Grant Heilman Photography, Inc. v. McGraw-Hill Cos.
| Decision Date | 26 June 2014 |
| Docket Number | Civil Action No. 12–2061. |
| Citation | 28 F.Supp.3d 399 |
| Parties | GRANT HEILMAN PHOTOGRAPHY, INC., Plaintiff, v. The McGRAW–HILL COMPANIES, INC., and John Does Printers 1–10, Defendants. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Amanda Leigh Bruss, Harmon & Seidman LLC, Aurora, CO, Autumn Witt Boyd, Chattanooga, TN, Jennifer M. Johnson, Arvada, CO, Maurice Harmon, Harmon & Seidman LLC, New Hope, PA, for Plaintiff.
Michael Beylkin, Levine Sullivan Koch & Schulz LLP, Denver, CO, for Defendants.
MEMORANDUM RE: MOTION FOR PARTIAL SUMMARY JUDGMENT
Prior to a bellwether trial of copyright infringement claims brought by a stock photography agency against a publishing company, Plaintiff moves for partial summary judgment on its infringement claims and several of the Defendants' affirmative defenses.
On April 18, 2012 Plaintiff filed a complaint for 2,395 instances of copyright infringement. On August 31, 2012, Defendants moved for summary judgment based on the statute of limitations (ECF 12), which this Court denied (ECF 28). Defendants then moved to bifurcate the litigation into two stages, first to consider the statute of limitations, and a second stage to determine liability and damages (ECF 29). This Court then ordered a bifurcated trial based on twenty-four invoices selected by Plaintiff and six invoices selected by Defendants (ECF 36). Plaintiff filed a motion for partial summary judgment on April 28, 2014, which is presently before the Court (ECF 104). Plaintiff seek summary judgment on claims of copyright infringement for the use of 57 images and on the following affirmative defenses Defendants asserted in their Answer: statute of limitations; lack of standing; copyright registrations are invalid or unenforceable; claims are barred by licensing or consent; claims are barred by acquiescence, novation or satisfaction;1 claims are barred by laches, estoppel or unclean hands;2 and failure to mitigate3 (ECF 104).
On June 11, 2014, this Court heard oral argument on the motion for summary judgment. (ECF 121). Plaintiff subsequently submitted a letter brief on June 16, 2014 arguing that courts can disregard testimony on the parties' course of dealing when it contradicts the express terms of an unambiguous contract. Defendants submitted a letter brief on June 17, 2014 responding to the cases Plaintiff submitted, and noting they could find no cases where the Third Circuit held the course of dealing altered the terms of a copyright license.
Plaintiff is a company that licenses stock image photographs. Defendants are McGraw Hill Companies and associated corporate entities that produce textbooks. Plaintiff alleges 2,395 instances of copyright infringement against Defendants, based on 594 invoices (ECF 1). Plaintiff contends it granted limited licenses clearly defining the use permissions granted, and that Defendants exceeded the use granted for each of the images alleged.
Plaintiff issued Defendants thousands of licenses to use its photographs in publications between 1995 and 2011. In 2003, the parties entered into a Preferred Vendor Agreement (PVA), which established pricing for each kind of licensing. Pl's Ex. H. The agreement is a single page, comprised of a chart with pricing based on the size of the image and the number of copies. Pl's Ex. H. The terms specify that the base rate includes only the English language, distribution in the United States and 15% of World distribution, and gratis ancillaries provided to teachers. Pl's Ex. H. The PVA specified the additional fees for additional languages, World distribution, re-licensing for new editions, and limits the total number of prints to 500,000. Pl's Ex. H.
Each invoice for the images specified the number of copies, geographic distribution, language, duration or number of editions, and media the images could be used. Pl's Ex. E. Term and Conditions were printed on the back of each invoice. Salient language includes the following:
Upon submission of and payment of an invoice for GHP, a license only is granted to use the images for the use specified on the invoice and for no other purpose, unless such images are purchased outright. Such use is granted for the United States only, and only for a one-year period, unless otherwise specified.... If Recipient desires to re-use an image or extend previous usage, then Recipient must request and pay for additional rights prior to publication. You agree not to make, authorize or permit any use of an image ... except as authorized by the invoice. In the event you utilize an image for any use other than that indicated on the invoice, including but not limited to the number of uses, the publication utilized, or the size of reproductions, GHP agrees to forego its right to sue for copyright infringement if you pay, as liquidated damages, a sum equal to ten (10) times the maximum price we would have charged for such use ... If you fail to make such payment in ten (10) days, we shall have the right to sue for copyright infringement and breach of contract.
Pl's Ex. E.
The record reflects four instances where Defendants do not dispute that they used the images beyond the terms of the invoices. The first instance in the record began with a letter dated April 8, 1999 from an attorney for the Picture Agency Council of America (PACA), Nancy Wolff. Def's Ex. 18. Wolff wrote to the director of the Glencoe division of McGraw Hill that in licensing images for the 2000 edition4 of a biology text, members of the trade association discovered that no license was granted for any of the images in the 1998 edition of the text. Def's Ex. 18. Wolff explained that use beyond what was specified in invoices required additional fees, and unauthorized use violated the copyright:
As you know, most stock agencies operate under the same industry norms and practices. Photographs are licensed for a particular usage. All other rights are reserved to the owner. If additional usage or rights are necessary, further permission must be sought and granted. In reviewing certain representative licensing agreements for the 1995 Edition, the agencies clearly stated that the rights were limited to “One Time North American Reproduction English Language Rights, One Edition.” The terms of most PACA members' invoice also provide that usage is limited to the rights granted on the invoice, and any use outside of the terms of the agreement constitutes copyright infringement. Unauthorized use entitles the agencies to receive a multiple of the fee it would have received had the use been with permission.
In response to this letter, Defendants wrote to Plaintiff on September 27, 1999 acknowledging they had “published a copyright update of this text in 1998 for which we did not obtain photo permission at that time” and enclosed a check for the image fee. Def's Ex. 20. Plaintiff returned a copy of the letter writing “Not Acceptable” on the signature line. Def's Ex. 20. Plaintiff eventually submitted an invoice that stated: “This invoice reflects a retroactive license fee for re-use of images without legal permission from Grant Heilman Photography.” Def's Ex. 22.
Second, in 2006 Defendants wrote to Plaintiff, “Enclosed please find payment under our photo license agreement for usage in a print run larger than originally anticipated.” Def's Ex. 26. Plaintiff wrote in response, “We are in receipt of the McGraw–Hill Companies check for payment for usage of imagery from our library where McGraw–Hill Companies has exceeded the terms of our original licensing agreements.” Def's Ex. 29. Plaintiff accepted the check, but also submitted invoices for new licenses for the additional use, explaining that permissions for print runs beyond the original invoice are routinely treated as pick up fees for new licenses:
We are in receipt of the McGraw–Hill Companies check for payment for usage of imagery from our library where McGraw–Hill companies has exceeded the terms of our original licensing agreement ... For the more than twenty years since I have been a part of Grant Heilman Photography, when publisher's [sic] books exceed their original printing quantities, the new licenses have been and currently are treated as pick up fees for new licenses.... [T]here is still a balance due to bring our original licenses up to current rights and distribution you are requesting ... [T]o extend the printing quantities ... the original license will be specified in the body of rights of the invoice and at the top of the invoice in the line for P.O. number.
Def's Ex. 29. The accompanying invoices stated they were an “extension of right to” a the original invoice number. Def's Ex. 30.
The third incident was in 2008 when Plaintiff discovered Defendants printed an image without obtaining a license when the Defendants sought to relicense the image for a new edition. Def's Ex. 32. Plaintiff sent Defendants an invoice for “[r]etroactive license fee for [an] image published and distributed without permission.” Def's Ex. 34. The invoice billed $795 for the image. Def's Ex. 34. This appears to be three times the $265 price indicated in the PVA pricing chart. Pl's Ex. H.
Finally, in 2011 Plaintiff discovered Defendants had already published a text for which they sought permissions. Plaintiff again wrote the use exceeded the license terms:
We have learned that this textbook has been published an[d] available for purchase since January 21, 2011. Our terms and conditions states that reproduction rights are granted only by creation and payment of our invoice prior to publication. Therefore, since this image is being used without the proper licensing, we reserve the right to charge a 10 times retroactive fee for this image.
Def's Ex. 48. Plaintiff then sent Defendants an invoice which states “licensing fee reflects a ten (10) times licensors terms and conditions definition.” Pl's Ex. G. This refers to the “Terms As To Use” printed on the back of each GHPI invoice imposing a penalty of ten...
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