Jarvis v. K2 Inc.
| Decision Date | 30 April 2007 |
| Docket Number | No. 05-35609.,05-35609. |
| Citation | 486 F.3d 526 |
| Parties | Chase JARVIS; Chase Jarvis Inc., a Washington Corporation, Plaintiffs-Appellants, v. K2 INC., a Delaware Corporation; K-2 Corporation, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Katherine Hendricks (argued) and J. Bowman Neely, Hendricks & Lewis, Seattle, WA, for the plaintiffs-appellants.
Shannon L. McDougald (argued), Seattle, WA, and Jennifer Bell, Ryan McBrayer and Matthew Diggs, Perkins Coie, LLP, Seattle, WA, for the defendants-appellees.
Appeal from the United States District Court for the Western District of Washington; Thomas S. Zilly, District Judge, Presiding. D.C. No. CV-03-01265-TSZ.
Before ROBERT R. BEEZER, RAYMOND C. FISHER and RICHARD C. TALLMAN, Circuit Judges.
Chase Jarvis is a professional photographer who created several thousand photographic slides over a three-year period for K2, Inc. ("K2"), a maker of outdoor sporting goods. Unfortunately, this relationship eventually soured. Jarvis sued K2, alleging that it infringed his copyrights in his photographic images, lost many of the slides that he delivered and repeatedly failed to credit him when it used his images. The district court agreed that K2 was liable under each of these theories and awarded damages to Jarvis. However, the district court found that 24 of Jarvis' images — contained in four K2 collage advertisements that combined Jarvis' images with other images and graphics — were not infringed because the ads were covered by the collective works privilege of 17 U.S.C. § 201(c).1 Jarvis now appeals the district court's damages awards and its ruling as to the collage ads' privileged status.
We hold that the district court properly calculated damages. It employed reasonable estimates of the market value of the infringed images as well as the business lost by Jarvis because of the lost images and failures to credit him. We do not agree with the district court, however, that the 24 images in the collage ads were privileged under § 201(c). The collage ads were derivative rather than collective works because they transformed Jarvis' original images into new promotional posters.2 The collective works privilege therefore did not apply to the ads, and their online display after K2's term of use had expired infringed Jarvis' copyrights in the underlying images. Accordingly, we reverse the district court's ruling as to § 201(c) and remand for determinations of willfulness, actual and statutory damages and attorney's fees with respect to the collage ads.
Jarvis is a professional photographer who specializes in outdoor sports images. K2 is a corporation that sells outdoor sporting goods such as skis, snowboards, skates and bikes. Jarvis and K2 entered into five separate agreements from 1999 to 2002, pursuant to which Jarvis took photographs for K2 and sent it the resulting slides in exchange for compensation. Each delivery of slides was accompanied by a delivery memorandum that, among other things, stated that "[l]oss or damage of any image will result in a $1,500 fee per image, as set forth by industry standards."
Three of the five agreements between Jarvis and K2 were oral. Of greater relevance here, two agreements were written by Jarvis and entered into, respectively, on October 6, 2000 ("2000 Agreement") and December 13, 2001 ("2001 Agreement"). Both of these agreements authorized K2 to "publish images" provided by Jarvis in K2's "brochures, print advertisements, trade show display booths, posters, and electronically for the web so as to market [its] business." All uses of Jarvis' images had to include an attribution credit. K2's "photo use rights" in the 2000 Agreement images were to "extend through the 2001-02 ski year or one year from[the images'] delivery date," while its rights in the 2001 Agreement images were to last "for the 2002-03 ski season, ending in May 2003."3 There was an integration clause in both agreements stating, "This Agreement constitutes the entire agreement of the parties as to the subject matter hereto." Jarvis delivered 2,516 slides to K2 and received $10,000 under the 2000 Agreement, and delivered 1,210 slides and received $7,200 under the 2001 Agreement.
In total, Jarvis provided 4,147 slides to K2, the vast majority of them pursuant to the 2000 and 2001 Agreements. K2 lost 396 of these slides and hence was unable to return them to Jarvis. K2 also failed to provide a photo credit to Jarvis in 105 images that it used, and miscredited one of his images to another photographer. Finally, 82 of Jarvis' images were used by K2 after the underlying licenses had expired or by third parties to whom K2 had improperly provided the images. Twenty-four of the 82 images were incorporated into four "collage" advertisements that were initially published as magazine inserts during the time period the 2001 Agreement authorized K2 to use the images. The ads combined edited versions of Jarvis' images with other images, marketing graphics and promotional slogans. After the contractual term limit for using Jarvis' images had expired, K2 scanned the collage ads and displayed them on its website.
Jarvis filed his action against K2 in June 2003. The district court granted partial summary judgment against K2 on Jarvis' copyright infringement, breach of contract and conversion claims in September 2004. The court later bifurcated Jarvis' claims, ordering the Lanham Act and damages issues to proceed to trial but staying the vicarious copyright infringement, breach of contract and conversion claims. Upon conclusion of a bench trial in March 2005 the court entered comprehensive findings of fact and conclusions of law. Although the court ruled in Jarvis' favor in many respects and awarded him damages, Jarvis takes issue with the court's ruling as to the collective works privilege as well as its determination of damages.
The district court's award of damages for the 396 unreturned slides totaled $199,000 ($500 each for the 395 unidentified slides and $1,500 for one slide identified as having been created for K2 Bike). Damages for the 105 failures to credit and one miscredit totaled $11,400, based on a rate of $50 per failure for online use, $200 per failure for print ads and $300 per failure for media use. And damages for 58 infringements of Jarvis' copyrights totaled $40,107, based largely on a fair market value of $461 each for images used online.4
The district court's damages awards were premised on several legal and factual determinations, two of which are particularly relevant here. First, the court found that the 2000 and 2001 Agreements were fully integrated contracts, and that Jarvis' delivery memos specifying a $1,500 liquidated damages amount for lost or damaged slides were simply proposed contract modifications that K2 never accepted. Second, the court ruled that K2's collage ads — which contained 24 images that would otherwise have infringed Jarvis' copyrights — constituted collective works and thus were privileged under § 201(c). According to the court, the time limits for usage specified in the Agreements did not obviate the rights conferred by § 201(c), and the transfer of the ads from print to electronic form did not transform them into unprotected new works. Importantly, by finding the ads privileged under § 201(c), the court negated the effect of Jarvis' registration of his copyrights in some of the 24 images in the collage ads before K2's alleged infringement. Otherwise, Jarvis could have elected statutory damages and potentially received attorney's fees for those infringements.
Judgment was entered in May 2005, and Jarvis timely appealed.
The district court's findings of fact are reviewed for clear error whereas its conclusions of law are reviewed de novo. See Zivkovic v. S. Cal. Edison Co., 302 F.3d 1080, 1088 (9th Cir.2002). Actual damages awards are reviewed for clear error. See Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc., 772 F.2d 505, 513 (9th Cir.1985). Whether a contract is integrated is a factual determination that we review for substantial error. See Sierra Diesel Injection Serv., Inc. v. Burroughs Corp., 890 F.2d 108, 112 (9th Cir.1989).
Jarvis contends that the 2001 Agreement, which applied to all the images in the collage ads, did not permit the images' use by K2 in any capacity after May 2003. He also argues that the district court erred in ruling that K2's collage ads were collective works protected by § 201(c) and hence not infringements of Jarvis' copyrights. We agree with Jarvis on both counts, because the 2001 Agreement explicitly limited the term of use of Jarvis' images and because the collage ads were derivative works not protected by § 201(c). We do not reach Jarvis' other arguments for why the collective works privilege did not apply to the collage ads, namely that the ads were publicly displayed when they were posted on K2's website, that the ads were new works rather than revisions of the original magazine inserts and that § 201(c) had been circumvented by the 2001 Agreement. Accordingly, we reverse the district court's ruling that the collage ads were privileged collective works and remand for determinations of K2's willfulness, statutory and actual damages and attorney's fees.
The 2001 Agreement authorized K2 to "publish" Jarvis' images in media including K2's "brochures, print advertisements ... posters, and electronically for the web so as to market [its] business." K2 therefore acted within its rights when it first created the collage ads and published them in the form of magazine inserts. K2 also would not have breached the Agreement had it scanned the ads and placed them online during the time period authorized by the contract. These uses were (or would have been)...
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