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Jose Luis Pelaez, Inc. v. Pearson Education, Inc.

United States District Court, D. New Jersey

November 21, 2019

JOSE LUIS PELAEZ, INC., et al, Plaintiffs,
v.
PEARSON EDUCATION, INC., Defendant.

          OPINION

          WILLIAM J. MARTINI. U.S.D.J.

         Plaintiffs Jose Luis Pelaez and Jose Luis Pelaez, Inc. bring this copyright infringement action against Defendant Pearson Education Inc. Now before the Court are the parties' cross motions for summary judgment. ECF Nos. 76-77. For the reasons set forth below, Defendant's motion is GRANTED and Plaintiffs motion is DENIED.

         I. BACKGROUND [1]

         Plaintiff Jose Luis Pelaez ("Pelaez") is a professional photographer and owner of Jose Luis Pelaez, Inc ("Pelaez Inc." and together with Pelaez, "Plaintiffs"). Plaintiffs entered into licensing agreements with Corbis Corporation ("Corbis"), a stock photography agency that serves as a licensing agent for photographers. The agreements allowed Corbis to sub-license Pelaez's photos to end users, including publishers.

         Defendant Pearson Education, Inc. ("Defendant") is a publisher of educational materials, including textbooks. In 2001, 2004, and 2007, Defendant and Corbis entered into three separate preferred vendor agreements ("PVAs"). The parties disagree over whether the PVAs constituted unlimited licenses to use Corbis's clients' photos at certain price points or merely pre-established some of the terms that would be applied to subsequent licensing agreements.

         At some point between 2009 and 2015, Plaintiffs became aware that Defendant (and other publishers) faced allegations of large-scale copyright infringement. Plaintiffs filed suit against Defendant on August 26, 2016, alleging copyright infringement (Count One) and contributory and/or vicarious copyright infringement (Count Two). Comp., ECF No. 1. The factual allegations are relatively barebones. Essentially, Plaintiffs accuse Defendant of obtaining access to their photos through Corbis and other licensing agencies, then (1) printing unauthorized copies, and, without permission, (2) distributing photos throughout the world, (3) publishing photos in electronic, ancillary, or derivative publications; and (4) publishing the photographs in international editions and foreign publications. Id. ¶ 10.

         The parties originally moved for summary judgment in November 2018. ECF Nos. 43, 45. Defendant requested, and was granted, leave to file a supplemental motion. ECF Nos. 56, 59, 62 (opposition). Defendant also filed a notice of supplemental authority. ECF Nos. 66. In February 2019, Plaintiffs moved to amend their complaint, ECF No. 67. In response, the Court terminated the pending summary judgment motions, ECF No. 75. Next, the Court denied Plaintiffs' motion for leave to amend and invited the parties to refile their cross motions for summary judgement. ECF Nos. 73-74. The parties did so on August 9, 2019, relying on their previous briefing. ECF Nos. 76-77. The parties also submitted various opposition and reply briefs. ECF Nos. 78-82.

         II. STANDARD OF REVIEW

         Summary judgment is appropriate if "there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law." FRCP 56. A fact is material if its determination might affect the outcome of the suit under the applicable substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). A dispute is genuine if "a reasonable jury could return a verdict for the nonmoving party." Id. To make this determination, the Court views the facts in the light most favorable to the nonmovant and all reasonable inferences must be drawn in the nonmovant's favor. Scott v. Harris, 550 U.S. 372, 378 (2007).

         The moving party bears the burden of demonstrating the absence of a genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The movant can meet this burden by pointing to an absence of evidence supporting an essential element as to which the non-moving party will bear the burden of proof at trial. Id. at 325. If the moving party carries its initial burden, "the nonmoving party must come forward with specific facts showing that there is a genuine issue for trial." United States v. Donovan, 661 F.3d 174, 185 (3d Cir. 2011) (citation omitted). "The non-moving party cannot rest on mere pleadings or allegations; rather it must point to actual evidence in the record on which a jury could decide an issue of fact its way." El v. SEPTA, 479 F.3d 232, 238 (3d Cir. 2007) (citation omitted). "A party moving for summary judgment on an issue for which it bears the ultimate burden of proof faces a more difficult road .... In such a case, if there is a chance that a reasonable factfinder would not accept a moving party's necessary propositions of fact, summary judgment is inappropriate." Donovan, 661 F.3d at 185 (citation omitted).

         III. DISCUSSION

         Despite all the spilled ink, the issues here are relatively simple: First, does Defendant's alleged conduct constitute a breach of contract or copyright infringement? Second, did Defendant have a valid license to copy the photographs? Third, can Defendant be liable for contributory or vicarious infringement?

         A. Prima Facie Direct Copyright Claim?

         Citing cases from the Second Circuit, Defendant argues that Plaintiffs' allegations, at most, state claims for breach of contract, not copyright infringement. Plaintiffs disagree, arguing that Defendant's use of their copyrighted works beyond the licenses provided constitutes copyright infringement. Plaintiffs are correct with respect to the law controlling their claims.

         In a recent precedential opinion, the Third Circuit analyzed whether photographer-plaintiffs were bound by the forum-selection provision in vendor agreements between Corbis and another publisher, McGraw Hill. In re McGraw-Hill Glob. Educ. Holdings LLC, 909 F.3d 48, 52 (3d Cir. 2018). In holding the photographers were not bound, the court clarified the elements of a copyright infringement claim: (1) ownership of a valid copyright and (2) copying the constituent elements of the work that are original. Id. at 66-67. The court made clear that a prima facie case did not require such copying be "unauthorized." Id. ("[W]e cannot expect them to plead unauthorized use as part of & prima facie case."). Of course, holding a valid license to copy the original work is an affirmative defense to copyright infringement. See Id. (citing with approval, Muhammad-Ali v. Final Call, Inc., 832 F.3d 755, 761 (7th Cir. 2016) ("[T]he existence of a license, exclusive or nonexclusive, creates an affirmative defense to a claim of copyright infringement.")); see also FRCP 8 (listing "license" as affirmative defense); Carlin v. Bezos, No. 14-cv-02406, 2015 WL 12803608, at *4 (E.D. Pa. June 11, 2015), aff'd, 649 Fed.Appx. 181 (3d Cir. 2016). But the existence of some limited license (or documents defendants argue amount to licenses) does not preclude copyright holders from suing for infringement. See In re McGraw-Hill, 909 F.3d at 61 ("McGraw-Hill is an infringer to the extent it exceeds any license that Krist or a sub-licensor granted it."). Here, Plaintiffs contend Defendant reproduced their copyrighted photographs without a license. Therefore, their claims sound in copyright.[2]

         B. License to Copy Photographs?

         The parties agree that in 2001, 2004, and 2007, Corbis and Defendant entered into the PVAs, which set forth at least some of the terms under which Defendant could license photos from Corbis (and its clients). Defendant argues that the PVAs actually grant a license to use Plaintiffs' photos, with such use producing a reciprocal obligation to pay Corbis according to the price schedules. Def. Mot. at 10-16. Plaintiffs disagree, arguing the PVAs merely set forth certain terms that would be incorporated into specific licenses granted via invoices sent from Corbis to Defendant. PL Mot. at 8-15. According to Plaintiffs, Defendant did not have a license to use their copyrighted photographs until Defendant received and paid the invoice setting forth the images licensed. Id.

         Because holding an applicable license is an affirmative defense to Plaintiffs' copyright claims, see supra Part III.A; FRCP 8(c)(1), Defendant bears the burden of proof, El, 479 F.3d at 238. Therefore, at this stage, "if there is a chance that a reasonable factfinder would not accept [Defendant's] propositions of fact, summary judgment is inappropriate." Donovan, 661 F.3d at 185 (citation omitted). Fortunately for Defendant, there is no dispute that Corbis and Defendant agreed to the terms of the PVAs as written. The issue before the Court is how to interpret those terms. And interpreting the unambiguous language of the PVAs is a question of law. See Fox v. U.S. Dep't of Hous. & Urban Dev.,680 F.2d 315, 319 (3d Cir. 1982) ("Interpretation of a contract is ordinarily a question of law for the courts. But when the contract is ambiguous, ...


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