IP Law Daily Print shops copied curriculum as licensed school districts’ agent; did not infringe
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Thursday, March 22, 2018

Print shops copied curriculum as licensed school districts’ agent; did not infringe

By Thomas Long, J.D.

A nonprofit organization that designs educational materials cannot go forward with copyright infringement claims against FedEx Office and Print Services, Inc. ("FedEx") for copying the organization’s math curriculum for school districts because a public license allowing noncommercial reproduction and distribution of the curriculum did not explicitly forbid licensees from engaging third-party commercial service providers to assist them in carrying out their own noncommercial uses, the U.S. Court of Appeals for the Second Circuit has held. There was no dispute that the licensee school districts sought to use the curriculum materials for permissible purposes, and FedEx acted as the mere agent of the districts when it reproduced the materials. Therefore, FedEx did not breach the license or infringe the organization’s copyright (Great Minds v. FedEx Office and Print Services, Inc., March 21, 2018, Carney, S.).

Plaintiff Great Minds designs educational materials, including a copyrighted curriculum called "Eureka Math." Great Minds sold the curriculum in book form and also released the materials to the public free of charge but subject to a Creative Commons public license. The license—which was extended to the general public on the same terms without the need to negotiate—allowed any member of the public to download, reproduce, and distribute the materials on a nonexclusive basis, for noncommercial purposes only. The license defined "noncommercial purposes" as purposes "not primarily intended for or directed towards commercial advantage or monetary compensation." According to Great Minds, the terms of the license required commercial print shops to negotiate a separate license and pay a royalty to Great Minds if they wished to reproduce the materials at the request of their customers.

School districts in Michigan and New York used the copying and printing services at FedEx stores to reproduce the curriculum materials. After discovering this activity, Great Minds sent a letter to FedEx demanding that FedEx negotiate a royalty-bearing license or cease reproducing the materials commercially. FedEx refused, asserting that the Creative Commons license allowed it to reproduce the materials on the request of school districts that sought to use them for noncommercial purposes. Great Minds filed suit for copyright infringement against FedEx in March 2016. The district court dismissed the lawsuit, concluding that the license permitted FedEx’s conduct. Great Minds appealed to the Second Circuit.

FedEx conceded that its copying services were commercial in nature and that its reproduction of the materials would violate the license if it were acting as a direct licensee. Great Minds did not allege that the school districts’ use of the materials exceeded the scope of the license. Therefore, the court said, the issue was whether the license permitted school districts to use FedEx’s services in furtherance of their own noncommercial use of the materials. According to the court, the license was silent on the question.

The Great Minds license contained no express language that would either permit or prohibit licensees’ use of third-party services in furtherance of their authorized purposes. However, that alone did not make the license ambiguous. Applying long-established principles of agency law, the court held that a licensee under a nonexclusive copyright license may use third-party assistance in exercising its license rights unless the license expressly provided otherwise. The license expressly permitted the school districts to reproduce and share the materials themselves. A provision stating that "downstream recipients" of the materials were automatically considered recipients of an offer to exercise the rights provided by the license did not mean that FedEx acted as a licensee in its own right, thereby making it liable for copyright infringement for violating the license’s terms against commercial uses. The court rejected this argument, pointing out the "mundane ubiquity" of lawful agency relationships in which one person acts on behalf of another person. "The concept of an agency relationship is a sine qua non in the world of entities like corporations and public school districts, which have no concrete existence," the court said. Such entities must, of necessity, act solely through their officers or other authorized agents, including teachers and administrative staff. If, as Great Minds contended, the license had the "radical result" of making every teacher or administrator who handled the materials a "downstream recipient" (i.e., an independent licensee), one would expect the license to contain a clear statement to that effect, which it did not.

By the same token, the court concluded that Great Minds’ licensees may rely on non-employee agents in carrying out permitted uses without converting those agents into independent licensees. Nothing in the text of the license provided a basis to distinguish between a school that directed its employees to make copies on the school’s machines and a school that achieved the same result by engaging a temporary independent contractor or a commercial duplication service.

Great Minds also argued that the license specifically reserved Great Minds’ right to collect royalties for all commercial uses, and that phrase must be read to include the commercial copying services that FedEx provided to the school districts. The Second Circuit disagreed, however, adopting the district court’s reasoning that "the unambiguous import of this provision is to reserve [Great Minds’] right to collect royalties from a licensee if the licensee exceeds the scope of the license by, for example, selling copies of the Materials." The court had already disposed of Great Minds’ contention that FedEx was a licensee; therefore, the reservation of rights did not apply here.

The court noted that any "volition" on FedEx’s part in making copies did not make it an infringer, because it was acting as an agent for the school districts, which had the right to copy the materials. Additionally, cases finding commercial printing businesses liable for reproducing copyrighted works that were subsequently used for educational purposes were inapposite because, unlike the print shops involved in those cases, FedEx sold the school districts its copying services, not readymade copies of the materials themselves. Moreover, the court said, those cases concerned the proper application of the fair use defense. In this case, FedEx had disclaimed reliance on the fair use defense, and the court’s was basing its holding on agency principles and the text of the license, not fair use principles. Accordingly, Great Minds failed to plead a plausible copyright infringement claim, and the court affirmed dismissal of the lawsuit.

The case is No. 17-808-cv.

Attorneys: Rhett O. Millsaps II (Law Office of Rhett O. Millsaps II) for Great Minds. Mark D. Taylor (Baker & McKenzie LLP) for FedEx Office and Print Services, Inc.

Companies: Great Minds; FedEx Office and Print Services, Inc.

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