By: James Kachmar
The Ninth Circuit recently addressed an issue as to who may pursue claims for copyright infringement concerning stock photos in the case DRK Photo v. McGraw-Hill Global Education Holdings, LLC, et al. (Sept. 12, 2017). Apparently there has been a rise in copyright infringement claims involving stock photos and the Ninth Circuit was called upon to determine whether the non-exclusive licensing agent for stock photos had standing to pursue a claim for copyright infringement.
The case involved a stock photography agency, DRK, which markets and licenses photos taken by others. DRK has a collection of hundreds of thousands of “stock photos” and licensed a number of its photos to McGraw-Hill for use in its text books and other publications from 1992 to 2009.
DRK typically entered into a “Representation Agreement” with photographers to license their photos. One form of the representation agreement was for DRK to (1) act as the “sole and exclusive agent” to license the subject photos; and (2) another form of agreement that appointed DRK as a “non-exclusive agent” to license such photos. Most of the agreements that DRK entered into with photographers were of the non-exclusive variety and these were the ones as issue in the Ninth Circuit’s case.
In 2008, DRK began to attempt to copyright the photographs in its collection. To assist it with doing so, DRK had its photographers enter into “copyright assignment, registration and accrued causes of action agreements” (“Assignment Agreements”) that purported to assign all copyrights and legal title in the images to DRK for the purpose of completing the copyright registration of the photos and resolving any infringement claims brought by DRK, after any copyright interest in the photographs would revert back to the photographer. DRK acknowledged that the purpose of these assignment agreements was to affect a transfer of any copyright interest to it so that it could pursue its copyright enforcement efforts. In fact, DRK admitted that it had no intent to use these interests for any purpose other than pursuing copyright infringement actions.
After DRK sued McGraw-Hill in May 2001 asserting claims for copyright infringement, among others, McGraw-Hill moved for summary judgment as to some of these claims arguing that DRK lacked standing to pursue copyright infringement claims. The District Court agreed with McGraw-Hill and granted it summary judgment, finding that DRK was not the legal or beneficial owner of the copyrights at interest and thus had no standing to sue. DRK appealed this decision to the Ninth Circuit.
The Ninth Circuit began by recognizing that section 501(b) of the Copyright Act sets forth the requirements for standing to bring a lawsuit for copyright 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.” DRK argued that it had standing to sue for copyright infringement with regard to the photos as either a legal or a beneficial owner of the subject copyrights. The Ninth Circuit examined each of these claims in turn and rejected both of them.
As to DRK’s claim that it had legal ownership in the photos’ copyrights, it recognized the well-settled rule that “a mere `non-exclusive license’ does not constitute a `transfer of copyright ownership’ and therefore cannot confer standing to assert an infringement claim.” DRK claimed that it had legal ownership rights in the copyrights because of the Representation and Assignment Agreements. First, DRK argued that the Ninth Circuit had previously held that a stock photograph agency had standing to bring copyright infringement claims in the case Minden Pictures, Inc. v. John Wiley & Sons, Inc., that was decided in 2015. The Ninth Circuit rejected this argument by concluding that DRK misread the extent of that case, given that what was at issue in the Minden case was an agreement that gave Minden “sole and exclusive” rights with respect to the licensing of the photographs. The Ninth Circuit distinguished the Representation Agreement at issue in the DRK case by noting that they did not give DRK exclusive rights and lacked “any limitation whatsoever on the photographer’s authority to contract with other licensing agents.” Thus, the non-exclusive license was insufficient to grant standing to DRK to pursue infringement claims.
DRK next argued that it became a legal owner of the copyrights by virtue of the Assignment Agreements. The Ninth Circuit likewise rejected this argument relying on its 2005 decision in Silvers v. Sony Pictures Entertainment, which held that the assignee of an accrued claim for copyright infringement could not maintain a copyright infringement claim if it had no legal or beneficial interest in the copyright itself. The Ninth Circuit noted that all of the acts of infringement occurred prior to DRK’s entering into the Assignment Agreements and that even following the execution of the Assignment Agreements, the photographers retained the right to market and sell the covered photographers themselves and through other agents. In essence, the Ninth Circuit concluded that the Assignment Agreements merely conveyed a “right to sue” to DRK that failed to comply with the Copyright Act; and thus failed to confer standing to pursue infringement actions under the Copyright Act.
Next, DRK argued that it had standing to sue because it was the beneficial owner of the subject copyrights. The Ninth Circuit recognized that it had not been called upon to fully explore the extent of who may qualify as a beneficial owner and declined to do so in the DRK case. In essence, DRK was arguing that the Representation and Assignment Agreements, while maybe not making it the legal owner of the copyrights at issue, rendered it a beneficial owner. The Ninth Circuit concluded that this was nothing but an “end run” around the Copyright Act ruling that “to hold that DRK is a beneficial owner simply on the very basis that it cannot be deemed the legal owner would effectively negate our holding in Silvers and render portions of section 501(b) superfluous.”
Circuit Judge Marsha Berzon concurred in the Court’s ruling solely on the basis that she recognized that Silvers remained good law in the Ninth Circuit and thus, compelled the conclusion reached by the Court. She wrote in her concurrence, however, that she continued to believe that Silvers was wrongly decided and that the Court should be more pragmatic in determining who had standing to pursue claims for copyright infringement. Judge Berzon found it significant that DRK is authorized to license photographs on behalf of the photographers and has a “substantial interest” in how the photos it licenses should be used. This should be sufficient in her view to confer standing for DRK to pursue copyright infringement claims.
Attorneys representing companies that are involved in the stock photography industry may want to revisit any applicable licensing agreements regarding stock photos to determine whether or not their client will have standing to pursue copyright infringement claims concerning the photos in their catalogues.
James Kachmar is a shareholder in Weintraub Tobin Chediak Coleman Grodin’s litigation section. He represents corporate and individual clients in both state and federal courts in various business litigation matters, including trade secret misappropriation, unfair business competition, stockholder disputes, and intellectual property disputes. For additional articles on intellectual property issues, please visit Weintraub’s law blog at www.theiplawblog.com.