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

United States District Court, N.D. Illinois, Eastern Division

September 2, 2014

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

MEMORANDUM OPINION AND ORDER

GARY FEINERMAN, District Judge.

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. The court denied Wiley's partial motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Docs. 38-39 (reported at 963 F.Supp.2d 842 (N.D. Ill. 2013)). Now before the court is Wiley's motion for partial summary judgment on Panoramic's fraud and contributory infringement claims and on Panoramic's recovery for any infringements occurring before December 17, 2009. Doc. 59. Also before the court is Panoramic's motion for partial summary judgment on liability for infringement and on Wiley's affirmative defenses. Doc. 65. Wiley's motion is denied, and Panoramic's motion is granted in part and denied in part. The case will proceed to a jury trial on November 17, 2014. Doc. 70.

Background

The general background of this case is set forth in the opinion denying Wiley's motion to dismiss, 963 F.Supp.2d at 843-46, familiarity with which is assumed. When considering Wiley's summary judgment motion, the facts are considered in the light most favorable to Panoramic, and when considering Panoramic's motion, the facts are considered in the light most favorable to Wiley. See In re United Air Lines, Inc., 453 F.3d 463, 468 (7th Cir. 2006) ("With cross summary judgment motions, we construe all facts and inferences therefrom in favor of the party against whom the motion under consideration is made.") (internal quotation marks omitted). The court will disregard the portions of Wiley's Local Rule 56.1(b)(3)(B) response that fail to cite specific record material or that present argument inappropriate for a Local Rule 56.1 submission ( e.g., Doc. 82 at ¶¶ 8, 13). See N.D.Ill. L.R. 56.1(b)(3)(B) (requiring the non-movant to file "(3) a concise response to the movant's statement that shall contain:... (B) a response to each numbered paragraph in the moving party's statement, including, in the case of any disagreement, specific references to the affidavits, parts of the record, and other supporting materials relied upon" ) (emphasis added); Ammons v. Aramark Unif. Servs., Inc., 368 F.3d 809, 817-18 (7th Cir. 2004) ("[W]here a non-moving party denies a factual allegation by the party moving for summary judgment, that denial must include a specific reference to the affidavit or other part of the record that supports such a denial. Citations to an entire transcript or to a lengthy exhibit are not specific and are, accordingly, inappropriate."); Sys. Dev. Integration, LLC v. Computer Scis. Corp., 739 F.Supp.2d 1063, 1068 (N.D. Ill. 2010) ("the purpose of Rule 56.1 statements is to identify the relevant evidence supporting the material facts, not to make factual or legal arguments, and thus the Court will not address the parties' arguments made in their Rule 56.1 statements and responses") (citation omitted).

Panoramic is a stock photography agency that licenses to publishers, including Wiley, photographs that independent photographers have authorized Panoramic to market. Doc. 84-1 at ¶ 2; Doc. 82 at ¶ 1. Panoramic claims to own the copyrights in the photographs at issue here ("Panoramic photographs") by virtue of agreements with those photographers. Doc. 84-1 at ¶ 3. Wiley is a publisher of educational textbooks and professional or trade books, which it sells throughout the United States and overseas. Id. at ¶ 1; Doc. 82 at ¶ 2.

From time to time between 1998 and 2010, Wiley paid stock photo permission invoices issued by Panoramic or its agent Getty Images in connection with Wiley's use in its publications of the Panoramic photographs. Doc. 84-1 at ¶ 6; Doc. 82 at ¶ 7. When Wiley wished to license a photograph directly from Panoramic, a Wiley photo editor informed Panoramic of Wiley's interest in using the photograph in a certain publication, often with an estimated usage or print run, and asked Panoramic to issue an invoice. Doc. 84-1 at ¶¶ 8-9; Doc. 82 at ¶ 8. When Wiley included a print run in a permission request, the Wiley photo editor would attempt to clear permissions for the full life of the publication, but the photo editor generally did not review prior edition print run information or forecasting documents, and instead sought permissions for an estimated usage or print run pursuant to an acquisitions editor's instructions. Doc. 84-1 at ¶¶ 9-10; Doc. 82 at ¶ 8. Terms and conditions set forth on the invoices limited the authorized print quantities, the geographic distribution for the publications, and the type of media in which the photographs could be reproduced. Doc. 82 at ¶ 8. This process was standard for the duration of Wiley's relationship with Panoramic. Doc. 84-1 at ¶ 7.

Parties to a licensing transaction in an ongoing licensing relationship-such as Wiley's relationship with Panoramic and Getty-customarily did not consider extended uses of a stock photograph to be an infringement. Doc. 82 at ¶ 8. Rather, publisher-agency licensing was a multistep process, beginning with an initial request from the publisher and continuing with multiple communications, agreements, purchase orders, billing requests, invoices, and license additions or relicensing requests, all of which together constituted the licensing history of a photograph in a publication. Ibid. Such ongoing, mutually beneficial relationships between publishers like Wiley and photo agencies like Getty and Panoramic were common, and because so many projects were ongoing and coincident with other projects, it was not unusual for time to elapse before the parties determined that additional licensing was required. Ibid. Thus, licensing transactions encompassed not just the invoice, but also the parties' course of dealings, negotiations, correspondence, and invoice requests. Ibid.

At some point before November 12, 2009, Douglas Segal, Panoramic's president, read a magazine article "about unauthorized use of stock agencies' photographs by publishers, " which described stock agency litigation against certain publishers and the involvement of Harmon & Seidman, a law firm, in that litigation. Doc. 84-1 at ¶ 29. At the time, Panoramic was unaware of any specific titles, publications, or publishers that were allegedly infringing its copyrights. Id. at ¶¶ 29-30. On November 12, 2009, Christopher Seidman of Harmon & Seidman emailed Segal to thank him for "contacting [Harmon & Seidman] to discuss the status of litigation by visual art licensors against textbook publishers" and to "welcome [Panoramic] as a client." Id. at ¶ 30. The email noted the pair's discussion of "systemic copyright infringement" by textbook publishers, and asked Segal to prepare spreadsheets reflecting Panoramic's invoices to Wiley and other textbook publishers. Ibid. Seidman said that Segal should review Panoramic's invoices "[g]oing back to 1995" because that time frame "will capture most infringing activity." Ibid. The email attached a proposed retainer and contingency fee agreement. Ibid. Segal testified that after the call with and email from Seidman, he did not suspect that Wiley had infringed any of Panoramic's copyrights, and he did not receive any information after the call or email identifying any infringing publications. Id. at ¶¶ 29-30. Segal testified that Panoramic first became aware of potential issues with Wiley's use of Panoramic photographs when he received an email from former Wiley employee Richard Fox on October 15, 2012. Id. at ¶ 29.

Panoramic filed this suit on December 17, 2012, alleging that Wiley infringed its copyrights on twenty photographs. Doc. 1-1; Doc. 84-1 at ¶ 12. Panoramic has withdrawn its claims as to eleven of those photographs. Doc. 84-1 at ¶ 13. Wiley used the remaining nine photographs in six titles: (1) Healing Journey; (2) Physical Geography: The Science and Systems of the Human Environment, 2d Edition (" Science 2/e"); (3) A Global History of Architecture (" Architecture 1/e"); (4) Hawaii with Kids, 3d Edition (" Hawaii 3/e"); (5) Caribbean Ports of Call, 8th Edition (" Caribbean 8/e"); and (6) Barbarians of Wealth: Protecting Yourself from Today's Financial Attilas (" Barbarians "). Id. at ¶ 14. The nine photographs are:

1. "USA, Michigan, Glen Lake, Sleeping Bear Dunes, " by James Schwabel, Registration No. VA 841-131 ("Schwabel Photograph"), used in Science 2/e;
2. "USA, Utah, Canyonlands National Park, " by Warren Marr, Registration No. VA1-002-221 ("Marr Photograph"), used in Science 2/e;
3. "Lavender Haute Provence France, " by D. Barnes/ImageState, Registration No. VA 957-800 ("Barnes Photograph"), used in Science 2/e;
4. "Storm, Canyonlands National Park, Utah, USA, " by James Cowlin, Registration No. VA X-XXX-XXX ("Cowlin Photograph"), used in Science 2/e;
5. "USA, West Virginia, Elk Mountain, Mountain Bikers, " by Skip Brown, Registration No. VA X-XXX-XXX ("Brown Photograph"), used in Science 2/e;
6. "Old Ruins of a Palace, Villa Jovis, Capri, Naples, Campania, Italy, " by Walter Bibikow, Registration No. 1-832-089 ("Bibikow Photograph"), used in Architecture 1/e;
7. "Buildings at the Waterfront, Willemstad, Curacao, Netherlands Antilles, " by Tom Sheckels, Registration No. [pending as of December 2012] ...

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