Judgment Creditor Can Have Receiver Appointed To Sell Copyrights In Master Recordings To Satisfy Debt

Hendricks & Lewis PLLC v. Clinton, No. 13-35010 (9th Cir. June 23, 2014; amended Aug. 27, 2014 [decision]).

The 9th Circuit affirmed an order appointing a receiver and authorizing the sale of copyrights in four master sound recording owned by the musician George Clinton to satisfy judgment obtained by his former lawyers for past-due attorneys' fees.  The 9th Circuit held that under Washington law, the copyrights were subject to execution to satisfy judgments against Clinton.  Further, section 201(e) of the Copyright Act did not protect Clinton from the involuntary transfer of his copyrighted works.  "Section 201(e) is of no help to Clinton because he is not the 'author' of the Masters within the meaning of the Copyright Act. Thang specifically agreed in its 1975 contract with Warner Bros. that Warner Bros. would be the sole owner of the master recordings resulting from the parties’ contract. Thang and Clinton were 'deemed [Warner Bros.’s]
employees for hire' in the same contract.  As noted, the parties signed a substantially similar agreement in 1979, and it is uncontested that all four Masters were created under these agreements. *** [E]ven if the Masters were not originally 'works for hire,'  § 201(e) protection does not apply where a copyright was
previously 'transferred voluntarily by that individual author.' There is no question that Clinton transferred any interest that he had in the Masters to Warner Bros., and, as part of a settlement arising from unrelated litigation, Warner Bros. subsequently agreed to transfer ownership back to Clinton. These voluntary transfers provide yet another basis for rejecting Clinton’s argument that he enjoys § 201(e) protection as the original author of the master sound recordings."  Accordingly, it was not an abuse of discretion to appoint a receiver to manage or sell ownership of the copyrights.  Clinton's defenses raise on appeal -- judicial estoppel and fraud on the court -- lacked merit.  Other defenses were waived for failure to raise them below, and in any event lacked merit.