Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_12-cv-08093/USCOURTS-azd-3_12-cv-08093-4/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 17:501 Copyright Infringement

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

DRK Photo, 

Plaintiffs, 

v.

The McGraw-Hill Companies, Inc.,

Defendant.

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CV 12-08093-PCT-PGR

 AMENDED

 ORDER

Before the Court is Defendant’s Motion for Partial Summary Judgment. (Doc. 30.)

Plaintiff opposes the motion (Doc. 47), which the Court will deny for the reasons set forth

herein.

Plaintiff DRK Photo, a stock photography agency, filed a complaint on May 15, 2012,

alleging that Defendant McGraw-Hill (“McGraw”), a textbook publisher, infringed DRK’s

copyright by exceeding the scope of license restrictions pertaining to certain photographs or

failing to obtain permission to use the photographs. (Doc. 1.) The allegedly infringing acts

occurred between July 1997 and October 2009. On October 10, 2012, McGraw filed the

pending motion, asserting that the vast majority of DRK’s claims are barred by the statute

of limitations. (Doc. 30.)

DISCUSSION

Under Federal Rule of Civil Procedure 56(a), “the court shall grant summary

judgment if the movant shows that there is no genuine dispute as to any material fact and the

movant is entitled to judgment as a matter of law.” Material facts are those that may affect

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the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A

dispute as to a material fact is “genuine” if the evidence is such that “a reasonable jury could

return a verdict for the nonmoving party.” “[A]ll justifiable inferences must be drawn in [the

nonmovant’s] favor.” United Steelworkers of Am. v. Phelps Dodge Corp., 865 F.2d 1539,

1542 (9th Cir.1989) (en banc) (citing Liberty Lobby, 477 U.S. at 255).

The moving party bears the initial responsibility for informing the district court of the

basis for its motion and identifying those portions of the pleadings, depositions, interrogatory

answers, admissions and affidavits that it contends demonstrate the absence of a genuine

issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A party

opposing a motion for summary judgment “may not rest upon the mere allegations or denials

of [that] party’s pleading, but . . . must set forth specific facts showing that there is a genuine

issue for trial.” Fed.R.Civ.P. 56(e); see also Liberty Lobby, 477 U.S. at 250. The opposing

party need not show the issue will be resolved conclusively in its favor. See Liberty Lobby,

477 U.S. at 248–49. All that is necessary is submission of sufficient evidence to create a

material factual dispute. Id.

McGraw seeks partial summary judgment based on the argument that the bulk of its

allegedly infringing uses of DRK’s photos occurred outside the three-year statute of

limitations provided by the Copyright Act. (Doc. 30.) According to McGraw, all but 51 of

the 1120 unauthorized uses alleged by DRK—those that occurred between April 15, 2008,

and April 15, 2011—are not barred by the statute of limitations. (Doc. 37 at 2.) 

The Copyright Act provides that, “No civil action shall be maintained under the

provisions of this title unless it is commenced within three years after the claim accrued.” 17

U.S.C. § 507(b). Under the so-called “discovery” rule, a claim for copyright infringement

“accrues when one has knowledge of a violation or is chargeable with such knowledge.”

Roley v. New World Pictures, Ltd., 19 F.3d 479, 481 (9th Cir. 1994). “[T]he statute of

limitations does not prohibit recovery of damages incurred more than three years prior to the

filing of suit if the copyright plaintiff was unaware of the infringement, and that lack of

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knowledge was reasonable under the circumstances.” Polar Bear Productions, Inc. v. Timex

Corp., 384 F.3d 700, 706 (9th Cir. 2004).

The statute of limitations is an affirmative defense for which the defendant bears the

burden of proof. Entous v. Viacom Intern., Inc., 151 F.Supp.2d 1150, 1154 (C.D.Cal. 2001).

To prevail on its summary judgment motion, McGraw must produce evidence sufficient to

show that “no reasonable trier of fact could find other than for the moving party” on the

statute of limitations issue. Id. (quoting Calderone v. United States, 799 F.2d 254, 259 (6th

Cir. 1986)).

McGraw contends that DRK was put on constructive notice of printing overrun issues

no later than August 15, 2006. (Doc. 30.) On that date McGraw notified DRK by letter of 13

instances in which it had printed more copies of a textbook containing DRK’s photographs

than the number referenced in the original invoice. (Doc. 30 at 6.) Along with the letter DRK

enclosed a check for $89,595.71, as “payment under our photo license agreement for usage

in a print run larger than originally anticipated.” (Id. at 6–7.)

According to McGraw, DRK was thus “alerted to exactly the same pattern of conduct

of which it complains here.” (Id. at 11.) McGraw further asserts that “DRK cannot contend

that it reasonably believed that the printing overrun issue was necessarily confined

exclusively to the 13 instances McGraw-Hill disclosed in August 2006” because it “made no

such representations” to DRK. (Id.) Therefore, according to McGraw, DRK was chargeable

with knowledge of the infringement because a reasonable person would have become

suspicious and investigated further. (Id.)

DRK responds that McGraw’s 2006 supplemental payment did not prompt it “to

believe McGraw had actually infringed hundreds of DRK’s other licenses,” but instead had

the opposite effect, leading DRK to “reasonably believe[] McGraw’s notification about 13

specifically identified invoices McGraw needed to ‘true-up’ meant McGraw had not

exceeded his other invoices.” (Doc. 47 at 2.) Therefore, DRK argues, it could reasonably

have regarded the 2006 payment as the resolution of an isolated, specific incident rather than

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an indication of a broader pattern of infringement. (Id.) As DRK states, a rational

interpretation of McGraw’s 2006 payment is that McGraw was not concealing its print

overruns.

In further support of the argument that its response to the overrun payment from

McGraw was objectively reasonable, DRK notes that “37 other photographers and stock

photo agencies received virtually identical letters and payments from McGraw in August

2006.” (Id. at 10.) DRK contacted seven of these licensors; as set forth in declarations from

their representatives, none of these licensors “suspected McGraw had infringed licenses

beyond those it specifically disclosed.” (Id.; see Doc. 48, Ex’s 2–9.)

One of these licensors was Grant Heilman Photography, Inc., which filed a copyright

infringement case against McGraw in the Eastern District of Pennsylvania. In Grant Heilman

Photography, Inc. v. McGraw-Hill Companies, Inc., No. 12-2061, 2012 WL 5944761

(E.D.Pa. November 28, 2012) (“GPHI”), the district court addressed the same statute of

limitations argument and denied McGraw’s motion for partial summary judgment. In GPHI,

as in this case, the plaintiff received an unsolicited check from McGraw as payment for a

print overrun. Id., at *1. In GPHI, as in this case, McGraw argued that the payment

constituted notice an imposed on the plaintiff a “duty to determine if McGraw was exceeding

the terms of any other licence [plaintiff] had issued. Id., at *4 In GPHI, as in this case, the

plaintiff contended that it “reasonably perceived McGraw’s voluntary disclosures as the acts

of an honest business partner, thus fostering trust in McGraw’s good faith rather than

cynicism.” Id. The court concluded that there were genuine factual disputes about whether

the plaintiff had notice of other infringing activity by McGraw, and therefore McGraw was

not entitled to summary judgment. Id., at *5. The court concluded that “McGraw has failed

to meet its burden of showing that the 2006 and 2007 incidents were, as a matter of law,

sufficiently obvious to place any reasonable copyright holder on notice that other infringing

activity might be afoot.” Id.

The same genuine factual disputes exist here, rendering summary judgment

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inappropriate. See, e.g., General Bedding Corp. v. Echevarria, 947 F2d 1395, 1398 (9th Cir.

1991) (denying summary judgment where material facts existed as to whether defendant had

constructive notice of fraud); Beneficial Standard Life Ins. Co. v. Madariaga, 851 F.2d 271,

275 (9th Cir. 1988) (“Ordinarily we leave the question of whether a plaintiff knew or should

have become aware of a fraud to the jury.”); Ajaxo, Inc. v. Bank of America Technology and

Operations, Inc., 625 F.Supp.2d 976, 982 (E.D.Cal. 2008) (denying summary judgment

where “[g]enuine issues of disputed material facts exist as to when each Plaintiff learned or

could have learned about the existence of its copyright infringement claims.”).

In sum, McGraw has not shown that no reasonable trier of fact could find for DRK

on the statute of limitations issue. Therefore, McGraw is not entitled to summary judgment.

Accordingly,

IT IS HEREBY ORDERED denying Defendant’s Motion for Partial Summary

Judgment (Doc. 30).

DATED this 19th day of March, 2013.

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