Legal Alert

Second Circuit Tells Aggregator Claiming Standing to Sit Down

February 22, 2018

Clarifying the issue of who has standing to pursue copyright infringement claims, the U.S. Court of Appeals for the Second Circuit on Friday rejected an attempt by a stock photography agency to aggregate claims belonging to individual photographers.

The photographers had executed agreements purporting to assign the agency the right to pursue past infringement. The court determined that the agency could not bring these claims as it is not the holder of an exclusive right under a copyright and thereby affirmed the grant of summary judgment dismissing claims asserting more than 250 alleged instances of copyright infringement. Robert Penchina—a partner in Ballard Spahr’s Media and Entertainment Law Group—represented John Wiley & Sons in the case, John Wiley & Sons, Inc. v. DRK Photo, 15-1134 (2d Cir. 2018).

DRK Photo is a stock photo agency that enters into representation agreements with photographers, thereby securing rights to their images, primarily on a non-exclusive basis. Beginning around 1992, DRK began licensing photographs to John Wiley & Sons, Inc., a publisher of educational materials, for use in Wiley’s educational textbooks. In 2011, DRK accused Wiley of infringement in connection with the parties’ transactions over the previous 20 years by allegedly using DRK's images beyond the scope of the licenses that had been granted.

Because DRK held only non-exclusive rights to the images and thus lacked standing to assert claims for copyright infringement, DRK entered into agreements with the photographers that purported to assign the copyrights to DRK along with the right to sue for past infringements. Wiley argued that these agreements were shams that did no more than assign a bare right to sue, which is insufficient to provide standing under Section 501 of the Copyright Act. The district court agreed.

In a 2 to 1 decision, the Second Circuit affirmed. The court found that by identifying in Section 501 the parties who may assert an infringement claim, namely the legal or beneficial owner of one of the six enumerated exclusive rights under the Act, Congress was signifying that others may not do so. The court noted that in drafting the Act, Congress was attempting to balance property interests with public policy concerns about the creation and publication of free expression, and they were reluctant to disturb that balance by reading into the Act additional features. The court therefore held that the Copyright Act does not permit prosecution of infringement suits by assignees of the bare right to sue that are not, and have never been, a legal or beneficial owner of an exclusive right under copyright.

DRK argued that recent Supreme Court decisions endorse the idea that claims should be freely assignable, and those holdings should apply to copyright actions because an aggregator like DRK is in a better position to vindicate rights than photographers holding individual claims. Although sympathetic to the policy argument, the majority found that the language of the Copyright Act simply does not extend standing to a party like DRK, to whom causes of action have been assigned.

The court rejected DRK’s argument that the agreements it had with photographers, which purported to convey “all copyrights and complete legal title,” gave it a sufficient ownership interest to satisfy Section 501. Relying on parol evidence, the court found that the agreements were intended only to convey an interest in the images for registration purposes and to permit DRK to sue for infringement, but that copyright ownership was not actually transferred. DRK also contended that because it stood to benefit from the licensing of the photos, it should be considered a beneficial owner of the images. The court rejected that argument, finding that beneficial ownership did not extend to a party that had not previously been in the chain of title.

The Second Circuit issued its decision more than two years after the case was argued. In the interim, the U.S. Court of Appeals for the Ninth Circuit had issued a ruling against DRK in another case addressing the same issues and reaching the same outcome. Although the Second Circuit could have applied collateral estoppel to that decision, it declined to do so, stating “this case presents an issue of importance in this Circuit, worthy of independent consideration.”

The attorneys in Ballard Spahr's Media and Entertainment Law Group are dedicated to supporting the free press and the First Amendment rights of groups and individuals. The Group helps clients navigate challenging media law issues across all platforms and industries. The firm’s Intellectual Property Department includes copyright attorneys who help our clients develop, license, buy, and sell copyrighted works, both alone and through collaborative arrangements with business partners. They negotiate agreements for the commercialization of copyrighted works and derivative works, devise and implement copyright policies, and litigate copyright infringement cases in courts throughout the country.

Copyright © 2018 by Ballard Spahr LLP.
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

Subscribe to Ballard Spahr Mailing Lists

Get the latest significant legal alerts, news, webinars, and insights that affect your industry.