Last week, the U.S. Court of Appeals for the First Circuit issued an opinion in Markham Concepts, Inc. v. Hasbro, Inc., No. 19-1927 (June 14, 2021), affirming the District of Rhode Island’s use and application of the instance and expense test to determine whether a copyrighted work, transferred under the 1909 Copyright Act, was a work for hire.
Toy designer Bill Markham’s successors-in-interest brought an action against the copyright owners of “The Game of Life,” seeking a judicial declaration that they possess “termination rights” under the 1976 Copyright Act. Those termination rights permit the transferor of a pre-1978 copyright, other than a copyright in a work for hire, to terminate the transfer. Specifically, Markham’s successors sought to terminate a 1960 agreement that assigned Markham’s interest in the game.
Because the copyright and transfer pre-dated the 1976 Copyright Act, the district court held a bench trial to determine whether the game was a work for hire. Applying the so-called “instance and expense” test established under the 1909 Copyright Act, the court found that Hasbro had “provided the instance for and bore the expense of the [game] prototype’s invention.” The court, therefore, held that Markham’s contribution was a work for hire, and that Markham’s successors held no termination rights. Markham’s successors appealed, arguing that the instance and expense test had been abrogated under the 1976 Copyright Act and precedent interpreting that Act.
The First Circuit affirmed the holding of the district court. The Court rejected appellants’ argument that the 1976 Copyright Act, as interpreted by that the Supreme Court in Community for Creative Non-Violence v. Reid, abrogated the 1909 Copyright Act’s “instance and expense” test thus narrowing the circumstances under which a work qualifies as a work for hire. Noting that, even after Reid, the First Circuit has continued to apply the “instance and expense” test to the evaluation of copyrights pre-dating the 1976 Copyright Act, the Court confirmed that the test still applies in cases involving these older copyrights. The Court further reviewed the district court’s application of the ‘instance and expense” test to the facts of the case before it and found no error in the district court’s analysis.
This blog post was co-authored by Eric Chad and River Lord.