President Obama’s December 17th announcement that the United States would begin the process of resuming relations with Cuba has left many with questions. How will it affect our individual relationships with Cuba and the Cuban people? Will general tourism be permitted? Are Americans able to open private businesses in Cuba? Are we able to engage in monetary or other economic transactions with Cuban nationals?
These questions are no less pressing for the arts community, both here and in Cuba. The trade embargo has significantly affected the Cuban art market since its inception. When President Kennedy enacted the embargo in 1961, communication between the American and Cuban art communities virtually stopped, though Cuban artists continued to work and gain prominence in Europe.
It wasn’t until 1989 that Cuban art began finding its way to the U.S. when a Federal court ruled that the Bush administration’s ban on the importation of art from Cuba violated the Trading with the Enemy Act and the First Amendment guarantee of a free flow of information. Those rulings forced the Treasury Department to allow licensed art dealers to bring Cuban art and literature into the United States, although the works had to travel through third party countries, not directly. The rulings also made art the only valuable commodity that American travelers have been able to bring home from Cuba without fear of confiscation.
To the extent that a U.S. person is permitted to bring Cuban works of art into the United States, would the same rules apply for an individual seeking to import a copyright from Cuba?
Cuba and Copyright
Consider this illustrative example. A very popular Cuban author wrote a children’s book that gained a large national following and had been frequently adapted as a play by Cuban school children. A few years ago, the author’s best friend Miguel, while living in the United States, decided to write a screenplay derived from the children’s book. Miguel began pitching his screenplay to various movie producers and agents, some of whom were interested in moving forward with the film. Since Miguel based his screenplay on his friends’ pre-existing work, it is considered a derivative work. Under copyright law, both in the U.S. and internationally, the copyright holder has the exclusive right to copy, distribute, publicly display and make derivatives of their work. Any creator from a country that is a signatory of the international treaty governing copyrights; the Berne Convention for the Protection of Literary and Artistic Works, should receive those exclusive rights.
Miguel’s friend has the exclusive right, therefore, to control any derivatives of his book, namely, Miguel’s script. In order to produce the script, Miguel’s friend must grant him permission to infringe on the copyright, the terms of which are set forth in a contract (license agreement) or the copyright can be permanently transferred to Miguel. The contractual terms would allow Miguel to commercialize his version of the story, in exchange for something of value, such as royalty rights, cross-licenses or some other valuable asset.
Seems easy enough, right? They’re best friends! But remember, with an economic embargo being in place between the U.S. and Cuba, even simple transactions may be against the law.
The Cuban Trade Embargo
The trade embargo with Cuba prohibits U.S. persons from engaging in transactions with Cuban nationals. According to the Department of State, Cuban Assets Control Regulations, (CACR) are enforced by the U.S. Treasury Department and affect all U.S. citizens and permanent residents. The regulation does not limit travel of U.S. citizens to Cuba per se, but it makes it illegal for U.S. citizens to have transactions in Cuba.
So, it must be determined whether the granting of a copyright license amounts to an illegal transaction as defined by the provisions of the embargo.
A transaction is legally defined as an agreement between two or more persons, who, for preventing or putting an end to a lawsuit, adjust their differences, by mutual consent. The means of formalizing that agreement is a contract.
A license agreement between Miguel and his friend would most likely be considered a transaction, as defined in the CACR as the agreement would be created to ensure that there is no copyright infringement or infringement lawsuit. And, since transactions between Cubans and U.S. nationals are prohibited, the copyright cannot be licensed, without an exception delineated in the statute, or some other favorable legal precedent. More importantly, money is not required for the transaction, just something of value must be exchanged (sometimes called consideration).
What if no money exchanged hands and Miguel is just given the copyright, at no charge? The Department of State has held that U.S. citizens may not receive goods or services for free from any Cuban national, which is designed to eliminate any attempts to circumvent the regulation based on that premise.
Interestingly, however, the U.S. government did carve out several exceptions to circumvent the general prohibition on economic transactions with Cuba or its people. The ones that we would expect to see often involve freedom of speech issues, such as news services access, historical research, and travel-related transactions, under certain conditions. Along with those expected exclusions, Congress surprisingly also allows Cuban artists to sell their work in the U.S. and receive reasonable royalties. The caveat is that only the original version, such as a book or lithograph can receive the exemption, but not derivative works. So Miguel’s friend can receive royalties for his book sales if sold in the U.S., but he cannot receive royalties for a movie based on his book.
Given the strict rules and lack of exceptions that may apply to Miguel’s situation, he had little chance of receiving the copyright license the studios wanted in order to move ahead with developing his screenplay into a motion picture.
How would Obama’s new regulations impact the copyright transaction? Though President Obama wishes to lift the Cuban trade embargo, he will not be able to do so without approval from Congress. There are, however, several measures he can enact unilaterally in order to facilitate the process, and since January, some of those measures have been put in place.
So far, Obama’s measures are aimed at easing restrictions on travel and trade. The administration has stated that its goal is to provide “alternative sources of information and opportunities for self-employment and private property ownership for Cuban nationals” and “further enhance the free flow of information.” However, these unilateral actions taken by the President are often very narrow, evaluated only on a case-by-case basis to ensure the Executive Branch is not overstepping its authority.
The most visible measure, to this point, is the ease on travel restrictions, thereby making it much easier to travel to Cuba. Now, to visit Cuba, one only need show they fall within one of 12 approved travel categories:
- Family visits
- Official business of the U.S. government, foreign governments, and certain intergovernmental organizations
- Journalistic activity
- Professional research and professional meetings
- Educational activities
- Religious activities
- Public performances, clinics, workshops, athletic and other competitions, and exhibitions
- Support for the Cuban people
- Humanitarian projects
- Activities of private foundations or research or educational institutes
- Exportation, importation, or transmission of information or information materials
- Certain export transactions that may be considered for authorization under existing regulations and guidelines.
- As well, a travel license is no longer required.
Along with the travel expansion, the Obama administration has also eased restrictions on travel-related transactions, two of which specifically apply to Miguel’s situation. The first involves the export, import, or transmission of information or informational materials and the second provides permission to attend professional research, professional meetings, and educational activities in Cuba.
Under the new Obama regulations, it appears that Miguel can at least visit his friend to discuss the copyright license to produce his derivative work. Miguel can easily make a case to fall within several of these categories, such as the story development rallies support for the Cuban People or maybe under the transmission of information. If Miguel can claim that the copyright license could “greatly enhances the free flow of ideas between Cuba and the United States,” also, the transaction will likely be permitted. Additionally, his visit to Cuba could certainly be considered a “professional meeting,” since his objective is to enhance his career by producing a film. Finally, Miguel’s visit to Cuba to complete a copyright transaction with his father directly serves the intention of President Obama by providing an opportunity for Miguel’s friend as a Cuban national, to earn private income and become an independent citizen of Cuba.
There is one caveat; Obama’s initiatives are crafted so as to not expressly override rules within the CACR, but rather skirt them until Congress votes to lift them. One rule that may be problematic under the CACR is 31 CFR 515.512 – Provision of certain legal services authorized, which states that legal services affecting property interests, including intellectual property, are prohibited. So Miguel may be able to work out an agreement but may not be able to use a U.S. attorney to do it.
It’s not over yet…
Since Cuba is a member of the Berne Convention, the U.S. will need to abide by Cuba’s copyright laws, if Miguel imports the copyright. What Cuban laws would govern Miguel’s copyright? Does the Cuban government exert any ownership over the intellectual property of its citizens? What are the risks involved with importing the copyright, both for Miguel and the U.S. government?
We’ll answer those questions in Part 2 of our series.