Minden Pictures v. John Wiley & Sons , 795 F.3d 997 ( 2015 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MINDEN PICTURES, INC., No. 14-15267
Plaintiff-Appellant,
D.C. No.
v. 3:12-cv-04601-EMC
JOHN WILEY & SONS, INC.,
Defendant-Appellee. OPINION
Appeal from the United States District Court
for the Northern District of California
Edward M. Chen, District Judge, Presiding
Argued and Submitted
March 13, 2015—San Francisco California
Filed July 29, 2015
Before: John T. Noonan, William A. Fletcher,
and Morgan Christen, Circuit Judges.
Opinion by Judge W. Fletcher
2 MINDEN PICTURES V. JOHN WILEY & SONS
SUMMARY*
Copyright
Reversing the district court’s judgment, the panel held
that Minden Pictures, Inc., a licensing agent for
photographers, had statutory standing under the Copyright
Act to bring an infringement suit based on alleged violations
of the terms of its licenses to John Wiley & Sons, Inc., a
textbook publisher.
The panel held that agency agreements between Minden
and individual photographers conveyed an ownership interest
in the photographers’ copyrights sufficient to permit Minden
to sue for infringement. The agency agreements transferred
legally cognizable rights to reproduce the copyrighted
photographs and to authorize the distribution and the display
of the photographs by granting licenses to third parties. The
panel held that even though the photographers also retained
the right to issue licenses themselves, Minden held an
“exclusive license” to grant licenses to others, and therefore
had standing to sue.
COUNSEL
Maurice Harmon (argued), Christopher Seidman, Gregory N.
Albright, and Alex Rice Kerr, Harmon & Seidman, LLC,
Grand Junction, Colorado, for Plaintiff-Appellant.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
MINDEN PICTURES V. JOHN WILEY & SONS 3
Steven David Zansberg (argued), Michael Beylkin, and
Christopher Beall, Levine Sullivan Koch & Schulz, LLP,
Denver, Colorado, for Defendant-Appellee.
OPINION
W. FLETCHER, Circuit Judge:
Minden Pictures, Inc., is a stock photography company
that serves as the licensing agent for dozens of photographers,
authorizing third parties to use copyrighted photographs.
Under the terms of its contracts with the photographers,
Minden has the exclusive right to act as their licensing agent,
but the photographers reserve their rights to use the
photographs themselves and to license them to others.
Minden brought an infringement suit under the Copyright
Act against John Wiley & Sons, Inc., a textbook publisher,
alleging that Wiley had substantially exceeded the scope of
the licenses granted by Minden by publishing far more copies
of books containing the photographs than permitted under the
licenses. The question in this appeal is whether Minden, as
a licensing agent, has statutory standing under the Copyright
Act to bring an infringement suit based on alleged violations
of the terms of its licenses to Wiley. The district court held
that Minden does not have standing under the Act. We
disagree and reverse.
I. Background
Minden Pictures, Inc., (“Minden”) is a 26-year-old stock
photography company based in Watsonville, California.
According to Richard Minden, its founder and CEO, Minden
4 MINDEN PICTURES V. JOHN WILEY & SONS
is “one of the world’s premium providers of wildlife and
nature photos.” Minden acts as a licensing agent for
individual photographers, displaying copyrighted
photographs on its website and granting licenses to end users,
including textbook publishers, for the limited use of the
photographs. Minden receives a commission, as much as 50
percent, of the fees that end users pay to reproduce the
photographs.
Until recently, Minden entered into “Agency
Agreements” with the individual photographers for whom it
serves as a licensing agent. The Agency Agreements at the
heart of this case were executed between 1993 and 2008. The
Agreements vary somewhat from photographer to
photographer, but they share similar features. Each
Agreement contains an “authorization” clause in which the
photographers agree to “appoint[] [Minden] as sole and
exclusive agent and representative with respect to the
Licensing of any and all uses of Images” in the relevant
territory. The Agreements also confer upon Minden “the
unrestricted, exclusive right to distribute, License, and / or
exploit the Images . . . without seeking special permission to
do so.” The Agreements define “Licensing” as “the
marketing, grant, lease, sale, use or other exploitation of
reproduction rights to an Image.”
The Agency Agreements limit in some aspects, but
preserve in others, the photographers’ ability to make use of
their photographs themselves. The Agreements specify that
the photographers “shall not issue any Licenses to any
Images, except as provided under this Agreement.” But they
reserve some authority for personal and, in some cases,
commercial use. All of the Agreements permit the
photographers to use the images “for personal promotion.”
MINDEN PICTURES V. JOHN WILEY & SONS 5
Some permit the photographers to issue licenses for the
“editorial use of images in books and magazines.” A small
number permit the photographers to license images for
“commercial” uses, or for “advertising.” In other words, the
Agreements generally permit the photographers to issue some
licenses themselves, subject to the terms of the individual
Agreements, but prohibit them from hiring a licensing agent
other than Minden.
Finally, each Agency Agreement contains a “copyright”
clause. That clause states that “[a]ll images shall at all times
remain the sole and exclusive property of the Photographer,
including the copyright.” Many also state that the copyright
“shall be held by [Minden] solely for Licensing purposes
described herein.” The Agreements provide that they shall
remain in force for five years. At the end of that period, the
Agreements automatically renew unless either party provides
notice of termination.
One company to which Minden granted licenses is an
educational publisher, John Wiley & Sons. According to its
brief, Wiley is “a 206-year-old publisher of textbooks,
professional and trade books, as well as other publications.”
Minden alleges that Wiley substantially exceeded the scope
of the limited licenses it granted Wiley — for example, by
printing hundreds of thousands of copies of textbooks
containing photographs licensed by Minden despite having
acquired a license to print only 20,000 copies of such
photographs. Minden attaches to its complaint 228
copyrighted photographs taken by 36 photographers that it
alleges it licensed to Wiley. Minden alleges that Wiley has
engaged in a longstanding practice of copyright infringement,
citing eleven other cases brought against Wiley “alleging
copyright infringement claims nearly identical to those
6 MINDEN PICTURES V. JOHN WILEY & SONS
asserted by Plaintiffs in this action.” The merits of Minden’s
allegations are not before us. This appeal concerns only
whether Minden is permitted by the Copyright Act to bring an
infringement suit against Wiley for exceeding the scope of its
licenses.
Minden began to contemplate infringement litigation
against Wiley in or around 2010. In March 2010, many of
Minden’s affiliated photographers executed an additional set
of agreements (the “2010 Assignments”) that purported to
convey an ownership interest in the copyrights to Minden.
Under the 2010 Assignments, Minden was authorized “to
present, litigate, and settle any accrued or later accruing
claims, causes of action, . . . or lawsuits” over “unauthorized
uses of the Images.” But Minden “agree[d] to reassign its
ownership of the Images back to the [photographers]
immediately upon the conclusion of any such litigation.”
In November 2011, Minden brought an infringement
action against another publishing company, Pearson
Education, Inc., alleging, as in the case now before us, that
“the licenses it sold to Pearson were limited, and that Pearson
exceeded those limitations by printing tens, and in some
instances, hundreds of thousands of unauthorized copies of
the licensed photographs.” Minden Pictures, Inc. v. Pearson
Educ., Inc., 929 F. Supp. 2d 962, 964 (N.D. Cal. 2013).
Minden based its claim to standing under the Copyright Act
on both the Agency Agreements and the 2010 Assignments.
The district court struck all Minden’s allegations based on the
Agency Agreements as a discovery sanction, and rejected its
claims based on the 2010 Assignments, concluding that they
conveyed no more than a “bare right to sue.” Id. at 968.
Minden appealed, but the parties later stipulated to a
dismissal of the appeal with prejudice.
MINDEN PICTURES V. JOHN WILEY & SONS 7
Minden brought the current infringement action against
Wiley in September 2012. As in Pearson, Minden alleged
that both the Agency Agreements and the 2010 Assignments
gave it sufficient ownership interest in the photographs to
allow it to bring an infringement suit. After the complaint
was filed, Minden and the photographers executed an
additional set of assignments (the “2013 Assignments”).
These assignments conveyed to Minden “co-ownership of the
copyrights in the Images not previously assigned to Minden.”
Unlike the 2010 Assignments, however, the 2013
Assignments did not provide for their own termination upon
the conclusion of litigation.
Wiley moved to dismiss the action under Federal Rule of
Civil Procedure 12(b)(1), arguing that because Minden did
not have an ownership interest in the copyrighted
photographs it had licensed to Wiley, Minden lacked standing
under the Copyright Act to bring an infringement suit. Wiley
subsequently brought a motion for summary judgment under
Rule 56 on substantially the same ground.
We note that Wiley’s Rule 12 motion to dismiss should
have been brought under Rule 12(b)(6) for failure to state a
claim rather than under Rule 12(b)(1) for lack of jurisdiction,
for the issue is statutory rather than Article III standing. See
Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S.
Ct. 1377, 1387 (2014); Cetacean Cmty. v. Bush, 386 F.3d
1169, 1172–73 (9th Cir. 2004). That is, the issue is whether
Minden has a statutory right to sue for infringement under the
Copyright Act, which is properly addressed in a motion under
Rule 12(b)(6), not whether Minden has satisfied the
requirements of Article III, which is properly addressed in a
motion under Rule 12(b)(1). See Cetacean Cmty., 386 F.3d
8 MINDEN PICTURES V. JOHN WILEY & SONS
at 1173. Wiley’s incorrect reliance on Rule 12(b)(1),
however, does not materially affect the appeal now before us.
The district court ruled for Wiley in all respects. First, the
court concluded that the Agency Agreements did not confer
standing under the Copyright Act to bring an infringement
suit. Minden Pictures, Inc. v. John Wiley & Sons, Inc., 10 F.
Supp. 3d 1117, 1120 (N.D. Cal. 2014). The district court
reasoned that, rather than transferring ownership of the
copyrights to Minden, the Agency Agreements “appear to
expressly disavow any such intent.” Id. at 1125. In the
court’s view, the fact that Minden was authorized, as the
exclusive licensing agent for the photographers, to issue
licenses to use the copyrighted photographs did not give it a
sufficient property interest in the photographs to permit it to
bring an infringement suit. Id. at 1129. Second, the court
held that Minden could not rely on the 2010 Assignments as
a basis for its cause of action because it was issue-precluded
by the judgment in Pearson. Third, invoking the general rule
that standing is evaluated by looking to “the facts as they
exist when the complaint is filed,” Lujan v. Defenders of
Wildlife, 504 U.S. 555, 569 n.4 (1992) (emphasis in original),
the court held that Minden could not rely on the later-
executed 2013 Assignments.
Minden appeals. For the reasons that follow, we reverse.
II. Standard of Review
We review de novo whether a party has standing under
the Copyright Act to sue for infringement. Righthaven LLC
v. Hoehn, 716 F.3d 1166, 1169 (9th Cir. 2013).
MINDEN PICTURES V. JOHN WILEY & SONS 9
III. Discussion
Minden makes three arguments on appeal. First, it argues
that the Agency Agreements conveyed an ownership interest
in the copyrights sufficient to permit Minden to sue for
infringement. Second, it argues that the district court erred in
concluding that the judgment in Pearson had issue-preclusive
effect in its action against Wiley. Third, it argues that the
district court erred in declining to consider the 2013
Agreements on the ground that they were executed after
Minden filed its complaint. Because we agree with Minden
that the Agency Agreements conveyed a sufficient property
interest in the photographs to permit it to bring an
infringement suit, we do not reach its second and third
arguments.
Under § 501(b) of the Copyright Act, only “[t]he legal or
beneficial owner of an exclusive right under a copyright is
entitled . . . to institute an action for any infringement of that
particular right committed while he or she is the owner of it.”
17 U.S.C. § 501(b). The “exclusive rights” in a copyright are
enumerated at § 106 of the Act. They are the rights “to do
and to authorize” others to do six things with the copyrighted
work: to reproduce the work, to prepare derivative works
based upon the work, to distribute copies of the work, to
perform the work publicly, to display the work publicly, and
to record and perform the work by means of an audio
transmission. See id. § 106. We have held that this list of
“exclusive rights” is exhaustive. Silvers v. Sony Pictures
Entm’t, Inc., 402 F.3d 881, 883–84 (9th Cir. 2005) (en banc).
Until the passage of the Copyright Act of 1976, a
copyright was seen as “an indivisible ‘bundle of rights,’
which were ‘incapable of assignment in parts.’” See Gardner
10 MINDEN PICTURES V. JOHN WILEY & SONS
v. Nike, Inc., 279 F.3d 774, 778 (9th Cir. 2002) (quoting
3 Melville B. Nimmer & David Nimmer, Nimmer on
Copyright § 10.01[A] (“Nimmer”)). The Copyright Act,
however, “eradicated much of the doctrine of indivisibility,”
id., by permitting a copyright owner to transfer “[a]ny of the
exclusive rights comprised in a copyright, including any
subdivision of any of the[se] rights,” to someone else.
17 U.S.C. § 201(d)(2). Thus, an author of a novel might
convey the right to publish a hardcover edition of the novel
to one person and the right to create a movie based upon the
novel to another. See HyperQuest, Inc. v. N’Site Solutions,
Inc., 632 F.3d 377, 383 (7th Cir. 2011); Nimmer, supra, at
§ 10.02[A].
Further, the Copyright Act permits the copyright owner
to subdivide his or her interest in what otherwise would be a
wholly owned “exclusive right” by authorizing the owner to
transfer his or her share, “in whole or in part,” to someone
else. 17 U.S.C. § 201(d)(1). It specifies that the owner can
transfer a right, or a share of such a right, via “an assignment,
. . . exclusive license, or any other conveyance, . . . whether
or not it is limited in time or place of effect.” Id. § 101. That
is, either an assignment (which transfers legal title to the
transferee) or an exclusive license (which transfers an
exclusive permission to use to the transferee) qualifies as a
“transfer” of a right in a copyright for the purposes of the Act.
See Corbello v. DeVito, 777 F.3d 1058, 1064 (9th Cir. 2015);
HyperQuest, 632 F.3d at 383; Nimmer, supra, at § 10.02[A].
It is established law under the 1976 Act that any party to
whom such a right has been transferred — whether via an
assignment or an exclusive license — has standing to bring an
infringement action based on that right. See Sybersound
Records, Inc. v. UAV Corp., 517 F.3d 1137, 1146 (9th Cir.
MINDEN PICTURES V. JOHN WILEY & SONS 11
2008); Nimmer, supra, at § 12.02[B][1]. Thus a party granted
an exclusive license to display a work may bring an
infringement action challenging the unauthorized display of
that work by another party, even though the licensee does not
hold legal title to the work. Nimmer, supra, at § 12.02[B][1]
(“As the owner of ‘an exclusive right under a copyright,’ an
exclusive licensee is ‘entitled . . . to institute an action for any
infringement . . . .’” (quoting 17 U.S.C. § 501(b))).
However, a party granted a mere “nonexclusive license”
— as, in this case, Wiley’s license to reprint a copyrighted
photograph in a textbook — cannot bring an infringement
suit. See 17 U.S.C. § 101; Eden Toys, Inc. v. Florelee
Undergarment Co., Inc., 697 F.2d 27, 32 (2d Cir. 1982).
Wiley argues that Minden cannot bring an infringement suit
because Minden has been granted, at most, a “nonexclusive
license” to authorize the reproduction, distribution, and
display of the photographs. We disagree.
First, we have no doubt — indeed, we do not understand
Wiley to contest — that the Agency Agreements transferred
an interest in a legally cognizable right in the photographers’
copyrights. The Agency Agreements explicitly permit
Minden to reproduce, and to authorize the reproduction of,
the copyrighted photographs. Reproduction is one of the six
“exclusive rights” described in the Act. 17 U.S.C. § 106(1)
(listing, inter alia, the right “to reproduce the copyrighted
work in copies or phonorecords” as an exclusive right).
Further, Wiley does not appear to dispute that, as the
photographers’ licensing agent, Minden had the right “to
authorize” both the distribution and the display of the
photographs by granting licenses to third parties such as
Wiley. The right “to authorize” these acts is also an
“exclusive right” under the Act. See id. § 106(3), (5).
12 MINDEN PICTURES V. JOHN WILEY & SONS
Minden thus had an interest in a legally cognizable right
under the copyrights. The only question is what kind of
interest Minden possessed.
Wiley makes two arguments regarding why the Agency
Agreements did not convey a sufficient interest to Minden to
permit it to bring an infringement action. First, Wiley argues
that the photographers did not assign their copyrights (or a
right under their copyrights) to Minden under the
Agreements. We agree that the Agency Agreements did not
assign the copyrights themselves. The Agreements explicitly
state that the photographs shall “remain the sole and
exclusive property of the Photographer, including the
copyright.” The Agreements also impose certain limitations
on Minden not generally associated with legal title. For
instance, Minden must seek the photographers’ approval
before issuing certain kinds of licenses. Further, the
Agreements permit either party to end the licensing
relationship at specified intervals. We thus agree with Wiley
that the Agreements do not make Minden the legal owner of
the copyrights.
Wiley argues, second, that, read as licenses, the Agency
Agreements are no more than “nonexclusive licenses” that are
insufficient to permit Minden to bring suit. We disagree.
The thrust of Wiley’s argument is that the Agency
Agreements do not grant “exclusive licenses” to Minden to
grant licenses to third parties, because the photographers
retain the right to issue licenses themselves. That is, Wiley
argues, because Minden was not the sole party authorized to
issue licenses to the photographs, it cannot have held an
“exclusive license” that would permit it to bring suit under
the Act. This argument runs contrary to the divisibility
principle embodied by the 1976 Act, and to the bulk of the
MINDEN PICTURES V. JOHN WILEY & SONS 13
caselaw and commentary in this field. Wiley’s argument is
inconsistent with the notion that, under the 1976 Act, a single
copyright, or right thereunder, may be divided between
parties, with each co-owner entitled to sue to protect his or
her interest in the right. As we recently explained in the
context of copyright ownership, “the word ‘exclusive’ in [the
Act] cannot mean that only sole owners possess ‘exclusive’
rights.” Corbello, 777 F.3d at 1065. “If an ‘exclusive right’
could only be possessed by a sole owner of a copyright, a co-
owner would be unable to bring an infringement action to
protect his interest.” Id.
We see no reason why the divisibility principle should not
apply with equal force when the interest granted is an
exclusive license to grant licenses to others. The reason the
Act prevents a holder of a “nonexclusive license” to use a
copyrighted photograph from bringing an infringement action
against others who use the same photograph is that such a
licensee has no more than “a privilege that protects him from
a claim of infringement by the owner” of the copyright. W.
Elec. Co. v. Pacent Reproducer Corp., 42 F.2d 116, 119 (2d
Cir. 1930); see Roger D. Blair & Thomas F. Cotter, The
Elusive Logic of Standing Doctrine in Intellectual Property
Law, 74 Tul. L. Rev. 1323, 1347 (2000). That is, because
such a licensee has been granted rights only vis-à-vis the
licensor, not vis-à-vis the world, he or she has no legal right
to exclude others from using the copyrighted work, and thus
no standing to bring an infringement suit. See Hyperquest,
632 F.3d at 385; Blair & Cotter, supra, at 1347. But when a
licensee has been granted rights vis-à-vis the world — even
if he or she shares those rights with another party, including
the owner of the copyright — we see nothing in the
Copyright Act that requires us to deem such an arrangement
14 MINDEN PICTURES V. JOHN WILEY & SONS
a mere “nonexclusive license” insufficient to give rise to
standing to sue.
Patent law, which has long recognized the distinction
between exclusive and nonexclusive licenses, follows the rule
we observe here. As early as 1930, the Second Circuit
rejected the argument that the existence of a residual interest
in another party turns an exclusive license into a nonexclusive
one:
The definition of an exclusive license . . .
might be thought to imply that an ‘exclusive
licensee’ is a sole licensee. But we do not so
understand it. A bare license might be
outstanding in one when the patent owner
grants a license to another accompanied by
the promise that the grantor will give no
further licenses. In such a case, the second
licensee needs the protection of the right of
joinder in a suit against infringers as much as
though he were sole licensee. We see no
reason why he should not have it, and we
think the authorities recognize his right.
Western Elec. Co., 42 F.2d at 119. More recently, the Federal
Circuit has adopted the same position. See WiAV Solutions
LLC v. Motorola, Inc., 631 F.3d 1257, 1266 (Fed. Cir. 2010)
(rejecting the argument that “that for a licensee to be an
exclusive licensee of a patent, the licensee must be the only
party with the ability to license the patent”); Intellectual
Prop. Dev., Inc. v. TCI Cablevision of California, Inc.,
248 F.3d 1333, 1347 (Fed. Cir. 2001). In the words of one
prominent treatise, “one who takes an ‘exclusive’ license
subject to a preexisting license may lack true exclusivity, but
MINDEN PICTURES V. JOHN WILEY & SONS 15
nonetheless possesses the legal right to exclude third parties
(other than the existing licensee) . . . and, thus, has . . .
standing to sue for infringement.” 2 Roger M. Milgram,
Milgram on Licensing § 15.08. Put more simply, we agree
with the Seventh Circuit that the essence of an “exclusive”
license under the Act is that “the copyright holder permits the
licensee to use the protected material for a specific use and
further promises that the same permission will not be given
to others.” I.A.E., Inc. v. Shaver, 74 F.3d 768, 775 (7th Cir.
1996).
Minden has been given just such a promise. Under the
Agency Agreements, Minden is the “sole and exclusive agent
and representative with respect to the Licensing of any and all
uses” of the photographs. That is, the photographers have
promised that Minden, and only Minden, will have the power,
as the photographers’ licensing agent, to authorize third
parties to reproduce, distribute, and display the photographs.
That the photographers have retained some limited degree of
authority to grant licenses themselves does not eliminate
Minden’s interest in the copyright as the sole entity to act as
the photographers’ licensing agent. It merely means that both
Minden and the photographers, under the terms of the
Agreements, can prevent those third parties who have
not received permission to use the photographs from using
them. To hold otherwise would be inconsistent with the
divisibility principle embodied by the 1976 Act.
To hold otherwise would also be inconsistent with
common sense. If the photographers had never entered into
the Agency Agreements, but instead had issued licenses
directly to Wiley, there would be no doubt that they could
bring infringement actions over the violations Minden alleges
in its complaint. We see no reason why, having appointed
16 MINDEN PICTURES V. JOHN WILEY & SONS
Minden to manage the commercial use of their photographs
in the first instance as their licensing agent, the photographers
should not also be able to rely on Minden to protect and
defend the licenses that it has issued on their behalf. Nothing
in the text of the Copyright Act, nor in the Agency
Agreements, compels a contrary conclusion.
By honoring the parties’ contracting expectations, we also
remove what would otherwise be a significant practical
disadvantage in seeking to protect a copyrighted work. If
Minden could not bring an infringement suit on behalf of the
photographers for whom it serves as a licensing agent, those
photographers would have to bring suit individually, either in
individual actions or in a single suit under Federal Rule of
Civil Procedure 20. Both procedural alternatives have
significant disadvantages. In a suit against Wiley brought by
an individual photographer, alleging infringement only as to
his or her own photographs, the expenses of litigation would
very likely dwarf any potential recovery. And in a suit under
Rule 20, both the total cost of litigation and the burdens of
coordination would be significant, given the complexities of
litigating on behalf of thirty-some named plaintiffs. The
practical disadvantages of these two alternatives compared
with the prospect of licensing agents bringing suit as sole
plaintiffs are likely obvious to defendants such as Wiley, and
it is not implausible that Minden’s inability to bring an
infringement suit would be an incentive to engage in
infringing behavior.
Because we conclude that the Agency Agreements convey
the rights to reproduce, distribute, and display the
photographs to Minden via an “exclusive license” to grant
licenses to third parties, we hold that Minden may bring an
infringement action to remedy the unauthorized reproduction,
MINDEN PICTURES V. JOHN WILEY & SONS 17
distribution, and display of the photographs by those to whom
it has granted licenses. We do not reach Minden’s remaining
arguments.
Conclusion
We hold that Minden has standing to bring an
infringement action under the Copyright Act. We therefore
reverse the judgment of the district court.
REVERSED.