Vondran Legal® Copyright Law Essentials - "Standing" to sue for copyright infringement. Call us for legal representation at (877) 276-5084.
In every court case, a Plaintiff is required to establish that they are the "real party in interest" that suffered a "discrete and concrete injury." In a copyright case, this can get complicated with all the photo agency companies out there that seek to obtain "exclusive rights" from a photographer, designer or artist via a written agreement alleging to transfer certain rights. A copyright holder enjoys a "bundle of rights" which each can be separately licensed to a different company. These rights are:
- The right to reproduce the copyrighted work
- The right to distribute the copyrighted work
- The right to prepare derivative works of the copyrighted work
- The right to perform the copyrighted work
- The right to display the copyrighted work
- The right to license the copyrighted work to third parties
In order to have standing to sue, an agency must have acquired one of these exclusive rights, and they only have to right to pursue infringement of that particular copyright. In cases dealing with photo agencies, you need to review their agreements and their copyrights very carefully to see just what rights they have, and what they do not have the right to enforce.
A few agencies to take a close look at include Pic Rights, Otto Archive, and others. Let's take a look at the copyright law and interpreting case law.
17 U.S.C 501 [standing to sue for copyright violations]
Under 17 U.S.C. 501
Copyright "Standing to sue" Case Law
Here is a key case in the area of copyright standing to file a lawsuit. See DRK Photo v. McGraw-Hill Global Educ. Holdings, LLC (9th Cir. 2017) 870 F.3d 978, 983.
Any of the exclusive rights comprised in a copyright, including any subdivision of any of the rights specified by section 106, may be transferred . . . and owned separately." 17 U.S.C. § 201(d)(2).
"[E]ither 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." Minden, 795 F.3d at 1003; accord 17 U.S.C. § 101.
By contrast, a mere "nonexclusive license" does not constitute a "transfer of copyright ownership" and therefore cannot confer standing to assert an infringement claim. See 17 U.S.C. § 101.
Attorney Steve® Tip: This highlights the importance of requesting to see the assignment agreements at issue. What is being assigned? Is it the "exclusive right" to one of the 6 bundle of copyrights, or something less than that. I have seen some tricky wording. Another thing to look at is any representation agreements that were signed between the photographer and the agency, plus looking at the copyright registration certificate to see who the record owner of the copyright is. Many times it will NOT be the agency claiming a right to sue.
A. The Representation Agreements.
The Minden Case
We recently held in Minden Pictures, Inc. v. John Wiley & Sons, Inc. that a stock photography agency that served as the exclusive licensing agent for allegedly infringed photographs had standing to sue for infringement under the Copyright Act. 795 F.3d at 1004-05.
DRK contends that Minden creates a bright line rule that stock photography agencies have standing to bring copyright infringement claims by virtue of their agency agreements with their contributing photographers. However, DRK reads Minden too broadly.
"Minden indeed analyzed whether a stock photography agency, Minden Pictures, Inc. ("Minden"), had standing to sue a publisher for infringement after the publisher exceeded the scope of its licensing agreement with Minden. Id. at 1001. Like DRK, Minden also entered into agency agreements with its contributing photographers under which the photographers authorized Minden to license and sell certain photographs to third parties.
Importantly, in those licensing agreements, the photographers agreed to appoint Minden "as sole and exclusive agent and representative with respect to the Licensing of any and all uses of [specified photographs]."
Although the agreements "permit[ted] the photographers to issue some licenses themselves," the photographers were "prohibit[ed] . . . from hiring a licensing agent other than Minden."
The publisher argued that Minden's agreements with the photographers did not "grant 'exclusive licenses' to Minden to grant licenses to third parties, because the photographers retain[ed] the right to issue licenses themselves." Minden rejected that argument, and held that the agreements at issue granted exclusive licenses of the right to authorize, rendering Minden a "legal owner" with standing to sue. Relying on "the divisibility principle embodied by the 1976 [Copyright] Act," Minden explained that the fact that the photographers retained some ability to authorize use did not render Minden's license nonexclusive:
The Court in DRK agreed with the Minden holding:
"[W]e 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.
The court then compared this with the DRK agreements at issue:
DRK's Representation Agreements here at issue, on the other hand, are devoid of that key provision. They also lack any limitation whatsoever on the photographers' authority to contract with other licensing agents. In the absence of any such promise, DRK's Representation Agreements confer nonexclusive licenses and do not render DRK a legal owner for standing purposes. Cf. Bourne Co. v. Hunter Country Club, Inc., 990 F.2d 934, 937 (7th Cir. 1993) (nonexclusive licensing agent not a necessary party because it was neither a legal nor a beneficial owner of the copyright).
DRK suggests that it nevertheless possesses an ownership interest merely because the Representation Agreements pertain to the right "to authorize" as opposed to one of the exclusive rights listed in section 106. Neither the statutory text nor the analysis in Minden suggests that, having been given the right "to authorize" others to exercise the rights of copyright holders, a nonexclusive licensee becomes a legal owner with standing to sue. Cf. Subafilms, Ltd. v. MGM-Pathe Commc'ns Co., 24 F.3d 1088, 1093 (9th Cir. 1994). David Nimmer & Melville B. Nimmer, Nimmer on Copyright § 12.04[A][a].
Courts also look to the language of the assignment agreement
The Silvers Case
B. The Assignment Agreements.
DRK next contends that, even if it was not a legal owner originally by virtue of the Representation Agreements, it became the legal owner when the Assignment Agreements passed full legal title of each photograph and copyright along with all accrued claims to DRK. McGraw-Hill counters that the Assignment Agreements are nothing more than invalid attempts to transfer the bare right to sue.
In Silvers v. Sony Pictures Entertainment, 402 F.3d 881 (9th Cir. 2005) (en banc), we held that "an assignee who holds an accrued claim for copyright infringement, but who has no legal or beneficial interest in the copyright itself, [may not] institute an action for infringement." This conclusion naturally followed from the notable absence of the "right to sue" from the list of exclusive rights set forth in section 106 and was reinforced by the text and legislative history of the Copyright Act as a whole.
Later, we clarified that the purported transfer of legal title coupled with the transfer of accrued claims does not confer standing when the transaction, in substance and effect, merely transfers a bare right to sue. Righthaven LLC v. Hoehn, 716 F.3d 1166, 1169-70 (9th Cir. 2013).
There, the plaintiff Righthaven LLC "was founded, according to its charter, to identify copyright infringements on behalf of third parties, receive 'limited, revocable assignment[s]' of those copyrights, and then sue the infringers." Id. at 1168. Righthaven asserted copyright infringement claims against two defendants for their allegedly unauthorized online posting of articles from the Las Vegas Review-Journal. Id. Righthaven was not the owner of the copyrights of those articles at the time of the alleged infringement. Id. Instead, the copyrights were owned by Stephens Media LLC, the company that owns the Las Vegas Review-Journal. After the alleged infringement, Stephens Media and Righthaven executed a copyright assignment agreement for each article.
Those assignments provided that, "subject to [Stephens Media's] rights of reversion, Stephens Media granted to Righthaven all copyrights requisite to have Righthaven recognized as the copyright owner of the Work for purposes of Righthaven being able to claim ownership as well as the right to seek redress for past, present, and future infringements of the copyright . . . in and to the Work." Id. (internal quotation marks omitted).
Prior to executing the assignments, Righthaven and Stephens Media executed a Strategic Alliance Agreement ("SAA"), which clarified that following an assignment of copyright Stephens Media would retain "an exclusive license to exploit the copyrights for any lawful purpose whatsoever" and upon thirty days prior notice could "revert the ownership of any assigned copyright back to itself." Id. at 1169 (internal quotation marks omitted). The SAA further provided that Righthaven had no right to exploit the copyrights or participate in any royalties. Id. at 1168-69.
Both defendants moved to dismiss for lack of standing. Id. at 1169. Righthaven and Stephens Media then executed a "Clarification and Amendment to Strategic Alliance Agreement" in which they "purported to clarify that the parties' intent in entering the SAA was to 'convey all ownership rights in and to any identified Work to Righthaven through a Copyright Assignment so that Righthaven would be the rightful owner of the identified Work.'" Id. Righthaven held that, despite their language purporting to transfer title and ownership, the copyright assignments in their substance and effect did no more than transfer a right to sue. Id. at 1172. Looking to the combined effect of the assignment and the SAA, Righthaven recognized that Stephens Media retained all exclusive rights to the articles and Righthaven had little if any right to exploit the works absent Stephens Media's consent. Id. at 1170-72. Thus, for all practical purposes, the assignments did nothing more than transfer a right to sue. Id.
Here, the parties similarly dispute whether the Assignment Agreements actually transferred ownership of the copyrights along with the accrued claims. As a preliminary matter, we reject DRK's contention that McGraw-Hill is precluded from challenging the effect of the Assignment Agreements. Although a third party may not raise noncompliance with 17 U.S.C. § 204(a)'s writing requirement as a defense to a copyright transfer where the parties to the transfer do not dispute its existence, Jules Jordan Video, Inc. v. 144942 Canada Inc., 617 F.3d 1146, 1157 (9th Cir. 2010), a third party is not foreclosed from challenging a plaintiff's ownership for purposes of standing, see Righthaven, 716 F.3d at 1169. Indeed, it is the plaintiff who has the burden of establishing a qualifying ownership interest both as a substantive element of the infringement claim, Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 361, 111 S. Ct. 1282, 113 L. Ed. 2d 358 (1991), and as a necessary predicate for standing to bring the claim, 17 U.S.C. § 501(b). See Urbont v. Sony Music Entm't, 831 F.3d 80, 88 (2d Cir. 2016) ("[E]ven courts that have precluded third parties from challenging a plaintiff's ownership rights under the statute of frauds provision in Section 204 have permitted those parties to challenge the validity of the underlying ownership transfer.").
Righthaven instructs that the assignment agreements' use of "language purporting to transfer ownership . . . is not conclusive . . . [and] [w]e must consider the substance of the transaction." 716 F.3d at 1170. Thus, as in Righthaven, we must consider the Assignment Agreements in conjunction with the Representation Agreements and the ongoing relationship between DRK and the individual photographers. The alleged acts of infringement occurred prior to the execution of the Assignment Agreements. DRK concedes that following the execution of the Assignment Agreements, photographers who were parties to nonexclusive Representation Agreements could continue to market and sell the covered photographs themselves and through other means under the terms of the Representation Agreements. The photographers did not pay royalties or fees of any kind to DRK following execution of the Assignment Agreements. DRK's admitted course of dealing with photographers following the execution of the Assignment Agreements demonstrates that each party retained the rights it had under the nonexclusive Representation Agreements—meaning the photographers retained the exclusive rights to the photographs and DRK retained a nonexclusive license to authorize their use. As the district court recognized, the email exchanges surrounding execution of the Assignment Agreements further underscore this reality.
DRK argues it was error to interpret the substance and effect of the Assignment Agreements contrary to DRK and the photographers' intent that DRK obtain the ownership interest necessary to register and pursue infringement claims on the copyrights at issue. DRK relies upon declarations submitted in opposition to McGraw-Hill's motion for summary judgment, which, like the clarification agreement in Righthaven, stated that the photographers "intended to transfer the copyrights to all . . . photographs" with the "intent that DRK should retain an ownership interest in the images until the full resolution of any infringement claims relating to those images" and so that DRK could "protect, by lawsuits if necessary, against unpermitted uses." As in Righthaven, however, "[t]he problem is not that the district court did not read the contract in accordance with the parties' intent; the problem is that what the parties intended was invalid under the Copyright Act." 716 F.3d at 1171. The undisputed evidence shows that for all practical purposes, the nonexclusive Representation Agreements continued to govern who controlled the exclusive rights associated with the photographs following execution of the purported copyright assignments; thus, the substance and effect of the Assignment Agreements was merely a transfer of the right to sue on accrued claims, which cannot confer standing. See Silvers, 402 F.3d at 890.
Finally, we reject DRK's contention that Silvers has been implicitly overruled by Sprint Communications Co. v. APCC Services, Inc., 554 U.S. 269, 128 S. Ct. 2531, 171 L. Ed. 2d 424 (2008). A three-judge panel is bound by prior circuit authority unless the authority is "clearly irreconcilable" with intervening Supreme Court precedent. Miller v. Gammie, 335 F.3d 889, 893 (9th Cir. 2003) (en banc). Sprint held that assignees of payphone operators' accrued claims under the Communications Act had Article III standing to bring the collection suit at issue. 554 U.S. at 271, 275. Sprint did not involve the Copyright Act, and its standing analysis was not predicated on any statutory provision analogous to section 501(b). Consequently, Sprint does not undercut the reasoning of Silvers, which was grounded on the specific statutory language and history of the Copyright Act's standing provision for infringement claims, and Sprint and Silvers are not "clearly irreconcilable." See Miller 335 F.3d at 893. To be sure, Righthaven, which post-dates Sprint, also applied the rule of Silvers, and a three-judge panel of this court is bound by both Silvers and Righthaven.
Although we are certainly sympathetic to the practical challenges attendant to policing infringement of photographic art in the publishing industry, those practical considerations cannot override the Copyright Act's "carefully circumscribed" grant of the right to sue. Silvers, 402 F.3d at 885. The nonexclusive licenses and assignments of the bare right to sue present here do not render DRK a legal owner of the copyrights under controlling law and thus are insufficient to confer standing.
II. Beneficial Ownership.
In the alternative, DRK contends that it is the beneficial owner of the copyrights for the photographs at issue.
Although section 501(b) provides that a beneficial owner of a copyright is entitled to bring an infringement action, the Copyright Act does not define the term "beneficial owner." The classic example of a beneficial owner is "an author who ha[s] parted with legal title to the copyright in exchange for percentage royalties based on sales or license fees." Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1144 (9th Cir. 2003) (quoting H.R. Rep. No. 1476, at 159); accord Broad. Music, Inc. v. Hirsch, 104 F.3d 1163, 1166 (9th Cir. 1997) ("Beneficial ownership arises by virtue of section 501(b) for the purpose of enabling an author or composer to protect his economic interest in a copyright that has been transferred."). By contrast, an author who receives royalties for a work created under a work-for-hire agreement, and thus who never had ownership of the work, is not a beneficial owner. Warren, 328 F.3d at 1144-45.
We have not previously explored the full extent of who may qualify as a beneficial owner of copyright, and we need not do so here. Indeed, to support its arguments that it is a beneficial owner, DRK once again points solely to the Representation Agreements and the Assignment Agreements. Yet, under those agreements, DRK is a nonexclusive licensing agent and an assignee of accrued causes of action. To hold that DRK is a beneficial owner simply on the very bases that it cannot be deemed the legal owner would effectively negate our holding in Silvers and render portions of section 501(b) superfluous. Thus, on the specific facts of this case, DRK has failed to demonstrate that it is a beneficial owner. See Bourne, 990 F.2d at 937 (recognizing that a nonexclusive licensing agent is not a beneficial owner).
Tips for ensuring proper standing in copyright infringement cases
- Pull the copyright registration certificate (plaintiff counsel will usually provide this). How is the copyright owner?
- The copyright registration certificate will not show the images or photos that were registered, but if you are in pre-litigation or litigation, you can request the deposit samples from the United States copyright office. There is a form you can fill out and submit; click on the link.
- Once you see who owns the images and confirm the image at issue was infringed, you can look to other agreements if a photo rights agency is involved.
- Request a copy of any power of attorney or representation agreement. Review these to see what, if any, rights are transferred.
- Request a copy of any copyright assignment agreements. Was one of the six bundles of copyrights exclusively assigned to the assignee agency? If so, what rights were transferred? These are the only rights that can be pursued for infringement.
- Make note of whether the copyright registration was timely filed before the infringement was detected. If not, a plaintiff may be limited to "actual damages" as opposed to "statutory damages plus attorney fees." Whether or not you are facing attorney fee awards is a big deal in copyright litigation.
Other factors may come into play, depending on the facts of your case.
Contact a Federal Copyright Infringement Law Firm
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