Opinion ID: 4557271
Heading Depth: 3
Heading Rank: 1

Heading: Indirect Infringement Claims

Text: A defendant may be held vicariously and contributorily liable for copyright infringement carried out by another. Luvdarts, LLC v. AT & T Mobility, LLC, 710 F.3d 1068, 1071 (9th Cir. 2013). But a plaintiff must show “[a]s a threshold matter . . . that there has been direct infringement by third parties.” Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1169 (9th Cir. 2007). The district court concluded that Oracle could not prove direct infringement by Terix in the form of unauthorized patch installations. 7 Oracle challenges the court’s failure to consider evidence of Terix’s pre-installation conduct. We briefly address that evidence and then discuss the deficiencies in the district court’s analysis. Direct infringement requires: “(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.” Seven Arts Filmed Entm’t Ltd. v. Content Media Corp. PLC, 733 F.3d 1251, 1254 (9th Cir. 2013) (citation omitted). On the second element, we have made clear that “[b]oth uploading and downloading copyrighted material are infringing acts.” Columbia Pictures Indus. v. Fung, 710 F.3d 1020, 1034 (9th Cir. 7 Oracle does not challenge the district court’s ruling concerning patch installations by Terix. Thus, we affirm the partial summary judgment for HPE on the indirect infringement claims as to that issue. ORACLE AMERICA V. HEWLETT PACKARD ENTER. 15 2012). Oracle provided evidence of Terix’s downloading and copying of patches for joint HPE-Terix customers. Terix downloaded some 11,500 copies of Solaris patches, including thousands of copies of registered protectable code by using customers’ MOS credentials. Terix employees copied patches to internal Terix repositories as well as to Terix-provided laptops so that it could provide patches on demand to joint customers. Terix reproduced and distributed patches on its servers so that customers could access patch copies. Although this evidence appears to show direct infringement, the district court did not consider it because the court read “Oracle’s support contracts to grant an Oracle customer, or an agent of the customer, a license to download, deliver, and install Solaris patches.” Reasoning that Terix was an agent of a customer with a license, the court thought that only patch installations could constitute infringing conduct. An applicable license may be dispositive of an infringement claim. “Anyone who is authorized by the copyright owner to use the copyrighted work in a way specified in [the Copyright Act] . . . is not an infringer of the copyright with respect to such use.” Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 433 (1984). Thus, an infringement claim “fails if the challenged use of the work falls within the scope of a valid license.” Great Minds v. Office Depot, Inc., 945 F.3d 1106, 1110 (9th Cir. 2019). And “[t]he existence of a license creates an affirmative defense to” an infringement claim. Worldwide Church of God v. Phila. Church of God, Inc., 227 F.3d 1110, 1114 (9th Cir. 2000). But “[w]hen a licensee exceeds the scope of the license granted by the copyright holder, the licensee is liable for infringement.” LGS Architects, Inc. v. 16 ORACLE AMERICA V. HEWLETT PACKARD ENTER. Concordia Homes of Nev., 434 F.3d 1150, 1156 (9th Cir. 2006). A court must construe the license to evaluate its effect on a claim of copyright infringement. “A copyright license ‘must be construed in accordance with the purposes underlying federal copyright law.’” Great Minds, 945 F.3d at 1110 (quoting S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1088 (9th Cir. 1989)); see also Cohen v. Paramount Pictures Corp., 845 F.2d 851, 854 (9th Cir. 1988) (same). “Chief among these purposes is the protection of the author’s rights.” S.O.S., 886 F.2d at 1088. “Federal courts ‘rely on state law to provide the canons of contractual construction to interpret a license, but only to the extent such rules do not interfere with federal copyright law or policy.’” Great Minds, 945 F.3d at 1110 (quoting S.O.S., 886 F.2d at 1088). The district court here, however, opined on Oracle’s licenses without applying these principles, and it never identified a license provision that authorized the challenged pre-installation conduct. 8 That was error. At summary judgment, “[t]he district court must not only properly consider the record . . . but must consider that record in light of the ‘governing law.’” Zetwick v. County of Yolo, 850 F.3d 8 HPE avers that the district court “held” HPE to its burden to identify a license provision authorizing the pre-installation conduct, pointing to an order in Oracle’s case against Terix. Oracle, 2015 WL 2090191, at . But, in that order, the magistrate judge granted summary judgment for Oracle on the affirmative license defense, reasoning that Terix “violated the terms of the relevant licenses by using a customer’s credential’s to . . . download patches for any number of that customer’s machines, whether covered by the license terms or not” because “[t]his type of use is clearly not contemplated on the face of the license agreements.” Id. at . And unlike the district court here, the magistrate judge there applied the relevant principles to construe the licenses for Solaris versions 7, 8, 9 and 10. Id. at , 7–9. ORACLE AMERICA V. HEWLETT PACKARD ENTER. 17 436, 441 (9th Cir. 2017) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). “[W]here application of incorrect legal standards may have influenced the district court’s conclusion, remand is appropriate.” Id. at 442. By applying no legal standard to interpret the licenses, the district court failed to apply the correct one. In doing so, the court excluded pre-installation conduct from its analysis. Thus, we remand for the court to properly analyze the licenses. The court must reconsider all infringement claims for pre-installation conduct, including the direct infringement claims for which the court also limited its focus to unauthorized installations. 9