Who's On (The) Second (Circuit)... And Why Are They Screwing Up Copyright Law?

So, last year, we wrote about the ridiculous situation in which the heirs of Abbott and Costello had sued for copyright infringement over a broadway play, Hand to God. In that play, which is a dark drama, and not a comedy, about a puppeteer, there's a scene in which the puppeteer performs a bit of the famous "Who's On First?" routine with puppets. The district court wasted little time in dumping the lawsuit. As we detailed in our first post, the copyright issues here were already somewhat complex for a variety of reasons. The short version is that (1) lots of comedy teams performed the same basic act before Abbott & Costello, and (2) the "copyright" is not actually for the whole routine, but rather two separate performances in two separate movies, where Abbott & Costello did (different) versions of the act. It is true that Universal Pictures transferred whatever copyright interest it might have in those two scenes to the heirs of Abbott & Costello in 1984, but it was never clear what copyright they could actually claim in those particular scenes & whether or not it had been properly registered and renewed. The district court sided with the producers of Hand to God based on fair use, skipping over the more thorny question of whether or not there was a copyright at all. Basically, the court (correctly) noted at the motion to dismiss stage that it needed to interpret things in the most favorable manner to the plaintiff, and thus it would just assume that the copyrights were valid, and said that even if the copyrights were valid, fair use would lead the case to be dismissed. Astoundingly, the heirs of Abbott & Costello have appealed... and they've lost on appeal as well at the Second Circuit court of appeals. But... the reasoning of the appeals court is very different, and potentially dangerous. Basically, the court here says that there's no valid copyright (which is probably correct), but then for no good reason also concludes that if there were a valid copyright, this would not be fair use. This is bizarre on a number of levels, starting with the fact that once it's decided there's no valid copyright, there's no reason at all to also do a fair use analysis, and it may mean that the fair use analysis is effectively meaningless dicta -- but you can bet that others will make use of it in trying to undermine fair use in other cases, and the fair use analysis here is bad. Really bad. Laughably bad... and not laughable like the Abbott & Costello routine. First, on the question of the copyright's validity. The court goes fairly deep into the wording of various contracts in determining who had the responsibility for renewing the copyright in question in the movies, and basically finds that Abbott & Costello did not actually transfer the copyright to the movie studios, and thus, the team (or their heirs) failed to renew the copyright as necessary in 1968 -- and thus, the act is in the public domain (this ignores, again, that the actual act predates the movies, and even predates Abbott & Costello, but whatever). The only mention of the fact that the act was performed previously was to toss aside the estate's claim that the act should be considered a "work made for hire" so that the copyright could have actually gone to the movie studio (so that it could later be transferred to the estate). Yet the judge points out that it can't be a work made for hire, since Abbott & Costello had already performed it earlier, so they didn't make it for the movie studio (I'm not sure this actually makes sense, since the copyright would be in the specific fixed work, but, again, this is getting deep into the weeds). Either way, the end result is no copyright, and that's a good thing, even if the reasoning is a bit weird for why. But the really problematic part of the ruling is the fair use stuff. Again, it's not at all clear why the court is looking at fair use at all, since it says there's no copyright anyway. But it does. And it does so badly. While the district court found the use in the play clearly transformative (taking a pure slapstick Vaudevillian comedy routine and putting it in a dark & disturbing play), the appeals court disagrees, basically saying that since the use is recognizable, it's not transformative:

Far from altering Who’s on First? to the point where it is “barely recognizable” within the Play... defendants’ use appears not to have altered the Routine at all. The Play may convey a dark critique of society, but it does not transform Abbott and Costello’s Routine so that it conveys that message. To the contrary, it appears that the Play specifically has its characters perform Who’s on First? without alteration so that the audience will readil