OverDrive Inc. v. Open E-Book Forum ( 2021 )

RECOMMENDED FOR PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 21a0027p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
OVERDRIVE INC., ┐
Plaintiff-Appellant, │
│
> No. 20-3432
v. │
│
│
OPEN E-BOOK FORUM dba International Digital │
Publishing Forum, │
Defendant-Appellee. ┘
Appeal from the United States District Court
for the Northern District of Ohio at Cleveland.
No. 1:17-cv-00165—Solomon Oliver, Jr., District Judge.
Argued: January 27, 2021
Decided and Filed: February 5, 2021
Before: BOGGS, SUTTON, and NALBANDIAN, Circuit Judges.
_________________
COUNSEL
ARGUED: Andrew G. Fiorella, BENESCH, FRIEDLANDER, COPLAN & ARONOFF LLP,
Cleveland, Ohio, for Appellant. David T. Movius, MCDONALD HOPKINS LLC. Cleveland,
Ohio, for Appellee. ON BRIEF: Andrew G. Fiorella, BENESCH, FRIEDLANDER, COPLAN
& ARONOFF LLP, Cleveland, Ohio, for Appellant. David T. Movius, MCDONALD
HOPKINS LLC. Cleveland, Ohio, for Appellee.
_________________
OPINION
_________________
SUTTON, Circuit Judge. When International Digital Publishing Forum decided to
license and potentially transfer its intellectual property to the World Wide Web Consortium, one
of its members sued. OverDrive claimed that the arrangement violated its rights under the
No. 20-3432 OverDrive Inc. v. Open E-Book Forum Page 2
Copyright Act. The district court granted summary judgment to International Digital because it
validly licensed its intellectual property and because it would be premature to resolve any claim
about future transfers. We affirm.
A digital reading platform, OverDrive is a member of International Digital Publishing
Forum, a nonprofit trade association dedicated to the development of electronic publishing
standards. At one point, International Digital’s members worked together to develop EPUB, the
leading eBook format.
International Digital has an intellectual-property policy. Approved by OverDrive and its
other members, the policy says that International Digital’s members retain any copyrights in their
separate and independent contributions to EPUB. But it also grants International Digital a
license to “reproduce, adapt, distribute, perform, display, and create derivative works” of any
copyrighted contributions to EPUB. R.16-2 at 11. And it allows International Digital to
sublicense others to do the same.
In 2016, by a vote of 88% to 12%, International Digital voted to transfer its assets to
the World Wide Web Consortium, an international organization committed to developing
Web standards. International Digital and the Consortium entered into an asset-transfer
agreement the next year. The agreement granted the Consortium a “license to use” International
Digital’s intellectual property to “carry out the digital publishing activities” of International
Digital. R.37-12 at 5. And it provided that International Digital would commence dissolution
within nine months, after which its intellectual property rights, including any in EPUB, would be
owned by the Consortium.
The Consortium began developing improvements to EPUB, with an eye to creating an
updated version. Nine months later, International Digital and the Consortium reached a second
agreement, “further document[ing] and affirm[ing] aspects of the license” that International
Digital had given the Consortium in the first agreement. R.37-13 at 2. The second agreement
stated that the Consortium’s license to “use” International Digital’s intellectual property
encompassed a broad license to “reproduce, adapt, distribute, perform, display and create
derivative works.” Id. at 2–3. And it explained that the license included International Digital’s
No. 20-3432 OverDrive Inc. v. Open E-Book Forum Page 3
sublicensable rights to any copyrights its members retained. The agreement also delayed
International Digital’s dissolution until it transfers its intellectual property to the Consortium.
OverDrive sued, seeking a declaratory judgment that International Digital had violated,
and would violate in the future, its copyrights in EPUB. OverDrive claimed that International
Digital infringed its EPUB copyrights by giving the Consortium access to EPUB. And it claimed
that International Digital would infringe OverDrive’s copyrights once International Digital
transferred its intellectual property to the Consortium. OverDrive sought various forms of relief,
including damages, a declaratory judgment, and an injunction.
After discovery ended, International Digital moved for summary judgment. The district
court granted the motion for two reasons: (1) International Digital’s license defeated the
infringement claim; and (2) the claim for future infringement was unripe because International
Digital had not yet transferred its intellectual property to the Consortium and the contours of any
future transfer remained contingent and speculative. OverDrive challenges both rulings on
appeal.
Past and Current Infringement. The Copyright Act says that a copyright owner has the
exclusive right to “reproduce,” “distribute,” or “prepare derivative works based upon” its
protected work. 17 U.S.C. § 106. The owner also can “authorize” others to do the same. Id.That means a licensee “authorized by the copyright owner to use the copyrighted work” does not
infringe the copyright “with respect to such use.” Sony Corp. of Am. v. Universal City Studios,
Inc., 464 U.S. 417, 433 (1984).
So it happened here when OverDrive granted International Digital the right to use any
copyrights OverDrive had in EPUB. By giving International Digital a license to “reproduce,
adapt, distribute, perform, display and create derivative works” of its EPUB copyrights (to the
extent it had them), OverDrive permitted International Digital to use the copyrighted work in
these ways. R.16-2 at 11. Not only that, it also gave International Digital an unrestricted right to
grant sublicenses with respect to those same copyrights. International Digital, in turn,
permissibly sublicensed EPUB by granting the Consortium a “license to use” International
Digital’s intellectual property. R.37-12 at 5. That gave the Consortium a sublicense to use any
No. 20-3432 OverDrive Inc. v. Open E-Book Forum Page 4
of OverDrive’s copyrights in EPUB. International Digital did not infringe OverDrive’s
copyrights by doing with them what it was authorized to do. See Sony, 464 U.S. at 433. No
infringement occurred.
In response, OverDrive acknowledges what the Copyright Act says, that International
Digital has the right to sublicense OverDrive’s copyrights in EPUB. But it maintains that
International Digital did not permissibly invoke this authority through the initial agreement and
did not create a valid sublicense that permitted the Consortium to develop a new version of
EPUB, a “derivative work.” Not true. The agreement granted the Consortium a “license to use”
all of International Digital’s intellectual property. R.37-12 at 5. That intellectual property
included a license to “create derivative works” (among other things) of any of OverDrive’s
copyrights in EPUB. R.16-2 at 11.
Future Infringement. Even if International Digital did not violate the Copyright Act in
the past through the initial agreement, OverDrive claims that the second agreement—which
could transfer the assets of International Digital to the Consortium—will violate the Act in the
future. The hiccup in this argument does not turn on the meaning of the Act; it turns on the
meaning of Article III of the United States Constitution.
Whether it is the legislative, executive, or judicial branch, the United States Constitution
delegates each of them limited powers, often only those enumerated. The federal “judicial
Power” does not extend to any dispute that might arise between any two people in the United
States. U.S. Const. art. III, § 2. It extends only to “Cases” and “Controversies.” Id. Not all
claims are “appropriately resolved through the judicial process.” Susan B. Anthony List v.
Driehaus, 573 U.S. 149, 157 (2014) (quotation omitted). A cognizable case or controversy
requires a plaintiff with a true injury, a defendant who could remedy the problem, and a live
dispute. As to this last imperative, a claim is not “amenable to . . . the judicial process,” Steel
Co. v. Citizens for a Better Env’t, 523 U.S. 83, 102 (1998), “when it is filed too early (making it
unripe)” or “filed too late (making it moot),” Warshak v. United States, 532 F.3d 521, 525 (6th
Cir. 2008) (en banc).
No. 20-3432 OverDrive Inc. v. Open E-Book Forum Page 5
Ripeness, the matter at hand, asks two questions. One: Does the claim “arise[] in a
concrete factual context and concern[] a dispute that is likely to come to pass?” Id. A claim is
not ripe if it turns on “contingent future events that may not occur as anticipated, or indeed may
not occur at all.” Trump v. New York, 141 S. Ct. 530, 535 (2020) (per curiam) (quoting Texas v.
United States, 523 U.S. 296, 300 (1998)). Two: What is “the hardship to the parties of
withholding court consideration”? Warshak, 532 F.3d at 525 (quoting Abbott Lab’ys v. Gardner,
387 U.S. 136, 149 (1967)). “No” and “none” are the answers to these questions. Because even
one negative answer creates a ripeness problem, this claim was properly dismissed.
The alert reader might wonder if the second inquiry amounts to an independent
requirement for establishing Article III ripeness. Is it really true that a federal court could refuse
to resolve a claim presented in a current and “concrete factual context” on the ground that the
parties would not be hurt by a delayed resolution of their claim? That seems doubtful. See
Driehaus, 573 U.S. at 167; Kiser v. Reitz, 765 F.3d 601, 606–07 (6th Cir. 2014). But the point
makes no difference here, as OverDrive fails both inquiries. For now, the Supreme Court
continues to look at both questions, whether in Abbott, 387 U.S. at 149, Ohio Forestry Ass’n,
Inc. v. Sierra Club, 523 U.S. 726, 733 (1998), or most recently in Trump, 141 S. Ct. at 536.
Perhaps over time the second inquiry will merge into the first, merely offering a way of
establishing concreteness, or its absence, in a given dispute.
With that side note accounted for, we can turn to the first inquiry: Is there a “concrete
factual context” concerning a dispute that is “likely to come to pass”? Warshak, 532 F.3d at 525.
Or does it turn on “contingent future events that may not occur as anticipated, or indeed may not
occur at all”? Trump, 141 S. Ct. at 535. OverDrive claims that, once International Digital
dissolves, the Consortium will lose its sublicense to OverDrive’s copyrights, and its work on
updating EPUB will then constitute copyright infringement. But that may or may not happen.
Recall International Digital’s most recent agreement with the Consortium. In it, International
Digital agreed to begin the dissolution process only if and only when it transfers its intellectual
property to the Consortium. If and when do not a ripe controversy make. Even assuming
International Digital does dissolve, we do not know how that will play out. It has already
changed its agreement with the Consortium once and may well do so again, “riddl[ing]” the
No. 20-3432 OverDrive Inc. v. Open E-Book Forum Page 6
claim with the kinds of “contingencies and speculation” that obstruct federal “judicial review.”
Id. Granting OverDrive relief at this juncture would require hypothetical rulings about
hypothetical facts, just the kind of advice Article III bars us from offering. See Aetna Life Ins. v.
Haworth, 300 U.S. 227, 241 (1937).
OverDrive does not fare any better under the second inquiry: Will declining to resolve
the question of future infringement create undue hardship for OverDrive? The reality that
International Digital is not currently infringing OverDrive’s copyrights allows us to answer this
question with a question of our own: How could OverDrive be prejudiced if no current
infringement exists and if it merely must wait until any new act of (alleged) infringement occurs
when (and if) International Digital transfers its intellectual property to the Consortium? Any
theory of prejudice is just as unripe as everything else in this claim.
One loose part of this conversation dangles. OverDrive separately argues that the district
court erred by failing to decide whether International Digital has an independent copyright
interest in EPUB as its “collective-work author.” In its view, we need to decide whether
International Digital has a copyright in EPUB before we can know whether transferring its
intellectual property to the Consortium would infringe OverDrive’s copyrights. But settling that
issue will not get us any closer to a ripe dispute. We do not need to know the precise scope of
International Digital’s intellectual property to determine that evaluating its transfer today would
be premature.
We affirm.