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National Ass’n For Stock Car Auto Racing, Inc. v. Scharle, 184 Fed.Appx. 270, 2006 Copr.L.Dec. P 29,201

Facts

Matthew T. Scharle, an independent contractor, was hired by the Franklin Mint to design a new trophy for NASCAR, known as the 'NASCAR NEXTEL Cup.' Although Scharle worked under a Master Agreement, no specific rider was executed for this project. After delivering multiple designs, NASCAR began using the trophy and attributed the design to the Mint's president, Bruce Newman. Scharle later claimed copyright infringement and sought rights in the design, leading to NASCAR filing a declaratory judgment action to establish its ownership of the trophy's rights.

In the fall of 2002, the Mint asked Scharle to design a new trophy for NASCAR to replace the Winston Cup, the trophy then in use.

Issue

The main legal issues were whether Scharle had granted an implied license to NASCAR for the use of the trophy and whether the images created by Scharle were considered works of visual art under the Visual Artists' Rights Act.

Scharle disputes that the trophy project was covered by the Master Agreement, that he assigned his rights to the Mint, or that the Mint had the ability to convey those rights to NASCAR.

Rule

The court applied the principles of implied license, determining that a nonexclusive license may arise by implication when a creator delivers a work intending for the recipient to copy and distribute it. Additionally, the court evaluated whether the works qualified as 'works of visual art' under the Visual Artists' Rights Act.

A nonexclusive license may arise by implication where the creator of a work at a defendant's request 'hands it over, intending that the defendant copy and distribute it.'

Analysis

The court found that Scharle's actions indicated he intended for NASCAR to use the trophy he designed. His deposition established that he was aware of the high-profile nature of the project and that he delivered designs to the Mint with the expectation they would be used by NASCAR. The court concluded that Scharle had granted an implied license to NASCAR, as he created the designs at their request and delivered them with the intent for NASCAR to use them. Furthermore, the court determined that Scharle's designs did not meet the criteria for protection under the Visual Artists' Rights Act, as they were drafts and not singular works of visual art.

Scharle's own deposition establishes that he knew he was being asked to 'submit designs for the cup,' the sponsor was NASCAR, and that he was to design a new trophy to replace the Winston Cup which was being retired.

Conclusion

The court affirmed the district court's summary judgment, ruling that Scharle had granted an implied license to NASCAR and that his designs were not protected under the Visual Artists' Rights Act.

Accordingly, the district court properly determined that the trophy images were not 'works of visual art' under VARA.

Who won?

The prevailing party was NASCAR, as the court found that Scharle had granted an implied license for the use of the trophy and that his claims of copyright infringement were unfounded.

The court found there was no genuine issue of material fact, and determined that Scharle had transferred all rights in his computer trophy drawings to the Mint, that he had granted an implied license in the trophy, and that he had no attribution right in the drawings.

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