Hasbro’s Right of Ownership to the Game of Life’s IP Affirmed

Markham Concepts v. Hasbro
United States Court of Appeals for the First Circuit
Case No. 19-1927
Filed: Sept. 26, 2019

The Game of Life has had a long life. In 1959 Bill Markham (“Markham”) and his team were approached by Rueben Klamer (“Klamer”) to create a game for the Milton Bradley Company (“MB”), and together Klamer and Markham created and pitched the Game of Life. After a successful pitch meeting, the parties entered into two agreements. The first was a license agreement between Klamer’s company, Link Research (“Link”), and MB, which gave MB the exclusive right to make and sell the game in exchange for a nonrefundable $5,000 license fee and a 6% royalty based on sales of the game. The second agreement was an assignment agreement between Link and Markham, which assigned all of Markham’s rights, title, and interest in the game to Link for a nonrefundable $773.05 fee and 30% of the 6% royalty  that Link received from the Game of Life profits.

After the game was published in 1960, MB was identified as the author of the board, the game rules, and the box art of the game across several copyrights. The game remains popular, even now that MB has been acquired by Hasbro, Inc. (“Hasbro”). Unfortunately, for years after the game’s success, Markham never felt he was given appropriate recognition for his part in the game’s creation. During his life, and continuing after it, Markham (and his successors) had a long legal battle with Klamer over what rights Markham had to the game. In October 2015 the Markham successors filed suit for breach of contract, seeking royalties off of the game and a declaratory judgement that the Markham successors have control over the Game of Life’s intellectual property. When the judge ruled in favor of Hasbro, Markham successors appealed to the United States Court of Appeals for the First Circuit Appeals.

The main issue in the case was what the relevant definition of “work for hire” was for the Game of Life; two different definitions being used between the Copyright Act of 1909 and the Copyright Act of 1976. A work for hire is a copyright where the individual author(s), in the normal usage of the term, is/are not the author listed on the copyright registration. Under the 1976 act, a work for hire can exist 1) when a work is created by an employee in the ordinary course of employment, or 2) by contract between two parties for certain types of copyrighted works. Under the 1909 Copyright Act, works for hire were based on common law principles, thereby encompassing employer/employee relationships, as well as some commissioned works.

Under the 1909 Copyright Act, the “instance and expense test” was the prevailing approach to determining if a work (outside of the employer-employee relationship) constituted a work for hire. The instance and expense test deemed commissioned works made by independent contractors to be works for hire if, (1) the hiring party was the motivating factor for creation of the work, (2) the work was made at the expense of the hiring party, and, (3) the hiring party had at least a theoretical right to supervise the work. This test usually favored the hiring party.

The 1976 Copyright Act imposed more requirements to finding a work for hire outside of a traditional employer-employee relationship; only certain kinds of works can constitute a work for hire and a written agreement is necessary. Further, the 1976 Copyright Act used the word employee without defining it, leaving the definition up to the courts.

The Game of Life was created in 1960, prior to the 1976 Copyright Act (which went into effect January 1, 1978) meaning its copyrights are governed by the 1909 act. However, the Markham successors argued that the Supreme Court decision in Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989) (“Reid”), made the instance and expense test inapplicable to even works predating 1978.

The Court found in Reid that, under the 1976 Copyright Act, a hired party is not necessarily an “employee” just because the hiring party has a right to control or actual control of the underlying work. Thus, the Supreme Court found the instance and expense test is inapplicable under the 1976 Copyright Act. But the First Circuit Court disagreed with the Markham successors that the test is now also retroactively inapplicable to works governed by the 1909 Act.

The court looked to its decision in Forward v. Thorogood, 985 F.2d 604, 606 (1st Cir. 1993) (“Forward”), which came four years after Reid. In Forward, the instance and expense test was used—after Reid—with respect to a copyright governed under the 1909 Act, which means that Reid did not preclude the instance and expense test for copyrights made before 1978, like those covering the Game of Life.

Under the instance and expense test, the First Circuit found that the Game of Life was a work for hire. The expense element of the test was satisfied because the court found that Klamer did promise to pay for the expenses in creating the game and that Markham bore minimal financial risk because of it. The instance element was clearly satisfied from the facts of the case.

The Markham successors also argued that the assignment agreement contained language that was intended to reserve copyright ownership for Markham, but the court found the language was not strong enough to indicate Markham’s ownership and more reflected protective language for Link.

On June 14, 2021, the First Circuit affirmed the finding that Hasbro holds the rights to the Game of Life, rejecting all of the Markham arguments. While this case was specific to a work created under the 1909 Act, copyright creators should be clear about whether a newly created work is intended to be a work made for hire or not.

The U.S. Copyright Office defines a work for hire as:

  1. a work prepared by an employee within the scope of his or her employment; OR
  2. a work specially ordered or commissioned AND the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire AND the work is one of the following
    1. a contribution to a collective work,
    2. a part of a motion picture or other audiovisual work
    3. a translation,
    4. a supplementary work,
    5. a compilation,
    6. an instructional text,
    7. a test,
    8. answer material for a test, or
    9. an atlas,

See 17 USC § 101.

It’s always helpful to consult with a lawyer if you are concerned about your rights in a copyrighted or creative work.

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