Panoramic Images Copyright Claims Against Textbook Publishers Permitted To Proceed

By Nancy Wolff Esq., PACA Counsel

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Panoramic Images (Panoramic) successfully defeated two separate motions to dismiss copyright claims it brought against textbook publishers, McGraw-Hill Companies, Inc. (McGraw-Hill) and John Wiley & Sons, Inc. (Wiley) for uses of photographs in excess of license agreements. Both cases were in the Federal District Court of the Northern District of Illinois, in front of two different judges and in each instance the court upheld Panoramic’s compilation registration of photographs and refused to follow the line of cases that restricted these registrations to the compilation and not the underlying photographs, granting deference to the Copyright Office.

170 photographs were at issue in the action against McGraw-Hill. All licenses contained restrictions with limitations based on the number of copies, territory, image size, language, duration, and nature of the media exceeded the permitted uses. According to the complaint Panoramic provided McGraw-Hill with a list of limited licenses that it believed had been exceeded. When McGraw-Hill failed to respond, Panoramic instituted an action for direct and contributory copyright infringement. McGraw-Hill did not dispute the claims against them with respect to 69 of the images, but asserted that Panoramic lacked valid copyright registrations for 101 of the 170 photographs at issue.

First, McGraw-Hill asserted that Panoramic should be barred from bringing an action on 52 photographs because they were registered as part of various compilations and collective works and that these registrations failed to list the title of each photograph with an individual author citing 17 U.S.C. §409(2)— that states an application must include the “author or authors” and “title of the work”. McGraw argued that the statute intends that each component of a collective work must individually be listed with an author and title and ignoring this requirement would render the law “meaningless,” allowing claimants to bring infringement suits on works that had not been individually registered, a mechanism that provides public notice of a work’s registration. McGraw-Hill relied on several recent cases to support this view, including Muench v. Houghton-Mifflin, Bean v. Houghton Mifflin, and Alaska Stock LLC v. Houghton Mifflin Harcourt Publ’g. Co., in which the courts determined that the plain language of §409 required each component photograph in a collective work to be listed with copyright registration in order for the plaintiff to bring an infringement action. In response, Panoramic noted that the United States has filed amicus briefs in support Alaska Stock and Bean, arguing that the Copyright Office has permissibly interpreted §409 to not require a registration application to identify the author of all claimed component works and that the court should defer to that interpretation. Panoramic also relied on Metropolitan Regional Info. Sys. V. American Home Realty Network Inc. a recent Fourth Circuit decision, which stated that §409 should not be interpreted to require that the copyright registrant identify each individual author and title in a collective work. Metropolitan further stated that reading §409 to mean that registration of a collective work also protects each component work is “more consistent with the statutory and regulatory scheme” because individually listing huge numbers of photographs would add excessive impediments to the registration process.”

The court rejected McGraw-Hill’s arguments concerning publication notice, pointing out that this apparent lack of notice did not prevent McGraw-Hill from knowing that Panoramic claimed copyright in the images and entering into licensing agreements with Panoramic. The court acknowledges that this is a developing issue in various district and circuit level courts and chooses to permit the action to continue, rather than barring the infringement suit at the pleadings stage. The court further states because the Seventh Circuit had not yet ruled on this issue, it preferred to grant deference to the Copyright Office’s reasonable interpretation of the statute, which “has directed that registration of a collective work “may cover (a) the collective work authorship, (b) any contribution created by the employee or other party commissioned by the author of a work made for hire, and (c) any other contributions that the claimant of the collective work obtained by transfer.” The Copyright Office further provides that where, as in this case, “the work being registered was created by a large number of authors, the application will be considered acceptable if it names at least three of those authors, followed by a statement such as ‘and [number] others.”

McGraw-Hill challenged the registration on an additional 49 of the photographs based on pending copyright registrations, and asserted that the action should not be permitted to proceed without a registration certificate from the Copyright Office. The court observed that there is a circuit split on the question of whether a pending copyright application is a sufficient basis for filing a copyright infringement suit (the application approach) or whether a copyright registration must be completed first (the registration approach). Courts that follow the registration approach urge that it follows the plain meaning of § 411(a), which states “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.” Advocates of the application approach contend that statute is ambiguous and permitting a claimant to bring a copyright infringement action on a work that has a pending application would better carry out the purpose of the statute by providing broad copyright protection without undue delay. The court found the application approach to be the most logical one following the Seventh Circuit case of Chicago Bd. of Educ. v. Substance, Inc., which stated that “although a copyright no longer need be registered with the Copyright Office to be valid, an application for registration must be filed before the copyright can be sued upon.”

Panoramic Images action against the publisher Wiley similarly alleged direct and contributory copyright infringement and common law fraud for exceeding the scope of the licenses. In addition to disputing the registrations based on compilation registrations and pending applications, Wiley brought a partial motion for dismissal arguing that litigation was improper because the arbitration clause in some of the license agreements precluded court proceedings.
Twenty photographs were at issue in the Wiley matter and as in the McGraw-Hill matter, limited licenses were issued to Wiley for use in in educational publications over the course of a number of years. The licenses expressly limited the number of copies, distribution area, language, duration, and media and Panoramic alleged that Wiley continually exceeded the limited grant of rights without securing additional permission. Further, it alleged that Wiley reproduced and distributed the photographs to third parties in the United States for profit, who translated the publications into different languages or published them in local adaptations or reprints all without Panoramic’s permission.

Nine of the 20 photographs were licensed by Panoramic’s distributor Getty Images through a series of Master License agreements that contained arbitration clauses. The court noted that a motion to dismiss was not the appropriate vehicle under which to enforce an arbitration clause, and a party must seek a stay under §3 of the Federal Arbitration Act. The court reviewed the arbitration provision and noted that it provided a “carve-out” option to litigate in court and that Panoramic may exercise its right to litigate in court, as it was “standing in Getty’s shoes”. Further, because Wiley’s reply brief did not address the scope and effect of the arbitration carve-out, it forfeited its ability to compel arbitration arising from the Getty Images agreements.

Similarly to the McGraw-Hill case, the court reviewed the current circuit split on whether “preregistration or registration” is required for purposes of filing a copyright and ultimately favored the application approach. The court preferred this approach because it avoided unnecessary delay by keeping claimants in “legal limbo,” waiting for their applications to be approved prior to bringing a legal action.

With respect to certain photographs that were registered as part of compilations, rather than individually, the court again referred to a split among district courts, and just as the court in the McGraw case, it looked to the Fourth Circuit’s in Metropolitan Regional Information Systems, stating that “where, as here, the copyright holder of a registered compilation owns the components at issue in a copyright suit, the registration suffices to permit filing of a suit.” The court stated that because the case was only at the pleading stage, it would permit Panoramic to proceed with its claims, but specifically stated that Wiley should be permitted to renew this argument later, if another Appeals Court departs from the Fourth Circuit.

There is still no new news from the Ninth Circuit on the appeal in Alaska Stock and Bean which was argued more than 2 years ago. It is clear that subsequent courts are more comfortable in giving deference to interpretation of section 409 by the Copyright Office, upholding the form of copyright registrations recommended to the industry by the Copyright Office.

Other courts depart from the view of the Fourth Circuit.

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