## Facts

- Lulirama Ltd., Inc., through its president and composer Spencer Michlin, created advertising jingles for Axcess Broadcast Services, Inc.
- In 1991, the parties entered a one-year arrangement for 50 jingles at $750 each, partly memorialized by a signed billing statement with handwritten “for hire” language and delivery/approval terms.
- Axcess paid under the arrangement; Lulirama delivered only seven jingles during the initial term.
- In 1992, the parties executed a Promotional License Agreement allowing Axcess to use Lulirama/Michlin musical works for demonstration and promotional purposes, with monthly payments and renewal at Axcess’s option.
- In 1993, the parties orally continued their business relationship, with Axcess paying $50,000 annually in monthly installments, at an understood rate of $1,000 per jingle; Lulirama delivered 29 additional jingles.
- Axcess sued in Texas state court for breach of contract; the trial court granted summary judgment for Axcess, but the court of appeals reversed.
- Lulirama and Michlin filed a federal copyright infringement action based on Axcess’s reproduction and distribution of the jingles; Axcess asserted ownership (work for hire/assignment) or, alternatively, a broad license, and sought Rule 11 sanctions.

## Issues

1. Whether the first seven jingles were “works made for hire” such that Axcess owned the copyrights.
2. Whether Axcess had an express, oral, or implied nonexclusive license to use the jingles, and the scope of any such license.
3. Whether any license was revoked or limited by the Promotional License Agreement or by Lulirama’s later infringement suit.
4. Whether the district court abused its discretion in denying Rule 11 sanctions.

## Decision

- The court held Axcess did not own the first seven jingles under the work-for-hire doctrine because the statutory requirements for independent contractors were not met.
- The court held Axcess nonetheless had at least a nonexclusive license to use all jingles, based on the parties’ payments, delivery, and shared understanding that Axcess would use the works in its business.
- The court held the Promotional License Agreement did not revoke or curtail Axcess’s broader license to use the jingles, and filing the infringement lawsuit did not revoke a paid-for nonexclusive license.
- The court affirmed dismissal of the infringement claims on the license ground, while vacating the district court’s work-for-hire ownership ruling and rendering judgment consistent with the appellate reasoning.
- The court affirmed denial of Rule 11 sanctions.

## Legal Principles

- For an independent contractor’s work to qualify as a “work made for hire,” the Copyright Act requires compliance with statutory conditions, including a qualifying written agreement; informal “for hire” wording that does not satisfy the statute does not transfer authorship.
- A nonexclusive copyright license may be granted orally or implied from conduct, including payment for commissioned works and delivery with knowledge and expectation of the licensee’s use.
- A nonexclusive license supported by consideration is generally not unilaterally revocable absent a contractual provision permitting revocation.
- Where a defendant’s challenged use falls within a valid nonexclusive license, the use does not constitute copyright infringement.
- Denial of Rule 11 sanctions is reviewed for abuse of discretion; unsuccessful claims are not sanctionable if not frivolous.

## Conclusion

The Fifth Circuit rejected work-for-hire ownership for the initial jingles but held Axcess had a paid-for, nonexclusive license to use all jingles, defeating infringement liability, and it upheld the district court’s refusal to impose Rule 11 sanctions.


Lulirama Ltd., Inc. v. Axcess Broad. Servs., Inc., 128 F.3d 872 (5th Cir. 1997)