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

963 F.Supp.2d 842

PANORAMIC STOCK IMAGES, LTD. d/b/a Panoramic Images, Plaintiff,

v.JOHN WILEY & SONS, INC., Defendant.

No. 12 C 10003.

United States District Court,

N.D. Illinois,

Eastern Division.

Aug. 28, 2013.

Maurice J. Harmon, 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 Plaintiff.

Christopher P. Beall, Levine Sullivan Koch & Schulz, L.L.P., New York, NY, Christopher William Schneider, Davis

McGrath LLC, Kevin Andrew Thompson, William T. McGrath, Davis, Mannix & McGrath, Chicago, IL, for Defendant.

Memorandum Opinion and Order

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. 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 misrepresentationsto 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 ¶ 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 fact did so. Id. at ¶¶ 26–27. Wiley profited from its transmission of the Photographs to the Third Parties because the Third Parties paid Wiley for translation and distribution rights, including access to all of the content in its publications. Id. at ¶ 28.

B. The Getty–Wiley Master License Agreements

Nine of the Photographs (Nos. 10, 12–14, 16–20) were “licensed by” Getty Images (US) Inc. to Wiley pursuant to a series of master license agreements. Doc. 1–1. Those Photographs will be referred to as the “Getty Images.” On May 1, 2006, Wiley and Getty entered into a Getty Images' Master License Agreement (“2006 Agreement”). Doc. 9–1 at ¶ 2. On June 30, 2010, Getty and Wiley entered into another Getty Images' Master License Agreement (“2010 Agreement”). Id. at ¶ 4. The 2010 Agreement was amended by a writing dated December 6, 2011 (“2011 Amendment”). Id. at ¶ 5. The 2011 Amendment was superceded by an amendment dated May 1, 2012 (“2012 Amendment”). Id. at ¶¶ 5–6.

The 2006 Agreement and 2010 Agreement each has an arbitration clause. Under the heading “ Governing Law ”, the 2006 Agreement states:

This Agreement will be governed in all respects by the laws of the State of New York, U.S.A., without reference to its laws relating to conflict of laws. Any disputes arising from this Agreement or its enforceability shall be settled by binding arbitration to be held in either Seattle, Washington; New York, New York; London, England; Paris, France; or Singapore.... Notwithstanding the foregoing, Getty Images shall have the right to commence and prosecute any legal or equitable action or proceeding before any court of competent jurisdiction to obtain injunctive or other relief against Licensee in the event that, in the opinion of Getty Images, such action is necessary or desirable.

Doc. 9–2 at 6, ¶ 13.2. Under the heading “ Governing Law ”, the 2010 Agreement states:

This Agreement will be governed in all respects by the laws of the State of New York, U.S.A., without reference to its laws relating to conflicts of law. Any disputes arising from this agreement or its enforceability shall be adjudicated in the state and federal courts located in New York City, New York.... Notwithstanding the foregoing, Getty Images shall have the right to commence and prosecute any legal or equitable action or proceeding before any court of competent jurisdiction to obtain injunctive or other relief against Licensee in the event that, in the opinion of Getty Images, such action is necessary or desirable.

Doc. 9–3 at 6, ¶ 8.5. From 2001 through May 1, 2006, the master agreements between Getty and Wiley did not include arbitration clauses. Doc. 9–1 at ¶ 7.

C. Panoramic's Compilation Copyright Registrations

Six of the Photographs (Nos. 2, 4, 5, 6, 12, 13, and 18) were registered by Panoramic with the Copyright Office as part of photographic compilations. Doc. 1–1; see also Doc. 9–5. Photograph Nos. 2, 12, 13, and 18 are included in the compilation with the registration number “VA 841–131.” Doc. 1–1. The registration form for VA 841–131 lists the copyright claimant as Panoramic, and the authors of the images as “David Lawrence, Mark Segal, Joseph Jacobson, et al.” along with “Panoramic Images.” Doc. 9–5 at 2. Photograph No. 4 is...