Source: http://pa.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20191118_0003338.EPA.htm/qx
Timestamp: 2020-02-25 02:10:48
Document Index: 548826171

Matched Legal Cases: ['§ 409', '§409', '§409', '§409', '§409', '§ 409']

FindACase™ | Krist v. Scholastic, Inc.
Plaintiff Bob Krist, a professional photographer, initiated this civil action against Defendant Scholastic, Inc. based on a claim of copyright infringement, in violation of the Copyright Act.[1] Although Scholastic obtained access to use Krist's photographs in accordance with a limited licensing agreement, Krist argues that Scholastic's use exceeded the licensing agreement's terms, and therefore infringed Krist's copyrights. Plaintiff now moves for partial summary judgment with respect to certain photographs and Defendant moves for summary judgment with respect to all of the photographs. For the reasons that follow, both motions will be granted in part and denied in part.
Krist is a National Geographic professional photographer who monetized his photographs through the stock photography agency Corbis Corporation.[2] Around 1995, Krist began participating in the Corbis Copyright Registration Program.[3] Through the program, Krist would assign to Corbis the rights to his photographs solely for the purpose of copyrighting the photographs.[4] Corbis then copyrighted the photographs through a group registration program whereby multiple photographers' work was copyrighted at once under the Corbis name.[5] After registering the photographs, Corbis assigned back to Krist complete copyright ownership of all the photographs.[6]
Krist also entered into a representation agreement with Corbis.[7] This agreement authorized Corbis to issue limited licenses to third parties for the use of Krist's photographs in exchange for a percentage of the license fee charged.[8] Corbis then entered into agreements, referred to by the parties as “Preferred Vendor Agreements” (“PVAs”), with different third parties, which shaped the licensing procedures between Corbis and the individual licensees.
Scholastic was one such licensee of photographs. In 2004, Corbis and Scholastic entered into a Preferred Pricing Agreement (“2004 PVA”)[9] to govern license agreements.[10] In 2008, and again in 2011, Corbis and Scholastic entered into new PVAs (“2008 and 2011 PVAs”).[11]
These PVAs listed prices, terms, and rights for a range of uses of photographs, based on factors including the estimated print run, size of the image, and territory where the publication would be sold.[12] Corbis gave Scholastic access to its stock photo collection through its internal, password-protected archive.[13] Scholastic would select images it wanted to use and notify Corbis of the anticipated usage of the selected photographs.[14] Corbis would then issue an invoice for the use of the selected photograph, with the limitations such as print run, geography, and duration included, based on the applicable PVA .[15] There is no dispute that Scholastic paid the fee specified in the invoices. Krist's only allegation is that Scholastic exceeded the scope of the invoices, i.e., that if an invoice allowed a print run of 50, 000, Scholastic would pay for 50, 000 but then print far more.
On November 30, 2016, Krist filed a Complaint against Scholastic alleging that Scholastic had exceeded the scope of the licenses it had agreed to with Corbis.[16] Krist attached to the Complaint exhibits containing 45 rows of photographs - with each row containing an image and the name of the image, along with a corresponding invoice number[17] and the copyright registration number[18] - as to which he alleged Scholastic exceeded the scope of the limited license it obtained from the invoice.[19] In his deposition, Krist explained how the alleged infringing uses in the Complaint were compiled - all 45 were selected based only on the knowledge that the photographs had been licensed to Scholastic and the belief that Scholastic had a history of exceeding licenses.[20] At the time he filed the Complaint, Krist had no other information suggesting that Scholastic infringed on his copyrights.[21]
C. Krist's Knowledge of Potential Claims
When exactly Krist had knowledge of Scholastic's alleged wrongdoings is hotly disputed. It is uncontested that Krist was informed that he had a potential claim against Scholastic by his counsel, Maurice Harmon, who was Krist's neighbor. The details of how and when these contacts occurred have evolved throughout the litigation.
In the deposition conducted in this case, Krist repeatedly testified that Harmon first reached out to him in 2014 and, accordingly, their first meeting was also in 2014.[22] After the close of discovery, Scholastic learned that, in a separate case Krist filed against a different publisher, Krist had represented that Harmon and Krist first met in 2013.[23] Scholastic then moved to reopen discovery and continue Krist's deposition.[24] Krist responded by serving a revised interrogatory admitting that he was first contacted by Harmon in “mid-November 2013 regarding potential copyright infringement claims against textbook publishers” and that the first substantive discussion regarding Harmon potentially representing Krist and searching for documents occurred in a social setting on November 22, 2013.[25]
While Scholastic's motion to reopen discovery was pending, Krist responded to interrogatories served in the other case with a statement indicating that his first meeting with Harmon actually occurred on November 14, 2013.[26] In this interrogatory response, Krist maintained that at the November 22, 2013 social gathering, he and Harmon “engaged in initial discussions about potential representation in copyright matters.”[27]
The Court then reopened discovery for the “limited purpose of permitting the continued deposition of Plaintiff Bob Krist regarding: (1) the precise date and circumstances regarding the initial conversation between Krist and his counsel, and (2) any information known to Krist about Scholastic's use before his conversation with his counsel.”[28]
At his continued deposition, Krist testified that it was at the November 14, 2013 lunch meeting with Harmon that they first discussed the issues in this case.[29] Although Krist had no information of his own to suggest that Scholastic infringed on his photographs, Krist testified that Harmon told him that he thought Krist “would have a case against several publishers.”[30]Krist explained that Harmon did not indicate any specific photographs that had been infringed.[31]Rather, Harmon's basis for concluding that Krist might have a copyright infringement claim was that there seemed to be a pattern among publishers, including Scholastic, to infringe copyrights.[32] At this lunch, Krist testified that the “whole issues came out.”[33] After leaving this lunch, Krist testified that he was aware “that there may be some copyright infringement cases that might be worth pursuing, ” and told his wife as much.[34]
Krist also testified that nothing about the substance of the claims was discussed at the November 22, 2013 social gathering.[35] After these conversations Krist put the matter “on the shelf to do the other things” and it was “relegated to, you know, something that we were going to come back to and do more thinking about.”[36] Krist explained that he “pushed it further down the queue than it deserved at that point” because “I don't enjoy learning that I've been ripped off. It's not pleasant. So I had a million other things to deal with, so I dealt with them.”[37]
At his continued deposition, Krist also identified another previously undisclosed meeting with Harmon on December 26, 2013.[38] In April 2014, Krist contacted some of his photographer friends whose names Harmon had given as references.[39] It was not until November 30, 2016, more than three years after Krist and Harmon first met about these issues, that Krist initiated this suit.
Plaintiff seeks partial summary judgment against Scholastic for the following eight claims, based on four of the photographs[40] listed in the complaint:
1) the use of “Rainforest Landscape”[41] on the title page of Scholastic's publication Rain Forest Homes.[42] Scholastic made 221, 682 copies of the publication.[43] Scholastic's license for this photograph authorized a print run of 50, 000 and included an expiration date of January 9, 2008.[44]
2) the use of “Touro Synagogue Altar.”[45] This photograph appears in Scholastic's publication Scholastic Book of World Records 2012.[46] Scholastic made 511, 202 copies of the book.[47] Scholastic's license allowed a print run of up to 500, 000 copies in that publication.[48] “Touro Synagogue Altar” also appeared in Scholastic Book of World Records 2010.[49] Scholastic made 847, 350 copies of the book[50] but provided no license authorizing the use of the photograph in the book.
3) the use of “Scarlet Macaw on a Tree Branch”[51] in Scholastic's publication Disney Yearbook 2006.[52] Plaintiff lists this photograph three times in the complaint with three separate invoices. Scholastic made 315, 000 copies of Disney Yearbook 2006[53]but did not provide a license for the photograph.[54]
4) the use of “Lifeguard on Duty”[55] in both of Scholastic's versions of Thunder and Lightning.[56] Between the two versions, the photograph was copied 518, 000 times[57]but Scholastic has not provided any license for its use of the photograph.[58]
Krist also seeks dismissal of Scholastic's affirmative defenses and a finding that Scholastic's infringements were willful. Plaintiff has not presented any evidence showing infringement for any of the other photographs cited in the complaint.
Defendant seeks summary judgment on all of Plaintiff's claims based on: 1) Plaintiff's alleged invalid copyright registration; 2) Plaintiff's failure to show unauthorized copying by Scholastic;[59] 3) the statute of limitations; and 4) the allegation that Plaintiff's claims are not actionable under copyright law and are instead contract claims.
“The underlying purpose of summary judgment is to avoid a pointless trial in cases where it is unnecessary and would only cause delay and expense.”[60] A court will award summary judgment on a claim or part of a claim where there is “no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”[61] A fact is “material” if it could affect the outcome of the suit, given the applicable substantive law.[62] A dispute is “genuine” if the evidence presented “is such that a reasonable jury could return a verdict for the nonmoving party.”[63]
In evaluating a summary judgment motion, a court “must view the facts in the light most favorable to the non-moving party, ” and make every reasonable inference in that party's favor.[64]Further, a court may not weigh the evidence or make credibility determinations.[65] Nevertheless, the party opposing summary judgment must support each essential element of the opposition with concrete evidence in the record.[66] “If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.”[67] Therefore, if, after making all reasonable inferences in favor of the non-moving party, the court determines that there is no genuine dispute as to any material fact, summary judgment is appropriate.[68]
A. The Burden of Proof in Copyright Cases
A copyright owner has the “exclusive rights” to copy or distribute copies of the work.[69]The copyright owner may “authorize” another person to copy or distribute the copyrighted material through a license.[70] “Since a nonexclusive license does not transfer ownership of the copyright from the licensor to the licensee, the licensor can still bring suit for copyright infringement if the licensee's use goes beyond the scope of the nonexclusive license.”[71]
The Supreme Court has identified only two elements for a copyright-infringement claim: “(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.”[72] But in cases where the parties agree that the defendant possessed a license but the scope of the license is at issue, the Courts of Appeals have differed on which party bears the burden of proving that the defendant's copying was unauthorized.
The Seventh Circuit recently held that “a plaintiff is not required to prove that the defendant's copying was unauthorized in order to state a prima facie case of copyright infringement.”[73] The court thus overruled an earlier case that had added the word “unauthorized” to the second element of copyright infringement, explaining that the addition was a “transcription error.”[74] Therefore, the court explained that “the burden of proving that the copying was authorized lies with the defendant.”[75] Further, the court explained that “[t]his rule makes sense: “proving a negative is a challenge in any context, and if there is evidence of a license, it is most likely to be in the possession of the purported licensee.”[76]
In contrast, the Second Circuit holds that “in cases where only the scope of the licenses is at issue, the copyright owner bears the burden of proving that the defendant's copying was unauthorized.”[77] Because the “existence of a license [is] essentially uncontested in [these] case[s], ” evidence of copying does not demonstrate infringement.[78] Thus, the plaintiff has the burden of showing that an infringement actually occurred.
Third Circuit case law has evolved in recent years. In Dun & Bradstreet Software Services, Inc. v. Grace Consulting, Inc. the Court of Appeals held that “a plaintiff must establish: (1) ownership of a valid copyright; and (2) unauthorized copying of original elements of the plaintiff's work.”[79] Applying this standard in scope of license cases, courts placed the burden on the plaintiff to show that the defendant exceeded the scope of its license.[80]
However, in a recent opinion ruling on a petition for mandamus in a separate case brought by Krist against another publisher, the Third Circuit in In re McGraw-Hill Global Education Holdings LLC expressly adopted the Seventh Circuit's approach.[81] The panel held that “Dun & Bradstreet's inclusion of ‘unauthorized' as part of the second element appears to be an error” because “[t]he precedent Dun & Bradstreet cites as support of the listed elements . . . do not include the term “unauthorized” in their listing of the second element. Nor has the Supreme Court held that unauthorized copying is the second element of a copyright claim.[82] Therefore, the panel held that showing that the copying is unauthorized “is not part of the photographers' prima facie case.”[83]
Defendant argues that In re McGraw-Hill is not controlling because that case “involved dueling petitions for writ of mandamus to determine whether two lower courts properly dealt with motions to transfer venue” and, thus, the court's discussion of the underlying merits was entirely dicta.[84] However, even if not binding, the Third Circuit's reasoning is directly on point, issued recently, and in a related case. Moreover, the Court agrees with the opinion's reasoning and analysis on this issue. Accordingly, the court will treat unauthorized use as an affirmative defense which Scholastic has the burden of proving. For this reason, Defendant's motion for summary judgment on the basis that Plaintiff failed to show unauthorized use is denied.
B. Plaintiff Had Ownership of Valid Copyright Registrations and Defendant Copied Plaintiff's Work
To meet his prima facie case, then, Krist has the burden of showing that, for the uses of photographs on which he seeks summary judgment, he has a valid copyright and Scholastic copied the copyrighted photographs.[85] Scholastic does not dispute that it copied the photographs listed in the Complaint but it seeks summary judgment on one photograph arguing that Plaintiff never showed that he owned a copyright, and on another 40 uses listed in the complaint arguing that the group registrations rendered Plaintiff's copyright registrations invalid.[86]
As an initial matter, because Krist presented evidence that he had a valid copyright for both “Scarlet Macaw on a Tree Branch, ”[87] which provided the basis for three of the infringements listed in the complaint, and “Closed General Motors Plant, ”[88] and Scholastic does not dispute its use of any of the photographs or the validity of these copyrights, the Court finds that Krist has met his prima facie burden for these photographs.
1. Absence of Copyright Information
Scholastic concedes that “Plaintiff alleges Copyright Registration Numbers and dates for the majority of the Licensed Uses” but argues that Plaintiff has not shown a valid copyright for the photograph “Uros women on reed island in Lake Titicaca.”[89] The Court agrees that Plaintiff has failed to allege or to show a copyright registration for this photograph, and therefore, summary judgment will be granted for any use by Scholastic of this photograph.[90]
2. Corbis Group Registrations
Scholastic seeks summary judgment on the photographs that were copyrighted as part of Corbis's group registrations, arguing that this was an invalid method of copyright.[91]
Section 409(2) of the Copyright Act requires that an application for a copyright registration “shall be made on a form prescribed by the Register of Copyrights and shall include . . . the name . . . of the author or authors [and] the title of the work.”[92] Plaintiff asserts that he is “the author and copyright owner of the photographs identified in his Motion for Partial Summary Judgment”[93] and presents evidence from the United States Copyright Office to support his assertion.[94]
As explained above, Krist participated in the Corbis Copyright Registration Program.[95]Through the program, Corbis registered compilations of photographs from different photographers, including Krist, listing itself as one of the authors, generally listing several of the photographers, and then including the phrase “& others” or “and (number) other photographers.”[96]
Scholastic argues that because only one of the registrations included Krist's name - the rest listed other authors and Krist was included through the phrase “and (number) other photographers” - Krist did not have a valid copyright on the photographs.[97]
“The crux of the issue, then, is whether Corbis' registration of a collection of photos under Section 409 of the Act also effectively registered the underlying individual photos.”[98]The Third Circuit has not ruled directly on this issue.[99] Scholastic relies on a single decision from the Southern District of New York, which determined that under the “plain language of the Copyright Act” the Corbis group registrations were invalid for failing to include the individual authors' names.[100]
However, numerous other courts have held that group registrations that do not list the individual authors' names are valid. This includes a later decision from the Southern District of New York which expressly rejected the reasoning in the earlier case determining that “when § 409(2) is read in context, the plain text does not require a database registrant like Corbis to list each individual author of each individual work in the database in order to effectively register those individual works.”[101] This is because “the key word in §409(2) is actually ‘work' rather than ‘author.'”[102] The statute defines “collective work” as being a type of “work.”[103] The author of the collective work here is Corbis, which is listed on all of the group registrations. Therefore, when “the text is considered in the larger context” the plain language of §409(2) validates the Corbis group registrations.[104]
Because the text is unambiguous, the inquiry can end here because the Court is “bound to give effect to the words of Congress.”[105] However, even if the text were ambiguous, Krist would still prevail because the Copyright Office's manuals and opinion letters interpreting §409(2) to allow for group registration are entitled to Skidmore deference.[106] “A court will afford Skidmore deference upon consideration of ‘the thoroughness evident in [an agency's] consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.'”[107] Furthermore, the most important considerations are whether the agency's interpretation “is consistent and contemporaneous with other pronouncements of the agency and whether it is reasonable given the language and purpose of the Act.”[108]
When the Copyright Office first started registering works under the Copyright Act of 1976, it interpreted §409(2) to mean that “[w]here a collective work is being registered, the application should name the author of the collective work. The names of the individual authors of separate contributions being registered as part of the claim need not be given on the application.”[109] In 1995, the Copyright Office provided an opinion letter to a trade association of stock photography agencies explaining that a “registration application submitted for a work created by a large number of authors is considered acceptable “if it names at least three of those authors followed by a statement such as ‘and (number) others.'”[110] “Circulars from the Office say the same thing.”[111] The Copyright Office stated that it had a “preference” for naming all the authors, but it is “just that-a preference but not a requirement.”[112]
Additionally, “the livelihoods of photographers and stock agencies have long been founded on their compliance with the Register's reasonable interpretation of the statute . . . [d]enying the fruits of reliance by citizens on a longstanding administrative practice reasonably construing a statute is unjust.”[113] As the Supreme Court has explained, “[i]n light of . . . substantial reliance interests, the longstanding administrative construction of [a] statute should not be disturbed except for cogent reasons.”[114]
Moreover, policy reasons supported the Copyright Office's interpretation of the statutory requirement because “it would be absurd and inefficient to require the registrant to list each author for an extremely large number of component works to which the registrant has acquired an exclusive license.”[115] “[T]he expensive and error-prone tedium of the Copyright Office typing all the names into its records may explain why the Register of Copyrights was satisfied to have the names of only three authors for so many years.”[116]
In sum, based on the Copyright Office's consistent interpretation of § 409(2) to allow for group registration, the policy reasons supporting allowing group registration, the reliance interests of photographers and stock photograph agencies, the reasonableness of interpreting the text to mean that it is the “author” of the collective work that must be listed on the registration forms, and the ‘“specialized experience and broader investigations and information' available to the agency, ” the Court holds that the Copyright Office's manuals and opinion letters are entitled to Skidmore deference.[117]
Therefore, group registrations are valid even if they fail to list all of the individual authors' names so long as they comply with the Copyright Office's instructions. Here, “Corbis complied with the statute's requirements by listing its own name as the author of the collective work, ”[118] a title for the collective work, and including “and (number) other photographers.”[119] Therefore, the Court holds that Krist had a valid copyright in the photographs listed in the complaint. Thus, Scholastic's Motion for Summary Judgment based on the invalidity of the Corbis Group Registration Program is denied.
Plaintiff, therefore, has met his prima facie burden of showing that there is no genuine dispute that he owned a valid copyright in the photographs (except for “Uros women on reed island in Lake Titicaca”) and that Scholastic copied the photographs. The Court thus turns to Scholastic's affirmative defenses.
C. Scholastic's Affirmative Defenses
Scholastic's affirmative defenses are that: 1) the statute of limitations bars Plaintiff's claims; and 2) Plaintiff's claims are based on contract law, rather than copyright law.[120]
Plaintiff's complaint was filed on November 30, 2016.[121] The Copyright Act provides that “[n]o civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued.”[122] Scholastic argues that the claims accrued, and that Krist had knowledge of the claims, more than three years before Krist filed suit.
The “accrual” of a cause of action “occurs at the moment at which each of its component elements has come into being as a matter of objective reality, such that an attorney with knowledge of all the facts could get it past a motion to dismiss for failure to state a claim.”[123] At that moment, the three year copyright statute of limitations period begins to run.[124] Therefore, Plaintiff's claims accrued at the moment that Defendant used works in which Plaintiff had a valid copyright.[125]
Additionally, “[t]he separate-accrual rule provides that in the case of successive violations of the Copyright Act, the limitations period runs separately from the date of each violation. In other words, a separate copyright claim accrues upon the occurrence of each infringing act.”[126] Thus, “where the infringing acts occurred before and after the three-year limitation period, only those discrete acts occurring within three years of the filing of suit are timely.”[127]
a) The discovery rule
Beyond the statutory periods, “various statutory and judge-made rules [exist] that operate to toll the running of the limitations period-that is, ‘to stop its running.'”[128] The discovery rule is one such rule that “operates in applicable cases to toll the running of the limitations period.”[129]
Under the “discovery rule, ” a claim under the Copyright Act is tolled until “the plaintiff discovers, or with due diligence should have discovered, the injury that forms the basis for the claim.”[130] It is presumed that a plaintiff “should have known of the basis for its claims” when they “had sufficient information of possible wrongdoing to place [them] on inquiry notice or to excite storm warnings of culpable activity.”[131] “The test for storm warnings is ‘objective,' based on what a reasonable person in the plaintiff's position would have perceived.”[132] The defendant bears the burden of “demonstrating such storm warnings, and if they do so, ‘the burden shifts to [the plaintiff] to show that it exercised reasonable due diligence and yet was unable to discover its injuries.'”[133] Accordingly, although Plaintiff's claims accrued at the moment that Scholastic copied photographs that Plaintiff owned a valid copyright in, the statute of limitations on these claims was tolled until the point when Plaintiff should have known of the basis for his claims.
b) Application of the discovery rule
Defendant argues that as soon as Plaintiff received his royalty statements he had knowledge of the prima facie elements of the claim - that Plaintiff had ownership of the copyrights and that Defendant was using the photographs - and therefore Plaintiff “discovered” the claim at these early dates.[134] In other words, Defendant argues that because Plaintiff did not need to know that the use was unauthorized, Plaintiff discovered everything he needed to know in order to bring the lawsuit when he received the statements.
This argument makes a mistake that “even the Supreme Court has [made] on occasion” and conflates the accrual of the cause of action with the tolling of the statute of limitations.[135] At the moment when Scholastic used Plaintiff's copyrighted photographs, the cause of action accrued. However, under the discovery rule, the statute of limitations is tolled until Plaintiff “had sufficient information of possible wrongdoing to place [him] on inquiry notice or to excite storm warnings of culpable activity.”[136] Scholastic has not shown that the royalty statements contained sufficient information of possible wrongdoing that they should have placed Plaintiff on inquiry notice. In fact, Krist explained that “[r]oyalty statements from Corbis do not include license parameters. Often, they do not even include the publications or works in which my photographs have been licensed to appear. If I ran across one of my photographs in a Scholastic book, I would have no way of knowing whether that particular use was licensed or not.”[137] Scholastic has not provided any evidence to the contrary. Therefore, the Court cannot hold as a matter of law that receiving the royalty statements would have given Krist reason to suspect that Scholastic was infringing his copyrights.
Scholastic alternatively asserts that Krist's meeting with Harmon on November 14, 2013 triggered storm warnings of culpable conduct such that, with due diligence, Krist should have discovered the injury that forms the basis for the claim.[138] Plaintiff argues that the November 14, 2013 meeting did not trigger any storm warnings because Harmon only provided him with general information and he did not receive specific information such as which publishers were using his photographs.
However, Krist testified in his deposition that at the meeting “[t]hese whole issues came out.”[139] Krist further testified that Harmon thought “that I would have a case against several publishers.”[140] After the lunch, Krist testified that he informed his wife that “there may be some copyright infringement cases that might be worth pursuing.”[141] Therefore, by November 14, 2013, an objectively reasonable person in Plaintiff's position - who was told about the issues involved, informed that he could have a legal case against publishers who published his work, and who understood enough to tell his wife that there were copyright infringement claims potentially worth pursuing - would have had sufficient information of possible wrongdoing to excite storm warnings.
Because Defendant met its burden of demonstrating storm warnings, the burden shifts to Plaintiff to show that he “exercised reasonable due diligence and yet was unable to discover its injuries.”[142] Plaintiff cannot do so. Krist testified at his deposition that, rather than exercise due diligence, he “put it up on the shelf” to think about it and it “was relegated to, you know, something that we were going to come back to and do more thinking about.”[143] Plaintiff further testified that “I may have pushed it further down the queue than it deserved at that point, but it's just that I don't enjoy learning that I've been ripped off. It's not pleasant. So I had a million other things to deal with, so I dealt with them.”[144]
Accordingly, all of Plaintiff's copyright claims against Scholastic that accrued before November 30, 2013 - which was three years before Plaintiff filed his Complaint - are barred by the statute of limitations.
c) Defendant's affirmative defense based on the statute of limitations
Scholastic asserts that all of Plaintiff's claims accrued before November 30, 2013, and are therefore time-barred.[145] In response, Plaintiff argues that because Scholastic has failed to provide “evidence reflecting the dates on which its infringements began and ended on a claim-by-claim basis . . . it is impossible for the Court to determine whether any concluded before November 30, 2013.”[146]
Plaintiff is mostly correct that the Court cannot determine the precise dates of alleged infringements. But, importantly, each infringing act is its own copyright claim and is subject to its own calculation of the statute of limitations.[147] So while summary judgment will be granted for any claims that accrued before November 30, 2013, the ruling is limited to those claims for which there is no genuine dispute as to when they occurred.
The record is devoid of evidence establishing when each infringing act occurred for 35 of the 45 claims on which Scholastic seeks summary judgment. Both because it is an affirmative defense, and because Defendant seeks summary judgment based on the statute of limitations, the burden is on Scholastic to show that there is no genuine dispute that the infringing acts occurred before November 30, 2013. Because Scholastic fails to meet this burden, Scholastic's motion for summary judgment based on the statute of limitations is denied for those 35 claims.
As to the remaining ten claims, which consists of all eight[148] claims for which Plaintiff seeks summary judgment, along with two others[149] - “Memorial to Victims of September 11th Terrorist Attacks”[150] and “Machu Picchu”[151] - the record has been adequately developed for the Court to determine when the alleged infringing use occurred.
Plaintiff presents evidence that “Rainforest Landscape”[152] appeared in the title page of Scholastic's publication Rain Forest Homes[153] and that Scholastic made 221, 682 copies of the publication.[154] Scholastic's license for this photograph authorized a print run of only 50, 000 and included an expiration date of January 9, 2008.[155] This claim accrued on June 29, 2007 when Scholastic ordered 65, 000 copies of the book - 15, 000 more than the license allowed.[156]Between June 29, 2007 and May 1, 2013, Scholastic placed another 13 orders all together totaling 127, 686 copies of the photograph.[157] Under the discovery rule, the statute of limitations for each of these infringing acts was tolled up until November 14, 2013. But because Plaintiff failed to file suit within three years of November 14, 2013, Scholastic is granted summary judgment on each of those 14 orders. However, 28, 996 copies of the photograph were ordered after November 30, 2013 in three separate orders.[158] Therefore, the statute of limitations is not a defense for those orders.
Scholastic's use of “Lifeguard on Duty” is equally complicated. Both of Scholastic's versions of Thunder and Lightning display the photograph on page 26, [159] and between the two versions, the photograph was copied 518, 097 times.[160] The version of Thunder and Lightning with the ISBN 10 of 0439269881 was copied 319, 699 times and the final order was on October 25, 2010.[161] The version of Thunder and Lightning with the ISBN 10 of 0439693233 was copied 198, 398 times.[162] 145, 498 of the copies were ordered before November 30, 2013.[163] However, the remaining 52, 900 were ordered after November 30, 2013.[164] Therefore, Defendant is granted summary judgment for all of the claims of copyright infringement of “Lifeguard on Duty” except for the final 52, 900 copies.
The record further shows that Scholastic's license allowed a print run of up to 500, 000 copies[165] of “Touro Synagogue Altar” in Scholastic's publication Scholastic Book of World Records 2012. However, Scholastic printed 511, 202 copies of the book.[166] There is no dispute that the final order of Scholastic Book of World Records 2012 was placed on July 27, 2012.[167]Similarly, the record shows that Scholastic made 847, 350 copies[168] of the book Scholastic Book of World Records 2010 which included “Touro Synagogue Altar, ” with the last order occurring on February 22, 2010.[169] Additionally, the last order of Disney Yearbook 2006, which Plaintiff identifies as the basis for his three claims related to “Scarlet Macaw on a Tree Branch, ” was on March 1, 2006.[170] Therefore, Defendant is granted summary judgment for these claims and accordingly Plaintiff's motion for partial summary judgment is denied for these claims.
As to “Memorial to Victims of September 11th Terrorist Attacks” and “Machu Picchu, ” Scholastic presented licenses and royalty statements showing that its use of “Memorial to Victims of September 11th Terrorist Attacks” was in 2009 and its use of “Machu Picchu” was in 2011.[171] Because these royalty statements show use before November 30, 2013, and Plaintiff fails to demonstrate any use after November 30, 2013, the claim for infringement is time-barred and Defendant's motion for summary judgment is granted as to these two photographs.[172]
2. Plaintiff's claims sound in copyright law
Scholastic advances an additional argument based on the PVAs: that under New York law, which governs the PVAs, [173] “[n]ot every breach of a license amounts to copyright infringement.”[174] Scholastic argues that Krist's claims are actually contract claims and not actionable under copyright law.[175]
The argument turns on the distinction in New York law between a covenant and a condition. A covenant is “a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.”[176] A condition precedent is “an act or event . . . which, unless the condition is excused, must occur before a duty to perform a promise in the agreement arises.”[177]
In the context of a license of copyrighted works, ‘“if the licensee's improper conduct constitutes a breach of a covenant undertaken by the licensee and if such covenant constitutes an enforcible contractual obligation, then the licensor will have a cause of action for breach of contract,' not copyright infringement.”[178] However, “if the nature of a licensee's violation consists of a failure to satisfy a condition to the license, it follows that the rights dependant upon satisfaction of such condition have not been effectively licensed, and therefore, any use by the licensee is without authority from the licensor and may therefore, constitute an infringement of copyright.”[179]
Scholastic argues that under New York law there is “a presumption that terms of a contract are covenants rather than conditions, ” and that there is no language in any of the invoices or PVAs sufficient to defeat the presumption in favor of covenants.[180]
The Court disagrees with Scholastic's argument because under New York law, the PVAs contain conditions precedent rather than covenants. “Express conditions are those agreed to and imposed by the parties themselves.”[181] “Express conditions must be literally performed.”[182]Because “[c]onditions precedent are not readily assumed . . . the law . . . demands that conditions precedent be ‘expressed in unmistakable language.'”[183] The words “if, ” “unless, ” “until, ”[184] “on condition that, ”[185] and “except”[186] are all examples of “unmistakable language of condition.”[187]
The PVAs all contain the language of condition “in unmistakable language” sufficient to overcome the presumption of a covenant.[188] The Terms and Conditions (“T&Cs”) attached to the 2004 PVA declared that, “unless otherwise specified in a separate writing signed by Corbis, your reproduction of the images is limited to . . . the specific use described in your invoice.”[189]Similarly, the Corbis/Scholastic Library Publishing Content License Agreement attached to the 2008 and 2011 PVAs provided that “[e]xcept where specifically permitted in the Agreement, [Scholastic] may not distribute, publish, display or otherwise use in any way, the Rights Managed Content.”[190] The New York Court of Appeals has specifically held that the use of terms “unless”[191] and “except”[192] “constitutes ‘unmistakable language of condition.'”[193]Therefore, the language of the agreements created a condition in unmistakable terms - exceeding the uses authorized by the invoices constituted a violation of the condition in the agreements between Corbis and Scholastic.
In addition to the PVAs containing the unmistakable language of condition, “specific, talismanic words are not required” to create a condition.[194] Therefore, “[c]ourts applying New York law find that expressly conditioning a license on receipt of payment creates a condition[195]and, similarly, that where parties agree that failure to pay [will] be viewed as copyright infringement, a condition has likely been created.”[196]
The PVAs contained such language conditioning the license on receipt of payment[197] and stating that the failure to pay would be viewed as copyright infringement.[198] The T&Cs in the 2004 PVA stated that “[a]ny license granted by Corbis is conditioned upon . . . Corbis' receipt of full payment by [Scholastic] for such use as invoiced by Corbis. [Scholastic's] failure to make full payment when due shall terminate any licenses granted to [Scholastic] and entitles Corbis to pursue all remedies available under copyright laws.”[199] The 2008 and 2011 PVAs stated that “[a]ny and all licenses granted by Corbis are conditioned upon . . . Corbis' receipt of full payment by [Scholastic] as identified in the applicable invoice” and that “Corbis shall be entitled to pursue all other remedies available under copyright and other laws” in the event of Scholastic's “failure to . . . make payment when due.”[200] Thus, because the license agreements expressly conditioned the licenses on receipt of payment and stated that the failure to pay would constitute a copyright infringement, the licenses operated as conditions, and relief lies in copyright law.[201]
The Court's determination accords with the Third Circuit's ruling in In re McGraw-Hill which held that:
[Plaintiff] is the exclusive owner of the rights to reproduce, distribute, and display the photographs by virtue of the Copyright Act. McGraw-Hill is an infringer to the extent it exceeds any license that [Plaintiff or a sub-licensor granted it. The limitations in the license are not a contractual benefit to [Plaintiff], because his right to those limitations arises from the Copyright Act.[202]
Defendant argues that In re McGraw is not controlling because the Third Circuit was “determining whether the photographers were bound to an arbitration clause in McGraw-Hill's version of the PVAs.”[203] However, despite the differences between the two cases, the Third Circuit unambiguously held that claims, similar to those at issue here, for exceeding a license to use photographs are grounded in copyright law and not contract law.
Scholastic also argues that the PVAs “provide a built-in solution for use outside of the face of the invoice.”[204] Scholastic asserts that “the PVAs contained a series of agreed-to ‘buckets' that assigned a particular price depending on the usage requested” and so “the PVAs actually built in a contractual solution in a case where any license term is exceeded: Scholastic went to the next, or applicable, bucket, paying slightly more for an increased use.”[205] In essence, Scholastic argues that its alleged conduct was not copyright infringement because the PVAs contractually allowed it to “use photos first (or exceed the use previously licensed) and then license and pay for that use later.”[206]
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, &ldquo;the pricing terms in the [PVAs] did not mean that &lsquo;overuse&#39; of the plaintiff&#39;s images was contemplated by the parties&#39; agreement because &lsquo;specifying a price if you agree to a transaction in the future is not the same as agreeing to a transaction.&#39;&rdquo;[207] The PVAs operated as a framework for the invoices that Scholastic requested for each photograph ...