GREAT MINDS, a non-profit organization v. OFFICE DEPOT, INC., a Delaware corporation
No. 18-55331
United States Court of Appeals, Ninth Circuit
December 27, 2019
D.C. No. 2:17-cv-07435-JFW-E
FOR PUBLICATION
Appeal from the United States District Court for the Central District of California John F. Walter, District Judge, Presiding
Argued and Submitted November 8, 2019 Pasadena, California
Filed December 27, 2019
Before: Jerome Farris and M. Margaret McKeown, Circuit Judges, and Virginia M. Kendall,* District Judge.
Opinion by Judge Farris
SUMMARY**
Copyright
The panel affirmed the district court‘s dismissal for failure to state a claim of a copyright infringement brought by Great Minds, publisher of math curriculum Eureka Math.
The panel held that defendant Office Depot, Inc., did not become a licensee of a Creative Commons license, and become bound by its terms, or otherwise infringe Great Minds’ copyright by making copies of Eureka Math materials for a profit on behalf of school and school district licensees. There was no dispute that the school and school districts licensees’ copying of Great Minds’ material was permitted under the license. There also was no dispute that, if Office Depot were itself a licensee, commercial copying of Great Minds’ material would fall outside the scope of the license and infringe Great Minds’ copyright. The panel held that, under California law, the school and school district licensees’ exercise of their rights under the license through the services provided by Office Depot did not result in Office Depot becoming a licensee. The panel further held that the district court did not abuse its discretion in denying leave to amend the complaint.
COUNSEL
Christopher J. Sprigman (argued), Simpson Thatcher & Bartlett LLP, New York, New York; Jeffrey E. Ostrow, Simpson Thatcher & Bartlett LLP, Palo Alto, California; Rhett O. Millsaps, II, Law Office of Rhett O. Millsaps II, New York, New York; for Plaintiff-Appellant.
Jennifer A. Golinveaux (argued), Winston & Strawn LLP, San Francisco, California; Diana Hughes Leiden, Winston & Strawn LLP, Los Angeles, California; for Defendant-Appellee.
Andrew M. Gass (argued) and Elizabeth H. Yandell, Latham & Watkins LLP, San Francisco, California; Diane M. Peters, Creative Commons Corp., Mountain View, California; for Amicus Curiae Creative Commons Corporation.
FARRIS, Circuit Judge:
Plaintiff-Appellant Great Minds, publisher of math curriculum Eureka Math, appeals from the January 18, 2018 dismissal under
BACKGROUND
Great Minds is an education-based non-profit organization. It created and copyrighted a math curriculum called “Eureka Math” for grades PreK-12, which it publishes and sells commercially in print form nationwide. It also releases digital files of Eureka Math online for free download to any member of the public under a limited public copyright license template produced by Creative Commons.1 Under the License, “[e]very recipient of [Eureka Math] automatically receives an offer from [Great Minds] to exercise the Licensed Rights.” License § 2(a)(5)(A).
The License grants “the individual or entity exercising the Licensed Rights” a “worldwide, royalty-free, non-sublicensable, non-exclusive, irrevocable license to . . . reproduce and Share [Eureka Math], in whole or in part, for NonCommercial purposes only . . . .” License §§ 1(n), 2(a)(1). The License defines “Share” to mean, in pertinent part, “to provide material to the public by any means or process that requires permission under the Licensed Rights, such as reproduction, public display, public performance, distribution, dissemination, communication, or importation, . . . .” License § 1(l). “NonCommercial” means, in pertinent part, “not primarily intended for or directed towards commercial advantage or monetary compensation.” License § 1(k).
But § 2(b)(3) of the License reserves Great Minds’ right to collect royalties for commercial uses of Eureka Math:
To the extent possible, the Licensor waives any right to collect royalties from [the licensee] for the exercise of [these NonCommercial] Licensed Rights, whether directly or through a collecting society under any voluntary or waivable statutory or compulsory licensing scheme. In all other cases the Licensor expressly reserves any right to collect such royalties, including when [Eureka Math] is used other than for NonCommercial purposes.
If any individual or entity exercising the licensed rights “fail[s] to comply with [the License], [their] rights under [the License] terminate automatically.” License § 6(a). Great Minds claims that this applies equally to every individual or entity that possesses Eureka Math materials, including all “downstream recipients.”
Office Depot provides copy services on request and behalf of public schools and school districts. It charges a fee for those services, and at times it makes copies of Eureka Math materials for the schools’
As a result, on October 11, 2017, Great Minds filed suit against Office Depot in district court, alleging claims of copyright infringement,
On December 6, 2017, Office Depot filed a motion to dismiss the copyright infringement claim, which the district court granted without leave to amend. Great Minds v. Office Depot, Inc., No. CV 17-7435-JFW (EX), 2018 WL 4945643, at *4–5 (C.D. Cal. Jan. 18, 2018). The court found that the License did not prohibit the school districts from employing third parties like Office Depot to make copies of the Eureka Math curriculum on their behalf. Id. This appeal followed.
DISCUSSION
I. MOTION TO DISMISS
We review the district court‘s
A valid claim for copyright infringement requires “(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.” Feist Publ‘ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991) (citing Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 548 (1985)). The claim fails if the challenged use of the work falls within the scope of a valid license. See S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1087-88 (9th Cir. 1989). A copyright license “must be construed in accordance with the purposes underlying federal copyright law.” Id. at 1088 (citing Cohen v. Paramount Pictures Corp., 845 F.2d 851, 854 (9th Cir. 1988)). Federal courts “rely on state law to provide the canons of contractual construction, but only to the extent such rules do not interfere with federal copyright law or policy.” Id. (citing Fantastic Fakes, Inc. v. Pickwick Int‘l, Inc., 661 F.2d 479, 482–83 (5th Cir. 1981)).
Here, the parties agree that California law applies to the construction of the License. Great Minds, 2018 WL 4945643, at *4 n.7. “Under California law, the interpretation of contract language is a question of law.” Atel Fin. Corp. v. Quaker Coal Co., 321 F.3d 924, 925–26 (9th Cir. 2003). “[T]he terms of a contract must be construed in a manner that takes into account the context of the language and is consistent with the contract as a whole.” Actuate Corp. v. Int‘l Bus. Machs. Corp., No. C-09-05892 JCS, 2010 WL 1340519, at *5 (N.D. Cal. Apr. 5, 2010) (citations omitted);
There is no dispute that the school and school district licensees’ copying of Great Minds’ material is permitted under the License. There also seems to be no dispute that if Office Depot were itself a licensee, commercial copying of Great Minds’ material would fall outside the scope of the License and infringe Great Minds’ copyright. The issue we consider then is whether the school and school district licensees’ exercise of their rights under the License through the services provided by Office Depot results in Office Depot becoming a licensee. We hold that it does not. A licensee‘s hiring of a third-party copy service to reproduce licensed material strictly for the licensee‘s own permitted use does not turn that third party into a licensee that is bound to the License terms. See Great Minds v. FedEx Office and Print Servs., Inc., 886 F.3d 91, 96 (2d Cir. 2018) (“Great Minds’ licensees may rely on non-employee agents in carrying out permitted uses without converting those agents into independent licensees.“); Automation by Design, Inc. v. Raybestos Prods. Co., 463 F.3d 749, 761 (7th Cir. 2006) (affirming summary judgment for both licensee and third party); Storage Tech. Corp. v. Custom Hardware Eng‘g & Consulting, Inc., 421 F.3d 1307, 1315 (Fed. Cir. 2005) (independent repair company that copied protected work on behalf of its customers-licensees was not liable for copyright infringement); Hogan Sys., Inc. v. Cybersource Int‘l, Inc., 158 F.3d 319, 324 (5th Cir. 1998) (third-party contractor was “sheltered under” the licensee‘s rights); Marconi Wireless Tel. Co. of Am. v. Simon, 227 F. 906, 910 (S.D.N.Y. 1915), aff‘d, 231 F. 1021 (2d Cir. 1916), reversed on other grounds, 246 U.S. 46 (1918) (third-party contractor was “not an infringer because he [was] supplying lawful goods to a lawful licensee“). See also Raymond T. Nimmer & Jeff C. Todd, 1 Modern Licensing Law § 6:28 (2018) (similarly describing the consensus
Under Great Minds’ reading of the License, third party contractors like Office Depot are “downstream recipients” of Eureka Math as contemplated in § 2(a)(5)(A) of the License, meaning they “automatically receive[] an offer from [Great Minds] to exercise the Licensed Rights,” they accept that offer the moment the copy store employee presses “copy” on a machine, and they become bound to the terms of the License. Office Depot is not a downstream recipient. That Office Depot employed field representatives to advertise the availability of copying services for schools and school districts that use Eureka Math does not confer a licensee status on Office Depot. Its activities remain within the ambit of the schools and school districts’ license.
Great Minds also contends that the “volitional” element, i.e., which entity‘s employee does the copying, is determinative in this case.4 But that argument produces the following absurd results: (1) a teacher may copy Eureka Math on an Office Depot-owned copy machine for a fee in-store, but cannot hand the materials to an Office Depot employee to be copied; (2) a school may pay a copy machine provider a monthly fee to keep a machine on site to copy Eureka Math, but cannot pay Office Depot employees to make the same copies; and (3) a school may permit teachers to copy Eureka Math on school-owned or leased machines, but cannot pay a high school student to make the same copies.
Great Minds’ interpretation cannot be correct. The License itself provides no basis to distinguish between permitted copies of Eureka Math made by a licensee‘s own employees (e.g., school teachers or staff) versus those made by a third-party contractor (e.g., Office Depot employees). We decline to read such a distinction into the License.
Under the License, a non-commercial licensee may hire a third-party contractor, including those working for commercial gain, to help implement the License at the direction of the licensee and in furtherance of the licensee‘s own licensed rights. The License extends to all employees of the
II. LEAVE TO AMEND
We review a district court‘s denial of leave to amend for abuse of discretion. Design Data Corp. v. Unigate Enters., Inc., 847 F.3d 1169, 1172 (9th Cir. 2017). Dismissal without leave to amend is proper if it is clear that “allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency.” Montz v. Pilgrim Films & Television, Inc., 649 F.3d 975, 984 n.3 (9th Cir. 2011) (internal quotations omitted). The district court denied leave to amend because its interpretation of the License was a question of law and “permitting Great Minds to amend would be an exercise in futility.” Great Minds, 2018 WL 4945643, at *5 n.8 (citing Rutman Wine Co. v. E. & J. Gallo Winery, 829 F.2d 729, 738 (9th Cir. 1987)). We agree.
Great Minds argues that the district court failed to consider relevant extrinsic evidence showing that the License is reasonably susceptible to Great Minds’ own interpretation. See United States v. King Features Entm‘t, Inc., 843 F.2d 394, 398 (9th Cir. 1988) (citing Brobeck, Phleger & Harrison v. Telex Corp., 602 F.2d 866, 871 (9th Cir. 1979), cert. denied, 444 U.S. 981 (1979)). But Great Minds alleged no such extrinsic evidence in its complaint. On appeal, it now offers three new pieces of evidence: a survey published by Creative Commons and two third-party websites. None of that evidence is relevant to the ultimate issue on appeal: whether Office Depot‘s commercial reproduction of Eureka Math on behalf and at the direction of proper non-commercial licensees converted Office Depot into a licensee. The district court did not abuse its discretion in denying leave to amend.
AFFIRMED.