By Thomas Long, J.D.
Stock photo agency DRK Photo lacked standing under the Copyright Act to sue textbook publisher John Wiley & Sons, Inc., for infringing DRK’s copyright by exceeding the scope of license restrictions pertaining to certain photographs or failing to obtain permission to use the photos, the U.S. Court of Appeals in New York City has held in a split decision. DRK, a nonexclusive licensing agent for the photographs at issue, was an assignee of a bare right to sue and had never been a legal or beneficial owner of an exclusive right in any of the photos. Neither representation agreements nor assignment agreements between DRK and the photographers who created the images conferred a legal or beneficial ownership interest upon DRK. A dissenting judge argued that the Copyright Act permitted assignments of the bare right to sue (John Wiley & Sons, Inc. v. DRK Photo, February 16, 2018, Carney, S.).
Arizona-based DRK maintained a collection of stock photographs available for licensing, for a fee, to publishers. Wiley, based in New York, was a global company that published educational materials for undergraduate and graduate students. DRK first granted Wiley a license to reproduce images in 1992. A typical license agreement between the parties gave Wiley a one-time, nonexclusive right to use specified images not to exceed a certain number of copies, usually ranging in the tens of thousands. Wiley was charged a license fee typically of about $80 to $500. DRK generally was open to amending a license to cover uses in larger production runs than initially anticipated.
Representation Agreements. DRK did not directly employ photographers, but entered into "Representation Agreements," under which photographers granted to DRK, for a share of the licensing proceeds, the right to include images in its collection and to license the images to third parties for a fee. These agreements established nonexclusive agency relationships, meaning that the photographers were free to enter into similar arrangements with other agents.
Assignment Agreements. In 2008, DRK undertook a "copyright registration program" and asked its photographers to execute a document titled "Copyright Assignment, Registration, and Accrued Causes of Action Agreement." DRK told the photographers that the Assignment Agreements were necessary to facilitate DRK’s program of registering images in its collection with the Copyright Office. The correspondence with the photographers advised that DRK would "receive the authorization necessary to initiate and settle copyright infringement claims brought against would be infringers of DRK Photo Images." In a "Granting Clause," the Assignment Agreements provided that the photographers assigned the copyrights and legal title in their images to DRK, and that DRK agreed to reassign the copyrights and legal title back to the photographers immediately after registering them and resolving infringement claims relating to them. The Assignment Agreements also contained a "Right-to-Sue Clause," purporting to effect a transfer from the photographers to Wiley of all rights in causes of action for copyright infringement regarding the images. About 100 photographers executed Assignment Agreements with DRK, and DRK registered the images at issue in this case between 2009 and 2010.
Declaratory judgment action. In August 2011, Wiley filed a declaratory judgment action against DRK, alleging that DRK threatened to bring infringement lawsuits against it for exceeding the usage limits set in its licenses. Wiley sought a declaration exonerating it from liability related to 316 instances of alleged infringement. "Instances" referred to the use of an image, and not to a distinct image. DRK counterclaimed, alleging that Wiley had engaged in 295 instances of infringement. Of those, 45 involved images for which DRK was the "sole and exclusive" agent of the photographer, and the remaining 250 were subject to nonexclusive agreements.
The parties moved for summary judgment. DRK prevailed with respect to the images subject to exclusive representation agreements; Wiley did not appeal that judgment. The district court granted summary judgment to Wiley and dismissed DRK’s infringement claims with respect to the images covered by nonexclusive licenses, and DRK appealed that judgment.
Copyright Act standing. Section 501(b) of the Copyright Act provided that "[t]he legal or beneficial owner of an exclusive right under a copyright is entitled … to institute an action for any infringement of that particular right while he or she is the owner of it." An assignee of the bare right to sue who did not hold, and never held, an exclusive right under a copyright, was not an owner with standing to sue for infringement, the court said. Nothing in the statute provided that such an assignee could sue; in the court’s view, this omission signaled that Congress did not intend for standing to exist in this type of situation. The court noted that the Copyright Act’s provisions on notice and joinder referred only to "other owners" and made no reference to assignees of a bare right to sue. Even if recent precedent demonstrated a trend toward liberal assignability of claims in a federal common-law context, that trend did not reach copyright infringement claims, according to the court. Moreover, suits for patent infringement based on bare assignments to sue were not permitted under patent law, and patent law was an area traditionally seen as closely related to copyright.
DRK’s status. Neither the Representation Agreements nor the Assignment Agreements made DRK a legal or beneficial owner of an exclusive right in the images, the court decided. Although an exclusive licensee was considered a legal owner of an exclusive right for the purposes of a copyright infringement action, a nonexclusive licensee was not. DRK argued that the Representation Agreements conveyed the exclusive right to authorize reproduction of the images, but those agreements specifically stated that the photographers could enter into agency relationships with others. With respect to the Assignment Agreements, the Granting Clause had the practical effect of merely conveying the bare right to sue for infringement. Additionally, the court said, extrinsic evidence demonstrated "beyond any genuine dispute" that DRK lacked legal ownership of an exclusive right. DRK’s communications with the photographers suggested that the assignments were only intended to provide DRK was a right to sue, and DRK’s proprietor himself had testified that the relationships were nonexclusive in nature.
Nor was DRK a beneficial owner, the court said. The Copyright Act did not define "beneficial owner," but the legislative history and Second Circuit precedent indicated that the term referred to such parties as an author who had parted with legal title to a copyright in exchange for royalty payments. Critically, Section 501(b) referred to the "beneficial owner of an exclusive right" (emphasis added), and the agreements at issue here did not convey any exclusive rights. Even if DRK could be deemed to have a "valuable" interest in the copyrights, that interest was traceable to the photographers’ exclusive rights, and the photographers allowing DRK to act as their agent. Accordingly, the district court’s grant of summary judgment in favor of Wiley was affirmed.
Dissenting opinion. Circuit Judge Barrington D. Parker dissented. According to Judge Parker, the Copyright Act did not prohibit the assignment of a bare right to sue for copyright infringement. Judge Parker therefore would have held that DRK had standing to sue Wiley under DRK’s agreements with the photographers.
The case is No. 15-1134.
Attorneys: Robert Penchina (Levine Sullivan Koch & Schulz, LLP) for John Wiley & Sons, Inc. Maurice Harmon (Harmon & Seidman, LLC) for DRK Photo.
Companies: John Wiley & Sons, Inc.; DRK Photo
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