• An Exclusive License or Exclusive Agent?

    by  • February 12, 2018 • copyright • 2 Comments

    I previously wrote about an Oregon decision, Fathers & Daughters Nev., LLC v. Zhang. The case was dismissed because the author of the film, the plaintiff, had exclusively licensed the infringed rights to someone else, so couldn’t sue for infringement itself. This post is a separate one to address an interesting footnote in the decision, a discussion of a case that I have struggled with, the 9th Circuit decision in Minden Pictures, Inc. v. John Wiley & Sons, Inc. (blogged here). In Minden, the plaintiff was a licensing agency for photographers. Minden was the photographer’s exclusive agent, but the photographers could also grant licenses themselves in limited circumstances, circumstances that were for uses that Minden could also license.

    The Minden court of appeals noted that the copyright owner has the exclusive right “to do and to authorize” the reproduction, distribution, etc. of the copyrighted work. 17 U.S.C. § 106(a). The court then held that “authorizing” the use of the copyrighted work is, in and of itself, a copyright right that can be exclusively granted:

    The right “to authorize” these acts is also an “exclusive right” under the Act. See id. § 106(3), (5). Minden thus had an interest in a legally cognizable right under the copyrights.

    The court then went on to hold that the photographers had given Minden the exclusive right to authorize others to use the photograph, which was different from the photographers’ retained right to grant licenses themselves and thus Minden, as the photographer’s exclusive agent, had standing for the infringement claim:

    [T]he photographers have promised that Minden, and only Minden, will have the power, as the photographers’ licensing agent, to authorize third parties to reproduce, distribute, and display the photographs. That the photographers have retained some limited degree of authority to grant licenses themselves does not eliminate Minden’s interest in the copyright as the sole entity to act as the photographers’ licensing agent.

    Well, that’s the best I can make of it, because I really don’t get it. And I was reassured to learn by the court’s footnote in Fathers & Daughters that it’s not just me:

    The Ninth Circuit may have created some confusion in this analysis with Minden‘s holding that in an agreement where the copyright holder expressly retains legal ownership: (1) a copyright owner can retain some “limited degree” of an “exclusive right,” (2) a copyright owner can license the remaining portion of that “exclusive right” to another, and (3) the licensee would have standing to sue as the recipient of an exclusive license of the right transferred to the licensee. Minden, 795 F.3d at 1004-06; see also DRK Photo, 870 F.3d at 984 (describing the holding in Minden). The ability of an “exclusive right” to be held fractionally between two parties seems to be contrary to the meaning of “exclusive”—and contrary to Righthaven‘s holding and the leading treatises’ conclusions that after an exclusive right has been transferred only the licensee and not the owner can enforce that exclusive right. The Court, however, need not address that tension here because … that aspect of Minden is inapplicable to the case at bar.…

    If my explanation of Minden is correct, I don’t think the 9th Circuit got it right. Section 106 says “the owner of copyright under this title has the exclusive rights to do and to authorize” the listed rights. But it’s a novel interpretation to consider the “doing” and the “authorizing” as separate rights.

    The word “authorize” was included in the Act “to avoid any questions as to the liability of contributory infringers. For example, a person who lawfully acquires an authorized copy of a motion picture would be an infringer if he or she engages in the business of renting it to others for purposes of unauthorized public performance.” H.R. Rep. 94-1476 at 61. “Authorizing” is not a separate category of rights in copyright, simply one way to exercise the six enumerated rights.

    The so-called exclusive licenses in Minden were titled “Photographer’s Agency Agreement for the Licensing of Stock Photographs” and should be understood as exactly that, establishing a principal-agency relationship. “PHOTOGRAPHER appoints MP as principal agent and representative in respect to the leasing and sale throughout the world of PHOTOGRAPHER’S Images.” Minden did not itself exercise any of the rights of the copyright owner, that is, it didn’t reproduce or distribute the photographs. It was not a licensee at all, much less an exclusive one. Instead, it was simply an agent authorized to grant exclusive licenses on behalf of its principals.

    The F&D court made this distinction for the most part, but failed at one point. F&D involved three parties, F&D, claiming to be the owner of the rights infringed, sales agent Goldenrod Holdings, and Vertical, the party to whom Goldenrod had granted an exclusive distribution license. The court’s license analysis was whether Vertical or F&D owned the rights to sue for a BitTorrent download. Note that Goldenrod wasn’t in the picture, as it wouldn’t be if it was acting only as an agent for F&D. But the court did get it wrong in dicta in another place. The court held that the retained rights were only the bare right to sue, which one cannot do – so far, so good. But it also said “the reservation of the rights was to Goldenrod and not to F&D. Thus, even if the clause could convey standing, it does not convey standing to F&D.” But that’s not consistent with the rest of the holding, which treats Goldenrod as agent, not licensee.

    Fathers & Daughters Nev., LLC v. Zhang, Civ. No. 3:16-cv-1443-SI (D. Or. Jan. 17, 2018)
    Minden Pictures, Inc. v. John Wiley & Sons, Inc., No. 14-15267 (9th Cir. July 29, 2015).

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