Saturday, April 01, 2006

Another reason I'm not fond of the Copyright Clearance Center

Resnick v. Copyright Clearance Center, Inc., 2006 WL 721535 (D. Mass.)

Plaintiffs are freelance photographers who registered copyrights in images that appear in articles managed by defendant CCC. They alleged that CCC facilitated and encouraged infringement of their copyrights, charging CCC with contributory and vicarious copyright infringement and false advertising under state and federal law.

After class certification was denied and discovery conducted, plaintiffs attempted to amend their complaint to allege that CCC violated state unfair competition law by “authorizing its customers to make photocopies,” “unjustly enriching itself by licensing Plaintiffs' copyrighted materials,” and “undercutting and interfering with the Plaintiffs' efforts and ability to license their respective copyrights.”

The reason for this attempted amendment, the court thought, was clear: in Venegas-Hernandez v. Sonolux (1st Cr. 2004), the First Circuit held that a publisher’s unauthorized grant of a license to a third party to copy is not itself an infringing act, without further proof that the third party infringed. Though the panel concluded that wrongful authorization of infringement did not create a federal claim, it believed that state law created remedies: if the authorizing entity collected a flat payment regardless of copying, a state claim for unjust enrichment might lie, and if the authorization undercut the true owner’s licensing efforts, a state claim for interference with economic relationships might exist.

The Resnick court, however, believed that Venegas-Hernandez said nothing about state-law false advertising claims, which, moreover, were barred by undue delay and futility. Amendment would be futile because CCC’s actions did not have the level of “rascality” required under Massachusetts state law, which requires conduct that is unscrupulous, intolerable, and unethical. The court found evidence

(1) that CCC is aware that a copyright problem exists when a photographer holds a copyright to a photograph that appears in a printed work to which CCC holds copying rights, (2) that CCC is interested in creating a licensing system for such photographs and has asked various photographer associations to participate, and (3) that, based on the information that CCC receives from the publishers who assign it copyrights, CCC is unable to determine whether those publishers or the original photographers hold the copyrights to any photographs that appear in the published works.

CCC authorized reproductions only where a rightsholder, usually the publisher, authorized CCC to do so. (Except they don’t hold these particular rights; from the photographers’ point of view, publishers bought limited rights but are profiting as if they’d bought all rights to the photos). CCC relies on the assurances of those rightsholders regarding their ability to authorize CCC to license, and those rightsholders are generally sophisticated businesses, so CCC is entitled to rely on those representations.

Even assuming CCC knew which pages some of its customers copied, the court held, that knowledge wouldn’t have let CCC know that its customers were infringing plaintiffs' rights. Further, though plaintiffs told CCC representatives to stop infringing their rights, CCC wasn’t required to believe that plaintiffs’ rights were actually being violated. (Shouldn’t they at least have taken the relevant pages out of their licensing catalogs? Though that wouldn’t have helped on the blanket licenses CCC sells.)

Because plaintiffs had no evidence of direct infringement by any third party, their contributory and vicarious infringement claims failed.

Plaintiffs’ false advertising claims were founded on CCC’s representations that it could “allow[]all your U.S. employees to legally make unlimited copies ... from nearly two million registered titles without the administrative hassle and expense of individual permissions,” and give licensees “a green light to duplicate from CCC's repertory of copyrighted works as often as needed.”

As a side note, I wonder whether plaintiffs and CCC are competitors? Does it matter whether they have an operational licensing scheme? If no one would ever find them to seek permission to copy the relevant images, they might not be competitors for Lanham Act false advertising purposes.

Anyway, the court found there was no material issue as to the falsity of CCC’s statements. Plaintiffs’ theory was that CCC’s statements falsely reassured customers that CCC licenses would allow them to copy without infringing. But, the court held, this statement is only false if in fact customers couldn’t copy without infringing. In other words, to find CCC’s statements false, plaintiffs would have had to show that licensees had infringed, which they couldn’t.

I find several weak points in this reasoning. First of all, CCC’s licenses aren’t a “green light” if they don’t cover all the works they claim to – it’s a green light that might turn out to be red, depending on what a licensee copied and on whether a photographer discovered the copying. A licensee might find it highly material that CCC’s rights don’t extend to all the images in its catalog, and that CCC can’t even identify which images are covered by its license. Given the marketplace context of licensees attempting to manage risks (risks that, by the way, CCC has had a big part in creating), the possibility that a licensee will still be found infringing should suffice for falsity. “Buy a license and you won’t infringe” is not the same as “buy a license and you probably won’t infringe, and anyway it will be hard to prove that you did.” It’s possible that this should be a claim of misleadingness and maybe plaintiffs needed to offer some licensee testimony on this point, but at least they should have been allowed to try.

Second and relatedly, although class certification was denied, evidence of copying other photographers’ images to which CCC lacked rights would be evidence that CCC’s claims were false, and there’s a lot more of that copying than just of the plaintiffs’ photos.

The thing that irritates me here is CCC’s hypocrisy – everyone else has to take a license from CCC, but they don’t have to worry about little copyright holders because it’s too hard to find them. If it’s too hard to find them, maybe you shouldn’t be selling licenses to copy their works. (I’ve long felt that CCC’s claims about its ability to license are vastly overstated and deceptive to licensees, as well as corrosive to fair use doctrine.) Presumably, though, on the First Circuit’s reasoning, future plaintiffs should be able to recover against either CCC or their publishers based on the blanket licenses CCC offers.

1 comment:

James Grimmelmann said...

That's an amazing irony you've pointed out: some CCC licensees may well face higher copyright risks than it would if the CCC and its license didn't exist. Wow.