Court Opinion

ID: 4202730
Source: CourtListenerOpinion
Date Created: 2017-09-12 17:01:11.476624+00
Date Added: 2024-06-11T14:40:54.061567
License: Public Domain

FOR PUBLICATION

 UNITED STATES COURT OF APPEALS
      FOR THE NINTH CIRCUIT

DRK PHOTO, a sole proprietorship,         No. 15-15106
                Plaintiff-Appellant,
                                             D.C. No.
                 v.                       3:12-cv-08093-
                                               PGR
MCGRAW-HILL GLOBAL EDUCATION
HOLDINGS, LLC; MCGRAW-HILL
SCHOOL EDUCATION HOLDINGS,                  OPINION
LLC,
            Defendants-Appellees.

     Appeal from the United States District Court
              for the District of Arizona
  Paul G. Rosenblatt, Senior District Judge, Presiding

      Argued and Submitted December 14, 2016
              San Francisco, California

               Filed September 12, 2017

  Before: Michael Daly Hawkins, Marsha S. Berzon,
        and Mary H. Murguia, Circuit Judges

             Opinion by Judge Hawkins;
            Concurrence by Judge Berzon
2               DRK PHOTO V. MCGRAW-HILL

                          SUMMARY *

                            Copyright

    The panel affirmed the district court’s summary
judgment in favor of the defendants in a copyright
infringement action brought by a stock photography agency.

    The panel held that the plaintiff, a nonexclusive licensing
agent for the photographs at issue, failed to demonstrate any
adequate ownership interest in the copyrights to confer
standing. Distinguishing Minden Pictures, Inc. v. John
Wiley & Sons, Inc., 795 F.3d 997 (9th Cir. 2015), the panel
held that the plaintiff lacked standing as a legal owner
because its representation agreements with the
photographers did not grant the plaintiff an exclusive license
to authorize use of the photographs. The panel held that
under Silvers v. Sony Pictures Entm’t, Inc., 402 F.3d 881
(9th Cir. 2005) (en banc), the plaintiff’s assignment
agreements with the photographers did not confer standing
because they merely transferred the right to sue on accrued
claims. The panel held that the plaintiff also lacked standing
as a beneficial owner of the copyrights.

    The panel affirmed the district court’s denial of the
plaintiff’s motion to modify the scheduling order for leave
to amend its complaint to join three photographers as
plaintiffs.

    *
      This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
              DRK PHOTO V. MCGRAW-HILL                      3

    Concurring, Judge Berzon wrote that Silvers, holding
that the transfer of the right to sue to a nonowner or
nonexclusive licensee of a copyright right can never confer
standing to sue for a copyright violation, controlled but was
wrongly decided.

                        COUNSEL

Maurice Harmon (argued), Christopher Seidman, and
Gregory Albright, Harmon & Seidman LLC, New Hope,
Pennsylvania, for Plaintiff-Appellant.

Christopher P. Beall (argued) and Thomas B. Kelley, Levine
Sullivan Koch & Schulz LLP, Denver, Colorado, for
Defendants-Appellees.

                         OPINION

HAWKINS, Circuit Judge:

    This appeal raises the now often litigated issue of
whether a stock photography agency—here, the Arizona-
based agency DRK Photo (“DRK”)—has standing under the
Copyright Act of 1976 to pursue infringement claims
involving photographs from its collection. Ultimately, there
is no bright line answer to this question. Here, we affirm the
grant of summary judgment in favor of defendants,
McGraw-Hill Global Education Holdings, LLC and
McGraw-Hill School Education Holdings, LLC
(collectively, “McGraw-Hill”), because DRK is a
nonexclusive licensing agent for the photographs at issue
and has failed to demonstrate any adequate ownership
interest in the copyrights to confer standing. We also affirm
4              DRK PHOTO V. MCGRAW-HILL

the denial of DRK’s motion to modify the scheduling order
for leave to amend its complaint.

                      BACKGROUND

    DRK is a stock photography agency that markets and
licenses images created by others to publishing entities,
including defendants McGraw-Hill. Since its inception in
1981, DRK has built a collection of hundreds of thousands
of photographs, primarily depicting worldwide wildlife,
marine life, and natural history. McGraw-Hill publishes K-
12 educational, post-secondary, professional, and trade
textbooks and publications. From approximately 1992 to
2009, McGraw-Hill licensed photographs from DRK to use
in its textbooks. Their agreements were reflected in
invoices, which set forth, among other terms, the fee
charged, the specific photographs licensed, and the number
and form of reproductions and distributions authorized under
each “[o]ne-time non-exclusive” license.

   With regard to its own licensing of the photographs,
DRK historically has entered into “Representation
Agreements” with the photographers of the images that
make up its collection. These Representation Agreements
have generally taken two forms: (1) agreements appointing
DRK as the “sole and exclusive agent” to license and sell the
covered photographs, and (2) agreements appointing DRK
as a nonexclusive agent to license and sell the covered
photographs. Only the latter are at issue in this appeal. 1

    1
      McGraw-Hill moved for summary judgment on claims involving
photographs covered by DRK’s nonexclusive Representation
Agreements. The parties subsequently settled all claims involving
photographs covered by exclusive Representation Agreements and
dismissed those claims with prejudice.
              DRK PHOTO V. MCGRAW-HILL                    5

    According to DRK’s owner, the majority of its
arrangements with photographers are nonexclusive. In
relevant part, those Representation Agreements provide that
DRK will act as the “agent with . . . respect to the sale or
leasing of the photographs or transparencies” delivered to
DRK. Many of the agreements further clarify:

       DRK PHOTO will not require, nor ask a
       photographer or agency for exclusivity of an
       image until such time that DRK PHOTO has
       made an exclusive sale of that image. . . .
       Without this condition of an exclusive
       license/sale being made, all parties are free to
       promote and/or market all images without
       restriction.

They also provide that DRK and the photographer will split
evenly the proceeds from all sales made by DRK.

    In 2008, DRK endeavored to register copyrights for the
photographs in its collection. To that end, each of the
photographers whose images are involved in this litigation
executed identical agreements entitled “Copyright
Assignment, Registration, and Accrued Causes of Action
Agreement” (the “Assignment Agreements”). In relevant
part, the agreements provide:

       The undersigned photographer . . . grants to
       DRK all copyrights and complete legal title
       in the Images. DRK agrees to reassign all
       copyrights and complete legal title back to
       the     undersigned    immediately      upon
       completion of the registration of the Images
       . . . and resolution of infringement claims
       brought by DRK relating to the Images.
6             DRK PHOTO V. MCGRAW-HILL

       The undersigned agrees and fully transfers all
       right, title and interest in any accrued or later
       accrued claims, causes of action, choses of
       action . . . or lawsuits, brought to enforce
       copyrights in the Images, appointing and
       permitting DRK to prosecute said accrued or
       later accrued claims, causes of action, choses
       in action or lawsuits, as if it were the
       undersigned.

The Assignment Agreements also provide that DRK and the
photographers will share equally the proceeds of any
litigation award or settlement.

    According to DRK, “[t]he primary purpose of the
assignments was to effect a transfer [of] copyright ownership
to DRK that was sufficient to support its copyright
enforcement efforts.” In an initial transmittal email to
photographers, DRK explained that with the Assignment
Agreements DRK would “receive the authorization
necessary to initiate and settle copyright infringement
claims.”     In subsequent email correspondence, DRK
discussed the scope and effect of the Assignment Agreement
in response to questions from several photographers as to
how the Agreement would affect their dealings with other
agencies licensing the same or similar photographs. DRK
consistently confirmed that the purpose of the Agreement
was to put DRK “in a legal position to bring copyright
infringement claims against infringers” and to have an
agreement with the photographers as to how settlement
proceeds would be divided, “nothing more.” It further
clarified that the copyright registration would allow DRK to
bring infringement suits and that DRK had “no intentions of
using it in any other manner.” In another email exchange,
DRK explained that there was no “‘rights grab’ going on
                DRK PHOTO V. MCGRAW-HILL                           7

here.” And in yet another exchange, DRK assured a
photographer that he understood “correctly” that “the
registration of copyright [would] be [the photographer’s]
and not [DRK’s], only in case of infringement [would DRK]
then use it.”

    Following execution of the Assignment Agreements,
photographers who were parties to nonexclusive
Representation Agreements with DRK continued to market
and sell their photographs on their own and through other
means according to the terms of the Representation
Agreements. DRK admits that the photographers had no
duty to account to DRK for their sales of the photographs
following execution of the Assignment Agreements.

                 PROCEDURAL HISTORY

    In May 2012, DRK sued McGraw-Hill, asserting claims
for copyright infringement premised on allegations that
McGraw-Hill exceeded the scope of its licenses with DRK
by printing and distributing more textbooks containing
licensed images than authorized. In full, DRK alleged that
McGraw-Hill made 1,120 infringing uses of approximately
636 unique photographs.

    The parties eventually cross-moved for summary
judgment, and the district court granted partial summary
judgment to McGraw-Hill on the basis that DRK lacked
standing to pursue infringement claims for photographs
taken by photographers for whom DRK was acting as a
nonexclusive agent. 2 In relevant part, the district court
determined that the Representation Agreements covering

     2
       The district court’s judgment covered 978 of the 1,120 alleged
infringements identified in the complaint.
8             DRK PHOTO V. MCGRAW-HILL

those photographs were nonexclusive licenses such that
DRK could not be deemed the legal owner of any exclusive
right pertaining to the images. The district court further
found that the Assignment Agreements in “substance and
effect” assigned “to DRK nothing more than the ‘bare right
to sue.’” Finally, the district court rejected DRK’s
remaining contentions that it was a beneficial owner of the
copyrights at issue and that recent case law had changed the
landscape of our court’s earlier precedent regarding the
assignment of infringement claims and standing.

    Following the district court’s grant of partial summary
judgment, and after the deadline set by the scheduling order,
DRK sought leave to amend its complaint to join three
photographers as plaintiffs. The district court denied the
motion explaining that DRK had not shown good cause to
amend the scheduling order, joinder of the photographers
was not warranted under the circumstances, and DRK had
not been diligent in pursuing the requested amendment. This
appeal timely follows.

    JURISDICTION AND STANDARD OF REVIEW

    We have jurisdiction under 28 U.S.C. § 1291. Standing
in a copyright case is a question of law we review de novo.
Minden Pictures, Inc. v. John Wiley & Sons, Inc., 795 F.3d
997, 1002 (9th Cir. 2015). We also review de novo a district
court’s grant of summary judgment and “determine, viewing
the evidence in the light most favorable to the nonmoving
party, whether there are any genuine issues of material fact
and whether the district court correctly applied substantive
law.” United States v. City of Tacoma, 332 F.3d 574, 578
(9th Cir. 2003). We review a district court’s denial of a
motion to modify a scheduling order for abuse of discretion.
Noyes v. Kelly Servs., 488 F.3d 1163, 1174 n.6 (9th Cir.
2007).
                 DRK PHOTO V. MCGRAW-HILL                                9

                           DISCUSSION

    Section 501(b) of the Copyright Act of 1976 establishes
who has standing to sue for infringement: “The legal or
beneficial owner of an exclusive right under a copyright is
entitled, subject to the [registration] requirements of section
411, to institute an action for any infringement of that
particular right committed while he or she is the owner of
it.” 17 U.S.C. § 501(b). 3 Section 106 sets forth an
exhaustive list of those exclusive rights. Id. § 106; Silvers v.
Sony Pictures Entm’t., Inc., 402 F.3d 881, 887 (9th Cir.
2005) (en banc). “They are the rights ‘to do and to authorize’
others to do six things with the copyrighted work: to
reproduce the work, to prepare derivative works based upon
the work, to distribute copies of the work, to perform the
work publicly, to display the work publicly, and to record
and perform the work by means of an audio transmission.”
Minden, 795 F.3d at 1002 (quoting 17 U.S.C. § 106).

    3
       Contrary to DRK’s contention, Lexmark International, Inc. v.
Static Control Components, Inc., 134 S. Ct. 1377 (2014), does not
expand the class of plaintiffs with standing to sue for copyright
infringement. When evaluating whether a plaintiff had standing under
the Lanham Act, Lexmark explained that, despite a statute’s expansive
wording, courts “presume that a statutory cause of action extends only to
plaintiffs whose interests fall within the zone of interests protected by
the law invoked.” Id. at 1388 (internal quotation marks omitted). Thus,
the “zone of interests” test applies as a logical limitation on “who may
invoke” a statutory cause of action that otherwise appears unfettered. Id.
at 1388–89. It is not, as DRK suggests, a tool for expanding and
overriding a clear statutory limitation on standing. The Copyright Act
expressly limits standing to two types of plaintiffs: (1) legal owners, and
(2) beneficial owners. 17 U.S.C. § 501(b). Lexmark does not alter that
express limitation.
10             DRK PHOTO V. MCGRAW-HILL

   Here, DRK contends that it has standing as either a legal
owner or as a beneficial owner of the copyrights. We
evaluate each argument in turn.

I. Legal Ownership.

    “Any of the exclusive rights comprised in a copyright,
including any subdivision of any of the rights specified by
section 106, may be transferred . . . and owned separately.”
17 U.S.C. § 201(d)(2). “[E]ither an assignment (which
transfers legal title to the transferee) or an exclusive license
(which transfers an exclusive permission to use to the
transferee) qualifies as a ‘transfer’ of a right in a copyright
for the purposes of the Act.” Minden, 795 F.3d at 1003;
accord 17 U.S.C. § 101. By contrast, a mere “nonexclusive
license” does not constitute a “transfer of copyright
ownership” and therefore cannot confer standing to assert an
infringement claim. See 17 U.S.C. § 101.

    To support its claim of legal ownership, DRK points to
(1) the Representation Agreements, which grant DRK a
license to authorize use of the photographs; and (2) the
Assignment Agreements, which purport to transfer to DRK
the legal title to and copyrights of the photographs along
with accrued infringement claims.

     A. The Representation Agreements.

    We recently held in Minden Pictures, Inc. v. John Wiley
& Sons, Inc. that a stock photography agency that served as
the exclusive licensing agent for allegedly infringed
photographs had standing to sue for infringement under the
Copyright Act. 795 F.3d at 1004–05. DRK contends that
Minden creates a bright line rule that stock photography
agencies have standing to bring copyright infringement
claims by virtue of their agency agreements with their
              DRK PHOTO V. MCGRAW-HILL                     11

contributing photographers. However, DRK reads Minden
too broadly.

    Minden indeed analyzed whether a stock photography
agency, Minden Pictures, Inc. (“Minden”), had standing to
sue a publisher for infringement after the publisher exceeded
the scope of its licensing agreement with Minden. Id. at
1001. Like DRK, Minden also entered into agency
agreements with its contributing photographers under which
the photographers authorized Minden to license and sell
certain photographs to third parties. Id. at 999–1000.
Importantly, in those licensing agreements, the
photographers agreed to appoint Minden “as sole and
exclusive agent and representative with respect to the
Licensing of any and all uses of [specified photographs].”
Id. at 1000. Although the agreements “permit[ted] the
photographers to issue some licenses themselves,” the
photographers were “prohibit[ed] . . . from hiring a licensing
agent other than Minden.” Id. The publisher argued that
Minden’s agreements with the photographers did not “grant
‘exclusive licenses’ to Minden to grant licenses to third
parties, because the photographers retain[ed] the right to
issue licenses themselves.” Id. at 1004.

    Minden rejected that argument, and held that the
agreements at issue granted exclusive licenses of the right to
authorize, rendering Minden a “legal owner” with standing
to sue. Relying on “the divisibility principle embodied by
the 1976 [Copyright] Act,” Minden explained that the fact
that the photographers retained some ability to authorize use
did not render Minden’s license nonexclusive:

       [W]e agree with the Seventh Circuit that the
       essence of an “exclusive” license under the
       Act is that “the copyright holder permits the
       licensee to use the protected material for a
12             DRK PHOTO V. MCGRAW-HILL

       specific use and further promises that the
       same permission will not be given to others.”
       I.A.E., Inc. v. Shaver, 74 F.3d 768, 775 (7th
       Cir. 1996). Minden has been given just such
       a promise. Under the Agency Agreements,
       Minden is the “sole and exclusive agent and
       representative with respect to the Licensing
       of any and all uses” of the photographs. That
       is, the photographers have promised that
       Minden, and only Minden, will have the
       power, as the photographers’ licensing agent,
       to authorize third parties to reproduce,
       distribute, and display the photographs. That
       the photographers have retained some limited
       degree of authority to grant licenses
       themselves does not eliminate Minden’s
       interest in the copyright as the sole entity to
       act as the photographers’ licensing agent. It
       merely means that both Minden and the
       photographers, under the terms of the
       Agreements, can prevent those third parties
       who have not received permission to use the
       photographs from using them.

Id. at 1004–05. As Minden explained, this concept of
exclusivity as the right to exclude third parties, even when
another entity can also exclude third parties, is consistent
with patent law treatment of similar arrangements. Id.

    In so holding, Minden declined to apply a rigid test to
determine exclusivity and adopted a more flexible approach
that allows for a license to be exclusive even if the copyright
owner retains some subset of the rights at issue. See id. The
key to determining whether Minden’s agency agreements
conferred a nonexclusive or exclusive license thus was not
                 DRK PHOTO V. MCGRAW-HILL                            13

whether the photographers retained some fractional right but
instead that the photographers promised “that Minden, and
only Minden, will have the power, as the photographers’
licensing agent, to authorize third parties to reproduce,
distribute, and display the photographs.” See id. at 1005
(emphasis added).

    DRK’s Representation Agreements here at issue, on the
other hand, are devoid of that key provision. They also lack
any limitation whatsoever on the photographers’ authority to
contract with other licensing agents. 4 In the absence of any
such promise, DRK’s Representation Agreements confer
nonexclusive licenses and do not render DRK a legal owner
for standing purposes. Cf. Bourne Co. v. Hunter Country
Club, Inc., 990 F.2d 934, 937 (7th Cir. 1993) (nonexclusive
licensing agent not a necessary party because it was neither
a legal nor a beneficial owner of the copyright).

    DRK suggests that it nevertheless possesses an
ownership interest merely because the Representation
Agreements pertain to the right “to authorize” as opposed to
one of the exclusive rights listed in section 106. Neither the
statutory text nor the analysis in Minden suggests that,
having been given the right “to authorize” others to exercise
the rights of copyright holders, a nonexclusive licensee
becomes a legal owner with standing to sue. Cf. Subafilms,
Ltd. v. MGM-Pathe Commc’ns Co., 24 F.3d 1088, 1093 (9th
Cir. 1994) (en banc) (“[W]e believe that ‘“to authorize”
[wa]s simply a convenient peg on which Congress chose to

    4
       We therefore need not consider whether a licensing agency
arrangement that limits the number of other licensing agents that will be
permitted is an exclusive licensing arrangement sufficient to permit
enforcement actions. See id. at 1004 (discussing authorities suggesting
that an exclusive licensee need not be a sole licensee).
14               DRK PHOTO V. MCGRAW-HILL

hang the antecedent jurisprudence of third party liability.’”
(quoting 3 David Nimmer & Melville B. Nimmer, Nimmer
on Copyright § 12.04[A][3][a], at 12–84 n.81 (1993))).

     B. The Assignment Agreements.

    DRK next contends that, even if it was not a legal owner
originally by virtue of the Representation Agreements, it
became the legal owner when the Assignment Agreements
passed full legal title of each photograph and copyright along
with all accrued claims to DRK. McGraw-Hill counters that
the Assignment Agreements are nothing more than invalid
attempts to transfer the bare right to sue.

    In Silvers v. Sony Pictures Entertainment, 402 F.3d 881
(9th Cir. 2005) (en banc), we held that “an assignee who
holds an accrued claim for copyright infringement, but who
has no legal or beneficial interest in the copyright itself,
[may not] institute an action for infringement.” Id. at 883.
This conclusion naturally followed from the notable absence
of the “right to sue” from the list of exclusive rights set forth
in section 106 and was reinforced by the text and legislative
history of the Copyright Act as a whole. Id. at 885–90. 5

     Later, we clarified that the purported transfer of legal
title coupled with the transfer of accrued claims does not
confer standing when the transaction, in substance and

     5
      Silvers suggested that a subsequent legal owner may have standing
to pursue accrued causes of action where the causes of action were
transferred along with full ownership of the copyright. 402 F.3d at 890
n.1. Silvers noted that the holding of a Second Circuit case to that end
“makes perfect sense, as it is consistent with the Act and with the
constitutional purpose of encouraging authors and inventors by creating
a limited monopoly on their works and inventions.” Id. (citing ABKCO
Music, Inc. v. Harrisongs Music Ltd., 944 F.2d 971, 980 (2d Cir. 1991)).
               DRK PHOTO V. MCGRAW-HILL                     15

effect, merely transfers a bare right to sue. Righthaven LLC
v. Hoehn, 716 F.3d 1166, 1169–70 (9th Cir. 2013). There,
the plaintiff Righthaven LLC “was founded, according to its
charter, to identify copyright infringements on behalf of
third parties, receive ‘limited, revocable assignment[s]’ of
those copyrights, and then sue the infringers.” Id. at 1168.
Righthaven asserted copyright infringement claims against
two defendants for their allegedly unauthorized online
posting of articles from the Las Vegas Review-Journal. Id.
Righthaven was not the owner of the copyrights of those
articles at the time of the alleged infringement. Id. Instead,
the copyrights were owned by Stephens Media LLC, the
company that owns the Las Vegas Review-Journal. Id.
After the alleged infringement, Stephens Media and
Righthaven executed a copyright assignment agreement for
each article. Id. Those assignments provided that, “subject
to [Stephens Media’s] rights of reversion, Stephens Media
granted to Righthaven all copyrights requisite to have
Righthaven recognized as the copyright owner of the Work
for purposes of Righthaven being able to claim ownership as
well as the right to seek redress for past, present, and future
infringements of the copyright . . . in and to the Work.” Id.
(internal quotation marks omitted).

    Prior to executing the assignments, Righthaven and
Stephens Media executed a Strategic Alliance Agreement
(“SAA”), which clarified that following an assignment of
copyright Stephens Media would retain “an exclusive
license to exploit the copyrights for any lawful purpose
whatsoever” and upon thirty days prior notice could “revert
the ownership of any assigned copyright back to itself.” Id.
at 1169 (internal quotation marks omitted). The SAA further
provided that Righthaven had no right to exploit the
copyrights or participate in any royalties. Id. at 1168–69.
16             DRK PHOTO V. MCGRAW-HILL

    Both defendants moved to dismiss for lack of standing.
Id. at 1169. Righthaven and Stephens Media then executed
a “Clarification and Amendment to Strategic Alliance
Agreement” in which they “purported to clarify that the
parties’ intent in entering the SAA was to ‘convey all
ownership rights in and to any identified Work to
Righthaven through a Copyright Assignment so that
Righthaven would be the rightful owner of the identified
Work.’” Id. Righthaven held that, despite their language
purporting to transfer title and ownership, the copyright
assignments in their substance and effect did no more than
transfer a right to sue. Id. at 1172. Looking to the combined
effect of the assignment and the SAA, Righthaven
recognized that Stephens Media retained all exclusive rights
to the articles and Righthaven had little if any right to exploit
the works absent Stephens Media’s consent. Id. at 1170–72.
Thus, for all practical purposes, the assignments did nothing
more than transfer a right to sue. Id.

    Here, the parties similarly dispute whether the
Assignment Agreements actually transferred ownership of
the copyrights along with the accrued claims. As a
preliminary matter, we reject DRK’s contention that
McGraw-Hill is precluded from challenging the effect of the
Assignment Agreements. Although a third party may not
raise noncompliance with 17 U.S.C. § 204(a)’s writing
requirement as a defense to a copyright transfer where the
parties to the transfer do not dispute its existence, Jules
Jordan Video, Inc. v. 144942 Canada Inc., 617 F.3d 1146,
1157 (9th Cir. 2010), a third party is not foreclosed from
challenging a plaintiff’s ownership for purposes of standing,
see Righthaven, 716 F.3d at 1169. Indeed, it is the plaintiff
who has the burden of establishing a qualifying ownership
interest both as a substantive element of the infringement
claim, Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc.,
              DRK PHOTO V. MCGRAW-HILL                     17

499 U.S. 340, 361 (1991), and as a necessary predicate for
standing to bring the claim, 17 U.S.C. § 501(b). See Urbont
v. Sony Music Entm’t, 831 F.3d 80, 88 (2d Cir. 2016)
(“[E]ven courts that have precluded third parties from
challenging a plaintiff’s ownership rights under the statute
of frauds provision in Section 204 have permitted those
parties to challenge the validity of the underlying ownership
transfer.”).

    Righthaven instructs that the assignment agreements’
use of “language purporting to transfer ownership . . . is not
conclusive . . . [and] [w]e must consider the substance of the
transaction.” 716 F.3d at 1170. Thus, as in Righthaven, we
must consider the Assignment Agreements in conjunction
with the Representation Agreements and the ongoing
relationship between DRK and the individual photographers.
The alleged acts of infringement occurred prior to the
execution of the Assignment Agreements. DRK concedes
that following the execution of the Assignment Agreements,
photographers who were parties to nonexclusive
Representation Agreements could continue to market and
sell the covered photographs themselves and through other
means under the terms of the Representation Agreements.
The photographers did not pay royalties or fees of any kind
to DRK following execution of the Assignment Agreements.
DRK’s admitted course of dealing with photographers
following the execution of the Assignment Agreements
demonstrates that each party retained the rights it had under
the nonexclusive Representation Agreements—meaning the
photographers retained the exclusive rights to the
photographs and DRK retained a nonexclusive license to
authorize their use. As the district court recognized, the
18                DRK PHOTO V. MCGRAW-HILL

email exchanges surrounding execution of the Assignment
Agreements further underscore this reality. 6

    DRK argues it was error to interpret the substance and
effect of the Assignment Agreements contrary to DRK and
the photographers’ intent that DRK obtain the ownership
interest necessary to register and pursue infringement claims
on the copyrights at issue. 7 DRK relies upon declarations
submitted in opposition to McGraw-Hill’s motion for
summary judgment, which, like the clarification agreement
in Righthaven, stated that the photographers “intended to
transfer the copyrights to all . . . photographs” with the
“intent that DRK should retain an ownership interest in the
images until the full resolution of any infringement claims
relating to those images” and so that DRK could “protect, by
lawsuits if necessary, against unpermitted uses.” As in
Righthaven, however, “[t]he problem is not that the district
court did not read the contract in accordance with the parties’
     6
       DRK argues for the first time on appeal that evidence of its email
correspondence with individual photographers submitted by McGraw-
Hill in support of summary judgment is inadmissible under the parol
evidence rule. DRK failed to raise any objection to the admissibility of
this evidence before the district court. Under the circumstances, DRK’s
failure to raise any objection or argument on this issue before the district
court precludes it from doing so on appeal. See Getz v. Boeing Co.,
654 F.3d 852, 868 (9th Cir. 2011).

      7
        The validity of the registration of the copyrights or the
effectiveness of the assignment for purposes of registration is not at issue
in this case. A temporary transfer of ownership for the purpose of
registering a collection is valid for purposes of that registration. Alaska
Stock, LLC v. Houghton Mifflin Harcourt Publ’g Co., 747 F.3d 673,
676–77, 685 (9th Cir. 2014). Although a certificate of registration may
serve as “prima facie evidence of the validity of the copyright and of the
facts stated in the certificate,” the registrations here are entitled to no
such presumption because they were filed more than five years after the
first publication of the work. 17 U.S.C. § 410(c).
               DRK PHOTO V. MCGRAW-HILL                     19

intent; the problem is that what the parties intended was
invalid under the Copyright Act.” 716 F.3d at 1171. The
undisputed evidence shows that for all practical purposes,
the nonexclusive Representation Agreements continued to
govern who controlled the exclusive rights associated with
the photographs following execution of the purported
copyright assignments; thus, the substance and effect of the
Assignment Agreements was merely a transfer of the right
to sue on accrued claims, which cannot confer standing. See
Silvers, 402 F.3d at 890.

    Finally, we reject DRK’s contention that Silvers has been
implicitly overruled by Sprint Communications Co. v. APCC
Services, Inc., 554 U.S. 269 (2008). A three-judge panel is
bound by prior circuit authority unless the authority is
“clearly irreconcilable” with intervening Supreme Court
precedent. Miller v. Gammie, 335 F.3d 889, 893 (9th Cir.
2003) (en banc). Sprint held that assignees of payphone
operators’ accrued claims under the Communications Act
had Article III standing to bring the collection suit at issue.
554 U.S. at 271, 275. Sprint did not involve the Copyright
Act, and its standing analysis was not predicated on any
statutory provision analogous to section 501(b).
Consequently, Sprint does not undercut the reasoning of
Silvers, which was grounded on the specific statutory
language and history of the Copyright Act’s standing
provision for infringement claims, and Sprint and Silvers are
not “clearly irreconcilable.” See Miller 335 F.3d at 893. To
be sure, Righthaven, which post-dates Sprint, also applied
the rule of Silvers, and a three-judge panel of this court is
bound by both Silvers and Righthaven.

   Although we are certainly sympathetic to the practical
challenges attendant to policing infringement of
photographic art in the publishing industry, those practical
20             DRK PHOTO V. MCGRAW-HILL

considerations cannot override the Copyright Act’s
“carefully circumscribed” grant of the right to sue. Silvers,
402 F.3d at 885. The nonexclusive licenses and assignments
of the bare right to sue present here do not render DRK a
legal owner of the copyrights under controlling law and thus
are insufficient to confer standing.

II. Beneficial Ownership.

   In the alternative, DRK contends that it is the beneficial
owner of the copyrights for the photographs at issue.

    Although section 501(b) provides that a beneficial owner
of a copyright is entitled to bring an infringement action, the
Copyright Act does not define the term “beneficial owner.”
The classic example of a beneficial owner is “an author who
ha[s] parted with legal title to the copyright in exchange for
percentage royalties based on sales or license fees.” Warren
v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1144 (9th
Cir. 2003) (quoting H.R. Rep. No. 1476, at 159); accord
Broad. Music, Inc. v. Hirsch, 104 F.3d 1163, 1166 (9th Cir.
1997) (“Beneficial ownership arises by virtue of section
501(b) for the purpose of enabling an author or composer to
protect his economic interest in a copyright that has been
transferred.”). By contrast, an author who receives royalties
for a work created under a work-for-hire agreement, and thus
who never had ownership of the work, is not a beneficial
owner. Warren, 328 F.3d at 1144–45.

    We have not previously explored the full extent of who
may qualify as a beneficial owner of copyright, and we need
not do so here. Indeed, to support its arguments that it is a
beneficial owner, DRK once again points solely to the
Representation Agreements and the Assignment
Agreements. Yet, under those agreements, DRK is a
nonexclusive licensing agent and an assignee of accrued
               DRK PHOTO V. MCGRAW-HILL                     21

causes of action. To hold that DRK is a beneficial owner
simply on the very bases that it cannot be deemed the legal
owner would effectively negate our holding in Silvers and
render portions of section 501(b) superfluous. Thus, on the
specific facts of this case, DRK has failed to demonstrate
that it is a beneficial owner. See Bourne, 990 F.2d at 937
(recognizing that a nonexclusive licensing agent is not a
beneficial owner).

III.   DRK’s Motion to Amend.

    Finally, DRK contends that the denial of its motion to
amend was erroneous. Where, as here, a party seeks leave
to amend after the deadline set in the scheduling order has
passed, the party’s request is judged under Federal Rule of
Civil Procedure (“FRCP”) 16’s “good cause” standard rather
than the “liberal amendment policy” of FRCP 15(a). In re
W. States Wholesale Nat. Gas Antitrust Litig., 715 F.3d 716,
737 (9th Cir. 2013). The central inquiry under Fed. R. Civ.
P. 16(b)(4) is whether the requesting party was diligent in
seeking the amendment. Id.

    The district court did not abuse its discretion in
determining that DRK was not diligent in seeking leave to
amend. As the district court highlighted, McGraw-Hill
raised standing as an affirmative defense in its answer less
than one month after the litigation was initiated and nearly
two years before DRK finally sought leave to amend.
McGraw-Hill again raised its standing argument in the
parties’ Joint Case Management Report prior to the entry of
the scheduling order. And, DRK’s claims were dismissed in
a parallel litigation on the very standing theory that
McGraw-Hill raised in this case. Yet, DRK waited until
after the adverse grant of summary judgment to seek leave
to amend. Given these facts, the district court’s findings that
DRK had ample notice of the defense and failed to exercise
22               DRK PHOTO V. MCGRAW-HILL

diligence are not clearly erroneous, and the district court’s
denial of leave to amend was not an abuse of discretion. See
Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609
(9th Cir. 1992) (explaining that if party seeking amendment
“was not diligent, the inquiry should end”). 8

                          CONCLUSION

    Ultimately, DRK failed to demonstrate or otherwise
create a genuine dispute of material fact whether it is a legal
or beneficial owner of any exclusive right under the
copyrights at issue. Accordingly, DRK failed to meet the
standing requirements of section 501(b), and summary
judgment in favor of the defendants was warranted. Further,
the district court’s determination that DRK failed to exercise
reasonable diligence in seeking leave to amend its complaint
was not erroneous, and thus, it was not an abuse of discretion
to deny DRK’s motion for leave to amend.

     AFFIRMED.

     8
      Nor did the district court err by denying DRK’s request to join the
three photographers under FRCP 17(a). See Commonwealth of Pa. Pub.
Sch. Emps.’ Ret. Sys. v. Morgan Stanley & Co., Inc., 814 F.3d 641, 643
(2d Cir. 2016) (affirming denial of FRCP 17 motion as untimely where
the plaintiff waited until after the court granted summary judgment to
defendants on standing grounds to seek joinder of additional plaintiffs
even though the standing issue was raised in the defendants’ pleadings
more than one year earlier).
               DRK PHOTO V. MCGRAW-HILL                     23

BERZON, Circuit Judge, concurring:

    As the main opinion explains, under Silvers v. Sony
Pictures Entertainment, Inc., 402 F.3d 881 (9th Cir. 2005),
the transfer of the right to sue to a nonowner or nonexclusive
licensee of a copyright right can never confer standing to sue
for a copyright violation, no matter the relationship of the
transferee to the copyrighted material. Main Op. at 14–15.
I write separately to reiterate my view that Silvers was
wrongly decided. In Silvers, I would have concluded that
Nancey Silvers, the creator of the copyrighted work, had an
interest in infringement sufficient to confer standing. By the
same logic, I would conclude that DRK photo has an interest
in infringement sufficient to confer standing to pursue the
causes of action here at issue. Because Silvers remains
controlling, however, I am compelled to agree with the
majority’s determination that DRK Photo lacks standing.

     Section 501(b) provides that “[t]he legal or beneficial
owner of an exclusive right under a copyright is entitled . . .
to institute an action for any infringement of that particular
right committed while he or she is the owner of it.”
17 U.S.C. § 501(b). That provision, in my view, should not
be read to exclude categorically any party not the “legal or
beneficial owner” from bringing an infringement claim, even
if the legal or beneficial owner authorizes that party to sue
and even if that party has an independent interest in
enforcing the copyright other than assignment of the right to
sue.

    The Silvers majority impliedly recognized that the
limitation on an owner of a copyright bringing suit “while he
or she is the owner of it” should be read pragmatically. It
acknowledged that a copyright owner may pursue claims
accrued before he or she acquired the copyright. Permitting
the new owner to sue for accrued claims “makes . . . sense”
24             DRK PHOTO V. MCGRAW-HILL

because “[w]hen one acquires a copyright that has been
infringed, one is acquiring a copyright whose value has been
impaired,” and “[c]onsequently, to receive maximum value
for the impaired copyright, one must also convey the right to
recover the value of the impairment by instituting a
copyright action.” Silvers, 402 F.3d at 890 n.1. A
construction of § 501(b) that allows an accrued cause of
action to transfer when copyright ownership transfers cannot
be reconciled with a construction that always precludes
assignment of the right to sue to any party not the legal or
beneficial owner.

      As my dissent in Silvers explained, I believe the question
whether copyright claims are assignable should be similarly
informed by the overall purpose of the Copyright Act. Id. at
893 (Berzon, J., dissenting). The issue in Silvers was
whether an author of a script could bring an action for
infringement when the work was created as a work-for-hire
such that the author did not own the copyright. Disagreeing
both with the majority’s conclusion that only the present
legal or beneficial copyright owner has standing to bring a
claim, and with Judge Bea’s assertion in a separate dissent
that there ought to be “an entirely free market for accrued
causes of action in copyright,” id. at 891 (Berzon, J.,
dissenting) (citing id. at 905 (Bea, J., dissenting)), I proposed
that we chart a middle course. As I wrote, “I would hold that
Silvers, given her status as the original creator of the
contested ‘work-for-hire,’ may pursue the accrued claims
assigned by Frank & Bob Films, while a complete stranger
. . . could not.” Id.

    In other contexts, this circuit looks to “the general goal
of the statute” in deciding whether to recognize assignment
of claims created by federal statute. Misic v. Bldg. Serv.
Emps. Health & Welfare Trust, 789 F.2d 1374, 1377 (9th
               DRK PHOTO V. MCGRAW-HILL                     25

Cir. 1986) (per curiam). For example, in the ERISA context,
we permit a health care provider, assigned accrued causes of
action for health welfare benefits by patients, to pursue
reimbursement claims, notwithstanding a statutory provision
identifying only “participants, beneficiaries, fiduciaries, and
the Secretary of Labor” as having standing. Id. at 1378
(citing 29 U.S.C. § 1132(a)); see Silvers, 402 F.3d at 892–93
(Berzon, J., dissenting). Derivative standing for the health
care providers, we determined, was “consistent with
Congressional intent.” Simon v. Value Behavioral Health,
Inc., 208 F.3d 1073, 1081 (9th Cir. 2000). We do not,
however, allow “health care providers to whom the
beneficiaries originally assigned their claims” to reassign
claims; doing so would “allow third parties with no
relationship to the beneficiary to acquire claims solely for
the purpose of litigating them” and be “tantamount to
transforming health benefit claims into a freely tradable
commodity.” Id.

    Applying that logic to the assignability of a copyright
claim in Silvers, I maintained that “the relevant inquiry is
whether recognition of the assignment to Silvers is
consistent with Congress’ overall intent in enacting the 1976
Copyright Act.” 402 F.3d at 893 (Berzon, J., dissenting).
Based on the fact that Silvers had “a significant interest” in
“how her work was used,” I would have concluded that
assignment was, in that case, consistent with the
congressional purpose. Id. at 893–94.

    In my view, DRK Photo, as the agency authorized to
license photographs on behalf of the photographers, has a
significant interest in the way the photographs it licenses are
used that should be sufficient to confer standing. That
interest arises not merely from the photographers’ grant of
the right to sue, but from DRK Photo’s position as the
26             DRK PHOTO V. MCGRAW-HILL

licensing agent. The licenses in question were issued to
McGraw-Hill by DRK, not by the individual photographers.
And DRK negotiated with McGraw-Hill to determine the
parameters of the permitted use, including the number of
copies, geographic distribution area, language, and
electronic use. Further, DRK received a portion of the
royalties paid by McGraw-Hill.

    In contrast to patent law, the primary purpose of which
is to encourage invention and innovation, the goal of the
copyright system is to encourage the publication and
dissemination of copyrighted works: “For the author seeking
copyright protection, . . . disclosure is the desired objective.”
Eldred v. Ashcroft, 537 U.S. 186, 216 (2003). By serving as
a licensing agent, DRK Photo promoted that objective of
disclosure and so was not “a complete stranger,” Silvers,
402 F.3d at 891 (Berzon, J., dissenting), to the process of
“creation and publication of free expression,” Eldred,
537 U.S. at 219.

    Under the pragmatic approach to the assignability of
infringement claims that I continue to favor, I would find
that DRK Photo could validly bring suit against McGraw-
Hill. That approach would “remove what would otherwise
be a significant practical disadvantage in seeking to protect
a copyrighted work”: Given “the expenses of litigation” and
“the burdens of coordination,” photographers may be
reluctant “to bring suit individually, either in individual
actions or in a single suit under Federal Rule of Civil
Procedure 20.” Minden Pictures, Inc. v. John Wiley & Sons,
Inc., 795 F.3d 997, 1005 (9th Cir. 2015).

    For now, however, Silvers’ prohibition on assignment of
claims to any party other than the “legal or beneficial owner”
controls. Because I concur with the main opinion’s
determination that DRK Photo is not the legal or beneficial
             DRK PHOTO V. MCGRAW-HILL               27

owner, I must conclude that DRK Photo lacks standing to
bring these claims.