IP Law Daily, COPYRIGHT—N.D. Cal.: Agreements did not give photo agency standing to sue publisher on behalf of photographers, (Jan 29, 2014)

By Thomas Long, J.D.

Stock photography agency Minden Pictures, Inc. (“Minden”) lacked standing under the Copyright Act to bring infringement claims, on behalf of various photographers, against educational publisher John Wiley & Sons (“Wiley”) for exceeding usage restrictions in licensing agreements, the federal district court in San Francisco has ruled (Minden Pictures, Inc. v. John Wiley & Sons, Inc., January 27, 2014, Chen, E.). Agency agreements between Minden and the photographers who created the works at issue did not give Minden standing to sue for infringement.

Minden licensed various photographs to Wiley, using licensing agreements that placed limits on the number of reproductions, distribution area, language, duration, and/or media in which Wiley was permitted to reproduce the images. Minden brought claims of copyright infringement, alleging that Wiley exceeded the limits of the licensing agreements and used the photographs for unlicensed purposes.

In an earlier decision, the court determined that Minden was collaterally estopped from asserting standing based on its copyright assignment agreements with the photographers based on a ruling in another dispute between Minden and a different publisher. However, at that time the court allowed the parties to conduct discovery on the question of whether Minden had standing to sue for infringement based on agency agreements between Minden and the 37 photographers whose works were at issue. The court now considered the parties’ cross-motions for summary judgment as to Minden’s standing.

Agency agreements. The agency agreements granted Minden the power to issue licenses to third parties to use and display the photographer’s images. The agreements generally defined licensing “as the marketing, grant, lease, sale, use or other exploitation of reproduction rights to an Image or any derivative rights thereof. The agreements specifically did not provide for Minden to engage in “royalty free” licensing of images. The agency agreements also gave Minden the authority to use the images directly for promotional purposes, without compensation to the photographer. Further, Minden was given the “unrestricted right and sole discretion to make Duplicates of any Images” as “required to distribute Images.” However, copyright ownership of the duplicates was expressly stated to “remain with the Photographer” and, if the Photographer so requested, Minden was obligated to destroy the duplicates at the termination of the agreement.

Each agreement included limitations on Minden’s ability to issue licenses, such as limitations regarding grants of rights in perpetuity, licenses for the “limited or unlimited edition photographic prints other than for museum display,” and use of images in books “of which greater than 50% of the total are by Photographer.” In addition, the agreements, to varying degrees, provided that the photographers retained the right to use—and license others to use—the images.

Finally, all of the agreements specifically provided that the photographers will retain ownership of the copyright in the images covered by the agreements.

Standing. Under Sec. 501 of the Copyright Act, only the “legal or beneficial owners of an exclusive right under a copyright is entitled, subject to the requirements of section 411, to institute an action for any infringement of that particular right committed while he or she is the owners of it.” The exclusive rights, the ownership of which confers standing to pursue a copyright infringement action, are articulated in Sec. 106 and include the rights to reproduce, to prepare derivative works, to distribute, to publicly perform, to publicly display, and to perform sound recordings via digital audio transmissions.

Section 501 granted standing to any legal or beneficial owner of “an exclusive right,” the court noted. These rights could be “unbundled” and owned or licensed separately, and each separate owner of a subdivided exclusive right had standing to sue to enforce that owned portion of an exclusive right.

Minden argued that the agency agreements gave it standing to sue because they conveyed co-ownership interests in Sec. 106 exclusive rights. Specifically, Minden claimed that the agreements “conveyed to Minden the rights to do, and to authorize, the following: to reproduce the copyrighted works in copies; to distribute copies of the work to the public; and to display the work publically.”

The court disagreed. The agency agreements did not make Minden a legal or beneficial owner of any exclusive right under the Copyright Act, the court said. Therefore, Minden lacked standing to pursue this action.

First, the agency agreements expressly stated that the photographs shall “remain the sole and exclusive property of the Photographer, including the copyright.” This was evidence that the parties did not intend the agency agreements to convey to Minden any ownership interest in the copyright, the court said.

Second, Minden was not an exclusive licensee under the agency agreements. Therefore, Minden could not claim an ownership interest under the agreements.

Third, the agency agreements did not convey to Minden any co-ownership interest in a Sec. 106 exclusive right. Conceding that it was not an exclusive licensee, Minden relied on its power to issue licenses under the agency agreement as evidence that the agency agreements conveyed an ownership interest. However, the court concluded, taking the agency agreement as a whole, the agency agreement did not convey to Minden an ownership interest in any Sec. 106 exclusive right.

Minden argued that only a copyright owner or co-owner can have the power to issue licenses or otherwise authorize third parties to exploit a copyrighted work. This was incorrect, the court said. Even a non-exclusive licensee could issue sublicenses authorizing a third party to exploit a copyrighted work if expressly authorized to do so by the copyright owner. Accordingly, the fact that the agency agreements authorized Minden to issue licenses to third parties did not establish Minden as a co-owner of the copyrights in those images.

Moreover, a number of courts have found that licensing agents are neither legal nor beneficial owners of a copyright. See, for example, Bourne Co. v. Hunter Country Club, Inc., 990 F.2d 934, 937 (7th Cir. 1993). Some courts have refused to find standing under the Copyright Act even where the plaintiff appeared to be the exclusive licensing agent, the court noted. Therefore, the court found that the power to issue non-exclusive licenses authorizing third parties to exploit a copyright was not itself an exclusive right under Sec. 106.

Even if an exclusive right to issue licenses as an exclusive licensing agent were sufficient to confer ownership, Minden had no such exclusive right. Minden conceded that it lacked the sole right to issue licenses, or to distribute, use, or otherwise exploit the images in question; Minden acknowledged that the photographers retained the rights to issue their own licenses.

To the extent that Minden argued it was, in effect, a co-owner of an exclusive right in the works, that argument also failed, the court said. In order to be considered a co-owner of an exclusive right, Minden would have to be, in some manner, similarly situated with respect to the photographers that owned the copyrights; that is, Minden would have to have an independent and equivalent power to exercise its rights in the agency agreements. Minden failed to establish that the agency agreements conferred upon it such independent and equivalent rights, the court stated. The photographers retained numerous important rights and control over Minden. In the court’s view, Minden simply failed to demonstrate that the provisions of the agency agreement did anything more than create a non-exclusive license.

Section 501 of the Copyright Act conferred standing on a “beneficial owner” of an exclusive right. The Act did not define what makes an individual the “beneficial owner” of a copyright, although legislative history provided one example: an author who had parted with legal title to the copyright in exchange for percentage royalties based on sales or license fees. District courts in the Ninth Circuit have narrowly defined “beneficial owner” as being only an individual who had legal title and parted with it in exchange for royalties, the court noted. Taking this narrow approach, the court found that Minden was not a “beneficial owner” in the images, since it was not nor had it been a legal owner of the copyrighted works.

The court therefore concluded that Minden lacked standing to pursue this action, and accordingly granted Wiley’s motion for summary judgment. The ruling did not bar the photographers themselves from suing Wiley on the same claims.

The case is No. C-12-4601 EMC.

Attorneys: Alexander Rice Kerr (Harmon and Seidman LLC) for Minden Pictures, Inc. Christopher Beall (Levine Sullivan Koch and Schulz, LLP) for John Wiley & Sons, Inc.

Companies: Minden Pictures, Inc.; John Wiley & Sons, Inc.

Cases: Copyright CaliforniaNews