Photo v. Mcgraw-Hill Global Educ. Holdings, LLC
| Decision Date | 12 September 2017 |
| Docket Number | No. 15-15106.,15-15106. |
| Citation | 870 F.3d 978 |
| Parties | DRK PHOTO, a sole proprietorship, Plaintiff-Appellant, v. MCGRAW-HILL GLOBAL EDUCATION HOLDINGS, LLC; McGraw-Hill School Education Holdings, LLC, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
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.
Before: Michael Daly Hawkins, Marsha S. Berzon, and Mary H. Murguia, Circuit Judges
OPINION
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 the denial of DRK's motion to modify the scheduling order for leave to amend its complaint.
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
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 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 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.
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 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.
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).
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." Min...
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