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Panoramic Stock Images, Ltd. v. John Wiley & Sons, Inc.

United States District Court, N.D. Illinois

August 28, 2013

PANORAMIC STOCK IMAGES, LTD. d/b/a PANORAMIC IMAGES, Plaintiff,
v.
JOHN WILEY & SONS, INC., Defendant

Page 843

For Panoramic Stock Images, Ltd., also known as Panoramic Images, Plaintiff: Maurice J. Harmon, LEAD ATTORNEY, Harmon & Seidman LLC, New Hope, PA; Amanda Leigh Bruss, Christopher Seidman, Harmon & Seidman LLC, Grand Junction, CO; E. Bryan Dunigan, III, Law Offices of E. Bryan Dunigan, Chicago, IL.

For John Wiley & Sons, Inc., Defendant: Christopher P. Beall, LEAD ATTORNEY, Levine Sullivan Koch & Schulz, L.L.P., New York, NY; Christopher William Schneider, Davis McGrath LLC, Chicago, IL; Kevin Andrew Thompson, William T. McGrath, Davis, Mannix & McGrath, Chicago, IL.

OPINION

Feinerman, United States District Judge.

Page 844

Memorandum Opinion and Order

Panoramic Stock Images, Ltd., brought this suit against John Wiley & Sons, Inc., alleging direct and contributory infringement under the Copyright Act, 17 U.S.C. § 501 et seq., and common law fraud. Doc. 1. Before the court is Wiley's partial motion to dismiss under Federal Rules of Civil Procedure 12(b)(3) and 12(b)(6). Doc. 9. The motion is denied.

Background

In considering Wiley's Rule 12(b)(6) motion, the court assumes the truth of the complaint's factual allegations, though not its legal conclusions. See Munson v. Gaetz, 673 F.3d 630, 632 (7th Cir. 2012). The court must also consider " documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice," along with additional facts set forth in Panoramic's brief opposing dismissal, so long as those facts " are consistent with the pleadings." Geinosky v. City of Chicago, 675 F.3d 743, 745 n.1 (7th Cir. 2012). To the extent an exhibit attached to or referenced by the complaint contradicts the complaint's allegations, the exhibit takes precedence. See Forrest v. Universal Sav. Bank, F.A., 507 F.3d 540, 542 (7th Cir. 2007). " When ruling on a motion to dismiss for improper venue [under Rule 12(b)(3)], the district court is not obligated to limit its consideration to the pleadings or to convert the motion to one for summary judgment if the parties submit evidence outside the pleadings." Faulkenberg v. CB Tax Franchise Sys., LP, 637 F.3d 801, 809-10 (7th Cir. 2011) (internal quotation marks omitted); see also Cont'l Cas. Co. v. Am. Nat'l Ins. Co., 417 F.3d 727, 733 (7th Cir. 2005).

The following sets forth the facts as favorably to Panoramic as permitted by the complaint and other materials that must be considered on a Rule 12(b)(6) motion. The facts that may be considered on a Rule 12(b)(3) motion but not a Rule 12(b)(6) motion will not be considered in evaluating Wiley's Rule 12(b)(6) motion.

A. Panoramic's Allegations

Panoramic is a stock photography licensing agency that licenses photographs to publishers, including Wiley. Doc. 1 at ¶ 1. Wiley publishes and sells textbooks in the United States and overseas. Id. at ¶ 2. Panoramic owns the twenty photographic images (" Photographs" ) at issue in this case; they are listed in Exhibit 1 to the complaint. Id. at ¶ 5; Doc. 1-1. The Photographs either have been registered with the United States Copyright Office or are the subject of complete applications for copyright registrations received by the Copyright Office. Doc. 1 at ¶ 6; Doc. 1-1.

Between 1992 and 2010, in response to requests from Wiley, Panoramic and/or its agents sold Wiley limited licenses to use copies of the Photographs in educational publications. Doc. 1 at ¶ 7. The licenses were expressly limited with reference to number of copies, distribution area, language, duration, and/or media (print or electronic). Ibid. Panoramic granted the limited use licenses in response to Wiley's representations that its use of the Photographs would not exceed the limitations contained in the license requests. Id. at ¶ 8.

At the time Wiley represented to Panoramic that it needed specific, limited licenses to use the Photographs, Wiley often knew that its actual uses would exceed the usage rights it was requesting and paying for. Id. at ¶ 9. Wiley intended by its misrepresentations

Page 845

to obtain access to the Photographs at a lower cost than it otherwise would have paid. Id. at ¶ 10. Wiley exceeded the uses of the Photographs allowed by the terms of the licenses, and it used the Photographs without any license or permission in additional publications. Id. at ¶ ¶ 11-12.

For example, in July 2001, Wiley sent a request letter to Panoramic's Chicago office seeking permission to print 15,000 copies of several of the Photographs in the textbook, Physical Geography, Science and Systems of the Human Environment Second Edition by Strahler (" Science 2/e" ), for distribution in North America only. Id. at ¶ 13. Based on Wiley's representation that it would use the Photographs in the specified amount and geographic area, Panoramic issued a license permitting 15,000 copies of the Photographs to be distributed within North America. Ibid. ; Doc. 1-2. Despite those limits, Wiley printed over 28,000 copies of Science 2/e. Doc. 1 at ¶ 14; Doc. 1-3. Wiley also printed copies of the Photographs in an international edition of the textbook that it distributed overseas. Doc. 1 at ¶ 14; Doc. 1-4. At the time Wiley secured the license, it knew its uses would exceed 15,000 copies and that it would distribute the Photographs in additional territories outside of North America. Doc. 1 at ¶ 15. Wiley intentionally misrepresented the number of reproductions and areas of distribution for Science 2/e, intending that Panoramic would rely upon those misrepresentations to its detriment by charging a lower fee than it otherwise would have charged. Ibid.

Wiley also reproduced and distributed the Photographs without Panoramic's permission to other entities, subsidiary companies, divisions, affiliates, and/or third parties (collectively, " Third Parties" ) in the United States. Id. at ¶ 23. The Third Parties then translated the publications at issue into different languages or published them in local adaptations or reprints, and included the Photographs in those publications without Panoramic's permission. Id. at ¶ 24. By transmitting the Photographs to the Third Parties, Wiley facilitated the Third Parties' unauthorized reproduction and distribution of the Photographs. Ibid. Wiley permitted the Third Parties to distribute Wiley's publications containing the Photographs in new territories, to translate its publications into new languages, and to adapt its publications for distribution in additional territories. Id. at ΒΆ 25. Wiley knew when it reproduced and distributed the Photographs that the Third Parties would reproduce and distribute the Photographs without Panoramic's authorization, and it was aware that the Third Parties in ...


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