By Nicholas Kaster, J.D.
Where the existence of a license is not in question, a copyright holder must plausibly allege that the defendant exceeded particular terms of the license.
The Court of Appeals for the Second Circuit has affirmed the dismissal of a copyright action brought by a photographer against a publishing company where the photographer failed to identify any license limitations as having been breached for any specific photographs. The appeals court characterized the suit as "no more than a collection of speculative claims," and, as such, the complaint did not survive a motion to dismiss (Yamashita v. Scholastic Inc., August 28, 2019, Carney, S.).
In 2016, Michael Yamashita, a professional photographer and sole owner of Michael Yamashita, Inc., sued defendant Scholastic, Inc., a publishing company, for 119 instances of copyright infringement, claiming that Scholastic exceeded the use limits set in the licenses to Yamashita’s works that Scholastic purchased from Corbis Corporation, a stock photography agency that Yamashita had authorized to license his works.
The complaint did not specify the use limits imposed by the Corbis license nor did it allege how Scholastic breached those limits. A federal district court in New York dismissed the complaint for failure to state a claim and denied leave to amend on futility grounds. The current appeal ensued.
On appeal, Yamashita argued that the district court erred by: (1) finding the complaint insufficient; (2) ruling that his proposed amended complaint was insufficient; and (3) denying him leave to plead four new common law claims.
At the outset, the Second Circuit noted that Scholastic procured licenses to copy the photographs. In pleading copyright infringement, a plaintiff who has authorized the licensed use of its work to the alleged infringer must allege with specificity facts concerning the limits and asserted breaches of the licenses by the alleged infringer. The Second Circuit has previously recognized that authorization to copy copyrighted material—i.e., through possession of an applicable license—is generally viewed as an affirmative defense to a claim of copyright infringement, but that it must be pleaded and proved. Where the existence of a license is not in question, a copyright holder must plausibly allege that the defendant exceeded particular terms of the license.
Scholastic’s purchase of licenses for each of the photographs was undisputed; thus, Scholastic was entitled to some copying. The gravamen of Yamashita’s copyright infringement claim was that Scholastic (1) represented to Corbis that it needed specified, limited licenses to use the photographs in particular publications, and then (2) exceeded the licenses and infringed Yamashita’s copyrights in the photographs. The complaint alleged that it did so by using them in greater numbers than it had a right to, possibly in publications distributed outside the geographic boundaries of the license, and possibly after expiration of the licenses, among other ways.
However, said the court, the complaint failed to identify any specific license limitations as having been breached for any specific photograph, except for one image as to which the claim was settled and dismissed with prejudice. Instead, the court stated, it offered a laundry list of license limitations that might have been imposed and that might have been violated as to the numerous photographs. Each of the "various ways" in which Scholastic allegedly "infringed Yamashita’s copyrights" would give rise to an actionable claim for a given photograph, only if paired with a license limitation that was included in the license covering that photograph, the court concluded.
Absent at least a modicum of such additional factual allegations, the appeals court characterized Yamashita’s complaint as "no more than a collection of speculative claims based on suspicion alone." Thus, the court held that the complaint did not survive Scholastic’s motion to dismiss.
The court expressed some sympathy for Yamashita, since it appeared that he had no access to information confirming or rebutting the extent of Scholastic’s use of the images. "His predicament underscores the precarious position that freelance commercial photographers occupy vis-à-vis their agents and publishers," the court observed. There may be few ways to hold large publishers that operate internationally accountable for their usage of licensed copyrighted works. For this reason, the court stated, Yamashita launched what the district court termed a "fishing expedition," "trawling" for infringement, trying to place on Scholastic directly the burden of reporting and justifying its uses, and omitting Corbis from the picture.
However, the court stated, to sustain such a complaint that alleges nothing but suspicions of infringement where a license has been granted is to invite transformation of the courts into an audit bureau for copyright licensing, "an administrative function that we are hardly designed to serve."
Ultimately, the court could not accept Yamashita’s argument that it should casually deem his entirely generic allegations of breach, pleaded "upon information and belief," sufficient simply because the facts regarding Scholastic’s actual use of the licensed material are peculiarly within Scholastic’s possession and control. He must marshal more than unsubstantiated suspicions to gain entitlement to broad-ranging discovery of his agent’s licensee, the court stated.
In addition, the court held that Yamashita’s proposed amended complaint (PAC) failed to cure the defects in his copyright claim. The proposed additions reflected in the PAC primarily related to the image for which the district court permitted amendment. The ability to plead a plausible infringement claim as to a single image did not render his claim plausible as to all the other images, said the court, absent plausible allegations of a connection between Scholastic’s license for and use of that image and its license for and use of the other images, or plausible, nonconclusory allegations of a pattern and practice of under-licensing and overuse.
The PAC’s attachments containing two other images did not cure the deficiencies in Yamashita’s claims either, because the PAC did not allege which, if any, license limitations Scholastic breached by including those images in those publications, the court stated.
Accordingly, the appeals court affirmed the district court’s dismissal of the copyright claim.
In a summary order issued concurrently with this opinion, the Second Circuit also affirmed the lower court’s denial of leave to add proposed common law claims.
This case is No. 17-1957-cv.
Attorneys: Christopher Seidman (Harmon Seidman Bruss & Kerr, LLC) for Michael Yamashita. Edward Rosenthal (Frankfurt Kurnit Klein & Selz PC) and Robert J. Kipnees (Lowenstein Sandler LLP) for Scholastic Inc.
Companies: Scholastic Inc.
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