the part of the photographer, I think its a tough case to make the works cannot sustain copyright… And while there is a plausible case for joint ownership of the works, I would think absent some sort of agreement between the parties, where is the intent to merge their work into a unitary whole? Is there enough circumstantial evidence in the behavior of the parties to make this showing of intent?

    The photographer(s) were working for the production company, and the creation of these works was presumably within the scope of their employment. Wouldn’t this likely make the production company the copyright holder (even absent a written agreement between the photographer(s) and the company?)