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DRK Photo v. McGraw-Hill Global Education Holdings, LLC

United States Court of Appeals, Ninth Circuit

September 12, 2017

DRK Photo, a sole proprietorship, Plaintiff-Appellant,
v.
McGraw-Hill Global Education Holdings, LLC; McGraw-Hill School Education Holdings, LLC, Defendants-Appellees.

          Argued and Submitted December 14, 2016 San Francisco, California

         Appeal from the United States District Court No. 3:12-cv-08093-PGR for the District of Arizona Paul G. Rosenblatt, Senior District Judge, Presiding

          Maurice Harmon (argued), Christopher Seidman, and Gregory Albright, Harmon & Seidman LLC, New Hope, Pennsylvania, for Plaintiff-Appellant.

          Christopher P. Beall (argued) and Thomas B. Kelley, Levine Sullivan Koch & Schulz LLP, Denver, Colorado, for Defendants-Appellees.

          Before: Michael Daly Hawkins, Marsha S. Berzon, and Mary H. Murguia, Circuit Judges.

         SUMMARY[*]

         Copyright

         The panel affirmed the district court's summary judgment in favor of the defendants in a copyright infringement action brought by a stock photography agency.

         The panel held that the plaintiff, a nonexclusive licensing agent for the photographs at issue, failed to demonstrate any adequate ownership interest in the copyrights to confer standing. Distinguishing Minden Pictures, Inc. v. John Wiley & Sons, Inc., 795 F.3d 997 (9th Cir. 2015), the panel held that the plaintiff lacked standing as a legal owner because its representation agreements with the photographers did not grant the plaintiff an exclusive license to authorize use of the photographs. The panel held that under Silvers v. Sony Pictures Entm't, Inc., 402 F.3d 881 (9th Cir. 2005) (en banc), the plaintiff's assignment agreements with the photographers did not confer standing because they merely transferred the right to sue on accrued claims. The panel held that the plaintiff also lacked standing as a beneficial owner of the copyrights.

         The panel affirmed the district court's denial of the plaintiff's motion to modify the scheduling order for leave to amend its complaint to join three photographers as plaintiffs.

         Concurring, Judge Berzon wrote that Silvers, holding that the transfer of the right to sue to a nonowner or nonexclusive licensee of a copyright right can never confer standing to sue for a copyright violation, controlled but was wrongly decided.

          OPINION

          HAWKINS, Circuit Judge.

         This appeal raises the now often litigated issue of whether a stock photography agency-here, the Arizona-based agency DRK Photo ("DRK")-has standing under the Copyright Act of 1976 to pursue infringement claims involving photographs from its collection. Ultimately, there is no bright line answer to this question. Here, we affirm the grant of summary judgment in favor of defendants, McGraw-Hill Global Education Holdings, LLC and McGraw-Hill School Education Holdings, LLC (collectively, "McGraw-Hill"), because DRK is a nonexclusive licensing agent for the photographs at issue and has failed to demonstrate any adequate ownership interest in the copyrights to confer standing. We also affirm the denial of DRK's motion to modify the scheduling order for leave to amend its complaint.

         BACKGROUND

         DRK is a stock photography agency that markets and licenses images created by others to publishing entities, including defendants McGraw-Hill. Since its inception in 1981, DRK has built a collection of hundreds of thousands of photographs, primarily depicting worldwide wildlife, marine life, and natural history. McGraw-Hill publishes K-12 educational, post-secondary, professional, and trade textbooks and publications. From approximately 1992 to 2009, McGraw-Hill licensed photographs from DRK to use in its textbooks. Their agreements were reflected in invoices, which set forth, among other terms, the fee charged, the specific photographs licensed, and the number and form of reproductions and distributions authorized under each "[o]ne-time non-exclusive" license.

         With regard to its own licensing of the photographs, DRK historically has entered into "Representation Agreements" with the photographers of the images that make up its collection. These Representation Agreements have generally taken two forms: (1) agreements appointing DRK as the "sole and exclusive agent" to license and sell the covered photographs, and (2) agreements appointing DRK as a nonexclusive agent to license and sell the covered photographs. Only the latter are at issue in this appeal.[1]

         According to DRK's owner, the majority of its arrangements with photographers are nonexclusive. In relevant part, those Representation Agreements provide that DRK will act as the "agent with . . . respect to the sale or leasing of the photographs or transparencies" delivered to DRK. Many of the agreements further clarify:

DRK PHOTO will not require, nor ask a photographer or agency for exclusivity of an image until such time that DRK PHOTO has made an exclusive sale of that image. . . . Without this condition of an exclusive license/sale being made, all parties are free to promote and/or market all images without restriction.

         They also provide that DRK and the photographer will split evenly the proceeds from all sales made by DRK.

         In 2008, DRK endeavored to register copyrights for the photographs in its collection. To that end, each of the photographers whose images are involved in this litigation executed identical agreements entitled "Copyright Assignment, Registration, and Accrued Causes of Action Agreement" (the "Assignment Agreements"). In relevant part, the agreements provide:

The undersigned photographer . . . grants to DRK all copyrights and complete legal title in the Images. DRK agrees to reassign all copyrights and complete legal title back to the undersigned immediately upon completion of the registration of the Images . . . and resolution of infringement claims brought by DRK relating to the Images.
The undersigned agrees and fully transfers all right, title and interest in any accrued or later accrued claims, causes of action, choses of action . . . or lawsuits, brought to enforce copyrights in the Images, appointing and permitting DRK to prosecute said accrued or later accrued claims, causes of action, choses in action or lawsuits, as if it were the undersigned.

         The Assignment Agreements also provide that DRK and the photographers will share equally the proceeds of any litigation award or settlement.

         According to DRK, "[t]he primary purpose of the assignments was to effect a transfer [of] copyright ownership to DRK that was sufficient to support its copyright enforcement efforts." In an initial transmittal email to photographers, DRK explained that with the Assignment Agreements DRK would "receive the authorization necessary to initiate and settle copyright infringement claims." In subsequent email correspondence, DRK discussed the scope and effect of the Assignment Agreement in response to questions from several photographers as to how the Agreement would affect their dealings with other agencies licensing the same or similar photographs. DRK consistently confirmed that the purpose of the Agreement was to put DRK "in a legal position to bring copyright infringement claims against infringers" and to have an agreement with the photographers as to how settlement proceeds would be divided, "nothing more." It further clarified that the copyright registration would allow DRK to bring infringement suits and that DRK had "no intentions of using it in any other manner." In another email exchange, DRK explained that there was no "'rights grab' going on here." And in yet another exchange, DRK assured a photographer that he understood "correctly" that "the registration of copyright [would] be [the photographer's] and not [DRK's], only in case of infringement [would DRK] then use it."

         Following execution of the Assignment Agreements, photographers who were parties to nonexclusive Representation Agreements with DRK continued to market and sell their photographs on their own and through other means according to the terms of the Representation Agreements. DRK admits that the photographers had no duty to account to DRK for their sales of the photographs following execution of the Assignment Agreements.

         PROCEDURAL ...


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