Photographic Illust'rs Corp. v. Orgill, Inc.

United States Court of Appeals
For the First Circuit
No. 19-1452
PHOTOGRAPHIC ILLUSTRATORS CORPORATION,
Plaintiff, Appellant,
v.
ORGILL, INC.,
Defendant, Appellee,
FARM & CITY SUPPLY, LLC,
Defendant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Patti B. Saris, U.S. District Judge]
Before
Howard, Chief Judge,
Lynch and Kayatta, Circuit Judges.
Charles E. Fowler, Jr., with whom Gary Cruciani, McKool Smith,
PC, Craig R. Smith, Eric P. Carnevale, and Lando & Anastasi, LLP
were on brief, for appellant.
Virginia H. Snell, with whom Byron E. Leet, Thomas E. Travis,
Wyatt, Tarrant & Combs, LLP, James F. Radke, and Murtha Cullina
LLP were on brief, for appellee.
March 13, 2020
KAYATTA, Circuit Judge. In this case of first impression
in the circuit courts, we hold that a copyright licensee given the
unrestricted right to grant sublicenses may do so without using
express language.
I.
Photographic Illustrators Corp. ("PIC") provides
commercial photography services -- primarily photos of consumer
goods -- through its principal photographer, Paul Picone. Osram
Sylvania, Inc. ("Sylvania") is one of the world's leading
manufacturers of lightbulbs. PIC owns valid copyrights to
thousands of photographs of Sylvania lightbulbs. Sylvania uses
the photos in marketing and selling its products, as do Sylvania's
dealers and distributors.
After a dispute arose between PIC and Sylvania
concerning the scope of Sylvania's permission to use the photos,
PIC and Sylvania negotiated a detailed, sixteen-page license
setting forth the precise terms of the parties' agreement. The
license was to be effective from 2006 to 2012. For present
purposes, the key provision in the license concerns the use of the
photos by those dealers and distributors who market and sell
Sylvania products. That provision states as follows: "PIC (and,
to any extent necessary, Paul Picone) hereby grants [Sylvania] a
non-exclusive, worldwide license in and to all the Images and the
copyrights thereto to freely Use, sub-license Use, and permit Use,
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in its sole and absolute discretion, in perpetuity, anywhere in
the world." Sylvania paid PIC approximately $3 million in
consideration for this license. The license also stipulated that,
"[t]o the extent reasonably possible and practical, [Sylvania]
shall . . . include a copyright notice indicating PIC as the
copyright owner and/or include proper attribution indicating Paul
Picone as the photographer," including "as a side note or footnote
for Images appearing in published advertisements." We refer to
this requirement in the license as the "attribution restriction."
Orgill, Inc., a global hardware distributor, is one of
those third parties that markets and sells Sylvania lightbulbs
through a network of dealers. Orgill's inventory includes nearly
1,000 Sylvania products. At issue here is Orgill's use of PIC
photos of Sylvania lightbulbs in Orgill's electronic and paper
catalogs. As best the record shows, it would have been unrealistic
to try to market and sell the lightbulbs without pictures of the
product. To obtain those pictures, Orgill's catalog editor, Dennis
Sills, told Sylvania which photos Orgill wanted to use. Sylvania
then sent the photos to Sills, who used them as he told Sylvania
he would. On occasion, instead of sending the photos to Sills in
response to his requests, Sylvania directed him to copies of the
photos maintained on Sylvania's website from which Sills then cut
and pasted copies for Orgill's use.
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Sylvania did not tell Orgill (or other Sylvania
customers) that Orgill needed to abide by the attribution
restriction in Sylvania's license. Deeming this omission to
violate the PIC–Sylvania license, PIC commenced more than thirty
separate lawsuits against Orgill and other Sylvania dealers and
distributors. A number of those actions filed in the District of
Massachusetts (not including this one) were consolidated, with
Sylvania intervening as an interested party. The district court,
with the consent of the parties, referred those consolidated cases
to arbitration. Sylvania also moved to intervene in the present,
unconsolidated case lodged by PIC against Orgill and one of
Orgill's dealers, Farm & City Supply, LLC ("Farm & City"). The
district court denied that motion.
PIC's claims against Orgill and Farm & City included
copyright infringement under 17 U.S.C. § 501, violations of the
Digital Millennium Copyright Act (DMCA), and false designation of
origin and false advertising under the Lanham Act. The district
court granted the defendants' motion for summary judgment as to
the DMCA and Lanham Act claims. See Photo. Illust'rs Corp. v.
Orgill, Inc. ("PIC I"), 118 F. Supp. 3d 398, 408, 410–11 (D. Mass.
2015). As to the copyright claim, the court determined that Orgill
had a sublicense from Sylvania to use the photos. Id. at 403.
Left unresolved by that ruling on summary judgment was the scope
of that sublicense and whether Orgill exceeded it. Id. at 403–
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05. The court also found Farm & City to be an innocent infringer.
Id. at 406. At that point, PIC dropped Farm & City from the case,
and the court granted the parties' motion to stay proceedings
pending the outcome of the arbitration.
Thereafter, the arbitrator issued a partial final award
in the dispute between PIC, Sylvania, and the non-Orgill
distributors. A key ruling in that decision framed the remainder
of this litigation. The arbitrator construed the attribution
restriction in Sylvania's license to be a "covenant," rather than
a "condition." This matters because a licensee who violates a
condition of a license (and thus exceeds the license's scope)
cannot claim the license as a defense to copyright infringement,
but if the licensee merely violates a covenant, the licensor's
only remedy is for breach of contract. See MDY Indus., LLC v.
Blizzard Entm't, Inc., 629 F.3d 928, 939 (9th Cir. 2010); Graham
v. James, 144 F.3d 229, 236 (2d Cir. 1998). The arbitrator went
on to determine that Sylvania breached this covenant by permitting
its distributors to reproduce PIC's photos without attribution.
As compensation for that breach, the arbitrator awarded PIC
approximately $8.5 million. As to the other distributors, the
arbitrator briefly noted -- apparently based on a concession by
PIC -- that they had sublicenses from Sylvania, so the arbitrator
awarded no damages from those parties.
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Following the arbitrator's decision, Orgill renewed its
motion in this case for summary judgment on the sublicense defense
and on the new ground of defensive, nonmutual issue preclusion.
The district court held that the arbitral award precluded PIC from
relitigating the arbitrator's construction of the PIC–Sylvania
license, including the finding that the license permitted Sylvania
to grant "implied sublicenses" to its distributors. See Photo.
Illust'rs Corp. v. Orgill, Inc. ("PIC II"), 370 F. Supp. 3d 232,
243–44 (D. Mass. 2019). The district court viewed that finding as
implicitly assuming that a copyright sublicense could be implied
in the absence of an express grant. Id. at 244. Nevertheless,
because the parties to the arbitration did not raise and contest
that assumption, the district court allowed PIC to argue in this
case that, as a matter of law, sublicenses of copyrights are
ineffective absent language expressly granting permission to use
the copyrighted work. Id. Having allowed PIC to make that
argument, the district court then rejected it. Id. at 245–47.
The district court also reaffirmed its prior ruling that Sylvania
impliedly granted Orgill a sublicense and then construed the scope
of that sublicense as having an attribution restriction that was
merely a covenant, not a condition. Id. at 244–45, 247–49.
Accordingly, PIC could not recover from Orgill for copyright
infringement. Nor could PIC recover on a contract theory because
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Orgill made no promise to PIC. The court thus granted full summary
judgment in favor of Orgill. Id. at 251. PIC timely appealed.
II.
We begin by narrowing the scope of the issues before us.
This is not a case in which there is any contention that Orgill
acquired ownership of PIC's copyrights. Hence the provision of
the Copyright Act that such a transfer of ownership must be in
writing is not at issue. See 17 U.S.C. § 204(a) ("A transfer of
copyright ownership . . . is not valid unless an instrument of
conveyance . . . is in writing and signed by the owner of the
rights conveyed."); see also id. § 101 (defining "transfer of
copyright ownership" to exclude "nonexclusive license[s]"). Nor
does PIC argue that Sylvania could not orally grant Orgill
effective permission to use the photos.
Instead, on appeal PIC makes two more narrowly tailored
arguments. First, PIC argues that any sublicense of the right to
use a copyrighted work must as a matter of law be "express," and
that here Sylvania's permission to Orgill was at most implied.
Second, PIC argues that even if a jury might find an express grant
of permission in this case, or even if an implied grant is
sufficient, there are issues of fact that would allow a jury to
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find that Orgill obtained no permission, either express or implied.
We address each argument in turn.1
A.
PIC frames its first argument by claiming that an implied
sublicense is a legal impossibility. We will assume without
deciding that, as the district court determined, the arbitral award
does not preclude PIC from making this argument. See PIC II, 370
F. Supp. 3d at 244 (deciding that the issue was not "actually
litigated" in arbitration).
Nothing in the Copyright Act requires that two parties'
agreement to a sublicense be expressed in any specific language.
And no circuit court has ever addressed whether such a requirement
exists. In fact, it appears that only one other district court
besides the court below has ever published an opinion considering
an implied copyright sublicense. See Catalogue Creatives, Inc. v.
Pac. Spirit Corp., No. CV 03-966-MO, 2005 WL 1950231, at *2 (D.
Or. Aug. 15, 2005) (calling an implied sublicense granted from an
implied licensee a "legal impossibility"). So we are for the most
part in uncharted waters.
To find our way, we consider first how the common law
treats the making of a license itself between the owner and the
1 PIC does not appeal the district court's ruling that Orgill
cannot be held liable to PIC for any breach of the attribution
restriction in Sylvania's license. PIC also does not appeal the
district court's earlier rulings on the DMCA and Lanham Act claims.
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original licensee. Both parties presume that federal common law
applies, so we shall as well. See Christopher M. Newman, "What
Exactly Are You Implying?": The Elusive Nature of the Implied
Copyright License, 32 Cardozo Arts & Ent. L.J. 501, 552 (2014)
(canvassing the applicable case law and declaring that "[t]here is
indisputably a federal common law of implied copyright licenses").
But cf. Foad Consulting Grp., Inc. v. Azzalino, 270 F.3d 821, 827
(9th Cir. 2001) ("[S]o long as it does not conflict with the
Copyright Act, state law determines whether a copyright holder has
granted [an implied] license."). Certainly at common law generally
a license (or, frankly, an agreement of most types) could be
manifest and proven by the parties' conduct short of any magic
words of assent. See License, 2 Bouvier's Law Dictionary (2d ed.,
photo. reprint 2006) (1843) ("An implied license is one which
though not expressly given, may be presumed from the acts of the
party having a right to give it."); see also Restatement (Third)
of Prop.: Servitudes § 2.16 cmt. f (Am. Law Inst. 2000);
Restatement (Second) of Contracts § 4 (Am. Law Inst. 1981).2 At
the same time, at least some courts tended to be somewhat demanding
in the type of proof required to show an implied license. See
Weldon v. Phila., Wilmington & Balt. R.R. Co., 43 A. 156, 159 (Del.
Super. Ct. 1899) ("Such a license must be established by proof,
2 The issue of an implied sublicense does not appear to have
come up much at common law.
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and is not to be inferred from equivocal declarations or acts of
the owner of the land."); see also Zellers v. State, 285 P.2d 962,
965 (quoting id.).
The case law dealing with copyrights accepts the
possibility of implied licenses. See, e.g., Effects Assocs., Inc.
v. Cohen, 908 F.2d 555, 558 (9th Cir. 1990). See generally Newman,
supra. And many courts have been rather demanding of parties
claiming an implied copyright license in cases involving
transactions between the owner and a putative licensee. See Estate
of Hevia v. Portrio Corp., 602 F.3d 34, 41 (1st Cir. 2010)
("[I]mplied licenses are found only in narrow circumstances.");
accord John G. Danielson, Inc. v. Winchester–Conant Props., Inc.,
322 F.3d 26, 40 (1st Cir. 2003) (same).
Our circuit has had two implied-license cases that
typify the general approach. In the first case, Danielson, we
stated that "[t]he touchstone for finding an implied license . . .
is intent." 322 F.3d at 40. Other circuits, we observed, have
"beg[un] their analysis with a three-part test . . . requir[ing]
that the licensee request the creation of the work, the licensor
create and deliver the work, and the licensor intend that the
licensee distribute the work." Id. at 41. However, those courts
"quickly pass over the 'request' and 'delivery' issues to focus on
manifestations of the [creator's] intent." Id. "We will do the
same here," we said, id., and we did so by determining that the
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creator did not intend to grant a license, so there was no need to
evaluate the other elements, id. at 41–42. In assessing the
creator's intent, we considered three factors:
(1) whether the parties were engaged in a
short-term discrete transaction as opposed to
an ongoing relationship; (2) whether the
creator utilized written contracts, such as
the standard [American Institute of
Architects] contract, providing that
copyrighted materials could only be used with
the creator's future involvement or express
permission; and (3) whether the creator's
conduct during the creation or delivery of
the copyrighted material indicated that use
of the material without the creator's
involvement or consent was permissible.
Id. at 41 (quoting Nelson–Salabes, Inc. v. Morningside Dev., LLC,
284 F.3d 505, 516 (4th Cir. 2002)).
In our second case, Estate of Hevia, we repeated much of
the same legal framework as quoted in Danielson, including that
the "request" and "delivery" elements can be "quickly pass[ed]
over" and that the three-factor Nelson–Salabes test guides the
analysis of intent. Estate of Hevia, 602 F.3d at 41. We found,
under this framework, that the creator's intent was manifest, so
we affirmed summary judgment for the defendant based on an implied
license. Id. at 41–42. We did not analyze the request and delivery
elements, perhaps because they were obviously satisfied under the
facts of the case.3
3 As PIC points out, Estate of Hevia perhaps could have been
resolved without resort to the implied-license analysis at all,
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At least two other circuits are arguably less flexible
in determining whether the owner of a copyright has impliedly
granted a license. In the Second and Seventh Circuits, the three
elements (request, delivery, and intent) seem to be absolute
requirements for establishing an implied license between the owner
and a licensee. See Muhammad-Ali v. Final Call, Inc., 832 F.3d
755, 763 (7th Cir. 2016) (stating that, "[t]o establish an implied
license, a party must show" request, delivery, and intent (emphasis
added)); SmithKline Beecham Consumer Healthcare, L.P. v. Watson
Pharm., Inc., 211 F.3d 21, 25 (2d Cir. 2000) ("[C]ourts have found
implied licenses only in 'narrow' circumstances where one party
'created a work at [the other's] request and handed it over,
intending that [the other] copy and distribute it.'" (second and
third alterations in original) (emphasis added) (quoting Effects
Assocs., 908 F.2d at 558)). Two leading copyright treatises,
however, suggest that this test is too rigid, and that implied
licenses can sometimes be found if one or more of these elements
is lacking. See 3 Melville B. Nimmer & David Nimmer, Nimmer on
Copyright § 10.03[A][7]; 2 William F. Patry, Patry on Copyright
§ 5:131. And the Fifth and Ninth Circuits appear to have found
implied licenses in cases where the three elements were not
since the defendant in that case might have owned the copyright ab
initio under the "works made for hire" rule. See 17 U.S.C.
§ 201(b). The parties to the case, however, did not argue that
point. See Estate of Hevia, 602 F.3d at 40 n.4.
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strictly satisfied. See Falcon Enters., Inc. v. Publ'rs Serv.,
Inc., 438 F. App'x 579, 581 (9th Cir. 2011) (mem.); Baisden v. I'm
Ready Prods., Inc., 693 F.3d 491, 500–01 (5th Cir. 2012).
Against this background, PIC insists that the three-part
test employed by many courts for assessing claims of an implied
license from the copyright owner must be applied literally and
inflexibly to assessing claims of an implied sublicense between a
licensee and a sublicensee. Such a literal application would mean
that there could rarely if ever be an implied sublicense because,
for example, the putative sublicensee generally deals only with
the licensee, and likely would not have requested the owner to
create the copyrighted work. But it makes no more sense to use
this test to assess the making of a sublicense than it would to
require that an assignment of a mortgage meet the same requirements
that might apply to the granting of a mortgage. See generally
Restatement (Third) of Prop.: Mortgages §§ 1.5, 5.4 (Am. Law.
Inst. 1997). One would not, for example, deem an assignment by
the mortgagee to a third party invalid because the owner/mortgagor
did not sign it.4
4 PIC similarly contends that the multi-factor analysis of
intent from Danielson and Estate of Hevia, which focuses on the
state of mind of the copyright holder, similarly makes an implied
license granted by anyone else impossible. Again, that analysis
was developed in a different context -- implied licenses, not
implied sublicenses -- so it is inapposite to this case.
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Practical considerations counsel against treating
implied sublicenses as legally impossible. In the case of a
sublicense, the copyright owner has the ability to set the
conditions of sublicensing, at least where, as here, the initial
license is in writing, is highly detailed, and expressly
contemplates sublicensing. Cf. Catalogue Creatives,
2005 WL 1950231, at *2 (finding no implied sublicense where the
original license was also implied). With ordinary implied
licenses, it is the courts rather than the owner who sets the rules
for establishing the agreement, so the courts may fairly be more
protective of the owner's property rights in deciding whether the
owner impliedly gave away some of those rights. With a sublicense,
though, there is first a license, and the owner can set forth in
the license the ground rules of the license itself -- including
the rules by which the licensee may permit others to distribute
the work. Here, for example, no party cites any reason why PIC,
had it wished, could not have insisted in the license to Sylvania
that a condition of that license was that sublicenses must be
express, or perhaps even in writing. Or PIC could have instead
negotiated a license that forbade sublicensing altogether.
Instead, PIC and Sylvania agreed that Sylvania could "sub-license
Use, and permit Use, in its sole and absolute discretion." So PIC
already affirmatively gave away many of its rights, and courts
need not protect it as much as they would otherwise.
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We are also not persuaded by PIC's remaining policy
arguments for why copyright sublicenses must be express. PIC
argues that forbidding implied copyright sublicenses would further
an "artist's right to control the work during the term of the
copyright protection," Stewart v. Abend, 495 U.S. 207, 228 (1990),
which in turn furthers "[t]he primary objective of the Copyright
Act" by "encourag[ing] the production of original literary,
artistic, and musical expression for the good of the public,"
Fogerty v. Fantasy, Inc., 510 U.S. 517, 524 (1994). But, as the
case law notes, the "artist's right to control the work" must be
"balance[d]" against "the public's need for access to creative
works," and "dissemination of creative works is [also] a goal of
the Copyright Act." Stewart, 495 U.S. at 228. Besides, this
argument can be made in essentially any copyright dispute: a
ruling in favor of the copyright holder increases the value of
copyrights generally and thus promotes creativity. But that cannot
mean that copyright holders always win. And the issue here -- the
level of formality required for a sublicense -- is far more removed
from the heart of copyright law than the kind of dispute directly
dealing with what copyright law protects, like whether a work is
copyrightable, see, e.g., Star Athletica, L.L.C. v. Varsity
Brands, Inc., 137 S. Ct. 1002, 1016 (2017) (cheerleading
uniforms); Burrow-Giles Lithographic Co. v. Sarony, 111 U.S. 53,
58–60 (1884) (photographs), or whether fair use applies as a
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defense to copyright infringement, see, e.g., Campbell v. Acuff–
Rose Music, Inc., 510 U.S. 569, 594 (1994) (musical parodies). So
we do not think the policy of promoting creativity helps PIC much
in this case.
PIC also contends that requiring the extra formality
that sublicenses be expressly granted would further the Copyright
Act's policy of "enhancing predictability and certainty of
copyright ownership." Cmty. for Creative Non-Violence v. Reid,
490 U.S. 730, 749 (1989). But as we have already noted, PIC had
an opportunity to set the conditions of sublicensing when it
negotiated the well-defined license to Sylvania. We think that
opportunity sufficiently enhances predictability while also
leaving the parties with more choice than would a judicial rule
that sublicenses must be expressly granted.
As an illustration of its policy arguments, PIC points
to the fact that Sylvania failed to tell Orgill about the
attribution restriction. PIC argues that if we require licensees
in Sylvania's position to communicate expressly with their
sublicensees, this sort of issue may be less likely to arise. But
the proposed solution does not quite fit the problem. For whatever
reason, Sylvania may well have neglected to relay the restriction
even if it had expressly granted Orgill a sublicense. PIC, after
all, concedes that an express sublicense can be oral. And in any
event, as the arbitrator found, the attribution restriction was a
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covenant between PIC and Sylvania, so the failure to abide by it
is a bone that PIC needs to pick (and did pick) with Sylvania, not
Orgill.
In sum, we hold that, where a licensor grants to a
licensee the unrestricted right to sublicense and permit others to
use a copyrighted work, a sublicense may be implied by the conduct
of the sublicensor and sublicensee. So although implied
sublicenses, like implied licenses, are probably not "an everyday
occurrence in copyright matters," Estate of Hevia, 602 F.3d at 41,
we reject the contention that they are a legal impossibility.
B.
We now turn to PIC's second argument, which is that
summary judgment in favor of Orgill was not warranted because a
reasonable jury could have found that Sylvania did not grant an
implied sublicense to Orgill. We look to evidence of whether
Sylvania by its actions sufficiently manifested an intent to grant
such a sublicense. Ultimately we agree with the district court
that no reasonable jury could find against Orgill on this point.
Initially, though, we must deal with two side issues.
The first side issue arises from the fact that the district court
based its ruling on the existence of a sublicense in this case in
part on a perception that "PIC conceded at the [May 2015]
hearing[ that] the defendants have borne their burden of showing
that [Sylvania] impliedly licensed Orgill's use of the images."
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PIC I, 118 F. Supp. 3d at 403; see also PIC II, 370 F. Supp. 3d at
244. PIC contends that it made no such concession. The transcript
of the hearing is arguably mixed on whether PIC actually made an
effective waiver/concession, although PIC's delay of nearly three
years5 in asking the court to withdraw its waiver finding cuts
quite heavily against PIC. Nevertheless, we will again assume
without deciding that there was no waiver. See Butynski v.
Springfield Terminal Ry. Co., 592 F.3d 272, 277 (1st Cir. 2010)
(remarking that a concession by counsel must be "clear and
unambiguous" to bind a party).6
The second side issue concerns the standard of review.
A license (implied or otherwise) is an affirmative defense to
copyright infringement. See Danielson, 322 F.3d at 34, 40. As
such, Orgill (the moving party) bears the burden of proof at trial
on this issue. See id. So summary judgment is warranted only if
Orgill has provided "conclusive" evidence proving the license.
Torres Vargas v. Santiago Cummings, 149 F.3d 29, 35 (1st Cir.
1998); see also Leone v. Owsley, 810 F.3d 1149, 1153–54 (10th Cir.
5 The district court's first opinion in this matter was
published on July 29, 2015. PIC I, 118 F. Supp. 3d 398. PIC did
not object to the district court's concession finding until its
opposition to Orgill's renewed motion for summary judgment, which
PIC filed on March 7, 2018, despite the fact that PIC updated the
district court about other matters during the intervening period.
6 Arguably, a contrary decision on our part would moot the
preceding legal discussion as well, since the legal possibility of
implied sublicenses would seem to be a necessary antecedent to
Orgill's having been granted one.
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2015) (collecting cases applying similar standards). In other
words, the familiar framework that a movant who does not bear the
burden of proof need only initially "point[] out . . . that there
is an absence of evidence to support the nonmoving party's case,"
Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986), is inapplicable
here. PIC argues that the district court in this case appears to
have lost sight of this distinction, see PIC II, 370 F. Supp. 3d
at 241–42 (citing cases applying the Celotex standard); PIC I, 118
F. Supp. 3d at 402 (same), but since our review on appeal is de
novo, see Pac. Indem. Co. v. Deming, 828 F.3d 19, 22 (1st Cir.
2016), we may affirm under the correct standard so long as the
record supports such a ruling. At the end of the day, the basic
standard -- that summary judgment is warranted if "there is no
genuine dispute as to any material fact" -- remains the same.
Fed. R. Civ. P. 56(a).
Having dealt with the side issues, we now turn to PIC's
main argument that the evidence was mixed enough to generate a
jury question on whether Sylvania actually granted Orgill a
sublicense. For the following reasons, we find that argument
unconvincing.
First, the very nature of the business at hand makes it
obvious that Sylvania wanted its distributors to use the photos,
just as one might confidently say that Sylvania wanted Orgill to
sell lots of Sylvania products. It would be effectively impossible
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for Sylvania to expect its distributors to have much success in
selling its lightbulbs without also permitting them to use photos
of those lightbulbs.
Second, Sylvania paid a substantial sum -- roughly
$3 million -- for its sixteen-page license granting it, among
other things, the authority to "sub-license Use, and permit Use,
in its sole and absolute discretion." A principal reason for
Sylvania's paying so much for this agreement was precisely to allow
its dealers and distributors to continue using the photos. Cf.
Effects Assocs., 908 F.2d at 559 (remarking that the nonexistence
of an implied license would be "a conclusion that can't be squared
with the fact that [the defendant] paid [the plaintiff] almost
$56,000 for" the work).
Third, as a matter of common sense, when Sills called up
Sylvania and said he needed copies of the photos to use in selling
Sylvania's lightbulbs, and Sylvania subsequently sent along the
photos (or pointed Sills to where to find them), Sylvania surely
manifested its permission for Sills (and Orgill) to use the photos
in the proposed way, even though Sylvania never uttered some magic
words that made express its permission. PIC objects to our
consideration of this fact on the grounds that "the copyright
statute forbids courts from inferring a transfer of copyright or
a license from mere delivery of the material object in which the
work is embodied." Corbello v. DeVito, 777 F.3d 1058, 1067 (9th
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Cir. 2015) (citing 17 U.S.C. § 202). But we rely on the fact of
delivery not in isolation, but as "'a relevant factor' to determine
the existence of an implied [sub]license." Id. (quoting Asset
Mktg. Sys., Inc. v. Gagnon, 542 F.3d 748, 755 n.4 (9th Cir. 2008));
see also Effects Assocs., 908 F.2d at 558 n.6 ("While delivery of
a copy 'does not of itself convey any rights in the copyrighted
work,' 17 U.S.C. § 202, it is one factor that may be relied upon
in determining that an implied license has been granted."
(emphasis in original)). Sylvania's delivery of the photos,
combined with the context in which they were given, makes clear
that Sylvania intended to allow Orgill to use them.
Fourth, Sylvania knew that Orgill was using the photos.
Twice per year, Orgill provided Sylvania a copy of Orgill's catalog
for Sylvania to review for accuracy. Although Sylvania has
periodically responded to make various corrections to the listings
in the catalog, Sylvania never objected that Orgill was using
copyrighted photos without permission. See I.A.E., Inc. v. Shaver,
74 F.3d 768, 775 (7th Cir. 1996) (recognizing that consent to an
implied license can be "given in the form of mere permission or
lack of objection").
Fifth, Sylvania and Orgill entered into a "Confirmatory
Copyright Sublicense Agreement" in July 2014, after PIC initiated
this lawsuit. This document purports to be effective "nunc pro
tunc as of June 1, 2006" and states that Sylvania "hereby confirms
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that it previously granted permission to Orgill to Use and to
sublicense the right to Use the Images to its dealers." PIC calls
this agreement a "sham" intended to frustrate this litigation.
And at least one court has held that, "[a]lthough the Copyright
Act itself is silent on the issue of retroactive transfer or
license, . . . such retroactive transfers . . . undermine the
policies embodied by the Copyright Act." Davis v. Blige, 505 F.3d
90, 97–98 (2d Cir. 2007); see also PIC I, 118 F. Supp. 3d at 403
n.3. But the issue here is not whether the agreement by itself
can operate as a retroactive sublicense, but rather whether it is
evidence of Sylvania's prior intent to grant a sublicense. And
certainly a statement by Sylvania itself provides such evidence.
Sixth, PIC successfully held Sylvania liable for breach
of its covenant precisely because Sylvania permitted its third-
party dealers and distributors to use the photos without
attribution. Although the arbitrator did not explicitly call out
Orgill as one of those distributors, the notion that Sylvania would
have permitted (i.e., sublicensed) only some of these third parties
to use the photos but not Orgill makes no sense.
For its part, PIC attempts to counter Orgill's strong
evidence with evidence of its own. PIC first notes that Sylvania
at some point prepared a "Photograph/Illustration Permission" form
specifically requiring attribution to Picone, that Sylvania
referred to this form in a "Do's and Don't's" statement, and that
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Sylvania did not give Orgill either document. So, PIC says, "[a]
jury could infer that had Sylvania intended to grant Orgill a
sublicense, it would have followed its policies and used its
permission form." But the arbitrator found that the "Do's and
Don't's" statement was created after the license from PIC expired
in 2012, so this document provides no insight into Sylvania's
intent to grant permission (or not) during the contested period.
In fact, the arbitrator stated, "[d]uring the six-year period of
the [PIC–Sylvania] Agreement, [Sylvania] had no policies in place
to ensure that its customers were using the PIC Images with the
copyright notice" (emphasis added). Furthermore, there is no
evidence that Sylvania gave these forms to any of its distributors,
and we know from the arbitrator that those other distributors had
sublicenses. So Sylvania's failure to diligently give out the
permission form is at best evidence of Sylvania's "poor management"
(in the arbitrator's words) of copyrighted images, rather than
evidence that Sylvania did not intend to permit Orgill to use the
images at all.
Along the same lines, PIC notes that Sylvania's public
website states that "[t]his site or any portion of this site may
not be reproduced, duplicated, copied, sold, resold, visited, or
otherwise exploited for any commercial purpose without express
written consent of [Sylvania]." Since Sills obtained some images
from the website without this written consent, PIC argues, a jury
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might assume that no permission was given. But again, the
arbitrator foreclosed this when it determined that, during the
contested period, Sylvania had no policy in place, or at least did
not follow any purported policy, to control the images that it was
sublicensing. And PIC's argument is strongly undercut by the fact
that Orgill was using the photos with Sylvania's knowledge in
furtherance of both of it and Sylvania's shared business objective
(to sell more lightbulbs). So it is unsurprising in this context
that Sylvania did not hold Orgill fast to the "written consent"
statement.
PIC also tries to show that Orgill might not have
"assent[ed] to a sublicense." It points to two facts in support
of this: first, that Sills did not have "authority" to enter into
contracts on Orgill's behalf, and second, that Orgill apparently
did not know about Sylvania's copyright license or that PIC even
existed. But PIC offers no explanation for why Orgill would have
turned down Sylvania's grant of permission to use the photos
Sylvania had of its own products in any event. And PIC's second
point appears to defeat the first one anyway; if Orgill was unaware
that the photos belonged to PIC, then there is no reason to think
that Orgill would insist that one of its employees with
"contracting authority" accept them. More to the point, Orgill,
as defendant in this lawsuit, is clearly content to say that
Sills's actions were binding on it in accepting a sublicense, and
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it would be very peculiar for a jury to take PIC's word to the
contrary in interpreting Orgill's intent, especially in view of
the foregoing facts we have already discussed.
Having considered the entire record, we find it
indisputable that Sylvania intended -- indeed, wanted -- Orgill to
use the photos, and gave the photos to Orgill for precisely that
purpose, just as the license itself anticipated and allowed. We
therefore agree with the district court that Orgill has
conclusively proven the existence of a sublicense and that no
reasonable jury could find otherwise.
III.
For the foregoing reasons, we affirm the grant of summary
judgment in favor of Orgill.
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