United States District Court, D. Hawai'i
Order Denying Reconsideration April 30, 2013.
J. Stephen Street, Paul Maki, Honolulu, HI, for Plaintiff.
Dana E. Becker, David W. Marston, Jr., Morgan Lewis & Bockius LLP, Philadelphia, PA, J. Kevin Fee, Morgan Lewis & Bockius LLP, Washington, DC, Sharon R. Smith, Morgan Lewis & Bockius LLP, San Francisco, CA, Jordon Jun Kimura, Kenneth J. Mansfield, McCorriston Miller Mukai MacKinnon LLP, Honolulu, HI, for Defendant.
ORDER DENYING PACIFIC STOCK'S MOTION FOR PARTIAL SUMMARY JUDGMENT; ORDER DENYING PEARSON EDUCATION'S MOTION FOR SUMMARY JUDGMENT
SUSAN OKI MOLLWAY, Chief Judge.
Plaintiff Pacific Stock, Inc., alleges that Defendant Pearson Education, Inc., has infringed on Pacific Stock's photograph copyrights. Pacific Stock gave Pearson licenses to use those photographs in textbooks that Pearson said it planned to publish, but, according to Pacific Stock, Pearson exceeded the terms of the licenses. Pacific Stock asserts claims for copyright infringement, fraud, and fraudulent concealment.
Both Pacific Stock and Pearson have moved for summary judgment, Pacific Stock on a portion of the case, and Pearson on the entire case. The motions rely largely on evidence in the form of dense charts containing line items representing orders, print runs, and similar information. That is, this is not a record filled with new-smelling books to thumb through or glorious color photographs to peruse. The record is far less exciting for any lover of either books or photographs. At most, postage-size versions of the photographs appear on some documents. Although Pacific Stock shows a likelihood that Pearson has infringed on copyrights, questions of fact about Pearson's actual use of the stock photographs preclude a grant of summary judgment to Pacific Stock. Summary judgment is similarly denied as to Pearson's motion for summary judgment.
The facts of this case are largely undisputed. Pacific Stock represents approximately 70 photographers, whose photographs it licenses others to use. The sole owner of Pacific Stock is Barbara Brundage. See Pearson Education, Inc.'s Concise Statement of Facts ¶¶ 1-2, ECF No. 76; Pacific Stock's Concise Statement of Facts in Opposition ¶ 1, ECF No. 94.
Pearson publishes school textbooks and other educational materials in which it sometimes includes Pacific Stock's " stock photos." The licensing process commences when Pearson sends a " billing request" to Pacific Stock. See Pearson's CSOF ¶¶ 3-4, ECF No. 76; Pacific Stock's CSOF ¶ 1, ECF No. 94. Copies of the billing requests are filed as Exhibit D, ECF No. 79. All of these requests contain similar information. For example, with respect to image 13, a picture of the Great Wall of China, Pearson informed Pacific Stock on or about January 21, 2000, that Pearson wished to use a 1/4-page image in a textbook, that the circulation of the textbook would be " Up to 40,000," and that the distribution region for the textbook would be " North America." See ECF No. 79, PageID # 1141.
Pacific Stock's practice is to respond to billing requests by sending invoices. Each invoice sent to Pearson stated the scope of the license to use the photograph in issue, as well as the price Pacific Stock was charging. For example, with respect to image 13, Pacific Stock sent Pearson an invoice dated February 1, 2000. The invoice stated that, for a certain price, Pearson would have a " One time non-exclusive use" of a 1/4-page photograph of the Great Wall of China for a textbook with a " Print-run: Up to 40,000" and " Distribution Area: North America." See ECF No. 80, PageID # 1234. The invoice stated: " Rights: NO electronic use (web site, CDROM, or other media use.)" The invoice also provided, " Use of any image is conditioned on the receipt of payment in full. In the event of unauthorized use, it is agreed that a retroactive license can be made available at a fee of ten (10) times the normal reproduction charge." Id.
Effective September 18, 2003, Pacific Stock agreed to pricing terms for Pearson's use of Pacific Stock's stock photographs. See Ex. 9, ECF No. 84-3. Pearson calls this agreement a " preferred vendor agreement," and says that the agreement was attractive to Pacific Stock because it encouraged Pearson's use of Pacific Stock's stock photographs by setting a price and eliminating the need to negotiate for each individual photograph. See Pearson's CSOF ¶¶ 6-8, ECF No. 76; Pacific Stock's CSOF ¶ 1, ECF No. 94. The September 2003 agreement set a " base rate" for up to a 1/2-page photograph, with distribution of up to 40,000 copies in North America. For a 3/4-page or full-page, the " base rate" increased. If distribution was over 40,000, a percentage was to be added to the " base rate." If distribution was to exceed 100,000, a higher percentage was to be added to the base rate. See Ex. 9, ECF No. 84-3. The invoices for images 1 to 10 and 12 to 19 preceded the effective date of the pricing agreement. See Ex. E, ECF No. 80.
Effective March 9, 2004, Pacific Stock and Pearson agreed to more detailed pricing terms. See Ex. 10, ECF No. 84-4. The terms set forth in this agreement are generally the same as in the previous one. In relevant part, the March 2004 agreement clarified the pricing for " Extended Print Runs." If distribution was over 40,000, the same percentage agreed to earlier was to be added to the " base rate." If distribution was to exceed 100,000, the same percentage agreed to earlier was to be added to the base rate. Id.
After the pricing agreements had been entered into, Pearson continued to send " billing requests" to Pacific Stock for use of stock photographs, and Pacific Stock continued to send Pearson invoices containing licenses for the use of the photographs. For example, on or about January 12, 2006, Pearson sent a " billing request" for a picture of a beach, image 22, saying that it wished to use a 1/4-page picture in a textbook with a circulation of up to 40,000, with distribution mostly in the United States, but not more than 10% abroad. Pearson indicated that it was willing to pay an additional percentage over the " base rate" for this use. See Ex. D, ECF No. 79, PageID # 1147. Pacific Stock sent Pearson an invoice with a price for use of the beach photograph. The price was generally consistent with the prices set forth in the pricing agreement. Pacific Stock granted Pearson a one-time, nonexclusive use of image 22 that allowed Pearson to use a 1/4-page picture in a textbook with a run of up to 40,000 and distribution mostly in the United States, with up to 10% abroad. See Ex. E, ECF No. 80, PageID # 1250.
At the hearing on the motions, Pearson indicated that, except with respect to image numbers 134 and 135, it had not asked Pacific Stock for extensions or expansions of the various image licenses.
Barbara Brundage testified in October 2012 that she had become suspicious that publishers might have been exceeding the terms of the licenses Pacific Stock was granting " Over the past couple of years." See Deposition of Barbara Brundage at 49, Oct. 25, 2012, ECF No. 98-2. Brundage apparently became suspicious of how Pearson was using the photographs in the Spring of 2011. Id. at 51.
On June 31, 2011, Pacific Stock filed the present Complaint against Pearson. See ECF No. 1. The Complaint asserts that Pearson committed copyright infringement by violating licenses for 151 stock photographs. It also asserts claims of fraud and fraudulent concealment. Id. Pacific Stock has withdrawn its claims with respect to 20 photographs, leaving licenses for 131 still in dispute.
Pacific Stock's motion for partial summary judgment addresses 59 of the 131 images. See Pacific Stock's Motion for Summary Judgment, ECF No. 70 (seeking summary judgment with respect to image numbers 3, 8, 9, 10, 12, 13, 14, 15, 16, 18, 19, 22, 28, 29, 30, 33, 35, 36, 37, 63, 64, 67, 68, 69, 70, 71, 74, 76, 78, 80, 85, 91, 92, 98, 103, 104, 105, 107, 108, 112, 113, 114, 115, 116, 117, 118, 119, 120, 121, 122, 123, 124, 125, 126, 127, 134, 135, 136, and 146).
A report from " Global Rights Data Warehouse" indicates that Pearson may have exceeded the licenses granted to it with respect to each of the 59 photographs. This report was created by Pearson, apparently for this litigation, and turned over to Pacific Stock. See Decl. of Paul Maki ¶ 3(f), ECF No. 71-2, PageID # 440. For example, with respect to image 13, which was licensed for use in up to 40,000 copies of a textbook, the report notes that the
image may have been used in more than 140,000 copies. See Ex. F, ECF No. 81, PageID # 1421. Similarly, the license for image 22 was for 40,000, but may have been used in more than 45,000 volumes. Id., PageID # 1424. Pacific Stock has summarized the data in Exhibit F and reprinted the pertinent data in Exhibit A, which is more easily readable than Exhibit F. See ECF No. 78.
Pearson notes that the report tracks the number of textbook volumes, not the number of times an image was used. The report therefore does not speak to whether any of the images was actually used in a textbook.
At the hearing on the motion, Pearson asserted that the images may not have been included in the textbooks as a result of last-minute editorial decisions. Pearson also noted that, when Pacific Stock began questioning Pearson's use of the images, Pearson began removing the photographs from the textbooks. While Pearson conceded at the hearing that it was likely that a high percentage of the textbooks did contain the images, it turns out that no one, not even Pacific Stock, has actually reviewed the textbooks to determine whether the images are actually included in them. Pearson admitted at the hearing that, if the textbooks contained the images, Pearson had exceeded the numerical limits of various licenses.
Pacific Stock complains that Pearson should not be allowed to argue at this time that the images may not have been used in the textbooks. Pacific Stock says that, in response to an interrogatory concerning " Product Use," Pearson referred Pacific Stock to various documents, including Exhibit F. See ECF Nos. 103-4, Interrogatory No. 3. " Product Use" as that term was used in the Interrogatories was defined by Pacific Stock as meaning " all uses of any of the Images as a part of or related or ancillary to that listed in the ‘ Title’ column on Exhibit A." ECF No. 103-3. Pearson is apparently taking the position that determining the number of times an image was used in a textbook cannot be discerned from Exhibit F alone. For its part, Pacific Stock is complaining that Pearson gave it no reason to think that Exhibit F's references to textbooks named in billing requests or invoices might actually be irrelevant to the interrogatory response because those textbooks might not include images licensed by Pacific Stock.
On the issue of who owns the copyrights to the images, Pacific Stock claims to have a Certificate of Registration from the Register of Copyrights for each of the 59 images at issue in its motion for partial summary judgment. See Ex. C, ECF Nos. 72-73. Pearson challenges the registration of 18 of the 59 images (numbers 8, 22, 28, 29, 30, 35, 36, 78, 85, 92, 103, 105, 115, 125, 134, 135, 136, and 146). See Opposition at 27 n. 6, ECF No. 99. Pearson is not contesting Pacific Stock's proper registration of the other 41 images (numbers 3, 9, 10, 12, 13, 14, 15, 16, 18, 19, 33, 37, 63, 64, 67, 68, 69, 70, 71, 74, 76, 80, 91, 98, 104, 107, 108, 112, 113, 114, 116, 117, 118, 119, 120, 121, 122, 123, 124, 126, and 127).
Pearson notes the 18 disputed images were part of six registration certificates corresponding to compilations of the work of multiple photographers. Pearson contends that a registration of a collective work does not have the effect of registering each of the individual works included in the collective work. Pacific Stock protests that it registered the 18 images in the manner it did pursuant to 37 C.F.R. § 202.3(b)(5) and guidance from the Copyright Office. See Decl. of Barbara Brundage ¶¶ 7, 8, and 11, ECF No. 27-1.
The ownership Pacific Stock asserts in the various copyrighted images was obtained through assignments. See Decl. of Barbara Brundage ¶ 8, ECF No. 71-1
(" Pacific Stock has been assigned, and is the owner of, the copyrights in all of the images at issue in this case." ). In her deposition, Brundage explained that Pacific Stock and the photographers entered into " Contributor Agreements." According to Brundage, from 1992 to 2003, photographers gave Pacific Stock the exclusive right to license their images in Hawaii, but retained the right to license their images outside of Hawaii. See Brundage Test. at 191-95, ECF No. 98-2. Beginning in 2003, the " Contributor Agreements" provided Pacific Stock with a worldwide exclusive right to license the photographers' images. Id. at 197-98. Each photographer still retained the right to use the images in the photographer's personal marketing materials and to personally license the image as well. Id. at 199.
Pacific Stock says it also obtained through assignments the right to pursue copyright violations on behalf of the various photographers. See, e.g., ECF Nos. 76-16 and 76-17. An assignment dated June 14, 2011, from Doug Perrine states that Perrine
hereby assigns to Agency [Pacific Stock] co-ownership of all copyrights in the image. This assignment authorizes Agency, in its sole discretion, to present, litigate and settle any accrued or later accruing claims, causes of action, choses in action— which is the personal right to bring a case— or lawsuits, brought by Agency to address unauthorized uses of the image by licensees of Agency, as if Agency were the undersigned.
ECF No. 76-16. An assignment dated June 17, 2011, from Jody Watt almost identically provides that Watt
hereby assigns to Agency [Pacific Stock] ownership of all copyrights in the image. This assignment authorizes Agency, in its sole discretion, to present, litigate and settle any accrued or later accruing claims, causes of action, choses in action— which is the personal right to bring a case— or lawsuits, brought by Agency to address unauthorized uses of the image by licensees of Agency, as if Agency were the undersigned.
ECF No. 76-17. The only difference between the assignments is that Perrine assigns " co-ownership," while Watt assigns " ownership."
Pearson seeks summary judgment on certain grounds with respect to all 131 of the images in issue. It also says that, with respect to 75 images (numbers 1, 4 to 6, 11, 20, 21, 23 to 27, 31, 32, 34, 37 to 39, 50 to 62, 65 to 66, 72 to 73, 77, 79, 83, 84, 86 to 90, 93 to 97, 99 to 102, 106, 109 to 111, 129 to 133, 136, 139 to 145, and 147 to 151), Pacific Stock has no evidence at all that Pearson exceeded the scope of the licenses. This list includes 2 images that Pacific Stock has also moved for summary judgment on, image numbers 37 and 136. It also includes 17 images concerning which Pacific Stock has withdrawn its claims (numbers 1, 4 to 6, 11, 20, 21, 24, 31, 34, 66, 84, and 86 to 90). Thus, Pearson's argument that Pacific Stock lacks evidence that the licenses were exceeded ends up concerning 58 images, not 75.
Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment shall be granted when " the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a) (2010). See Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir.2000). The movants must support their position that a material fact is or is not genuinely disputed by either " citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those
made for the purposes of the motion only), admissions, interrogatory answers, or other materials" ; or " showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed.R.Civ.P. 56(c). One of the principal purposes of summary judgment is to identify and dispose of factually unsupported claims and defenses. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
Summary judgment must be granted against a party that fails to demonstrate facts to establish what will be an essential element at trial. See id. at 323, 106 S.Ct. 2548. A moving party without the ultimate burden of persuasion at trial— usually, but not always, the defendant— has both the initial burden of production and the ultimate burden of persuasion on a motion for summary judgment. Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir.2000). The burden initially falls on the moving party to identify for the court " those portions of the materials on file that it believes demonstrate the absence of any genuine issue of material fact." T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir.1987) (citing Celotex Corp., 477 U.S. at 323, 106 S.Ct. 2548); accor ...