Ninth Circuit: An Exclusive Licensing Agent Has Standing to Bring an Infringement Action under the Copyright Act

In a recent decision, Minden Pictures, Inc. v. John Wiley & Sons, Inc., D.C. No. 3:12-CV-04601-EMC, 9th Cir. Case No. 14-15267, the Ninth Circuit Court of Appeals held that a licensing agent for several individual photographers has standing to bring an action under the Copyright Act against a textbook publisher for unauthorized use of copyrighted photographs. The Ninth Circuit found that the licensing agent held an “exclusive license” to reproduce and authorize production of the photographs even though the individual photographers retained the right to personal and limited commercial use of the photographs under the Agency Agreements. The Ninth Circuit held that the divisibility principle embodied in the Copyright Act allows for the licensing agent to have an “exclusive license” with respect to certain uses of the photographs and therefore it has standing to sue infringers.

Minden Pictures, Inc. (“Minden”) is a licensing agent for several individual photographers. Minden grants licenses to end-users such as textbook publishers. The Agency Agreements between Minden and the individual photographers provide that Minden is the sole and exclusive agent and representative with respect to licensing any of the subject images, and they grant Minden the unrestricted, exclusive right to distribute, license, and/or exploit the images without seeking special permission to do so. The Agency Agreements, however, allow the individual photographers to make some commercial and personal use of the photographs. The individual photographers are allowed to use the images for personal promotion, advertising, and editorial use in books and magazines. The Agency Agreements prohibit the individual photographers from hiring a licensing agent other than Minden with respect to the subject photographs. The Agency Agreements also provide that “all images shall at all times remain the sole and exclusive property of the photographer, including the copyright.”

Minden discovered that one of the licensees, an educational publisher named John Wiley & Sons (“Wiley”), was substantially exceeding the scope of the license with respect to the photographs by printing hundreds of thousands of textbooks in violation of the license agreement, which limits printing to only 20,000 copies. Minden filed a copyright infringement action in the U.S. District Court for the Northern District of California. Wiley moved for summary judgment on the grounds that Minden lack standing to sue under the Copyright Act, and the District Court agreed. Minden appealed to the Ninth Circuit.

The Ninth Circuit reversed, holding that the Agency Agreements conveyed a sufficient property interest in the photographs to permit it to bring an infringement action under the Copyright Act. First, the Court identified the relevant statutory language in the Copyright Act respect to standing: “[t]he legal or beneficial owner of an exclusive right under a copyright is entitled…to institute an action for judgment of that particular right committed while he or she is the owner of it.” These exclusive rights include the right to reproduce, distribute, or display the work, prepare derivative works, perform the work in public, and record and perform the work by means of an audio transmission. The Court noted that current Ninth Circuit case law holds that a party granted an assignment or an exclusive license with respect to these exclusive rights has statutory standing to sue for copyright infringement, but a party granted a mere “non[-]exclusive license” does not have standing.

The Court then identified several of the exclusive rights that were conveyed to Minden under the Agency Agreements: Minden received the right to authorize third parties to reproduce, distribute, and display the photographs. Of course, Wiley’s argument is that these rights were not exclusive because the individual photographers also retained similar rights to the photographs. The Court then explained the divisibility principle inherent in the Copyright Act, which permits an owner to transfer a right or a subdivision of a right—for example, if an author wished to sell publication rights of the hardcover edition to one person and publication rights to create a movie based on the novel to another person. The Court reasoned that the divisibility principle permits the individual photographers to divide the exclusive rights between themselves and Minden as their exclusive licensing agent. The rights have been divided in such a way that the individual photographers retain the right to issue licenses of the photographs, but that Minden receives the exclusive right to act as a licensing agent for licensing the photographs. The Court held that Minden’s exclusive right to act as a licensing agent constitutes an exclusive license and therefore entitles it to sue infringers under the Copyright Act.

Doctrinally, the Court relied on the divisibility principle, but it also articulated several practicality arguments in support of its holding. First, the Court noted that it would be inconsistent with common sense to hold that Minden did not have standing as the individual photographers’ exclusive licensing agent. If the individual photographers never hired a licensing agent and instead handled the licensing on their own, they would have standing to sue for infringement—thus, there should be no reason why having hired Minden to manage licensing of the photographs they would not be allowed to also have Minden protect and defend the licensed photographs.

Second, if Minden were to be precluded from suing, the individual photographers would be significantly disadvantaged by having to file individual actions or joined actions under Rule 20. In the former case, the potential recovery would not justify the litigation expense; and in the latter case, the complexities of coordinating all of the individual named plaintiffs would make litigation burdensome.

Therefore, the Court held that Minden, as the exclusive licensing agent, has standing to sue for infringement under the Copyright Act.