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Palmer Kane LLC v. Scholastic Corporation

United States District Court, S.D. New York

March 31, 2014



THOMAS P. GRIESA, District Judge.

Plaintiff Palmer/Kane LLC ("Palmer Kane") brings this action alleging copyright infringement, breach of contract, and breach of the implied duty of good faith and fair dealing. Presently, there are two motions before the court: (1) defendant Corbis Corporation's ("Corbis") motion to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6) and Fed.R.Civ.P. 8, and (2) defendant Scholastic Corporation and Scholastic, Inc.'s (collectively "Scholastic") motion to dismiss or, in the alternative, for a more definite statement of the copyright claim pursuant to Rule 12(e).

For the following reasons, the court grants both motions to dismiss. Scholastic's motion for a more definite statement is moot.

The Complaint

This opinion assumes the truths of the facts alleged in the complaint for the purposes of deciding these motions to dismiss.

Plaintiff Palmer Kane is a photography agency that licenses the works of Gabe Palmer, a professional photographer. Defendant Corbis licenses and distributes photographs to publishers on behalf of photographers. Defendant Scholastic publishes and distributes textbooks and other educational material throughout the United States.

Palmer created photographs, also called images, for an entity named Palmer/Kane Inc. ("PKI"). PKI registered and became the copyright owner of the photographs identified in Exhibit A of the complaint. On January 15, 2008, PKI transferred its ownership rights in the photographs to Palmer Kane. Palmer Kane then registered its copyrights with the United States Copyright Office. The complaint provides 17 registration numbers covering Palmer Kane's photographs.

Through Corbis, Palmer Kane entered into agreements authorizing Scholastic to publish specific photographs, subject to certain limitations. Those limitations are not described in the complaint.

A. Allegations against Scholastic

Palmer Kane alleges that "[u]pon information and belief, Defendants exceeded the licenses it obtained to use Plaintiff's images, reused Plaintiff's works without a license or prior to obtaining a license, and made unauthorized uses of Plaintiff's works." (Compl. ¶ 22). Specifically, Scholastic exceeded the scope of its licenses by publishing Palmer Kane's photographs in the following publications: Scholastic Explains Writing Homework, Scholastic Children's Dictionary, Scholastic Children's Encyclopedia, Book of Knowledge, New Book of Knowledge, and New Book of Popular Science.

In support of its claim, Palmer Kane attaches Exhibit A, which describes 146 photographs and notes each photograph's licensor or publisher, title, ISBN, agent, invoice number and date, and image number. However, Palmer Kane asserts that Exhibit A does not contain an exhaustive list of the photographs infringed by Scholastic. Palmer Kane alleges that, as part of a broader pattern of infringing activity, Scholastic has concealed its illegal conduct by ignoring Palmer Kane's request for usage information. By refusing to provide the requested information, Scholastic has prevented Palmer Kane from learning the full extent of Scholastic's unauthorized, unlicensed, and infringing uses of its photographs.

B. Allegations against Corbis

Palmer Kane also alleges that Corbis - one of the agents hired to license photographs to Scholastic - breached their contract and the implied duty of good faith and fair dealing in connection with the infringement alleged against Scholastic.

Palmer Kane entered into a photographer representation agreement with Corbis (the "Corbis Agreement") on October 3, 2003. The Corbis Agreement contains an "Audit Rights" provision, which provides that the photographer has a right to an "audit of Corbis' records with respect to sales of... Accepted Images." (Compl., Ex. U, at 5).

On at least three occasions, Palmer Kane requested in writing that Corbis provide "copies of invoices and licenses relating to Palmer Kane images that have been licensed by Corbis." (Compl. ¶¶ 66-69). However, Corbis refused to provide copies of the license agreements governing Palmer Kane's photographs. Corbis' refusal, Palmer Kane alleges, breached the "Audit Rights" provision of the Corbis Agreement.

Palmer Kane also alleges that Corbis' refusal also violated contracts Palmer Kane signed with companies later acquired by Corbis. On June 21, 2000, Palmer Kane entered into a photographer representation agreement with the Stock Market Photo Agency of New York, Inc. (the "TSM Agreement"). On an unspecified date, Palmer Kane signed a photographer representation agreement with Zefa Visual Media Group (the "Zefa Agreement"). Both the TSM and Zefa Agreements contain provisions that grant photographers the right to inspect certain records possessed by TSM and Zefa. Corbis acquired TSM and Zefa, along with all their contractual rights and obligations in 2000 and 2005, respectively.

The complaint alleges that Corbis breached the TSM Agreement by refusing to produce license agreements related to Palmer Kane's photographs. (Compl. ¶ 53). The TSM Agreement is attached to the complaint as Exhibit T. Similarly, Palmer Kane claims that Corbis breached the Zefa Agreement. However, Palmer Kane does not quote the Zefa contract or attach the Zefa Agreement to the complaint. Instead, Palmer Kane attaches a "representative photographer's agreement" as Exhibit Y.

Even if Corbis did not breach any express contractual terms, Palmer Kane alleges that it breached the implied duty of good faith and fair dealing. Palmer Kane alleges that Corbis' refusal to provide the license agreements prevented Palmer Kane from determining which publishers are infringing its copyrights. Thus, Corbis hindered Palmer Kane's ability to bring copyright enforcement actions against infringing publishers. In doing so, Corbis deprived Palmer Kane of "the benefit of its bargain."

Palmer Kane also alleges that Corbis "knew or had reason to know that such terms had been violated by licensees" and therefore had a duty to enforce the agreements or assist ...

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