Spinelli v. Nat'l Football League

Decision Date11 September 2018
Docket NumberNo. 17-0673-cv,August Term, 2017,17-0673-cv
Citation903 F.3d 185
Parties Paul SPINELLI, Scott Boehm, Paul Jasienski, George Newman Lowrance, David Stluka, David Drapkin, Thomas E. Witte, Plaintiffs-Appellants, v. NATIONAL FOOTBALL LEAGUE, NFL Ventures, L.P., NFL Productions, L.L.C., NFL Enterprises, L.L.C., Replay Photos, L.L.C., Associated Press, NFL Properties, LLC, Arizona Cardinals Holdings, Inc., Atlanta Falcons Football Club LLC, Baltimore Ravens Limited Partnership, Buffalo Bills, Inc., Panthers Football, Inc., Chicago Bears Football Club, Inc., Cincinnati Bengals, Inc., Cleveland Browns LLC, Dallas Cowboys Football Club, Ltd., Denver Broncos Football Club, Detroit Lions, Inc., Green Bay Packers, Inc., Houston NFL Holdings LP, Indianapolis Colts, Inc., JacksonvilleJaguars Ltd., Kansas City Chiefs Football Club, Inc., Miami Dolphins, Ltd., Minnesota Vikings Football Club LLC, New England Patriots, LP, New Orleans Louisiana Saints, LLC, New York Football Giants, Inc., New York Jets Football Club, Inc., Oakland Raiders LP, Philadelphia Eagles Football Club, Inc., Pittsburgh Steelers Sports, Inc., San Diego Chargers Football Co., San Francisco Forty Niners Ltd., Football Northwest LLC, Rams Football Co. LLC, Buccaneers Limited Partnership, Tennessee Football, Inc., Washington Football Inc., Defendants-appellees, Getty Images (US), Inc., Defendant.
CourtU.S. Court of Appeals — Second Circuit

Kevin P. McCulloch (Nathaniel Kleinman, on the brief ), The McCulloch Law Firm PPLC, New York, NY; William P. Ferranti, The Ferranti Firm LLC, Portland, OR, for Plaintiffs-Appellants.

Andrew L. Deutsch (Tammy Y. Duvdevani, on the brief ), DLA Piper LLP, New York, NY; Jura C. Zibas, Wilson Elser Moskowitz, Edelman & Dicker LLP, New York, NY, for Defendants-Appellees Associated Press and Replay Photos, LLC.

Jeffrey A. Mishkin (Anthony J. Dreyer, Karen Hoffman Lent, Jordan A. Feirman, on the brief ), Skadden, Arps, Slate, Meagher & Flom LLP, New York, NY, for Defendants-Appellees National Football League, NFL Ventures, L.P., NFL Productions, L.L.C., NFL Enterprises, L.L.C., NFL Properties, LLC, Arizona Cardinals Holdings, Inc., Atlanta Falcons Football Club LLC, Baltimore Ravens Limited Partnership, Buffalo Bills, Inc., Panthers Football, Inc., Chicago Bears Football Club, Inc., Cincinnati Bengals, Inc., Cleveland Browns LLC, Dallas Cowboys Football Club, Ltd., Denver Broncos Football Club, Detroit Lions, Inc., Green Bay Packers, Inc., Houston NFL Holdings LP, Indianapolis Colts, Inc., JacksonvilleJaguars LTD., Kansas City Chiefs Football Club, Inc., Miami Dolphins, Ltd., Minnesota Vikings Football Club LLC, New England Patriots, LP, New Orleans Louisiana Saints, LLC, New York Football Giants, Inc., New York Jets Football Club, Inc., Oakland Raiders LP, Philadelphia Eagles Football Club, Inc., Pittsburgh Steelers Sports, Inc., San Diego Chargers Football Co., San Francisco Forty Niners LTD., Football Northwest LLC, Rams Football Co. LLC, Buccaneers Limited Partnership, Tennessee Football, Inc., and Washington Football Inc.

Before: Lynch and Droney, Circuit Judges, and Sessions, District Judge.*

Gerard E. Lynch, Circuit Judge:

Plaintiffs-Appellants are seven sports photographers who make a living taking and licensing photographs of NFL events. Defendants-Appellees are the National Football League, various other league entities, and its 32 constituent teams (collectively, "the NFL"); the Associated Press ("AP"), which licenses NFL event photographs for commercial and editorial uses; and Replay Photos, LLC, which sells NFL photographs through an online store. Through this lawsuit, Plaintiffs seek to recover damages on copyright, contract, and tort theories of liability after the NFL and Replay Photos, with AP’s permission, allegedly exploited thousands of Plaintiffs’ photographs without a license and without compensating Plaintiffs in any way. Plaintiffs also bring an antitrust challenge, alleging that the NFL and AP conspired to restrain trade in the market for commercial licenses of NFL event photographs.

The United States District Court for the Southern District of New York (Robert W. Sweet, J. ) dismissed all of the claims at issue here for failure to state a claim. For the reasons that follow, we AFFIRM IN PART, VACATE IN PART, and REMAND for further proceedings.

BACKGROUND
I. The Relationships Between the Parties

Beginning in 2003, the NFL began to outsource the licensing of its pooled intellectual property (e.g. , league and team logos) to outside agencies. From 2007 to 2009, Getty Images (US), Inc., served as the NFL’s exclusive licensing agent.1 From March 2009 to present, the NFL’s exclusive licensing agent has been AP.

The agreement that the NFL reached with AP in 2009 (the "2009 AP-NFL agreement") was relatively straightforward. As relevant here, AP became the exclusive agent for and distributor of commercial licenses for photographs that contain NFL intellectual property, and guaranteed the NFL a share of the royalty revenue that it received. AP also granted the NFL a broad complimentary license for "AP-Owned Photos" of NFL events, i.e. , photos for which AP owned the copyright. It did not grant such a license for "AP-Contributor Photos," i.e. , photos that AP had the right to license, but in which a photographer not employed by AP owned the copyright.

AP and the NFL entered a renewed agreement in April 2012 (the "2012 AP-NFL agreement"). Although the structure of the AP-NFL relationship remained largely the same, the new agreement departed from the prior agreement in at least one significant way: it expanded the complimentary license granted to the NFL to cover photographs owned by non-AP contributing photographers. The new license provision provided as follows:

AP grants the NFL Entities ... the right (for no additional payment or fee) to make Editorial use and/or marketing and charitable uses of AP-Owned Photos, Pre-Existing AP-Owned Photos and AP-Contributor Photos .... [The] Scope of Use may include ... NFL or Member Club driven marketing initiatives, NFL or Member Club publishing, catalog or entertainment projects (including, but not limited to magazines, game programs, DVDs, and books whether produced by NFL Entities or in conjunction with third parties) ... press releases, media guides, game tickets, Member Club season ticket brochures, Member Club wall décor, and the NFL and Member Club websites, profootballhof.com and any other NFL or Member Club owned or controlled website or mobile offerings. ... AP has or will promptly secure the rights from AP Contributors for the NFL Entities royalty-free use of AP-Contributor Photos within the Scope of Use as of April 1, 2009 ....

C.J.A. 74–75.2

Because photographs of NFL events inevitably contain NFL trademarks, commercial exploitation of such photos requires a license from the NFL. In serving as the exclusive licensing agent for the NFL marks, AP became the gateway to the commercial NFL photography market for professional sports photographers like Plaintiffs who wish to shoot NFL events.

Plaintiffs, therefore, entered into "contributor agreements" with AP in order to secure access to NFL events and obtain licenses for the intellectual property contained in the photographs taken at those events. Under their contributor agreements, Plaintiffs agreed to provide their "Best Cut Photos" from each of the events they covered, and AP agreed to use commercially reasonably efforts to accept as many of Plaintiffs’ photographs as possible for inclusion in its stock photo database. Plaintiffs retained "all right, title and interest in and to" each of the photographs accepted by AP, as well as the right to sue for infringement, J.A. 923, 925, but granted AP a broad license as follows:

Photographer hereby provides to AP a perpetual, irrevocable, transferable, worldwide, right and license to reproduce, edit, translate the caption of, prepare derivative works of, publicly perform, publicly display, load into computer memory, cache, store and otherwise use the Final Photos and to transfer or sublicense these rights to other entities. With respect to NFL Event Photos taken at NFL Events for which AP directly or indirectly arranges for Photographer to obtain a credential, the foregoing rights shall be exclusive for so long as the NFL (or one of its affiliates) confers to AP (or one of its affiliates) the exclusive rights to operate as an NFL commercial use licensing agent, and nonexclusive thereafter. With respect to all other Event Photos and the Archival Event Photos, the foregoing rights shall be non-exclusive. AP shall present the Final Photos through AP’s image database currently known as "AP Images" (the "AP Images Platform") and other image databases at AP’s discretion.

J.A. 923.3

In turn, AP agreed to pay royalties for certain uses of Plaintiffs’ works. The provision covering royalties reads as follows:

In exchange for the license granted in Section 4, AP shall provide to Photographer on qualifying Event Photo Sales (as defined below), the greater of (a) a royalty equal to the Applicable Percentage (as defined in Section 5.2) of Net Revenue (as defined below), and (b) a royalty equal [to] twenty-five dollars ($25.00) per Final Photo (each of (a) and (b), "Royalties").... For purposes of this agreement, "Event Photo Sales" shall mean only the a la carte sale of licenses for Event Photos through AP’s online database service, currently known as "AP Images." A la carte sales shall mean the sale of licenses for individual photos for which a per-image price is established. No Royalties or other compensation shall be due to Photographer for the downloading of "preview" or "thumbnail" or other promotional or browse-quality images. For the purposes of this Agreement, "Net Revenue" shall mean all cash actually collected by AP from the sale of copies of a particular Event Photo, less sales commission. ... It is understood that AP may offer the Event Photos for a la carte sale at
...

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