Manish S. Shah, United States District Judge.
Plaintiff Robert Frerck, a professional photographer, claims defendant Pearson Education infringed his copyrights by publishing and distributing his photographs beyond the scope of the parties' agreements. Plaintiff also contends defendant infringed his rights by using some photographs
Plaintiff has moved for partial summary judgment as to liability on a subset of infringement claims. Defendant has moved for partial summary judgment on plaintiff's fraud claims. For the following reasons, I grant both motions.
A party seeking summary judgment must show there is no genuine dispute as to any material fact and that it is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Fed. R. Civ. P. 56(a). There is a genuine dispute as to a material fact if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In opposing summary judgment, a nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corporation, 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Likewise, if the nonmoving party's evidence is "merely colorable or is not significantly probative," summary judgment may be granted. Anderson, 477 U.S. at 249-50, 106 S.Ct. 2505 (internal citations omitted). On cross-motions for summary judgment, all facts are construed and all reasonable inferences are drawn in favor of the non-moving party. Garofalo v. Village of Hazel Crest, 754 F.3d 428, 430 (7th Cir.2014).
Plaintiff Robert Frerck was a professional photographer engaged in the business of selling stock photographs for nonexclusive use. Dkt. 145-2 ¶ 2, Plaintiff's Response to Defendant's Separate Statement of Facts. Defendant Pearson Education was a publisher of school textbooks and other educational materials. Id. ¶ 1. The parties had been doing business with each other since 1992. Id. ¶¶ 3-4.
Whenever defendant wanted to publish some of plaintiff's photographs, it had an image permission coordinator send him a written "billing request." Id. ¶¶ 10, 13-14. The billing request identified the photographs being requested and the publications in which they were going to appear. Id. Plaintiff claims the billing requests also provided the maximum number of copies defendant intended to publish, while defendant claims they provided only an estimate. Id. ¶ 10, 14.
Plaintiff responded to the billing request by sending defendant's image permission coordinator an invoice, which contained limitations on print quantities and geographical distributions for the publications at issue. Id. ¶ 11; Dkt. 106-2 ¶ 9, Defendant's Response to Plaintiff's Separate Statement of Facts. The parties dispute the significance of the invoice. Defendant describes it as an acknowledgement of the billing request, a request for payment, and only one part of the parties' licensing agreement. Dkt. 145-2 ¶ 11; Dkt 106-2 ¶ 11. Plaintiff thinks of it as the license in its entirety — granting and setting forth specifically limited rights. Dkt. 145-2 ¶ 11; Dkt 106-2 ¶ 11. Plaintiff also believes that at the time defendant transmitted certain billing requests, it knew its demand for the requested photographs would be — or already was — in excess of the requested licenses. Dkt. 146-2 ¶¶ 15-16.
The parties maintained this back-and-forth for almost 20 years, but in July 2011 plaintiff brought suit. Plaintiff's Amended Complaint alleges two sets of claims. The
The second set of 12 separate claims alleges defendant committed common-law fraud under Illinois law because defendant intentionally misrepresented the number of reproductions it would make and the geographic areas in which it would distribute them, intending that plaintiff would rely on those misrepresentations to his detriment by charging a lower fee. Dkt. 105 ¶¶ 11, 28; Dkt. 105-1-105-4.
Plaintiff has moved for partial summary judgment as to liability on a subset
Plaintiff believes no material fact is genuinely in dispute and that he is entitled to judgment as a matter of law. Defendant disagrees and identifies four threshold areas of dispute: (1) defendant's affirmative defenses generally, (2) the statute of limitations, (3) the doctrine of laches, and (4) implied license. Defendant also believes elements of plaintiff's copyright claims remain genuinely in dispute.
Plaintiff is not entitled to summary judgment, defendant argues, because his opening brief does not preemptively tackle all of its affirmative defenses. Defendant identifies two decisions in which courts have held that a plaintiff's opening brief must refute affirmative defenses. Amwest Surety Insurance Co. v. Szabo, 2001 WL 1230643, *4 (N.D.Ill. Oct. 11, 2001); Navistar International Tranportation Corp. v. Freightliner Corp., 1998 WL 786388, *2 (N.D.Ill.1998).
Respectfully, I am not persuaded by these cases. Instead, I agree with those decisions in which courts have required the defendants to raise their affirmative defenses in their opposition briefs. See, e.g., United Mine Workers v. Pittston Co., 984 F.2d 469, 478 (D.C.Cir.1993); Pandrol USA, LP v. Airboss Railway Products, Inc., 320 F.3d 1354, 1366 (Fed. Cir.2003); United Central Bank v. Wells Street Apartments, LLC, 957 F.Supp.2d 978, 987-88 (E.D.Wis.2013). First, when a plaintiff moves for judgment as a matter of law on an entire claim, he implicitly contends there is no genuine dispute about any fact material to the defendant's affirmative defenses. Indeed, a dispute over a fact material to an affirmative defense precludes summary judgment. Second, when — as here — the defendant takes a
Defendant argues that a genuine dispute over whether plaintiff's claims are time-barred precludes summary judgment. Under 17 U.S.C. § 507(b), no action for copyright infringement "shall be maintained... unless it is commenced within three years after the claim accrued." In determining when a copyright claim accrues, courts in the Seventh Circuit apply the "discovery rule." The "statute of limitations starts to run when the plaintiff learns, or should as a reasonable person have learned, that the defendant was violating his rights...." Gaiman v. McFarlane, 360 F.3d 644, 653 (7th Cir.2004) (emphasis added).
In July 2008, Julie Orr, defendant's Manager of Image Permissions, notified plaintiff that defendant had exceeded the print run relating to several products in the Realidades series.
I find no genuine dispute on this score. No reasonable jury could conclude that plaintiff, based on the experience he had with defendant, should have inquired into whether it was infringing his copyrights. Orr's disclosure was voluntary and proactive. Defendant seemed to take it upon itself to remedy an occurrence that was — from plaintiff's perspective — the first of its kind over a nearly 20-year relationship. Dkt. 111-3 at 58:11-59:9. Furthermore, after her initial report, Orr told plaintiff the overrun had actually been smaller than first believed. Again, the fulsome communication belied any hint of wrongdoing.
Defendant argues that plaintiff's delay in filing suit creates a genuine issue of fact concerning the defense of laches. For laches to apply, the party asserting the defense must demonstrate: (1) an unreasonable lack of diligence by the party against whom the defense is asserted, and (2) prejudice arising therefrom. Hot Wax, Inc. v. Turtle Wax, Inc., 191 F.3d 813, 820 (7th Cir.1999). "A defendant has been prejudiced by a delay when the assertion of a claim available some time ago would be `inequitable' in light of the delay in bringing that claim ... [and] prejudice ensues when a defendant has changed his position in a way that would not have occurred if the plaintiff had not delayed." Id. at 824 (internal quotation omitted).
As with defendant's statute of limitations defense discussed above, I find plaintiff did not demonstrate an unreasonable lack of diligence. Defendant has also provided no evidence that it changed its position in any way due to plaintiff's delay. Defendant argues only that it "could have taken steps to remove and replace [plaintiff's] photographs." Dkt. 106 at 12. This unsupported statement is insufficient given defendant's burden at this stage.
Plaintiff's motion must be denied, defendant argues, because there is a genuine dispute of material fact regarding whether — through the parties' course of conduct — defendant was granted an implied license to use plaintiff's photographs beyond the scope of the invoices. An implied license is an affirmative defense to a claim of copyright infringement. I.A.E., Inc. v. Shaver, 74 F.3d 768, 776 (7th Cir. 1996).
The Seventh Circuit has so far recognized only a narrow circumstance in which an implied license is granted. See Kennedy v. National Juvenile Detention Association, 187 F.3d 690, 694 (7th Cir. 1999) (citing Shaver, 74 F.3d at 776). "An implied nonexclusive license has been granted when (1) the licensee requests the creation of a work; (2) the licensor creates the work and delivers it to the licensee who asked for it; and (3) the licensor intends that the licensee copy and distribute the work." Id. Here, there is no evidence that defendant requested the creation of plaintiff's photographs. Under Seventh Circuit precedent, therefore, defendant's argument for an implied license fails.
Relying on decisions from outside this circuit, defendant argues that implied licenses may arise in situations other than the narrow work-for-hire arrangement found in Shaver. Dkt. 106 at 7. Specifically, defendant relies on a decision from the Ninth Circuit in which the court affirmed a finding of implied license on the
I do not reach the question of whether the broader rule articulated in Falcon is consistent with Seventh Circuit precedent because I hold that, in any event, defendant fails to present a genuine dispute of material fact under the Falcon test as well. In contrast to the "frequent and informal interactions between the parties" in Falcon, plaintiff and defendant abided by a formal protocol: First, defendant issued billing requests to plaintiff asking to reproduce his photographs in defendant's publications. Second, in response to these requests, plaintiff issued limited licenses in the form of invoices.
Additionally, in nearly every transaction, defendant was required to pay for the license before publishing the photographs. To be sure, on one occasion plaintiff expressly granted defendant a retroactive license after defendant exceeded the original license. Dkt. 106 at 6; Dkt. 106-12 ¶ 10, Plaintiff's Objections and Responses to Defendant's First Set of Interrogatory Requests. And three times
Finally, the mere fact plaintiff never refused defendant a license does not mean defendant was free to use plaintiff's photographs beyond the scope of those licenses or that plaintiff was barred from refusing a request. Defendant has offered no authority that goes so far.
Defendant also cites two district court opinions in which the judge denied a motion for partial summary judgment because the parties' course of conduct created a genuine issue of material fact about an implied license. Alaska Stock, LLC v. Pearson Education, Inc., 975 F.Supp.2d 1027, 1041-43 (D.Alaska 2013); Psihoyos v. Pearson Education, Inc., 855 F.Supp.2d 103, 124-125 (S.D.N.Y.2012).
In Alaska Stock, the court found a factual dispute due to an admission by the plaintiff's president that, even after the he knew Pearson was over-printing photographs, the plaintiff continued to send the defendant license agreements post-publication. 975 F.Supp.2d at 1042. Here, however, there is no evidence of plaintiff knowingly and continuously ratifying an inverted licensing protocol, so Alaska Stock does not apply.
In Psihoyos, the court applied a "meeting of the minds" test. 855 F.Supp.2d at
In sum, this case clearly does not fit the narrow Seventh Circuit definition of implied license, but even applying the broader tests of other courts, defendant has failed to demonstrate a genuine dispute of fact on this defense.
To prove copyright infringement a plaintiff must demonstrate: "(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original." Feist Publications, Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340, 361, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991). If the plaintiff has granted the defendant a license, the second element is satisfied by showing that the license was limited in scope and that it has been exceeded. See Shaver, 74 F.3d at 775 ("The licensee violates the copyright by exceeding the scope of [the] license").
Plaintiff presents proof that he created the photographs at issue and that he holds a copyright to each one. Dkt. 98-2 ¶¶ 6-7. Defendant does not dispute that plaintiff created these photographs. Dkt. 106-2 ¶ 6. And though defendant does not admit either that plaintiff holds a legal copyright to the photos, or that the photos are the subject of a valid Certificate of Copyright Registration, Dkt. 106-2 ¶ 6-7, defendant has not presented any evidence to contrary. Nor has it substantively argued to the contrary in its brief. I therefore find that plaintiff has satisfied the first prong of the copyright infringement test with regard to the images identified in Exhibit 1 to the Declaration of Alex Kerr.
Next, plaintiff points to business records defendant produced in discovery to support his claim that defendant exceeded the scope of the licenses. Dkt. 98 at 7-8; Dkt. 98-12 ¶¶ 2-8. According to plaintiff, "Global Rights Data Warehouse" reports show how many copies defendant made of the publications at issue, see Dkt. 98-14-98-39, while "Geography Reports" show where in the world defendant distributed the publications at issue, see Dkt. 98-40-98-46. For every claim in plaintiff's motion, these reports show defendant printed more copies than the pertinent license allowed (when defendant had a license), distributed the photos in more countries than the pertinent license allowed (when defendant had a license), or both. See Dkt. 98-13. In addition, plaintiff declared under penalty of perjury that for each of the publications at issue, he "reviewed a copy of the student or teacher editions and confirmed that the Photographs are included in the publications...." Dkt. 98-3 ¶ 15.
Defendant argues plaintiff's evidence is insufficient. It dismisses as "conclusory" plaintiff's declaration that he personally checked each publication. Dkt. 106 at 13. To that end, defendant notes that neither party produced six of the publications at issue (underlying 25 claims), which makes it impossible to verify whether plaintiff's 25 photographs were actually published.
In response, plaintiff says he stands by his declaration, but also supplements the record with scans of the publications at issue (including the missing six). Dkt. 111 at 14. Plaintiff further explains that he did not make the six publications available to defendant because "in certain instances, he returned copies to resellers or he examined the books at a public library." Id. at 14-15 n. 75.
Plaintiff's evidence satisfies his initial burden of demonstrating that no genuine dispute exists as to whether defendant exceeded the scope of the licenses. Defendant's own business records plainly show that the publications at issue were produced and distributed in excess of what the relevant licenses allowed. Plaintiff submitted a declaration swearing that he personally reviewed a copy of each publication and verified that it contained the subject photos.
Defendant's evidence fails to satisfy its counter-burden of presenting a genuine dispute of material fact. The record is devoid of any evidence that defendant actually removed any of plaintiff's photographs during last-minute editorial changes. Likewise, there has been no proof presented that defendant's "replacement process" actually resulted in any of plaintiff's photographs being pulled so as to affect the accuracy of the data contained in the Global Rights Data Warehouse report or Geography Report. The evidence defendant has presented on that score is "not significantly probative" because it does not assert that plaintiff's photographs were actually removed under either of the two theories. Anderson, 477 U.S. at 249-50.
Although reasonable inferences must be construed in defendant's favor on plaintiff's motion, it would not be reasonable to infer from defendant's Rule 30(b)(6) testimony that plaintiff's photographs were actually removed. In sum, I find that "the record taken as a whole could not lead a rational trier of fact to find for [defendant]," and thus "there is no `genuine issue for trial.'" Matsushita, 475 U.S. at 587.
A claim of common-law fraud under Illinois law requires proof of five elements: (1) a false statement of material fact; (2) defendant's knowledge that the statement was false; (3) defendant's intent that the statement induce the plaintiff to act; (4) plaintiff's reliance upon the truth of the statement; and (5) plaintiff's damages resulting from the reliance on the statement. Massuda v. Panda Express, Inc., 759 F.3d 779, 783, 2014 WL 3566419, *4 (7th Cir. July 21, 2014). "[A] party can satisfy the fraudulent intent element by proving that a misrepresentation was made knowingly or with a reckless disregard for its truth or falsity." Orix Credit Alliance, Inc. v. Taylor Machine Works, Inc., 125 F.3d 468, 479 (7th Cir.1997).
Plaintiff alleges defendant committed fraud several times by telling him it would use his photographs to a small extent when, in fact, defendant knew it would use the photographs to a greater extent. Dkt. 145 at 1, Plaintiff's Response in Opposition to Defendant's Motion for Partial Summary Judgment. Defendant's alleged aim was to pay less for the licenses. Id.
According to plaintiff, "the identity of the persons making the misrepresentations, the time, place, and content of the misrepresentations, and the method by which the misrepresentations were communicated to [him]" are all contained in Exhibits E-P of his Amended Complaint. Dkt. 105 ¶ 10. Each contains a billing request from defendant along with the corresponding invoice-license from plaintiff. Dkt. 105-8-105-19. The only people named in the billing requests — and so the only "persons making the misrepresentations" — are defendant's image permission coordinators. Id.; see also Dkt 145-2 ¶ 17 ("The only alleged misrepresentation that [plaintiff] relies on for the basis of his fraud claims are [defendant's] billing requests issued by specific image permission coordinators at [defendant]").
Plaintiff seeks to prove "Pearson's" knowledge, or reckless indifference, with reference to defendant's internal forecasts, which — according to plaintiff — demonstrate that at the time of the requests "Pearson" knew it would print more copies than it was requesting permission to print. Dkt. 145 at 1; Dkt. 145-9, -11, -12. "Pearson" allegedly also knew it had sold more copies of prior versions of the publications than were being requested for the new versions. Dkt. 145 at 1-2; see e.g., Dkt 145-14.
Plaintiff claims it was defendant's image permission coordinators who made the false representations, though he deposed none but Julie Orr and asked her nothing about her alleged misrepresentation. Dkt. 145-2 ¶¶ 18-61. Plaintiff provides no evidence of the image permission coordinators' day-to-day job. He also provides no evidence linking a specific higher up, whose wrongful intent could perhaps be inferred, with a coordinator's specific misrepresentation.
Without any of this evidence, Plaintiff is forced to rely on the theory that defendant as a corporation had the collective wrongful intent required to support his fraud claims. Dkt. 145 at 9. The parties debate whether this is tenable and cite to the Seventh Circuit decisions, Pugh v. Tribune Co., 521 F.3d 686, 697 (7th Cir.2008) and Makor Issues & Rights, Ltd. v. Tellabs Inc., 513 F.3d 702, 707-08 (7th Cir.2008),
Plaintiff has failed to raise a genuine dispute of material fact on his fraud claims because he identifies no evidence linking the image permission coordinators with anyone's wrongful intent or reckless indifference. While there is evidence that some in the company believed defendant would make more copies than the coordinators contemporaneously requested, the record contains no evidence — direct or circumstantial — that any specific person caused any specific coordinator to make any specific request. Therefore no reasonable jury could find that defendant committed fraud.
Plaintiff's motion for partial summary judgment, Dkt. 98, is granted on the claims identified in Exhibit 1 to the Kerr Declaration, except for those at lines 80, 96, 166, and 347, which were withdrawn. Defendant's motion for partial summary judgment, Dkt. 130, is granted. By separate order, the court will address the continued sealing of any exhibits at issue in this opinion.