Affirming a grant of summary judgment in favor of copyright defendants, the US Court of Appeals for the Ninth Circuit took up the "often litigated issue" of whether a stock photography agency has standing under the Copyright Act to pursue infringement claims pertaining to photographs from its stock collection, and concluded that only the legal or beneficial owner of an exclusive right conferred by the Act has standing to sue. DRK Photo v. McGraw-Hill Global Education Holdings, LLC, et al., Case No. 15-15106 (9th Cir., Sept. 12, 2017) (Hawkins, J) (Berzon, J, concurring).
DRK Photo is a stock photography agency that markets and licenses images created by others to publishing entities, including McGraw-Hill. With regard to its own licensing of the stock photographs, DRK enters into "representation agreements" with the photographers of the images that make up its collection.
The representation agreements at issue in this case appointed DRK as a non-exclusive agent to license and sell the covered photographs. In 2008, after learning of instances of infringement, DRK entered into additional "assignment agreements" with various photographers for a temporary assignment of the photographs and accrued infringement claims in order to allow DRK to register copyrights for the photographs and to place itself in a legal position to bring copyright infringement claims against infringing third parties.
DRK sued McGraw-Hill asserting copyright infringement based on claims that McGraw-Hill exceeded the scope of its licenses with DRK by printing and distributing more textbooks containing licensed images than originally authorized. The parties cross-moved for summary judgment, and the district court granted partial summary judgment to McGraw-Hill on grounds that DRK lacked standing to pursue infringement claims for photographs taken by photographers for whom DRK was acting as a non-exclusive agent, since DRK could not be deemed the legal owner of any exclusive right pertaining to the images. The district court further found that the assignment agreements in "substance and effect" assigned to DRK nothing more than the "bare right to sue." DRK appealed.
The Ninth Circuit examined the preliminary issue of standing to sue under § 501(b) of the Act, which states that the "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." DRK argued that it had standing as either a legal or beneficial owner of the copyrights.
DRK argued that the representation agreements granted a license to authorize use of the photographs, and that the assignment agreements transferred to DRK the legal title to the copyrights in the photographs along with accrued infringement claims. DRK also cited the Ninth Circuit's 2015 decision in Minden Pictures v. John Wiley & Sons ( IP Update, Vol. 18, No. 9), asserting that the Court created 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.
The Ninth Circuit, however, explained that DRK interpreted its Minden holding too broadly. In Minden, the stock photography agent had standing to sue because it was the "sole and exclusive agent and representative with respect to the [l]icensing of any and all uses" of the photographs at issue. The court distinguished DRK's position from Minden, noting that DRK's representation agreements did not have such an exclusivity provision and thus did not render DRK a legal owner for standing purposes.
Turning to the assignment agreements, DRK claimed legal ownership through the assignments of the photographs, while McGraw-Hill argued that the assignment agreements were nothing more than invalid attempts to transfer the bare right to sue. Here, the Court referred to its 2005 decision in Silvers v. Sony Pictures Entertainment ( IP Update, Vol. 8, No. 4), in which it held that because of the absence of a "right to sue" under the exclusive rights set forth in § 106 of the Act, "an assignee who holds an accrued claim for copyright infringement, but who has no legal or beneficial interest in the copyright itself," may not sue for infringement. Examining the timing and language of the assignment agreements, their interplay with the representation agreements, and DRK's course of dealing with the photographers, the Ninth Circuit determined that each party kept the rights it had under the representation agreements, with the photographers retaining exclusive rights to the photographs, and DRK having retained only a non-exclusive license to authorize use of the photographs.
Because DRK also based its claim of beneficial ownership on the representation and assignment agreements, the Ninth Circuit rejected this argument on similar grounds: "[t]o hold that DRK is a beneficial owner simply on the very bases that it cannot be deemed the legal owner would negate our holding in Silvers and render portions [of the Copyright Act] superfluous." Citing procedural issues and delay, the Court also affirmed the district court's denial of leave for DRK to amend its complaint to join three photographers as plaintiffs in the suit.
In a concurring opinion, Judge Berzon noted that she believed that Silvers was wrongly decided, opining that the plaintiff in the case had a sufficient interest in the infringement to confer standing. However, given that Silvers remains controlling precedent, Judge Berzon stated that she was "compelled to agree" with the majority.
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