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T.B. Harms Co. v. Eliscu

United States Court of Appeals Second Circuit
339 F.2d 823 (1964)
ELI5:

Rule of Law:

An action "arises under" the Copyright Act for the purposes of federal subject-matter jurisdiction only if the complaint is for a remedy expressly granted by the Act, asserts a claim requiring construction of the Act, or presents a case where a distinctive policy of the Act requires that federal principles control the disposition of the claim. A dispute over copyright ownership based solely on state contract law does not confer federal jurisdiction.


Facts:

  • In 1933, composer Vincent Youmans contracted with RKO Studios, Inc. to compose music for the film "Flying Down to Rio."
  • RKO employed Gus Kahn and defendant Edward Eliscu to write the lyrics for the songs.
  • Max Dreyfus, the predecessor to plaintiff T.B. Harms Co., acquired Youmans' rights to the music and was designated to receive the assignment of the lyricists' rights.
  • Harms alleges that on June 30, 1933, Eliscu executed an agreement assigning all of his rights in the existing and renewal copyrights to Dreyfus in exchange for royalties.
  • Upon the expiration of the original copyright terms, the heirs of Youmans and Kahn assigned their renewal rights to Harms.
  • Eliscu, denying the earlier assignment, filed for renewal himself and, in 1962, assigned his purported renewal rights to defendant Ross Jungnickel, Inc., which was recorded in the Copyright Office.
  • Eliscu's lawyer then notified music licensing agencies that Eliscu held an interest in the renewal copyrights and demanded an accounting from Harms.

Procedural Posture:

  • Edward Eliscu initiated an action in the New York Supreme Court (a state trial court) for a declaration that he owned a one-third interest in the renewal copyrights.
  • T.B. Harms Co. subsequently filed this action in the U.S. District Court for the Southern District of New York against Eliscu and Ross Jungnickel, Inc.
  • The defendants moved to dismiss the federal complaint for lack of subject-matter jurisdiction.
  • The District Court granted the defendants' motion and dismissed the complaint for want of federal jurisdiction.
  • T.B. Harms Co., as appellant, appealed the dismissal to the United States Court of Appeals for the Second Circuit.

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Issue:

Does a lawsuit to establish ownership of a copyright, where the central dispute revolves around the validity and interpretation of a contract, "arise under" the Copyright Act for purposes of federal jurisdiction under 28 U.S.C. § 1338 when no claim of copyright infringement is made?


Opinions:

Majority - Friendly, Circuit Judge

No. A lawsuit to establish copyright ownership based on a contract dispute does not "arise under" the Copyright Act for purposes of federal jurisdiction if it does not allege infringement or require construction of the Act. The court reasoned that the statutory grant of federal jurisdiction for cases "arising under" copyright law is narrower than the constitutional grant. Historical precedent dictates that disputes over ownership or contractual rights related to copyrights, which depend on state law principles of contract and equity, do not create federal jurisdiction merely because a copyright is the subject matter. The court formulated a three-part test, finding this case failed all three prongs: 1) the complaint did not seek a remedy expressly granted by the Copyright Act, such as a suit for infringement; 2) the complaint did not assert a claim requiring construction of the Copyright Act, as the central issue was a factual dispute about whether a contract was signed; and 3) the case did not present a distinctive policy of the Act requiring federal principles to control the outcome. Therefore, the dispute properly belongs in state court.



Analysis:

This case is significant for establishing the influential 'Harms test' or 'Friendly test' for determining federal 'arising under' jurisdiction in copyright cases. It clarifies the jurisdictional line between state contract law and federal copyright law, preventing federal courts from being inundated with ownership disputes that are fundamentally state-law matters. By narrowing the scope of § 1338, the decision ensures that federal judicial resources are reserved for cases that genuinely implicate the interpretation, remedies, or core policies of the Copyright Act itself. This framework remains a cornerstone for analyzing subject-matter jurisdiction in intellectual property litigation.

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