Bagdadi v. Nazar, 94-56588

• Decision Date: 29 May 1996
• Docket Number: No. 94-56588,94-56588
• Parties: , 1996 Copr.L.Dec. P 27,533, 109 Ed. Law Rep. 1094, 38 U.S.P.Q.2d 1900, 96 Cal. Daily Op. Serv. 3776, 96 Daily Journal D.A.R. 6143 Henri BAGDADI, d.b.a. Languavision, Plaintiff-Appellant, v. Jose NAZAR; Hispanic-American Educational Materials, Inc., d.b.a. Lexicon School of Languages; Lexicon Institute, Inc.; Lexicon Sales Corp.; Linguex, USA, a Colorado corporation; Linguex International Limited, a British Virgin Islands corporation; and Linguex Washington DC, a District of Columbia joint venture, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1194

84 F.3d 1194

65 USLW 2027, 1996 Copr.L.Dec. P 27,533,

109 Ed. Law Rep. 1094,

38 U.S.P.Q.2d 1900, 96 Cal. Daily Op. Serv. 3776,

96 Daily Journal D.A.R. 6143

Henri BAGDADI, d.b.a. Languavision, Plaintiff-Appellant, v. Jose NAZAR; Hispanic-American Educational Materials, Inc., d.b.a. Lexicon School of Languages; Lexicon Institute,

Inc.; Lexicon Sales Corp.; Linguex, USA, a Colorado

corporation; Linguex International Limited, a British

Virgin Islands corporation; and Linguex Washington DC, a

District of Columbia joint venture, Defendants-Appellees.

No. 94-56588.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 8, 1996.

Decided May 29, 1996.

Richard E. Posell, Greenberg, Glusker, Fields, Claman & Machtinger, Los Angeles, California, for plaintiff-appellant.

James C. Potepan, Cooper, Kardaras & Scharf, Pasadena, California, for defendant-appellees Nazar, Hispanic American Educational Materials, Inc., d.b.a Lexicon School of Languages: ISB of America, Inc., ISB of Texas, Inc., Lexicon Institute, Inc., Lexicon Sales Corp., Lexicon Service Corp.

Vincent M. O'Brien, Rankin, Luckhardt, Vandeweghe, Landsness & Lahde, San Jose, California, for defendant-appellee Linguex.

Appeal from the United States District Court for the Central District of California, A. Wallace Tashima, District Judge, Presiding. D.C. No. CV-94-378-AWT(CT).

Before O'SCANNLAIN and TROTT, Circuit Judges, and VAN SICKLE, District Judge. ^*

TROTT, Circuit Judge:

OVERVIEW

Appellant Henri Bagdadi (Bagdadi) appeals the district court's grant of summary judgment in favor of Defendants Jose Nazar (Nazar) ¹ and Linguex ² in his action for copyright infringement. The district court granted Nazar's motion for summary judgment and sua sponte granted summary judgment for Linguex. The court concluded that Defendants were entitled to an absolute defense as "innocent infringers" pursuant to section 406(a) of the Copyright Act of 1976. We affirm summary judgment as to Defendant Nazar and reverse the sua sponte grant of summary judgment as to Defendant Linguex.

FACTS

In 1983, Bagdadi contracted with Linguex to produce a series of language instruction videos. Linguex was opening language instruction schools and wanted Bagdadi to make an audio-visual program for use by instructors. The project included the video "English I," which is the subject of this dispute. On the "English I" video, Bagdadi placed the Linguex Company logo and a notice reading "Copyright 1984 by Linguex International Limited, All Rights Reserved." He also included graphics crediting himself as the writer, director, and producer of the video. Neither Bagdadi nor Linguex registered a copyright for the video when it was created.

Bagdadi and Linguex agree that at the time they contracted, they intended that Linguex would use the video for classroom use only. The video was formatted for a classroom setting, requiring a teacher. After the video was completed, Linguex sent Bagdadi a copyright release form, but Bagdadi objected to it and sent it back with changes. The copyright matter was never resolved, and no copyright transfer has surfaced.

In the fall of 1988, Linguex sold approximately 400 copies of the "English I" video to a different language instruction school, the Lexicon School, for inclusion in a 12-cassette series known as "Ingles Sin Barreras." In October 1988, Bagdadi coincidentally visited the Lexicon School. The school was operated by Defendant Jose Nazar, and Bagdadi was considering buying the school. While in the lobby of the school, Bagdadi saw a video monitor playing "English I," and he told Nazar that he had made the video. Bagdadi claims that no one at Lexicon School told him that "English I" was being offered for sale, and that he did not see any ads or displays indicating that it was for sale. Nazar never asked Bagdadi any questions about the rights to the video. In a letter following his meeting with Nazar, Bagdadi commented on the display of the video, but he did not protest its use. Nazar states that the video was for sale, but Bagdadi claims that he thought the video was being used for classroom use and he did not recognize it as part of a sales display.

In January 1989, Linguex entered into a licensing agreement with Nazar to authorize the reproduction and sale of the "English I" video. In July 1993, Bagdadi saw a television infomercial on "Ingles Sin Barreras" and recognized a clip from "English I." Bagdadi first notified Nazar of his objection to their use of the video on October 27, 1993. On December 22, 1993, Bagdadi obtained a copyright registration for "English I."

On January 18, 1994, Bagdadi filed this action. Nazar moved for summary judgment, claiming to be an "innocent infringer," as the term is used in section 406(a) of the Copyright Act. Defendants American Top English, Inc. and National Education Systems joined in Nazar's motion. The district court granted summary judgment in favor of those Defendants, and then granted summary judgment sua sponte to Defendant Linguex.

STANDARD OF REVIEW

A grant of summary judgment is reviewed de novo. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir.1995), cert. denied, --- U.S. ----, 116 S.Ct. 1261, 134 L.Ed.2d 209 (1996). The appellate court must determine, viewing the evidence in the light most favorable to the nonmoving party, whether genuine issues of material fact exist and whether the district court correctly applied the relevant substantive law. Id. at 441.

DISCUSSION

This action is governed by the Copyright Act of 1976 because the work in question was created after January 1, 1978, and it involves "an original work[ ] of authorship fixed in [a] tangible medium of expression ... from which [it] can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device." 17 U.S.C. § 102(a); see 17 U.S.C. § 301(a)(exclusive rights within general scope of copyright governed exclusively by this title). Copyright "vests initially in the author or authors of the work." 17 U.S.C. § 201(a).

For purposes of the motion for summary judgment, this court must assume, as the district court did, that Bagdadi "owned" the copyright and that he did not transfer ownership of the copyright to Linguex. Bagdadi claims that his exclusive license to Linguex granted only the right to use the video for classroom use. It is important to note that the various rights ³ included in a copyright are divisible and that "any of the exclusive rights comprised in a copyright ... may be transferred ... and owned separately." 17 U.S.C. § 201(d)(2). An exclusive licensee owns separately only the "exclusive rights comprised in the copyright" that are the subject of his license. Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 10.02[C] (1995) [Nimmer on Copyright ].

Defendants claim that, even assuming Bagdadi's ownership of the copyright, they were entitled to summary judgment based on an absolute defense of innocent infringement under section 406(a) of the Copyright Act. Section 406(a) states:

With respect to copies ... publicly distributed by authority of the copyright owner ..., where the person named in the copyright notice on copies ... publicly distributed by authority of the copyright owner is not the owner of the copyright, the validity and ownership of the copyright are not affected. In such a case, however, any person who innocently begins an undertaking that infringes the copyright has a complete defense to any action for such infringement if such person proves that he or she was misled by the notice and began the undertaking in good faith under a purported transfer or license from the person named therein, unless before the undertaking was begun--

1) registration for the work had been made in the name of the owner of copyright; or

2) a document executed by the person named in the notice and showing the ownership of the copyright had been recorded.

The person named in the notice is liable to account to the copyright owner for all receipts from transfers or licenses purportedly made under the copyright by the person named in the notice.

17 U.S.C. § 406(a).

Bagdadi argues that the innocent infringer defense is not applicable to Defendant Nazar because: 1) the work was not "publicly distributed"; 2) even if the initial distribution of the work was publicly distributed with Bagdadi's authority, the copy Nazar relied on was not distributed with Bagdadi's authority; and 3) Nazar did not act in good faith. Bagdadi also contends that the district court erred in granting summary judgment sua sponte for Linguex.

I

"Public Distribution" of English I

The first question before this court is whether Bagdadi "publicly distributed" the "English I" video when he provided it to Linguex for use in classrooms. "Publicly distributed" is not defined in the Copyright Act, but the parties agree that its definition is equated with "publication." Publication is defined as:

[T]he distribution of copies ... of a work to the public by sale or other transfer of ownership, or by rental, lease, or lending. The offering to distribute copies ... to a group of persons for purposes of further distribution, public performance, or public display, constitutes publication. A public performance or display of work does not of itself constitute publication.

17 U.S.C. § 101.

Bagdadi argues that Bagdadi's initial distribution of "English I" to Linguex was not a public distribution because it was not offered to a "group of persons for purpose of ... public performance." Bagdadi reasons that his distribution to Linguex was a distribution to a single entity, not to a group. He contends that there is no authority supporting the proposition that employees of a single corporate distributee constitute a "group" within the meaning of the statute. He argues that the fact that the school is comprised of multiple people does not change the fact that the distribution was to a single entity.

Defen...