Sale of artifacts encapsulating copyrighted works

Question

By my understanding, copyright law would generally interpreted as allowing someone who buys e.g. a book containing some copyrighted poetry, to use the works personally in a variety of ways including, e.g. incorporating them into an embroidery piece intended for display in their home. If it were well known that one publisher did not object to such usage, but some other publisher would seek to punish anyone using their work in such fashion, revenue from the additional sales made by the first publisher as a consequence of this would likely exceed any revenues the second might plausibly achieve from selling countless individual licenses to produce one-off works.

What rules would apply if the person who embroidered the work became famous, and the value of the work as e.g. "A piece of embroidery by ___" vastly exceeds its value as "A copy of the poem ___", and the work would become part of an estate sale or bankruptcy liquidation? Would the publisher of the poem be entitled to any additional revenue at that time? How much? What rules would apply to e.g. published retrospectives of the works embroidered by the person? It would seem fair that if a publisher mass-produces copies of a book containing a photograph of an embroidery piece in which the entire poem is legible, the author of the poem should receive some sort of payment, but it would not seem fair for the author to require that the publisher either pay $1 million per copy of the book or else exclude the work in question from it.

Things would of course be simplest if the person who produced the original embroidery piece had nogotiated a license that provided for the possibility that the embroidered work might become notable for reasons other than the poetry contained thereon. Of course, the practicality of having everyone who embroiders poetry negotiate such a license would be essentially nil.

Is there any accepted practice of assessing royalties based upon the established value of per-copy royalties of the work or publications containing it, or how are such things handled?

Answer 1

By my understanding, copyright law would generally interpreted as allowing someone who buys e.g. a book containing some copyrighted poetry, to use the works personally in a variety of ways including, e.g. incorporating them into an embroidery piece intended for display in their home.

This understanding is not correct, or at least is too broad.

The purchaser of a copy of a work protected by copyright does have certain rights under US law. Such a person has the right to re-sell the copy, or to lend it to another, including by way of lease or rental, under the first-sale doctrine. Such a person also has the right to read the work, and to make use of any ideas or information contained in it.

However, Under 17 USC 106 the copyright holder has the:

... exclusive rights to do and to authorize any of the following:

(1) to reproduce the copyrighted work in copies or phonorecords;

(2) to prepare derivative works based upon the copyrighted work;

(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;

...

(5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly [emphasis added]

While an embroidered (or cross-stitch, or other textile) copy of a poem displayed only in the home of the person who made the copy might be held to be fair use (see 17 USC 107 for the law o fair use), public display, say in a museum or gallery, or reproduction in a book, would very probably not be considered fair use, although one can never be sure about a fair use decision until there is an actual court ruling. Such a use might be considered "transformative" and therefore fair, but I doubt it.

If such use was held not to be fair use, it would be copyright infringement, and the copyright owner could sue and obtain damages, which could include all profits made by the infringer plus all losses suffered by the owner, or else statutory damages of up to $150,000, all under 17 USC 504. In addition, the owner can get an injunction against any further infringement under 17 USC 502. The owner can also get a court order for the impoundment and destruction of any infringing copies under 17 USC 503.

The owner can also recover the "full costs" of bringing suit, including "a reasonable attorney’s fee", under 17 USC 505

Under 17 USC 507 a copyright infringement suit must be brought with 3 years after a "claim accrues". But each separate act of unauthorized copying or distribution is an infringement, and causes a separate claim to accrue. So would separate displays of the work. A suit can be commenced within three years of the most recent act of infringement.

There is, to the best of my knowledge, nothing like the compulsory ("mechanical") license for "cover" recordings of musical compositions (see 17 USC 115) which would apply in such a case. There is no standard scale of royalties in such a case, the owner could demand any sum at all, or refuse to grant permission at any price.

Answer 2

There is no general "personal use" exception under US copyright law. If you buy a print book of poems, you may chop the book up and glue the pieces into a piece of art, because you own the book. You can sell the book or the piece of art. However, you cannot freely copy the poetry of the book into embroidery, although if you do you may successfully defend yourself against an infringement lawsuit as long as this remains (this is because of the "fair use" escape clause in US copyright law).

The copyright owner might learn of infringement and decide not to pursue a lawsuit against the copier. They can change their minds for 3 years, and after that they can't sue (statute of limitations). If the copier suddenly becomes famous, or rich, within that time frame, they can sue, or, they can demand a license fee (actually, they can demand a license fee at any time, there is just no stick that they could use to force payment).

The license fee charged to get permission to use is set by negotiations between the parties, however the infringer has no effective bargaining power other than the retort "So sue me!". Usually, the copyright owner assesses the probability that they can actually get that much money. The author may be in a position to hold out for 33% per copy, or they may be stuck with a flat payment of $100, or less. Assuming that the author has transferred copyright to the publisher, then the publisher can not only sell copies of the work, they can sub-license to one or more other distributors. The point of these details is that the copyright owner sues for damages, that is, the amount of money that they would have gotten, had the work not been illegally copied.

In your scenario, the plaintiff would need to prove, for example, that they standardly charge $25 for an "embroidery license", and in this instance, the damage would be about $25. It does not matter that the defendant is Bill Gates of Joe Shmoe who has two dimes to rub together. The most draconian remedy that the plaintiff could go for is destruction of the embroidery. If, in addition, the infringer sold the work for a huge sum of money, they could be liable for the profits from the sale (not just the license fee). This is completely separate from the concept of "royalties"