Here in the Holy Land, we’ve just finished the seven-day Passover festival. (Our brethren who are silly enough to still be living outside of the biblical Land of Israel are still in the throes the extra eighth day observed there.) Other than the requisite eating of matza on the first night, the real hallmark of the festival is the prohibition against leavened foods from wheat, rye, spelt, barley or oats (aka hametz). Jews are enjoined not only from consuming such products, but from even possessing them. The former prohibition is easy enough to abide by, but the latter presents difficulties: try as they might, most people can’t be certain that they’ve removed all the hametz from every nook and cranny of every space that they own. And what, for example, if you’re a spirits merchant, with a stock of grain-derived products worth thousands of dollars – do you have to pour your entire inventory down the drain before Passover?
The rabbis of the Talmud dealt with the issue of potentially insufficient cleaning by prescribing a ritual in which one symbolically burns his hametz, coupled with an oral disavowal of ownership of one’s hametz. That’s fine for overlooked crumbs and the occasional pretzel that your kid left behind the sofa that you missed while cleaning, but that doesn’t solve the problem of valuable hametz that you don’t really want to get rid of on account the financial loss that would be incurred.
Enter the realm of quasi-legal fiction: the sale of one’s hametz to a non-Jew. The prohibition against possession of hametz on one’s premises only applies to one’s own hametz; it’s ok to have hametz belonging to someone who isn’t Jewish in one’s house, provided it’s kept out sight. Hence observant Jews for whom the eradication of all their hametz would present a financial hardship sell their hametz to a non-Jew for the duration of the festival.
I call this a “quasi-legal fiction” for several reasons. First, typically, the sale is a conditional sale, subject to a small down payment (maybe $10) up front, at which time ownership transfers to the buyer, with the remainder being due at the conclusion of the festival. If the buyer doesn’t provide the money at the end of festival, the ownership reverts to the seller. I’ve never heard of a case where the buyer actually produced the remainder of the money to complete the transaction. Moreover, it’s common practice for many sellers to appoint a common agent (usually the local rabbi), who sells the collective hametz (having a higher value than any individual’s hametz) to a single buyer. The increased value decreases the likelihood of the transaction being completed. Finally, the seller almost never intends to really sell the hametz: the expectation is that at the end of the festival, ownership will revert to the seller.
Now, what does any of this have to do with patents, or IP in general? It turns out that a similar arrangement has been used for year by the US Copyright Office – and that that arrangement recently received the imprimatur of the Ninth Circuit Court of Appeals in a case entitled Alaska Stock, LLC v Houghton Mifflin. The dispute stemmed from the (uniquely) US requirement that a copyright holder register its copyrights before asserting them. Registration requires a listing of the author and a brief description of the work being copyrighted. This isn’t a problem if you are, say, an individual photographer registering your own photos. However, many photographers utilize “stock agencies”, which register the copyrights for the photographers and then market those photographs for use by others, paying the photographer for each instance of use (and of course keeping something for themselves; in many cases the photographers initially pay the agency for its services). A stock agency has no difficulty registering a compilation of thousands of photographs from hundreds of photographers (e.g. a catalogue or database): it simply registers the compilation as a “collective work” as defined in the copyright statute. But if the agency also wants to register the copyright in the individual photographs, it’s a burden to list every single photographer and every single photograph.
So in 1995, the Register of Copyrights (anyone know why the person is called the “Register” and not “Registrar”, which would seem to make more sense?) came to an agreement with a trade association of stock agencies called the Picture Agency Council of America, Inc., and reached an agreement: as explained by the Ninth Circuit, rather than requiring individual registration of each photograph in the catalogue, “a stock agency could register both a catalog of images and the individual photographs in the catalog in one application if the photographers temporarily transferred their copyrights to the stock agency for the purposes of registration”. (According to the court, the practice actually went as far back as 1980.)
Now here’s where we come to the sale of hametz. As reported in the Ninth Circuit’s decision,
“The trade association confirmed this with the Copyright Office in writing, and advised its member stock agencies. Using language suggested by the Copyright Office, Alaska Stock's typical pre-2001 agreement with a photographer includes this language: "I grant Alaska Stock the right to register for copyright my photographs which appear in this catalog in the name of Alaska Stock solely for the purpose of catalog registration. Alaska Stock shall reassign such copyright to me upon request." The post-2001 language was materially similar: "Photographer grants to Alaska Stock, solely for the purpose of registration, the copyright…." “
In other words, the photographers sold (or otherwise transferred) some of their rights in the photographs to the stock agency on condition that the agency would reassign those rights back to the photographer upon completion of the registration at the Copyright Office. Sounds a lot like the sale of hametz. Or the notion of “matana al m’nat l’hahzir” (a gift made on condition of being returned to the giver), a legal ruse used inter alia in the context of the four species on Sukkot.
As a patent practitioner, there’s another aspect to the case that I find interesting, namely the willingness of both the lower court and the appellate court to get into the nitty-gritty of the copyright registration process. We’ll get to that in a follow-up post.