Edition: U.S. / Global

Final Twist in 'Rear Window' Case

By LINDA GREENHOUSE, Special to The New York Times
Published: April 25, 1990

In a copyright decision calling into question the legal status of hundreds of motion pictures, the Supreme Court ruled today that the current owners of Alfred Hitchcock's ''Rear Window'' had infringed the copyright of the short story on which the 1954 movie classic was based.

As a result, the movie's owners, including the actor James Stewart, who was one of its stars, will have to pay damages and a portion of the movie's profits to a literary agent who in 1972 acquired the copyright to the short story for $650. ''Rear Window'' generated more than $12 million in gross revenue in commercial distribution during the 1980's.

The copyright owner had sought half of the gross proceeds of the film, but the precise amount of damages to which he is entitled will now be determined by the lower courts.

The further implications of the 6-to-3 ruling are unclear but are likely to be substantial. The motion picture industry has not kept records that would indicate what other movies are based on copyrighted material that can now no longer be legally used.

But briefs in the case indicated that 1,000 or more movies might be in that category. A brief filed on behalf of several big Hollywood studios asserted that some movies might be withdrawn from distribution ''in order to avoid continuing liability for copyright infringement.''

The decision, written by Justice Sandra Day O'Connor, affirmed a 1988 ruling by the United States Court of Appeals for the Ninth Circuit, in San Francisco.

The case posed a technical and intensely disputed issue of copyright law, growing out of the relationship between two provisions of the Copyright Act of 1909. Under one provision, owners of a copyright could grant to others, for a negotiated fee, the right to use the material to create a separate, ''derivative'' work, like a movie.

Under the other provision, the original copyright expired after 28 years and was eligible for renewal for another 28 years. The intent of the renewal provision was to give a work's creator a second chance to benefit from the work and from any changes in its market value by renogiating any contracts for derivative works.

But there was a dispute among lower courts over what had been intended in the copyright law when an original author, having expressed the intention to renew both the original copyright and any agreements authorizing derivative use, died before the first 28-year period expired.

Until the ''Rear Window'' case reached the courts, the leading decision to address this issue was a case called Rohauer v. Killiam Shows, decided in 1977 by the United States Court of Appeals for the Second Circuit, in New York. The Court of Appeals decided that the owners of the derivative work could continue to use it as they had before the original author's death, even if the right had not been officially renewed.

Rights Sold for $9,250

''Rear Window'' fit a similar pattern. A short story, ''It Had to Be Murder'' by Cornell Woolrich, was published in Dime Detective Magazine in 1942. Three years later, Mr. Woolrich sold a production company the movie rights to this story and five others for $9,250.

The rights to ''It Had to Be Murder'' were bought the next year for $10,000 by a production company formed by Mr. Stewart and Mr. Hitchcock. The result was ''Rear Window,'' co-starring Grace Kelly.

Mr. Woolrich, who had promised to renew the movie rights when the copyright term expired, died in 1968 before he could do so. His estate was administered by the Chase Manhattan Bank, which renewed the copyright on the original story and sold the renewed movie rights for $650 to a New York literary agent, Sheldon Abend, who has bought the rights to some 100 movies.

Several years later, after ''Rear Window'' was shown on television, Mr. Abend sued the movie's owners for copyright infringement, demanding half the movie's gross proceeds. The lawsuit was eventually dismissed by a Federal district judge in Los Angeles. Mr. Abend appealed, and the Court of Appeals for the Ninth Circuit declared that in its view, the Rohauer precedent was erroneous. It ruled for Mr. Abend, and the movie's owners appealed to the Supreme Court.

In its decision today, Stewart v. Abend, No. 88-2102, the Supreme Court agreed with the Court of Appeals. Justice O'Connor's majority opinion relied principally on a 1960 Supreme Court ruling that established that a promise to renew a copyright is only an ''expectancy'' until the renewal date actually arrives. Use of the material without permission was copyright infringement, she said.

Reply to Industry Warning

Justice O'Connor, noting the movie industry's warning that this decision would lead to ''many fewer works reaching the public,'' said, ''These arguments are better addressed by Congress than the courts.''

Congress did in fact substantially rewrite copyright law in 1976, eliminating the renewal provision and substituting a single copyright term of the life of the author plus 50 years. But the new law affects only those original works copyrighted in 1978 or later. Prior works are still subject to renewal under the old law, so movie rights for them could be affected until the year 2005.

The decision will have a far-reaching financial effect in Hollywood, said David Nimmer, a Los Angeles entertainment lawyer and author of a book on copyright law. ''With the booming of the videocassette industry and with the public's appetite for theatrical rereleases, under the straight rule of this case, there will have to be a share of the proceeds set apart for the authors' heirs,'' he added.

New Risks for Old Works

Lionel S. Sobel, a professor of law at Loyola Marymount University in Los Angeles and editor of Entertainment Law Reporter, a monthly periodical, said that novels, short stories, plays and songs created before 1978 would be worth less money as a result of the ruling, because heirs of the original authors could demand a new fee for licensing rights. Such copyrighted works are suddenly ''very risky works to incorporate into movies,'' Professor Sobel added. The majority opinion was joined by Justices William J. Brennan Jr., Thurgood Marshall, Harry A. Blackmun and Anthony M. Kennedy. Justice Byron R. White filed a separate concurring opinion.

Justice John Paul Stevens filed a dissenting opinion that was joined by Chief Justice William H. Rehnquist and Justice Antonin Scalia. They said that the majority had overlooked Congress's intent to give derivative works full copyright protection.

Photo: Grace Kelly and James Stewart in a scene from Alfred Hitchcock's ''Rear Window.''