Lee v. A.R.T. Company
125 F.3d 580 (7th Cir. 1997)

  • Lee was an artist who owned the copyright to her paintings. She authorized postcards to be made of her work, which were then sold in stores.
  • ART legitimately bought copies of Lee's postcards and glued the individual pages onto ceramic tiles, which they sold. Lee sued for copyright infringement.
    • Lee argued that she had the right to control the distribution of her copyrighted work, and that had never authorized ART to make ceramic tiles.
    • ART argued that they had legitimately purchased the postcards and therefore had the right to do anything they wanted with them, including ripping them apart, gluing the pages to ceramic tiles and selling them.
  • The Trial Court found to ART. Lee appealed.
    • The Trial Court found that Lee retained the right to authorize derivative works under 17 U.S.C. 106(2). However, since ART had not altered the work in anyway, they could not theoretically claim a copyright on what they had done. Therefore no derivative work had been created.
  • The Appellate Court affirmed.
    • The Appellate Court noted that 17 U.S.C. 109(a) (aka the first sale doctrine), gives someone who buys a work the right it or lend it or do anything they want with it, in general.
    • The Court found that Lee had not suffered any economic loss because she had already "captured the value" of the original sale of the postcard.
      • Any subsequent alterations that consume or destroy the postcard lack economic significance.
    • The Court found that mounting the artwork on a ceramic tile wasn't an alteration that resulted in a derivative work. It was more like putting a painting in a frame. And you wouldn't say that someone who buys a painting is violating a copyright by putting it into a frame of their choosing.
      • Since the work wasn't recast, transformed, adapted, or altered, it couldn't be considered a derivative work, so 106(2) did not apply.
  • Contrast this decision with Mirage Editions, Inc. v. Albuquerque A.R.T. Company (856 F.2d 1341 (9th Cir. 1988)), which came to the exact opposite conclusion.