When Does a Work Infringe the Derivative Works Right of a Copyright Owner?

Consider the following fact situation: A, an artist, designs art work and registers the copyright in that art work. A then licenses P to publish note cards using the art work. The note cards are published by P and distributed to retail card stores. T purchases several hundred cards and then takes each card, glues it carefully to a ceramic tile, and sells the tiles for a profit as tile art that purchasers can use to decorate walls, counters, even floors. If A now sues T for copyright infringement, how should the court rule? Has T infringed A\u27s copyright? In addressing cases involving facts much like these, the courts have split. In Mirage Editions v. Albuquerque A.R T. Co., the Ninth Circuit ruled that the creator of the tile art had infringed the artist\u27s exclusive right to prepare derivative works based upon her copyrighted art work. That decision has been followed by two district courts in the Ninth Circuit in Munoz v. Albuquerque A.R T. Co. and Greenwich Workshop v. Timber Creations. On the other hand, in Lee v. A.RT. Co., the Seventh Circuit ruled in favor of the tile art creator, concluding that the tile art was not an infringing derivative work and that the defendant was entitled to make and sell the tile art without incurring liability to the artist in accordance with the first sale doctrine reflected in section 109(a) of the Copyright Act of 1976 ( 1976 Copyright Act or 1976 Act ). These differing outcomes have implications for copyright law that go far beyond the simple fact pattern involved. In fact, many of the policy assumptions that underlie copyright law are at stake in deciding which of these outcomes is proper. At its core, this fact pattern forces the courts to address the question of just what it means to provide an artist with copyright protection. Is the artist thereby ensured that any meaningful economic exploitation of the copyrighted work is subject to her control, or is copyright protection to be defined more narrowly, and if so, subject to what limitations? What are the limits of the personal property rights of those who purchase material objects that contain works protected by copyright? This Article addresses these questions, using the tile art scenario as the focal point. Part I describes generally the goals of copyright law and the historical development of the copyright owner\u27s right to control the creation of so-called derivative works. Part II focuses on the Mirage and Lee decisions and the reasoning used by these courts to reach their different outcomes. Part III critiques both of these decisions and places them in the context of other pertinent case law and commentary. Part IV provides an alternative approach to analyzing these issues