In a case of first impression, the First Circuit has held a copyright licensee may grant an implied sublicense to another party as long as it obtained the right to do so from the copyright owner.
Photographic Illustrators Corp. v. Orgill Inc. involved copyright infringement claims over photos of Sylvania-branded lightbulbs. While a commercial photographer owns the copyrights to all the photos, it licensed them to Sylvania on an unrestricted worldwide basis allowing for nearly any use whatsoever, including the right to sublicense the photos in Sylvania’s discretion. After a hardware distributor and other Sylvania dealers used the photos electronically and in their paper catalogs—but without an express, written license from Sylvania—the copyright owner filed over 30 lawsuits for infringement. In a consolidated action, the federal district court held that Sylvania impliedly granted its distributors a sublicense to use the photos and rejected the owner’s copyright infringement claims.
On appeal, the copyright owner argued a sublicense to use a copyrighted work must be in writing. After noting it was in “uncharted waters” because no circuit had addressed whether an implied sublicense is legally possible, the First Circuit turned to the common law’s focus on party conduct for the creation of an implied license, as well as the touchstone for finding an implied license altogether: the intent of the parties. Applying these principles and other practical considerations, the First Circuit found the copyright owner affirmatively chose to give many of its rights over the photos to Sylvania, which did not obligate the courts to protect those rights as much as they otherwise would.
Affirming the district court’s grant of summary judgment, the First Circuit held that where a licensor grants a licensee the unrestricted right to sublicense and allow others to use copyrighted works, a sublicense can be implied by the conduct between the licensee-sublicensor and a sublicensee.