The Adventures of Sherlock Holmes: a warning against “disreputable” licence fees

Klinger, a Sherlock Holmes expert and co-editor of an anthology inspired by Sherlock Holmes, has been praised for performing a “public service” in fighting the Conan Doyle Estate (the Estate) for the right to use characters taken from Sherlock Holmes stories published before 1923.  At the same time, Judge Posner issued a strong warning to the Estate for its business strategy in seeking to extract licence fees for which there is no legal basis – which may cause other copyright holders to reassess how they “protect” similar works and indeed, whether they even have a proper basis to do so.

Sherlock Holmes made his first appearance on our IP Whiteboard in January this year, when we profiled the December decision of the District Court of Illinois in Klinger v Conan Doyle Estate, Ltd.  In that case, District Judge Castillo made a declaration that Klinger should not have to pay a $5,000 licence fee to use the Sherlock Holmes and Dr Watson characters in his new book.  Despite the fact that copyright had expired on the majority of the Sherlock Holmes stories, the Estate had argued that Klinger required a licence to use the characters because copyright had not yet expired on the last 10 stories in the series (due to special circumstances, the last 10 stories are protected by copyright until 2018-2022).

The Estate appealed the District Court’s decision but lost again in June when a three-judge panel lead by Judge Posner found that there was no basis in statute or case law for effectively extending copyright beyond its expiration and affirmed the declaration awarded to Klinger.  The Estate argued that creativity would be discouraged if copyright was not extended but Judge Posner noted that extending copyright protection was in fact a “two-edged sword from the standpoint of inducing creativity” as it also has the effect of reducing the incentive of subsequent authors to create works inspired by it.

In July, the Estate filed a petition for an emergency stay with the US Supreme Court – this was denied.  Following this, in August the Estate was ordered to reimburse Klinger for the fees he incurred in the appeal.  At the same time, the Estate received a further blow when Judge Posner warned that it should, for the sake of “its own self-interest, change its business model”.

Judge Posner’s warning followed a terse description of the Estate’s business strategy as “disreputable”, “a form of extortion” and “unlawful”.  As Judge Posner put it, the Estate’s business strategy was plain:

“to charge a modest licence fee for which there is no legal basis, in the hope that the “rational” writer or publisher asked for the fee will pay it rather than incur a greater legal cost, in legal expenses, in challenging the legality of the demand”.

It is reported that the Conan Doyle estate wishes to appeal the matter to the US Supreme Court.  In the meantime, we wonder what effect the praise dispensed to Klinger for “exposing the Estate’s unlawful business strategy” might have.

Indeed, the Court of Appeal shared the concern that alleged copiers may be induced into obtaining licences which are unnecessary or convey non-existent rights, using the song “Happy Birthday to You” as an example (see what we had to say about this last year here).  Will others alleged of copyright infringement follow in Klinger’s footsteps and re-think whether a work is in actual fact in the public domain before surrendering?  As Sherlock Holmes famously said…“the world is full of obvious things which nobody by any chance ever observes”…