Tag Archives: statute of limitations

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 Copyright Claims against MCGraw Hill May Proceed Subject to Further Evidence

 by Nancy Wolff, PACA Counsel

Grant Heilman Photography, Inc. v. McGraw-Hill Company

Prior to a trial over 2395 alleged instances of copyright infringement against text book publisher McGraw Hill Company, Grant Heilman Photography (GHP) brought a motion for partial summary judgment for copyright infringement on 57 of the images and to seek dismissal of a number of the publisher’s affirmative defenses. On June 26th the federal Court for the Easter District Court of Pennsylvania denied the motion for partial summary judgment without prejudice and allowed GHP copyright claims on those images to proceed based on issues of fact that could be resolved with additional evidence. The affirmative defenses raised various issues including whether GHP had standing in the case; if McGraw-Hill’s use of the images constituted copyright infringement; under implied licenses, and whether the statute of limitations for bringing an infringement claim had expired.

McGraw-Hill contested that GHP had standing to bring copyright infringement claims on behalf of their contributors, siting a Ninth Circuit case Righthaven v Hoehn that denied standing to sue based on an assignment of only the bare right to sue without any of the exclusive rights under copyright such as the right to  authorize reproductions, distributions and to create derivative works .     GHP contributor agreements and subsequent riders, however, granted GHP the exclusive rights to exploit the copyrighted works and provided sufficient ownership rights to convince the court that GHP had enough ownership interest in the photographs and their copyrights to bring a claim for infringement.

Second, McGraw-Hill attempted to claim that no actual copyright infringement had occurred even though its use in many instances had exceeded written license agreements.  The Court examined whether McGraw-Hill’s alleged infringements qualified as copyright infringements using a two part test: the first requiring that a work have a valid copyright registration, and second, that there has been an unauthorized use of that registered work.  GHP satisfied the first part by providing evidence of registrations for each of the photographs in question.  The second part, however, was a more complicated matter.  McGraw-Hill claimed that while it may have exceeded the original agreed upon terms, it had established implied licenses with GHP to allow for an increased use of the images through conduct, course of dealing and its interactions with GHP over the years.

The Third Circuit has not explicitly ruled on implied licenses, leaving no binding precedent upon which to base the current decision.  Similar implied licenses have, however, formed the basis for decisions in other districts’ court decisions with conflicting results.  Two district courts, one in Arizona and another in Colorado, have held that an implied license cannot be found through conduct and that permission must be requested and granted in order to use the photos in excess of the license terms.  Other district courts, including in New York and Alaska, have held that conduct can be used as the basis of an implied license.  Here, the court concluded that even if the Third Circuit were to allow an implied license to affect the terms of an agreement in this regard, McGraw-Hill’s conduct with GHP did not support an implied license to use the images beyond original invoice terms.  McGraw-Hill routinely requested permission from GHP before exceeding the use and GHP had correspondence reiterating that rights were only granted upon payment of invoice before publications and all past GHP retroactive licenses were identified as uses without permission. As a result, the court determined that McGraw-Hill had infringed on GHP’s copyrights.

Lastly, the Court examined whether the statute of limitations had run and barred GHP’s copyright infringement claim for McGraw-Hill’s use of the 57 photographs in question.  In this circuit, a copyright infringement action must either be brought within three years of the infringement having taken place, or three years of when the party infringed upon should have discovered that the infringement occurred (referred to as the “Discovery Rule”).  Importantly, the court stated that a recent Supreme Court case looking at laches under copyright (Petrella v. Metro-Goldwyn) did not overrule the Third Circuit Discovery Rule.

McGraw-Hill presented evidence which showed that GHP had knowledge of the publisher’s pattern of infringing activities dating back to 1998.  McGraw-Hill did not dispute that it had infringed on certain GHP photography copyrights, but that none of the infringements were actionable as the fell outside of the three year statute of limitations.  GHP brought forward no clear evidence of infringements within the three-year period.

Consequently the court denied the motion for summary judgment on the grounds that there remained questions of material fact regarding the statute of limitations issue and permitted GHP to provide additional evidence.  Depending on whether GHP can present any new evidence which would point to their lack of knowledge of these infringements, or if there were any other infringements from within the applicable time period, McGraw-Hill may be liable for copyright infringement and GHP may be able to recover damages for these 57 infringing uses. Remaining for trial are the other more than 2000 instances of copyright infringement.