Just in time for Spooky Season, the U.S. Court of Appeals for the Second Circuit ruled that the screenwriter of the iconic horror film Friday the 13^th (1980), Arthur Miller (“Miller”), reclaimed the copyright in his screenplay from Manny, Inc. (“Manny”) and its successor-in-interest Horror Inc. (“Horror”).  Assessing the relationship between Miller and Manny, the Court determined that Miller did not write the screenplay as a “work made for hire” under the Copyright Act of 1976 (the “Act”) and thus Miller’s timely copyright termination notice to Manny and Horror (collectively, the “Companies”) effectively reclaimed his copyright.

In its blockbuster decision, the Second Circuit recounted the undisputed record of the lower court on summary judgment.  In 1979, producer, director, and writer Sean S. Cunningham, whose company is Manny’s general partner, contacted close friend and collaborator Miller about writing a screenplay for a horror film following the success of Halloween.  Miller and Manny then signed an agreement (the “Parties’ Agreement”) based on a standard form contract from the Writers Guild of America, East (the “WGA”), a union for screenwriters, which Miller had joined.  The agreement recognized that Miller had signed the WGA’s then-operative collective bargaining agreement known as the Minimum Basic Agreement (the “MBA”), and that Miller’s terms could not be less advantageous than the minimums under the MBA.  Furthermore, the Parties’ Agreement provided that Manny “employ[ed]” Miller to write the screenplay in exchange for two lump-sum payments.

Over approximately two months, Miller wrote the Friday the 13^th screenplay while working closely with Cunningham, bouncing ideas off one another at each other’s homes.  Miller drafted the screenplay at his own house using his own typewriter and paper, but also relied on some supplies from Cunningham.  He consistently received sole writing credit for the screenplay. 

At least a year after Miller finished the screenplay, Cunningham granted Georgetown Productions, Inc. (“Georgetown”) “complete control” over the screenplay in exchange for financing the film.  Georgetown’s principal, investor Phil Scuderi, provided extensive notes and added, over Miller’s objection, the famous finale where franchise villain Jason—who does not appear in any of Miller’s drafts and died as a young boy—emerges from Crystal Lake and drags the protagonist into the waters below, giving birth to numerous sequels, a TV show, books, comics, and Halloween-ready merchandise. 

In 1980, Manny assigned its rights in the screenplay to Georgetown, which filed a copyright registration listing Georgetown as the film’s “author” and identifying Friday the 13^th as a “work made for hire.”  Horror later acquired the rights to the screenplay and Friday the 13^th from Georgetown, becoming the successor-in-interest to Manny and Georgetown. 

In 2016, Miller served notices of termination on the Companies to recover his copyright pursuant to Section 203 of the Act.  The Court recounted that under Section 203, authors who transfer or license a copyright in their work may terminate and reclaim it except for “works made for hire,” which the Act defines as a “work prepared by an employee within the scope of his or her employment.”^[1] In response, the Companies sought a declaratory judgment from the U.S. District Court for the District of Connecticut that Miller wrote the screenplay as a work made for hire, rendering his notices invalid. Miller filed a counterclaim to the contrary.

The district court granted summary judgment to Miller, finding that he did not prepare the screenplay as a work made for hire because he was an independent contractor rather than an employee and that his termination notice was timely under the Act’s statute of limitations.  The Companies appealed both determinations, which the Second Circuit ruled de novo.

Regarding whether the screenplay was a work made for hire, the Court looked to the thirteen non-exhaustive factors established by the Supreme Court in Community for Creative Non-Violence v. Reid, 490 U.S. 730, 737 (1989) (“Reid”), the first five of which the Second Circuit assigned greater weight:

1. the hiring party’s right to control the manner and means by which the work is accomplished;

2. the skill required to create the work;

3. the provision of employee benefits;

4. the tax treatment of the hired party;

5. whether the hiring party has the right to assign additional projects to the hired party;

6. the source of the instrumentalities and tools;

7. the location of the work;

8. the duration of the relationship between the parties;

9. the extent of the hired party’s discretion over when and how long to work;

10. the method of payment;

11. the hired party’s role in hiring and paying assistants;

12. whether the work is part of the regular business of the hiring party; and

13. whether the hiring party is in business. 

Before applying the factors, the Second Circuit rejected the Companies’ argument that Miller was as an employee independent of Reid because he belonged to the WGA and had signed an agreement incorporating the MBA, which inherently created an employer-employee relationship.  In support, the Companies cited the National Labor Relations Board’s decision in In re Metro-Goldwyn-Mayer Studios, 7 N.L.R.B. 662 (1938).  That decision held that screenwriters counted as “employees” under the National Labor Relations Act (“NLRA”), which permitted screenwriters to unionize and the WGA to negotiate the MBA on their behalf.  The Second Circuit, however, rejected that argument, holding that defining employees for copyright purposes based on labor law principles and the NLRA conflicted with Reid and Second Circuit precedent that the common law of agency applies to Section 203.  Thus, the Court held that the Reid factors applied regardless of Miller’s WGA membership or employment status under the NLRA. 

The Second Circuit also disagreed with the Companies that it should consider Miller’s union membership as an additional Reid factor.  The Companies pointed to the Restatement (Second) of Agency, which provides that “community custom” is relevant to determining employment status, and argued Miller’s WGA status reflected “the screenwriter community’s general belief” that following MGM and the MBA, screenwriters would be hired as employees.  But the Second Circuit saw this reasoning as another attempt to shift from agency law to labor law and held that whether Miller’s screenwriter status entitled him to labor law protections had no bearing under copyright law.  Rather, his WGA status merely informed its analysis of the Reid factors, “namely whether Miller received benefits commonly associated with an employment relationship.”

Now reaching the Reid factors, the Second Circuit held that while Georgetown’s copyright registration identifying the screenplay as a work for hire raised a rebuttable statutory presumption, the strength of the factors in Miller’s favor sufficiently rebutted the presumption.  Specifically, the Court decided that merely three factors—and only one of the core factors in the Second Circuit—weighed in favor of the Companies.

As to the first (and core) factor, whether Manny maintained the right to control the manner and means of creation of the Friday the 13^thscreenplay, the Court found that Cunningham’s exchange of ideas with Miller about the screenplay demonstrated at least some control by Cunningham.  Yet the Court also determined that Cunningham’s suggestions and contributions demonstrated a “non-hierarchical exchange of ideas” not rising to the comprehensive control of an employment relationship.  Scuderi’s alteration of the ending, the sole example of overriding Miller’s ideas, did not change this conclusion because Scuderi did not work for Manny and Georgetown had no formal involvement until at least a year after Miller finished the screenplay.  Thus, the Court found this factor weighed marginally in favor of the Companies, at best.

The remaining core Reid factors all favored Miller.  The Court held that Cunningham relied on Miller’s skills in writing the screenplay despite Miller’s minimal experience in the horror genre.  It also determined that while Miller received benefits under the MBA, including residual and sequel payments, Manny did not provide Miller traditional employee benefits such as pension or health insurance.  Moreover, the Second Circuit found no evidence that Manny treated Miller as an employee for tax purposes because it never withheld or deducted any amounts from his compensation.  And it determined that Manny hired Miller solely to write the screenplay and therefore had no right to assign additional projects, even if Miller had distinct tasks in completing the screenplay to Manny’s satisfaction.    

Most of the non-core factors favored Miller as well.  The Second Circuit found that the brief two months it took for Miller to complete the screenplay and Manny’s lump-sum payments were consistent with treatment as an independent contractor.  It also held that Miller’s discretion over his day-to-day schedule, and the fact that he worked primarily from his home and not a traditional office building, also weighed in favor of such treatment.

Only two of the non-core factors favored Manny.  The Second Circuit first determined that because Manny produced screenplays, Miller’s work involved Manny’s regular business.  And while the Court recognized that the hiring party, Manny, was in business, it noted this factor had little weight in the Second Circuit.

Furthermore, the Court did not weigh two of the non-core factors.  It disregarded whether Miller had authority to hire assistants because it is normally not relevant where the work requires the hired party to work alone, like the “solitary nature” of screenwriting.  Nor did the Second Circuit consider the source of the instrumentalities because Miller used both his and Cunningham’s supplies.

In sum, because the majority of Reid factors—including four of the five core factors in the Second Circuit—weighed decisively in Miller’s favor, the Court concluded Miller was an independent contractor and successfully rebutted the presumption in favor of work-made-for-hire status raised by Georgetown’s registration.

But like the “final girl” in every B-grade slasher movie, the Companies made one last effort to retain the copyright.  The Companies argued that the statute of limitations under Section 507 of the Act barred Miller’s claim.  The Court detailed that the Act requires plaintiffs to bring all civil actions within three years after their claims accrue, which for authors accrues when a defendant plainly and expressly repudiates a claim of authorship. 

The Companies relied on three pieces of evidence.  First, the Companies claimed that they expressly repudiated Miller’s authorship more than three years prior to his notices because the cover page attached to drafts of the screenplay listed a copyright in “Sean S. Cunningham Films.”  However, the Court dismissed this claim on the basis that a copyright notice cannot serve as an express repudiation because it merely lists the name of the copyright owner and not the author.  

The Companies then pointed to a 2003 interview where Miller stated that Cunningham and Scuderi were “the owners” of Friday the 13^th.  But the Second Circuit dismissed this statement as evidence because it only related to current ownership and not Miller’s authorship.  Finally, the Court rejected the Companies’ argument that the registration identifying Friday the 13^th as a work made for hire constituted repudiation based on Second Circuit precedent to the contrary.

Thus, in the final scene, the Court dragged the Companies’ work made for hire argument into the lake by determining that because the Companies had not expressly repudiated Miller’s authorship and started the statute of limitations period, Miller successfully reclaimed his copyright in the screenplay through his termination notices.  Time will tell whether the Companies will attempt a sequel by submitting a writ of certiorari to the Supreme Court.

The case is Horror Inc. v. Miller, No. 18-3123, __ F.4d __ , 2021 WL 4468980 (2d Cir. Sept. 30, 2021).

^[1] While the Court clarified that a “specially commissioned work” may also constitute a work made for hire under Section 101 if an express agreement provides as such, the Companies conceded the Screenplay did not qualify because the parties’ contract did not state that the screenplay was a work made for hire.