Tag Archives: actual damages

COURT UPHOLD GRANT HEILMAN’S JURY AWARD FOR UNLICENSED PHOTO USAGE

by Nancy Wolff,  DMLA Counsel 

The Third Circuit, in Grant Heilman Photography, Inc. v. McGraw Educ. Holdings, LLC, 2015 WL 1279502 (E.D. Pa. Mar. 20, 2015), upheld the jury’s verdict that McGraw-Hill had not proven that Grant Heilman Photography, Inc. (“GHP”), was on notice as to McGraw-Hill’s unlicensed use of GHP’s photographs in its textbook publications prior to April 18, 2009. As such, GHP was not barred by the Copyright Act’s three-year-statute of limitation, 17 U.S.C. 507(b), from collecting damages for the overrun and unlicensed use of their images prior to April 18, 2009.

Background:

17 U.S.C. 507(b) states that a plaintiff cannot bring a civil copyright infringement claims, unless such claims are “commenced within three years after the claim accrued.” Circuits Courts, such as the Second (NY, CT and VT) and Third Circuit (NJ, PA and DE) has adopted the “discovery rule”, under which the three-year “countdown” does not begin to run until the plaintiff discovers, or should have discovered through due diligence, when the infringement took place.

On April 18, 2012, GHP brought a copyright infringement suit against McGraw-Hill citing 2,395 instances of McGraw Hill’s infringing use of GHP photographs between 1995-2011 (only a representative sample of 53 claims were presented to the jury). McGraw-Hill did not deny copyright infringement, but argued that GHP’s copyright infringement claims against McGraw-Hill for unlicensed use of their photographs prior to April 18, 2009—the purported accrual date of GHP’s claims—are barred under the Copyright Act’s three year statute of limitation.

In its review of the jury’s verdict for GHP, the court analyzed whether, as per the discovery rule, the evidence and testimony presented at trial showed that GHP “should have known the basis for [its] claims[, which] depends on whether [it] had sufficient information of possible wrongdoing to place [it] on inquiry notice or to excite storm warnings of culpable activity.” The court admitted that McGraw-Hill had a strong argument that an objectively reasonable copyright holder could recognize that McGraw-Hill’s numerous copyright infringements between1995-2009 were storm warnings “heralding possible greater infringement” by McGraw-Hill. However, in what it called “a very close question”, the court found that other evidence presented at trial indicated that the jury could have found verdict in favor of GHP. Mainly, there was evidence that:

  1. McGraw-Hill itself was unaware of the extent of its license infringements until 2013, so that a jury could find that GHP could not be on inquiry notice before April 18, 2009;
  2. McGraw-Hill’s records were not well organized, so that a jury could find that GHP would not have received concrete information even if it had inquired;
  3. There was an impliedly accepted “course of dealing” between McGraw-Hill and GHP, where McGraw-Hill would use GHP’s photographs without permission, and subsequently invoice GHP for the use;
  4. When GHP became aware of specific license infringements, it worked with McGraw-Hill towards resolving the issue, so that a jury could find that GHP (i) did not sit on its rights, and (ii) viewed past infringements by McGraw-Hill as officially resolved, and not as “storm warnings of future instability”;
  5. McGraw-Hill’s print run of its book was confidential, so that a jury could find the GHP, dependent on such information to determine whether McGraw-Hill had overrun its licenses, could not have been on inquiry notice.

Takeaway:

This case is a reminder that the industry’s procedures and course of dealings are relevant and that practices once prevalent before electronic licensing may need to be updated by publishers and licensors to ensure accurate licensing. A few years back the then PACA Editorial Relations Committee made great efforts to work with educational publishers on contracts ad practices that would protect the interests for both licensors and publishers in the digital era. Cengage was the most responsive and worked with the association in crafting language and licensing structures that took account the needs of both parties. DMLA remains open to further collaborations with other publishers. Hopefully this decision will reduce the litigation in this area and lead to reasonable resolutions as both publishers and image libraries need to work together to ensure that educational books contain images necessary to illustrate the history, culture and information reflective of our times.

Original article on original jury trial can be found here

GRANT HEILMAN AND PANORAMIC IMAGES• AWARDED DAMAGES FOR COPYRIGHT INFRINGEMENT CLAIMS AGAINST TEXTBOOK PUBLISHERS

In two recent jury trials, both Grant Heilman Photography Inc. (Grant Heilman) and Panoramic Images were awarded copyright damages against textbook publishers resulting from the publication of images outside of the scope of the license terms.

Grant Heilman brought a copyright infringement action in Federal Court, Eastern District of Pennsylvania against the McGraw-Hill Companies. This trial was a bellwether trial, meaning that the trial was limited to a representative sample of the many images that were alleged to be used outside the scope of the license, to give the parties a feel of how a jury would decide the issues on the other images. The jury was asked to determine a number of issues and all were answered in Grant Heilman’s favor. One issued involved the validity of Grant Heilman’s copyright registrations in some of the images that were being contested by the publisher. The jury did not agree that the publisher had presented evidence that the copyright registrations were invalid, upholding Grant Heilman’s registration practices.

In this sample infringement case, the copyright registrations were not filed before the infringing use, consequently Grant Heilman was limited to seeking actual damages, including profits and could not elect statutory damages. Nonetheless Grant Heilman was awarded a total of $127, 087, which included profits and actual damages.

Importantly, the jury rejected the publisher’s theory that Grant Heilman should have known about “storm warnings” (general knowledge of excessive use of images by textbook publishers) or should have been on notice that the publisher was not complying with its license agreements prior to 2009. This is significant because if the publisher was successful in claiming that Graham Heilman should’ve known of “storm warnings”, then the statute of limitations may have reduced the number of years that damages could be awarded. Because the jury found in Grant Heilman’s favor, it was not precluded from bringing claims for infringements prior to April 18, 2009. Presumably, the parties will either have a trial or settle the remaining claims that were not tried in this bellwether trial.

Panoramic Images brought a similar action against John Wiley & Sons, Inc. in Federal District Court of the Northern District of Illinois. This trial involved damages for six images in excessive of license terms. As in the Grant Heilman case, there was an issue as to whether Panoramic should have known that the publisher was not complying with its license agreements before it filed its claim, which would have limited the amount of years Panoramic could recover damages. The jury did not find that Panoramic should have known that its licenses were not complied with and did not cut off damages before December 17, 2009. In this instance, 5 of the 6 pictures were registered before the infringement, permitting the jury to award statutory damages.

The jury found that Wiley’s infringement of the 5 photographs was willful and for 4 of the images the jury awarded damages of $62,500 each, for a total of $250,000.

For one cover image, the excess use was substantial, and the jury awarded the maximum statutory damages of $150,000. For another individual image that Panoramic Images had not registere3d before the use, the jury awarded actual damages of $500 and profits of $3000. In total the jury award for all six images was $403,500.

Both Grant Heilman and Panoramic Images were represented by the firm of Harmon & Seidman.