IP/Entertainment Law Weekly Case Update for Motion Picture Studios and Television Networks - March 7, 2012

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Table of Contents

Psihoyos v. Pearson Education, Inc., USDC S.D. New York, February 29, 2012
 Click here for a copy of the full decision.

  • District court denies photographers’ motion for partial summary judgment on copyright infringement claims against publisher, finding an issue of fact as to whether publisher could establish, through its course of conduct with plaintiffs’ sub-licensee, that publisher had an implied license allowing it to use plaintiffs’ photographs prior to obtaining and paying for an express license.

Plaintiffs, professional photographers, sued defendants Pearson Education, publishers of educational textbooks, and others, asserting copyright infringement for defendants’ use of four photographs (Tyrannosaurus Being Cleaned, One Hundred Monkeys Type Shakespeare, Vintage Sketch of an Iguanodon and Storm Researchers in Action). Plaintiffs filed a motion for summary judgment on their infringement claims, and for summary judgment that those infringements were “willful.” Pearson opposed that motion, arguing that plaintiffs lacked standing to sue for copyright infringement, that summary judgment was improper because plaintiffs had not adequately established that they owned the photographs at issue, and that Pearson had an implied license to copy and publish the images until it could obtain and pay for an express license. The court rejected Pearson’s challenge to plaintiffs' standing to sue and ownership of the copyrights, and granted summary judgment to plaintiffs on these issues. The court denied plaintiffs’ motion on the implied license issue, finding insufficient evidence to rule as a matter of law on whether, through a course of conduct with Getty Images, Pearson had obtained implied licenses.

Plaintiffs licensed their images through stock photography agency Visions of Tomorrow, Inc., also known as Science Faction, which sublicensed the images to Getty Images. Getty, in turn, provided Pearson and other publishers with access and licenses to view images to determine whether they were appropriate for use in a particular publication. When a publisher selected a particular image for use in its publication, Getty would provide the publisher with a non-exclusive, non-sub-licensable, and non-assignable license to use and reproduce the image.

Under a separate image storage agreement with Getty, defendant Pearson was able to store and view images on an internal database, the Pearson Asset Library (PAL), prior to obtaining licenses to use the images. In 2009, Pearson used plaintiffs’ four images in publications without first seeking a license from Getty or Science Faction. Following publication of each of the images, Pearson sought a license from Getty, but was advised that Getty no longer had the rights to license the images, because the sublicensing agreement between Getty and Science Faction had expired, and that Pearson would need to contact Science Faction directly. Pearson contacted Science Faction, but never obtained a license or received an invoice for its use of plaintiffs’ images.

As a threshold matter, Pearson argued that plaintiffs lacked standing to bring copyright claims because they had granted an exclusive license to Science Faction to market and distribute the images, and the agreement gave Science Faction 60 days to bring an infringement action before plaintiffs were entitled to sue on the copyrights. The court rejected defendant’s argument, ruling that plaintiffs did have standing. The Science Faction’s license could not grant Science Faction standing or the exclusive right to bring a lawsuit for infringement, because such a right was not recognized by the Copyright Act. In addition, despite language in the agreement purporting to grant Science Faction the exclusive license to distribute the images, the parties agreed that the images remained the exclusive property of the plaintiffs, and that plaintiffs retained the copyright in the images. The agreement also expressly stated that the relationship between the parties was non-exclusive, and plaintiffs were entitled to the majority of the licensing fees and any awards or judgments for infringements. The court concluded that the agreement did not effectively grant Science Faction the exclusive right to bring a lawsuit for infringement, but even if it had, the 60-day period of exclusivity has long since lapsed.

Pearson also argued that plaintiff should be denied summary judgment because genuine issues of fact existed as to plaintiffs’ ownership of the copyrights in the images. Pearson suggested that two of the images – “Tyrannosaurus” and “Monkeys” -- were “works made for hire,” and therefore owned by another entity who hired plaintiffs to take the pictures. The court rejected defendant’s argument, finding no evidence that the works were owned by anyone other than the plaintiffs and that, without evidence, the argument was too speculative to preclude summary judgment. The court also rejected as insufficient to create a genuine issue of fact defendant’s challenge to plaintiffs’ ownership of the “Monkeys” image copyright because the image was not a photograph, but a digital composite of multiple photographs, which was created with the assistance of a digital artist hired by plaintiffs. Pearson also argued – for the first time – that the “Iguanodon” photograph lacked sufficient originality to warrant copyright protection because it was a “mere slavish copy” an original sketch by Edward Drinker Cope located in the Natural Museum of London. The court found this argument likewise unsupported by any evidence and noted that defendant had failed to plead an affirmative defense regarding the validity of plaintiffs’ copyrights.

The court denied plaintiffs’ motion for summary judgment on the issue of infringement. While no dispute existed that Pearson published copies of plaintiffs’ images without express permission, the court noted that the plaintiffs had the burden of showing the absence of genuine issues of material fact that Pearson did not have an implied license.

Reviewing the landscape of applicable law on the issue of implied licenses and noting a certain amount of conflict, the court explained that while an implied license traditionally was only found to exist in the narrow circumstance where the owner created the work at the request of the licensee with the intent that the implied licensee exploit it, courts in the Second Circuit (and elsewhere) have relaxed (or disregarded) the “created at the request of the licensee” aspect of the test. An implied license may be based upon consent in the form of permission or lack of objection, whether oral or in writing. Whether an implied license exists requires a meeting of the minds between the parties to permit the particular usage at issue.

Pearson argued that, based on the course of conduct between the parties, it had an implied license to publish plaintiffs’ photographs before it completed the process of securing and paying for a license to publish the photographs – essentially to publish the works and then pay for their uses on a retroactive basis. While plaintiffs countered that an implied license in those circumstances amounts to a “forced license” of all of their works, the court disagreed. No party is forced to offer a license to use its works and “[i]f the course of conduct between two parties demonstrates that there was a “meeting of the minds” that the practice of occasionally backdating licenses was permissible – in other words, if the plaintiff demonstrated ‘knowledge of, and acquiescence’ to the practice of backdating licenses – then it is reasonable not to impose copyright infringement liability when a defendant engages in this practice.”

Noting that courts have held that contractual language can create or negate an implied license, the court found that the agreements between the parties did not definitively establish whether or not an implied license arose between plaintiffs and Pearson in this case. Even if strict application of the contract language would preclude an implied license to use the images, however, defendant could establish a course of conduct between the parties that did create an implied license. The problem, according to the court, was that the evidence in the record was not clear on exactly what the parties’ course of conduct had been with respect to this practice. The parties each submitted testimony and documents in to support their respective characterizations of the parties’ course of conduct , but the evidence in the record was “inconclusive and contradictory.” The agreements between the parties required that a license must be obtained before any use of an image is permissible. In practice, Pearson did, at times, publish images before finalizing permission, and the agencies (or at least Getty) tacitly assented to this practice. The evidence in the record was insufficient, however, to establish whether this retroactive billing was the ordinary course of conduct between the parties, such that plaintiffs (or their agents) could be said to have both “knowledge of” and “acquiescence to” this practice, or whether these were aberrations from the norm. In addition, the court noted that it could not rule as a matter of law whether, and to what extent, the Agencies – Getty and Science Faction – stood in the shoes of the plaintiffs for purposes of these interactions. The court concluded: “Defendants may or may not be able to persuade a jury that the course of conduct here created an implied license. In either case, there is insufficient evidence in the record for the Court to resolve this question as a matter of law.”


Righthaven LLC v. Smith, USDC D. Nevada, March 1, 2012
 Click here for a copy of the full decision.

  • District court dismisses plaintiff assignee’s copyright infringement complaint in this and nine other cases, holding that plaintiff had not received, by assignment, the exclusive rights necessary to confer standing, and that subsequent agreements, executed after suit was filed, could not create standing.

This case is one of 10 similar copyright infringement actions filed by plaintiff, Righthaven, against various defendants, in which plaintiff alleged that it is the owner of copyrights in works originally published in the Las Vegas Review-Journal, pursuant to an assignment made in a Strategic Alliance Agreement (SAA) between plaintiff and Stephens Media, the original owner of the copyrights in the works at issue, and that defendants infringed on Righthaven's exclusive rights in the works—specifically, the rights of reproduction, preparation of derivatives, distribution, and public display.

The court granted defendants’ motion to dismiss (in this and the nine other cases), holding that plaintiff did not have standing to sue because the SAA did not transfer to plaintiff any of the exclusive rights necessary to maintain standing in a copyright infringement action. Section 501(b) of the Copyright Act establishes that only the owner or beneficial owner of an exclusive right under a copyright law has standing to sue for infringement. Although the different exclusive rights, as defined by Section 106 of the Act, may be transferred and owned separately, the right to sue is not one of those exclusive rights, and the assignment of a bare right to sue does not confer standing on the assignee. A party can only obtain the right to sue on a copyright if that party also obtains one of the exclusive rights in the copyright. Agreeing with other courts in the district that the language of the SAA grants Righthaven only the bare right to sue and deprives Righthaven of any of the rights normally associated with ownership of an exclusive right, the court concluded that Righthaven lacked standing and dismissed the claims for lack of subject matter jurisdiction.

The court also rejected plaintiff’s argument that additional agreements conferred on Righthaven the standing to sue. Righthaven and Stephens Media executed two amendments to the SAA: a Clarification and Amendment to Strategic Alliance Agreement, executed after Righthaven's complaints were filed, and an Amended and Restated Strategic Alliance Agreement, executed after other courts in the district held that Righthaven lacked standing sue for copyright infringement based on assignments made under the original SAA. According to the court, neither of the two amendments could create standing because the existence of federal jurisdiction depended on the facts as they existed at the time the complaint was filed. “Although a court may allow parties to amend defective allegations of jurisdiction, the parties are not permitted to amend the facts themselves.“ The court ruled that it would consider only the actual assignment and language of the original agreement at the time plaintiff filed the complaint. Because the SAA did not confer standing to sue, the court dismissed all 10 cases for lack of subject-matter jurisdiction. The court also held it would disregard Righthaven’s amended complaint because plaintiff sought to add facts that did not exist at the time it commenced the actions —namely to allege standing under the amendments.

For more information, please contact Jonathan Zavin at jzavin@loeb.com or at 212.407.4161.

Westlaw decisions are reprinted with permission of Thomson/West. If you wish to check the currency of these cases, you may do so using KeyCite on Westlaw by visiting http://www.westlaw.com/.

Circular 230 Disclosure: To assure compliance with Treasury Department rules governing tax practice, we inform you that any advice (including in any attachment) (1) was not written and is not intended to be used, and cannot be used, for the purpose of avoiding any federal tax penalty that may be imposed on the taxpayer, and (2) may not be used in connection with promoting, marketing or recommending to another person any transaction or matter addressed herein.

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