|October 23, 2013|
Previously published on October 22, 2013
In a unanimous three-judge opinion, the United States Court of Appeals for the Fourth Circuit held that the “writing” and “signature” requirements for assigning a copyright can be met by clicking a button in a web browser. This gives greater certainty to enforceability of such terms by online clickwrap agreements, an increasingly common method of doing business.
The court upheld the transfer under the “writing and signature” provision for two reasons. First, the court held that the Copyright Act’s writing and signature requirements were intended to resolve disputes between the transferor and transferee of a copyright, not to provide a defense for a third party infringer where there is no dispute between the transferor and transferee. In this case, the defendant was a third party who the court concluded should not be permitted to “fabricate for its own benefit” a dispute over ownership between the plaintiff and the original owners of the photos. Second, and more significantly, the court found that transfers of copyright interests were properly covered by the Electronic Signatures in Global and National Commerce Act of 2000 (“E-Sign Act”), which “mandates that no signature be denied legal effect simply because it is in electronic form.” The E-Sign Act defines an “electronic signature” as “an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.”
Although the court could find little authority regarding the application of e-signatures to instruments conveying copyrights, the court cited cases holding that the E-Sign Act applied with respect analogous statutory provisions. The court also cited an 11th Circuit decision affirming a district court’s determination that applying the E-Sign Act to copyright transfers was consistent with the purpose of written signature requirement in Section 204, which is to resolve disputes between copyright owners and transferees and to protect copyright holders from persons mistakenly or fraudulently claiming oral licenses or copyright ownership.
Finally, the court concluded that none of the specific exemptions to the E-Sign Act were applicable with respect to the use of an e-signature to effectuate the transfer of copyright interests and declined to read the statute as allowing it to create new exceptions piecemeal. In particular, the court noted that the E-Sign Act explicitly states that it only “affects any [legal] requirement that contracts or other records be written, signed, or in nonelectric form,” and that the Copyright Act’s writing and signature requirements for copyright transfers fall squarely within that provision and contain no other requirements that would necessitate a written signature.
The Metropolitan Regional Information Systems decision provides important clarification regarding the applicability of the E-Sign Act to transfers of copyright interests. It also is a harbinger of future actions concerning the use of e-signatures and e-filing under the Copyright Act. For example, earlier this year, the Copyright Office commenced a rulemaking proceeding to determine whether and under what circumstances e-signatures will be accepted in fulfillment of the “hand written signature” requirement for statements of account submitted by cable systems pursuant to the Section 111 compulsory copyright license. While the court’s decision that the E-Sign Act applies to transfers does not necessarily resolve the issues raised in the compulsory license rulemaking, it suggests that, over time, e-signatures will become the favored means of fulfilling written signature requirements under the Copyright Act.