GREAT MINDS, Plаintiff-Appellant, –v.– FEDEX OFFICE AND PRINT SERVICES, INC., Defendant-Appellee.
Docket No. 17-808-cv
United States Court of Appeals FOR THE SECOND CIRCUIT
Decided: March 21, 2018
RAGGI, HALL, and CARNEY, Circuit Judges.
August Term, 2017 (Submitted: October 3, 2017)
AFFIRMED.
Rhett O. Millsaps II, Law Office of Rhett O. Millsaps II, New York, New York; Eric M. Lieberman, Rabinowitz, Boudin, Standard, Krinsky & Lieberman, P.C., New York, New York, for Plaintiff-Appellant.
Mark D. Taylor & Nicholas O. Kennedy, Baker & McKenzie LLP, Dallas, Texas; Michael A. Pollard, Baker & McKenzie LLP, Chicago, Illinois, for Defendant-Appellee.
SUSAN L. CARNEY, Circuit Judge:
Plaintiff-Appellant Great Minds appeals from the March 21, 2017 dismissal under
BACKGROUND1
Great Minds is a non-profit organization that designs educational materials. These include a copyrighted curriculum called “Eureka Math” (the “Materials“). Great Minds sells the Materials in book form and also releases them to the public without charge but subject to a “public license” (the “License“), using a template that is made available by a group called Creative Commons.2 The License allows “[a]ny member of the public [to] download, reprоduce, and distribute [the Materials] pursuant to the terms of the [] License, which is made available to all on the same terms without the need to negotiate.” Appellant‘s Br. 2.
The License provides that “[e]very recipient of the [Materials] automatically receives an offer from the Licensor to exercise the Licensed Rights under the terms and conditions of this [] License,” and grants each “individual or entity exercising the Licensed Rights” what it describes as a “worldwide, royalty-free, non-sublicensable, non-exclusive, irrevocable license to . . . reproduce and Share the [Materials], in whole or in part, for NonCommercial purposes only.” App‘x 30–31. It defines “NonCommercial purposes” to meаn purposes “not primarily intended for or directed towards commercial advantage or monetary compensation.” Id. at 30.
In late 2015 and early 2016, Great Minds discovered that FedEx stores in Michigan and New York reproduced the Materials, without Great Minds’ authorization, in the course of their ordinary, for-profit business. After each such discovery, Great Minds sent a letter to FedEx demanding that FedEx either negotiate a royalty-bearing license with it or cease commercial reproduction of the Materials. FedEx refused, arguing that it had permissibly reproduced the Mаterials at the request of school districts, which sought to use the Materials for noncommercial purposes under the License.
Great Minds filed the instant lawsuit in March 2016, asserting a single claim of copyright infringement against FedEx. The District Court dismissed the action under
DISCUSSION
FedEx concedes that its copying services are commercial in nature, and that its reproduction of the Materials would therefore be impermissible under the License if FedEx were acting as a direct licensee. Appellee‘s Br. 25–26. Great Minds, in turn, has nоt alleged that the school districts’ use of the Materials exceeded the scope of the License. The question we must answer is whether the License permits school districts to
I. Legal standards
A complaint will survive a motion to dismiss if it “contain[s] sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). To state a claim for copyright infringement, a plaintiff must allege that the рlaintiff owned a valid copyright and the defendant “violat[ed] one of the exclusive rights that
Copyright licenses are generally construed according to principles of contract law. See Chapman, 546 F.3d at 236; 3 Melville B. Nimmer & David Nimmеr, Nimmer on Copyright § 10.08 (2017). “In a dispute over the meaning of a contract, the threshold question is whether the contract is ambiguous,” Lockheed Martin Corp. v. Retail Holdings, N.V., 639 F.3d 63, 69 (2d Cir. 2011), which is a question of law for the court, Orchard Hill Master Fund Ltd. v. SBA Commc‘ns Corp., 830 F.3d 152, 156 (2d Cir. 2016). Under New
II. Analysis
On de novo review of the complaint, we identify no express License language that would either permit or prohibit licensees’ use of third-party services in furtherance of their authorized purposes. That silence does not produce an ambiguity, however. Applying well-established agency principles, we conclude that licensees may use third-party assistance in exercising their rights under non-exclusive copyright licenses unless the license clearly states otherwise.
A. The text of the License
1. The meaning of “reproduce and Share”
The License authorizes licensees to “reproduce and Share” the Materials for noncommercial purposes. App‘x 31. FedEx argues that, because the License defines “Share” to mean “provid[ing] material to the public by any means or process“—including “reproduction“—FedEx‘s provision of commercial copying services falls within the licensee school distriсts’ right to “reproduce and Share” the Materials. Id. at 30 (emphasis omitted). This argument plucks out of context the operative License language, however. The License specifies more fully that Great Minds’ licensees may
2. The “downstream recipients” provision
Great Minds agrees that, under the License, sсhool districts may themselves “reproduce and Share” the Materials. It maintains, however, that the school districts’ authority to use commercial reproduction services for the same purpose is limited by the License‘s “downstream recipients” provision. Under that provision, “[e]very recipient of the [Materials] automatically receives an offer . . . to exercise the Licensed Rights under the terms and conditions of this [] License.” Id. at 31. In Great Minds’ view, FedEx was a “recipient” of the Materials that received an “offer” to exercise the Licensed Rights. It therefore acted as a licensee in its own right when it reproduced the Materials for profit, which violated the terms of the License and thereby made FedEx liable for copyright infringement.
We find this argument unpersuasive. Great Minds fails to account for the mundane ubiquity of lawful agency relationships, in which “one person, to one degree or another . . . , acts as a representative of or otherwise acts on behalf of another person.” Restatement (Third) of Agency § 1.01 cmt. c (2006); see also Kirschner v. KPMG LLP, 15 N.Y.3d 446, 465 (2010) (noting the “fundamental principle that . . . the acts of agents, . . . while acting within the scope of their authority[,] are presumptively imputed to their principals“). The concept of an agency relationship is a sine qua non in the world of entities like corporations and public school districts, which have no
Under Great Minds’ reading of the License, each teacher and administrator who handles the Materials is a “downstream recipient” who acts as an independent licensee, even if their use of the Materials is compelled by the terms of their employment. If a license were intended to achieve such a radical result, we would expect a clear statement in the license to that effect. Great Minds’ public license contains no such statement. We conclude, therеfore, that the “downstream recipients” provision cannot reasonably be read to apply within the scope of employment relationships.
By the same token, we conclude that Great Minds’ licensees may rely on non-employee agents in carrying out permitted uses without converting those agents into independent licensees. Thе License text provides no basis for distinguishing between a school that directs its employees to make copies on the school‘s machines and a school that achieves an identical result by enlisting a temporary independent contractor—or a commercial duplication service. Our conclusion in this regard is no outlier. Seе, e.g., Automation By Design, Inc. v. Raybestos Prods. Co., 463 F.3d 749, 757 (7th Cir. 2006) (reasoning that if a license “allowed Raybestos to make photocopies of [certain] designs[,] . . . Raybestos could certainly take the designs to a Kinko‘s photocopy shop to have them copied” there); see also Estate of Hevia v. Portrio Corp., 602 F.3d 34, 44–45 (1st Cir. 2010) (“When . . . there is no indication that a [licensor] has restricted the
Great Minds could, if it wished, draft a public license that specified whether, and under what circumstances, a licensee may rely on employees or non-employee agents in reproducing or otherwise engaging with the Materials. But Great Minds included no such specification in the license at issue here. As written, the License cannot reasonably be read to convey any such intention. See Boosey & Hawkes Music Publishers, Ltd. v. Walt Disney Co., 145 F.3d 481, 487 (2d Cir. 1998) (“[T]he party seeking exception or deviation from the meaning reasonably conveyed by the words” of a license “should bear the burden of negotiating for language that would express the limitation or deviation.“).
3. The reservation of rights
In a last gasp, Great Minds offers a final textual argument: the License “specifically reserves Great Minds’ right to collect royalties for all commercial uses,” and this phrase must be read to include the commercial reproduction services that FedEx provided to its school district clients.4 Appellant‘s Br. 26 (emphasis added). We agree with the District Court‘s reading, however, that “the unambiguous import of this provision is to reserve [Great Minds‘] right to collect royalties from a licensee if the licensee exceeds the scope of the license by, for example, selling copies of the Materials.” Great Minds, 2017 WL 744574, at *5 (emphasis in original). Great Minds’ argument has little persuasive force, as it merely begs the question whether FedEx should properly be cоnsidered a licensee or an agent of the licensee school districts.
We address here two additional arguments made by Great Minds, both of which miss the mark.
First, Great Minds unavailingly points to Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008), in support of its supposition that, irrespective of whether FedEx acted on behalf of the school districts, FedEx is liable for infringement because the copying company acted volitionally in reproducing the Materials. Cartoon Network involved а claim of direct infringement against Cablevision Systems Corporation for offering customers a digital video recording system through which customers made unauthorized reproductions of copyrighted works such as television programs. See id. at 123. In identifying ”who made [an unauthorized] copy,” our Court looked to the “volitional conduct that cause[d] the copy to bе made,” and concluded that the customer who made the unauthorized reproduction—not the cable company providing the technology—properly bore the liability for direct infringement. Id. at 130–31 (emphasis in original). The relevant question here, however, is not whether FedEx engaged in volitional conduct when it photocopied the Materials at the school districts’ request, but whether the License permits school districts to request those copies at all. We conclude that it does, and nothing in Cartoon Network is to the contrary.
Great Minds next flags two copyright infringement decisions that differentiated between a business‘s commercial conduct in reproducing copyrighted works and a student‘s subsequent use of those same materials fоr educational purposes, and urges that they compel a liability finding here. See Princeton Univ. Press v. Mich. Document Servs., Inc., 99 F.3d 1381 (6th Cir. 1996); Basic Books, Inc. v. Kinko‘s Graphics Corp., 758 F. Supp. 1522 (S.D.N.Y. 1991). Unlike the defendants in Princeton and Basic Books, FedEx sold the school districts its copying services, not ready-made copies of the Materials themselves. Moreover, those cases concern the proper application of the “fair use”
CONCLUSION
In sum, Great Minds’ non-exclusive public license does not expressly preclude licensee school districts from engaging third parties, including commercial third parties, in furtherance of their rights under the License. Absent any such limitation, licensees may rely on services provided by third-party agents whеn exercising their license rights. We conclude that the License unambiguously permitted school districts to engage FedEx, for a fee, to reproduce the Materials. Great Minds has therefore failed to state a plausible claim of copyright infringement against FedEx. We accordingly AFFIRM the judgment of the District Court.