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John Wiley & Sons, Inc. v. DRK Photo

United States District Court, S.D. New York

February 21, 2014

JOHN WILEY & SONS, INC., Plaintiff/Counter-Defendant,
v.
DRK PHOTO, Defendant/Counter-Plaintiff

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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For John Wiley & Sons, Inc., Plaintiff, Counter Defendant: Christopher Perry Beall, Robert Penchina, Levine, Sullivan, Koch & Schulz, LLP(NYC), New York, NY; Joseph John Barker, John Wiley & Sons, Inc., Hoboken, NJ.

For DRK Photo, Defendant, Counter Claimant: Christopher Seidman, LEAD ATTORNEY, Harmon & Seidman LLC (CO), Grand Junction, CO; Adam Louis DiLeo, NYC Department of Environmental Protection, Bureau of Legal Affairs, Flushing, NY; Amanda L Bruss, PRO HAC VICE, Harmon & Seidman LLC - Denver, CO, Denver, CO; Edward Hernstadt, Hernstadt Atlas, LLP, New York, NY; Maurice James Harmon, PRO HAC VICE, Harmon & Seidman LLC (PA), New Hope, PA.

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OPINION AND ORDER

KATHERINE POLK FAILLA, United States District Judge.

On August 5, 2011, Plaintiff/Counter-Defendant John Wiley & Sons, Inc. (" Plaintiff" or " Wiley" ), commenced this action against Defendant/Counter-Plaintiff DRK Photo (" Defendant" or " DRK" ) under the Declaratory Judgment Act, 28 U.S.C. § 2201, seeking a declaration that Wiley had not infringed the copyrights on certain stock photographs that DRK had previously licensed to Wiley. In response, on May 31, 2012, DRK counterclaimed against Wiley for infringement under the Copyright Act of 1976, 17 U.S.C. § § 101-810, as to a subset of these photographs.

The parties have filed cross-motions for summary judgment. For the reasons set forth in the remainder of this Opinion, Wiley's motion for summary judgment is granted in part and denied in part; DRK's motion for partial summary judgment is also granted in part and denied in part.

BACKGROUND[1]

A. DRK's Stock Photography Business

DRK is a stock photography agency that licenses photographic images to publishers. (DRK 56.1 Statement ¶ 1). Daniel Krasemann has owned DRK as a sole proprietorship since 1981. (D. Krasemann Decl. ¶ 1). Rather than employ photographers, DRK executes agreements with photographers pursuant to which the photographers grant DRK the right to include certain of the photographers' works in DRK's collection of stock photographs. (DRK's Counterstatement ¶ ¶ 3-4). Once

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the photographers' images are included in DRK's collection, DRK offers to license those images to publishers, like Wiley, and other users of photographs. ( Id. at 4).

DRK employs an internal numbering system to track the images that DRK includes in its collection. (D. Krasemann Decl. ¶ 7). Using this system, DRK assigns each image an internal number when that image is received from a photographer and added into DRK's collection. ( Id.). The images are numbered sequentially from the date on which the image was received. ( Id.). This number allows DRK to identify when the image was first released into its collection, and consequently, when the image is deemed published under copyright law. ( Id.; Penchina Decl., Exh. 31 at 66).

This procedure was applied to all images at issue in this case, except for certain images received from Stephen Krasemann, a photographer and Daniel Krasemann's brother. ( See D. Krasemann Decl. ¶ 8). Although internal numbers were assigned to Stephen Krasemann's images at the time DRK received them, the images were often not simultaneously released into DRK's collection. Instead, the images were released, and thus published at later dates. ( Id.).[2] Consequently, according to DRK, the internal numbers assigned to Stephen Krasemann's photographs may not reliably indicate the date on which the image was released for publication. ( Id. at ¶ 9).

B. DRK's Agreements with Photographers

DRK entered into a form representation agreement (the " Representation Agreement" ) with each photographer for whom DRK maintained images in its collection. (D. Krasemann Decl. ¶ 3, Exh. 1). Pursuant to the Representation Agreements for all images at issue, except those by photographers Tom Bean (" Bean" ) and Peter French (" French" ), DRK would serve as the photographers' " agent with [] respect to the sale or leasing of the photographs or transparencies which [the photographer had] delivered to [DRK] and shall deliver to [DRK] in the future." ( Id.). In contrast, under the Bean and French Representation Agreements, DRK agreed to act as Bean's and French's " sole and exclusive agent with respect to the sale or leasing of the photographs or transparencies which [Bean or French had] delivered to [DRK] and shall deliver to [DRK] in the future." ( Id. (emphasis added)).

The Representation Agreements also provided, in relevant part:

I understand that the best possible care will be taken of my material and agree that you assume no liability for any loss or damage to the items so delivered to you. In the event that any transparency is lost, destroyed or damaged by others, then I give you full and complete authority to make claim or bring suit for redress or compromise said claim without my permission.
I understand that there will be a 50/50 split between DRK PHOTO and myself regarding all sales made and received. Payment is to be made within ninety (90) days of receipt. DRK PHOTO shall notify me on a regular monthly basis if

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any sales activity occurred during that time.
I understand that the terms and compensation of the sales or leasing of my photographs or transparencies shall be solely in your discretion.
In the event of termination of this agreement DRK PHOTO retains the right to its normal commission on all sales which might arise from a user who has made duplicates of those transparencies, photographs, or other materials submitted to it during the terms of this agreement and then, after term hereof, the user wishes to utilize such duplicate materials. DRK PHOTO shall have the right to grant such usage and collect 50% of the net sale from usage. DRK PHOTO shall also retain the right to collect 50% of the net sale from all subsequent pick-ups or reprints on photos that were originally placed with the client during the term of this agreement, and then reprinted or picked-up after expiration of this agreement.

( Id.). Although DRK contends otherwise, the record before the Court conclusively establishes that all Representation Agreements, except those with Bean and French, granted DRK nonexclusive rights for the photographers' images in DRK's collection. ( See, e.g., Penchina Decl., Exh. 3, 30 at 166-67, 33 at 21).[3]

The Representation Agreement is not the only operative agreement between DRK and the photographers whose images are at issue here. In 2008, DRK initiated a program to register copyrights for the photographs in its collection. (Wiley 56.1 Statement ¶ 20). To that end, beginning in June 2008, DRK asked photographers to sign a form agreement, pursuant to which the photographers would grant DRK the right to assert copyright infringement claims for those photographs in its collection (the " Assignment Agreement" ). ( Id. at ¶ ¶ 21, 24). The Assignment Agreement, entitled " Copyright Assignment, Registration, and Accrued Causes of Action Agreement," provided:

The undersigned photographer, the sole owner of the copyrights in this undersigned's images, (the " Images" ) selected by DRK PHOTO (" DRK" ) and included in DRK's collection, hereby 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, as evidenced by DRK's receipt of a Certificate of Registration

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from the United States Copyright Office for such 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 in action -- which is the personal right to bring a case -- 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.
Any proceeds obtained by settlement or judgment for said claims shall, after deducting all costs, expenses and attorney's fees, be divided and paid 50% for the undersigned and 50% for DRK.

( Id. at ¶ 22).[4]

The purpose of the Assignment Agreement was to allow DRK to register photographs with the United States Copyright Office " as the copyright holder by assignment" so that DRK would have -- at least as DRK understood it -- " legal standing with the courts to pursue would be infringers." (Wiley 56.1 Statement ¶ 27). Indeed, when transmitting the Assignment Agreement to photographers, DRK informed them that the purpose of the agreement was for DRK to register the photographers' images in its collection with the United States Copyright Office so that DRK would be " in a much stronger position with much more leverage for settling copyright infringement claims." (Penchina Decl., Exh. 4). In those e-mails to photographers, DRK confirmed that the Assignment Agreement was " not a permanent assignment." ( Id.). Rather, and as provided for in the Assignment Agreement, DRK " agree[d] to reassign all copyrights and complete legal title back" to the photographers " immediately upon completion of the registration of the images, as evidenced by DRK's receipt of a Certificate of Registration from the United Stated Copyright Office for such images, and resolution of infringement claims brought by DRK relating to the images." ( Id.). When one photographer expressed his concern in signing the agreement, based on his unwillingness to allow the copyright registration to his image to be in DRK's name, DRK " assure[d]" the photographer that there was " no rights grab going on here. We simply want to register our website/database of images so the images

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are protected under copyright law, and so we can pursue infringers." ( Id. at Exh. 9). In another e-mail exchange, one photographer, upon realizing how many images that DRK had registered with the Copyright Office, e-mailed DRK to clarify: " I have not assigned copyright to any of these images other than temporarily to DRK Photo in order for you to pursue your infringement lawsuit. I have however sold non-exclusive rights to some of these pictures. I expect re-assignment of full copyright in the very near future when your lawsuit is concluded." ( Id. at Exh. 12).

C. DRK's Relationship with Wiley

Wiley is a publisher of textbooks and other educational materials. (Wiley 56.1 Statement ¶ 1). Beginning around 1992, DRK began licensing photographs to Wiley for inclusion in textbooks and related products published by Wiley. ( Id. at ¶ 9). In general, Wiley would submit a letter to DRK for each transaction that would identify which particular stock photographs from DRK's collection Wiley desired to use. ( Id. at ¶ 10). Wiley would also inform DRK which textbook or publication the photographs would be included in, and the number of print runs that Wiley intended to complete. ( Id.).

Once Wiley's request was approved, DRK would issue an invoice to Wiley that set forth the terms applicable to Wiley's use of the licensed photographs. (Wiley 56.1 Statement ¶ 11). For example, the invoices specified the terms of the " Media Usage and Type Allowed" as follows:

One-time, non-exclusive, North American, English language reproduction and distribution rights for publication inside the print version of the copyright 1997 John Wiley's & Sons, Inc. COLLEGE LEVEL TEXTBOOK publication titled THE SCIENCE, 2ND EDITION, by Trefil; the total number of copies to be printed is not to exceed 20,000. No other rights granted or implied. No electronic publishing rights granted.

(Second D. Krasemann Decl., Exh. 2-A, 2-B). The invoices also contained standard form language under the heading " Rights Granted" that stated:

One-time, non exclusive reproduction rights to the photographs listed below, solely for the uses and specifications indicated and limited to the individual edition, volume series, show event or the like contemplated for this specific transaction (unless otherwise indicated in writing).

( Id.).[5] Invoices that used a revised standardized form also included additional restrictions on the use of the images beyond the terms of the agreement:

If [Wiley] desires to reuse an image or extend previous usage, then Recipient must request and pay for additional rights prior to publication. [Wiley] agrees not to make, authorize or permit any use of an image or its derivative ... except as authorized by the invoice. In the event [Wiley] use[s] an image for any use other than that indicated on the invoice, including but not limited to the number of uses, the publication using, or the size of reproduction, DRK PHOTO agrees to forego its rights to sue for copyright infringement and breach of contract if [Wiley] pay[s], as liquidated damages, a sum equal to ten (10) times the maximum price [DRK] would have

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charged for such use, within 10 (ten) days of [DRK] billing such fee.

(Second Krasemann Decl., Exh. 2-B, Invoices 8795 and 9243).

In addition to the aforementioned agreements, for the period 2000 through 2001, DRK and Wiley entered into a separate pricing agreement that set forth the prices that DRK would charge Wiley for use of photos licensed by DRK (the " Pricing Agreement" ). ( See Wiley 56.1 Statement ¶ ¶ 13-14). Pursuant to the Pricing Agreement, " DRK charged Wiley $170 for the right to print and distribute in North America (with up to 10% of the distribution permitted to be sent abroad) up to 40,000 copies of a book (printed in the English language) in which DRK's photos comprised up to half a page; and DRK charged an additional 10% [(i.e., $17)] to increase the permitted print run up to 80,000 copies." ( Id. at ¶ 14).

D. The Alleged Instances of Copyright Infringement

1. Background and Nomenclature

At issue in this case are a number of photographs, and an even greater number of alleged instances of copyright infringement with respect to those photographs. Certain photographs are the subject of multiple instances of alleged infringement. Consequently, when referring to " instances" of alleged infringement, the Court is not necessarily referring to different photographs. Rather, the Court is identifying particular uses of a photograph by Wiley as to which DRK has claimed copyright infringement.

To capture the instances of alleged infringement, the parties have submitted three summary charts, included as exhibits to the parties' submissions; these charts detail information about each instance, such as the photograph used by Wiley and the publication in which it appeared. When referring to an instance of alleged infringement, the Court has adopted the parties' convention of referring to a line on one of the summary charts where the instance is identified. There are a total of 316 instances of alleged copyright infringement for which Wiley seeks a declaration of non-infringement (the " Wiley Non-Infringement Instances" ). These Instances are set forth in Exhibit A to Wiley's amended complaint (" Wiley's Chart" ). (Dkt. #23).[6]

In its counterclaims against Wiley for copyright infringement, DRK isolated 295 of the 316 Wiley Non-Infringement Instances, and listed them in Exhibit 1 to DRK's counterclaims. (Dkt. #26-1).[7] For clarity, the Court will refer to these instances as the " DRK Counterclaim Instances." In DRK's pending motion, it has further narrowed the scope of instances of alleged infringement as to which DRK seeks summary judgment in its favor, identifying only 88 instances (the " DRK Summary Judgment Instances" ). The DRK Summary Judgment Instances are identified in Exhibit A to the Second Declaration

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of Autumn Witt Boyd (" DRK's Chart" ). (Dkt. ...


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