## Facts

- Larry Cohen hired Effects Associates, Inc., a special-effects company, to create special-effects footage for his low-budget film *The Stuff*.
- Effects proposed specific shots in writing, but the parties’ agreement was oral and did not address copyright ownership.
- Effects created and delivered the footage intended for incorporation into the film.
- Cohen was dissatisfied with part of the work and paid only half of the promised amount for one shot, leaving an unpaid balance of a little over $8,000.
- Cohen nonetheless incorporated the footage into the film and provided the film to a distributor.
- Effects sued for copyright infringement, asserting Cohen had no right to use the footage without full payment and without a written transfer of rights.
- On remand after an earlier appeal, the district court granted summary judgment for defendants, holding Cohen had an implied license and indicating Effects’ remedy lay in contract.

## Issues

1. Whether Cohen obtained an implied nonexclusive license to use Effects’ footage in the film despite the absence of a written agreement and incomplete payment.
2. Whether 17 U.S.C. § 204(a)’s signed-writing requirement barred reliance on an implied nonexclusive license in these circumstances.

## Decision

- The Ninth Circuit affirmed summary judgment for defendants.
- The court held Cohen had an implied nonexclusive license to incorporate the footage into *The Stuff*.
- The court held § 204(a) applies to transfers of copyright ownership (including exclusive licenses), not to nonexclusive licenses implied from conduct; therefore no writing was required.
- The court treated the unpaid balance as a contract dispute rather than copyright infringement once a nonexclusive license existed.

## Legal Principles

- A nonexclusive copyright license may be granted orally or implied from conduct; it does not require a signed writing under 17 U.S.C. § 204(a).
- Section 204(a)’s writing requirement applies to transfers of copyright ownership and exclusive licenses, serving to prevent inadvertent loss of ownership rights.
- An implied nonexclusive license is supported where a creator makes a work at the user’s request, delivers it, and intends it to be used for the requested purpose.
- Failure to pay the full agreed price generally sounds in contract and does not, by itself, convert licensed use into infringement.

## Conclusion

The Ninth Circuit held that Effects’ creation and delivery of footage for Cohen’s film, without use restrictions, supported an implied nonexclusive license permitting use in the film, and that § 204(a) did not require a written instrument for such a license; the payment shortfall was a contract matter rather than infringement.


Effects Assocs., Inc. v. Cohen, 908 F.2d 555 (9th Cir. 1990)