US Court of Appeals 7th Circuit

Facts: HIT Entertainment owns the copyright to the "Thomas & Friends" train characters. Learning Curve hired the plaintiff (Schrock) to take photographs of the characters (in toy form) and used the photos on a promotional basis for about 4 years. After 4 years the Learning Curve no longer hired Schrock, but continued to use his photos. Schrock sued for a violation of his copyright in the images. The District Court misapplied the standard for derivative works and found for the defendant on Summary Judgment because he found the photos to be derivative and as such he had the permission to make, but not to copyright the photos. The 7th Circuit reversed the finding that their is a heightened standard for copyright protection of derivative works, but remanded the case for a determination of the terms of the original agreement of the parties as to permission to use.

Holding: Reversed the higher standard for copyright protection of derivative works and remanded case for factual determination of understanding of the parties.

Analysis: The court signals very clearly here that derivative works shall not be held to a higher standard for copyright protection. Simply because a work is derivative does not mean that it can not by copyrightable. The court found that "Schock created the photos with permission and therefore owned the copyright to the photos provided they satisfied the other requirements for copyright and the parties did not contract around the default rule." The case: Gracen v. Bradford Exchange is mentioned as often misapplied in that it states that in order to get protection a derivative work must be "substantially different" from the original. The 7th Circuit made clear that the standard is only that of originality and that originality need only be such that the new work can be readily distinguished from its predecessors. So long as the derivative work doesn't infringe the underlying work, as here then Schrocks use of light and feel in his photographs was sufficient to grant them copyright protection even though they were a derivative work. The court acknowledged that photographs are controversial in this regard, but came down in favor of a presumption of their originality.

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