IP Law Daily McGraw-Hill exceeded the scope of its license in numerous copyrighted photographs
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Tuesday, August 6, 2019

McGraw-Hill exceeded the scope of its license in numerous copyrighted photographs

By Robert B. Barnett Jr., J.D.

But the potential damages resulting from exceeding the scope were severely limited by the court’s rulings.

In a copyright infringement suit by Jose Luis Pelaez, a professional photographer, alleging that McGraw-Hill repeatedly exceeded the scope of the license it held in 573 of his photographs, Pelaez was entitled to summary judgment on liability on all 129 of the photographs for which he sought summary judgment, but McGraw-Hill was also entitled to summary judgment that severely limited Pelaez’s right to recover damages, the federal district court in New York City has ruled. As a result, the court ruled that, although McGraw-Hill violated the licenses’ scope, Pelaez had no right to recover statutory damages for almost all of the 129 claims and had no right to claim any damages for the 94 claims that were based on conduct that occurred more than three years before he filed suit (Jose Luis Pelaez, Inc. v. McGraw-Hill Global Education Holdings LLC, August 2, 2019, Wood, K.).

Jose Pelaez, a commercial photographer who is the sole owner of Jose Luis Pelaez Inc., entered into representation agreements with Corbis that authorized Corbis to sub-license Pelaez’s photographs. Corbis sub-licensed at least 573 photographs to McGraw-Hill from 1992 through 2017 for inclusion in its textbooks. Pelaez sued McGraw-Hill in 2016 in New York federal court, alleging that McGraw-Hill infringed his copyrights by repeatedly exceeding the limitations contained in the Corbis-McGraw-Hill agreements. In essence, Pelaez charged that McGraw-Hill paid Corbis a licensing fee based on print run estimates, then far exceeded those estimates without paying any more for the license. Both parties moved for summary judgment, with Pelaez seeking summary judgment on 129 of the 573 photographs and McGraw-Hill seeking summary judgment on all claims.

McGraw-Hill’s summary judgment motion. McGraw-Hill made four arguments: (1) that Pelaez’s claims constituted, if anything, breach of contract rather than copyright infringement, (2) that 477 of the 573 claims were ineligible for statutory damages because no date could be determined when the infringement began, (3) that the remaining 96 claims had no valid registrations, and (4) that Pelaez was not entitled to relief for conduct that occurred more than three years before his suit was filed.

Breach of contract. The court rejected the argument that the claim should have been for breach of contract. McGraw-Hill might have been right if Pelaez had sought an infringement claim based on a violation of the license. Instead, Paleaz alleged an infringement claim that McGraw-Hill exceeded the scope of a license. Thus, copyright infringement was the proper claim. As a result, the court denied McGraw-Hill’s motion for summary judgment as it applied to McGraw-Hill’s contention that Pelaez had to show that the limitations on the licenses were conditions rather than covenants. This type of claim, the court said, does not require the court to consider whether a particular contract term was a condition or a covenant.

Statutory damages. To be eligible for statutory damages, a copyright owner must have registered his work prior to the date the infringement began (17 U.S.C. §412). The court rejected Pelaez’s contention that the burden was on McGraw-Hill to show that the infringement did not occur prior to registration. Pelaez never produced sufficient evidence establishing that it had the registrations before the infringement began. As a result, the court granted McGraw-Hill summary judgment on its contention that Pelaez was not entitled to statutory damages for all but two of the 477 claims. Summary judgment was denied for those two claims because eligibility information for statutory damages was provided.

Registrations. McGraw-Hill argued that the other 96 claims had no valid registrations because the registrations were obtained as part of a program in which Corbis submitted a single application for multiple photographers. Once the bulk registration was complete, Corbis assigned ownership back to the individual photographers, including Pelaez. The court acknowledged that the courts within the Second Circuit have disagreed on whether this process confers a valid registration. This court, however, sided with those courts that have found that such a registration was valid. The court, therefore, denied McGraw-Hill’s summary judgment motion on invalid registrations.

Damages. McGraw-Hill asserted that Pelaez was not entitled to damages for infringements that occurred before July 7, 2013, which was three years before suit was filed. A split exists in this circuit about how to treat this argument. Some courts have allowed recovery more than three years before it was filed, as long as it was filed initially within the required three years. Others have ruled that the recovery was limited to the three years prior to suit being filed. This court sided with those courts that have limited recovery to no more than three years before suit was filed. The Second Circuit, the court contended, has always applied a rolling approach that permits damages only for infringing acts up to three years before the complaint was filed. As a result, the court granted McGraw-Hill’s summary judgment motion prohibiting Pelaez from recovering any damages for 94 of his claims because the conduct occurred before July 6, 2013.

Pelaez’s summary judgment motion. Pelaez moved for summary judgement on liability for 129 of his claims, on the ground that the agreements expressly limited the number of copies that McGraw-Hill was permitted to make and that it exceeded those limitations. McGraw-Hill made three arguments: (1) Pelaez lacked a copyright in those photographs, (2) a genuine dispute existed as to when Pelaez know about the claims, and (3) a genuine dispute existed as to whether use of the photographs was authorized.

Registration. For the reasons previously explained about the validity of the bulk registration, the court rejected McGraw-Hill’s argument that the photographs were not registered.

Statute of limitations. McGraw-Hill argued that Pelaez knew much earlier about the infringement than he contended in his complaint because either industry knowledge of the infringement or Corbis’s knowledge of the infringement was imputed to him. The court rejected both arguments. Industry knowledge or experience never triggers the running of a statute of limitation. Similarly, a principal’s knowledge is not imputed to the agent unless the agent is employed to represent the principal on the matter and acquires the knowledge as part of that representation, which did not occur here. The court thus rejected McGraw-Hill’s statute of limitations argument.

License. McGraw-Hill argued that it had either express or implied permission to exceed the limits. The court rejected both arguments. As for the express right, the documents that established McGraw-Hill’s rights were clear. Nothing in any of the documents gave McGraw-Hill the right to exceed the quantities set forth in the agreements. As for the implied right, the court rejected McGraw-Hill’s contention that it had ongoing authorization from Corbis to exceed the limits. On the contrary, the documents indicated that McGraw-Hill was expected to re-license the content if it expected to exceed the limits. As a result, the court granted Pelaez’s motion for summary judgment on liability, while noting that Pelaez would be unable to recover actual or statutory damages on many of the claims for the reasons set out above.

Willfulness. Pelaez had also sought summary judgment on the question of McGraw-Hill’s willfulness in committing the infringement. The court rejected that claim, noting that a genuine issue of fact remained as to whether the conduct was willful.

Damages. As a final matter, Pelaez conceded that he did not allege damages for 61 of his claims, and the court entered summary judgment for McGraw-Hill on those claims.

This case is No. 1:16-cv-05393-KMW.

Attorneys: Maurice James Harmon (Harmon & Seidman LLC) for Jose Luis Pelaez Inc. Michael Beylkin (Fox Rothschild LLP) for McGraw-Hill Global Education Holdings, LLC and McGraw-Hill School Education Holdings LLC.

Companies: Jose Luis Pelaez Inc.; McGraw-Hill Global Education Holdings, LLC; McGraw-Hill School Education Holdings LLC

MainStory: TopStory Copyright NewYorkNews

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