Photographic Illustrators Corporation v. Orgill, Inc. et al
Filing
129
Chief Judge Patti B. Saris: MEMORANDUM and ORDER entered. OSI's Motion to Intervene (Docket No. 99 ) is DENIED (Geraldino-Karasek, Clarilde)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
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Plaintiff,
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v.
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ORGILL, Inc.,
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Defendant.
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PHOTOGRAPHIC ILLUSTRATORS
CORPORATION,
Civil Action
No. 14-11818-PBS
MEMORANDUM AND ORDER
March 11, 2016
Saris, C.J.
INTRODUCTION
Plaintiff Photographic Illustrators Corporation (PIC) is a
Massachusetts corporation specializing in commercial
photography, including photography of consumer products for
advertising and product packaging. PIC took photographs of
lighting fixtures manufactured by Osram Sylvania, Inc. (OSI),
and entered into a licensing agreement with OSI regarding the
product images in June 2006. The 2006 Agreement granted OSI a
non-exclusive, worldwide license to use and sublicense the
photographs with certain limitations: OSI could not sublicense
the images in exchange for valuable consideration, such as a
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fee, and, to the extent reasonably possible and practical, OSI
had to display the images with proper attribution. Defendant
Orgill, Inc. is a one of OSI’s distributors. Orgill obtained the
product images at issue in this case from OSI for use in its
electronic and paper catalogues.
In April 2014, PIC filed suit against Orgill alleging
copyright infringement under 17 U.S.C. § 501 (Count I);
mishandling of copyright management information under the
Digital Millennium Copyright Act (DMCA), 17 U.S.C. § 1202 (Count
II); and false designation of origin and false advertising under
the Lanham Act, 15 U.S.C. § 1125(a) (Count III). OSI admits that
it learned of the case shortly after PIC filed suit, and that it
has been in consistent communication with Orgill since that
time. Three months after PIC filed suit, Orgill and OSI executed
a confirmatory copyright sublicense agreement, effective nunc
pro tunc as of June 1, 2006. The confirmatory agreement cites to
and incorporates language from the 2006 Agreement between PIC
and OSI, and explicitly references the complaint in the present
action. During the course of this litigation, Orgill and OSI
have also entered into a common-interest agreement.
On July 28, 2015, the Court allowed in part and denied in
part Orgill’s motion for summary judgment. See Photographic
Illustrators Corp. v. Orgill, Inc., 118 F. Supp. 3d 398, 411 (D.
2
Mass. 2015). The Court assumes familiarity with the summary
judgment order and the underlying facts of this case. In short,
I allowed the defendant’s motion on the DMCA and Lanham Act
claims. With respect to the copyright infringement claim, I held
that Orgill had received an implied license from OSI to use the
images at issue, and that Orgill’s “use of the images must be
measured against the terms of the original licensing agreement
between PIC and OSI.” Id. at 403. The 2006 Agreement “provides
the relevant benchmark for the defendants’ conduct” because, as
the parties agreed at the summary judgment hearing, “OSI could
not give Orgill rights that went beyond those it in fact had.”
Id. at 403-04.1 I denied Orgill’s motion for summary judgment on
the copyright infringement claim due to “fact disputes as to
fee, attribution, and the nature of the implied license OSI
granted Orgill.” Id. at 404.
On December 17, 2015, OSI filed a motion to intervene as a
matter of right, or in the alternative permissively, pursuant to
Federal Rule of Civil Procedure 24. OSI argues that the
“determination of OSI’s rights under the 2006 Agreement will be
essential to resolving PIC’s claims” because of the Court’s
holding that the 2006 Agreement establishes the minimum
1
The other original defendant in this case, Farm & City Supply,
LLC, was dismissed after summary judgment. See Docket No. 111.
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limitations on Orgill’s use of the images. Docket No. 100 at 2.
PIC counters that the motion is untimely because OSI waited over
a year and a half—until after the close of fact discovery on
liability and the Court’s summary judgment decision—to move to
intervene.
After hearing, the Court DENIES OSI’s motion to intervene
(Docket No. 99) because it is untimely. The only explanation OSI
offers as to why it waited so long to move to intervene is that
OSI believed the “defendants would have no difficulty showing
that they were properly authorized to use PIC images because
Orgill was an OSI customer that received images from OSI.”
Docket No. 100 at 7. In other words, OSI considered PIC’s claim
meritless. The First Circuit has explicitly rejected this
argument twice, and held that motions to intervene were untimely
when the putative intervenors delayed for less time than OSI did
in this case.
DISCUSSION
I.
Motion to Intervene as a Matter of Right
Federal Rule of Civil Procedure 24(a) provides for
intervention as a matter of right on “timely motion” in two
circumstances: (1) the putative intervenor “is given an
unconditional right to intervene by federal statute,” or (2) the
putative intervenor “claims an interest relating to the property
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or transaction that is the subject of the action, and is so
situated that disposing of the action may as a practical matter
impair or impede the movant’s ability to protect its interest,
unless existing parties adequately represent that interest.”
“Rule 24(a)(1) statutory intervenors need not show inadequacy of
representation or that their interests may be impaired if not
allowed to intervene.” Ruiz v. Estelle, 161 F.3d 814, 828 (5th
Cir. 1998) (internal quotation marks and citations omitted).
Instead, to succeed on a motion to intervene under Rule
24(a)(1), a potential intervenor need only demonstrate (1) that
its motion is timely and (2) that the statute clearly applies.
See id. at 827-28; Moosehead Sanitary Dist. v. S. G. Phillips
Corp., 610 F.2d 49, 52 n.6 (1st Cir. 1979) (noting “a party may
intervene as of right upon timely application if unconditionally
authorized to do so by federal law”).
Here, § 501(b) of the Copyright Act provides that the Court
“shall permit the intervention, of any person having or claiming
an interest in the copyright” in an infringement action. 17
U.S.C. § 501(b). Although there are no circuit court cases on
point, several district courts have concluded that § 501(b)
creates an “unconditional right to intervene” under Federal Rule
of Civil Procedure 24(a)(1). See Distribuidora De Discos Karen
C. Por A. v. Universal Music Grp., Inc., No. 13-CV-7706, 2015 WL
5
4041993, at *3 (S.D.N.Y. July 2, 2015); Vestron, Inc. v. Home
Box Office, Inc., No. 87-4603, 1987 WL 123012, at *2 (C.D. Cal.
Nov. 20, 1987). PIC makes a strained textual argument that
§ 501(b) does not create such a right in this case, but does not
offer compelling support for its interpretation of the Copyright
Act. OSI does not address whether the statute creates an
unconditional right to intervene, and instead argues that it is
entitled to intervene as a matter of right under Federal Rule of
Civil Procedure 24(a)(2).
To succeed on a motion to intervene as of right under Rule
24(a)(2), a putative intervenor must demonstrate:
(i) the timeliness of its motion to intervene; (ii) the
existence of an interest relating to the property or
transaction that forms the basis of the pending action;
(iii) a realistic threat that the disposition of the
action will impede its ability to protect that interest;
and (iv) the lack of adequate representation of its
position by any existing party.
R & G Mortg. Corp. v. Fed. Home Loan Mortg. Corp., 584 F.3d 1, 7
(1st Cir. 2009); see also In re Efron, 746 F.3d 30, 35 (1st Cir.
2014). The putative intervenor must satisfy all four
preconditions; the “failure to satisfy any one of them dooms
intervention.” R & G Mortg. Corp., 584 F.3d at 7. “The first of
these elements—timeliness—is the sentinel that guards the
gateway to intervention.” In re Efron, 746 F.3d at 35. Although
the timeliness requirement “is often applied less strictly with
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respect to intervention as of right,” compared to permissive
intervention, “even in the case of a motion to intervene as of
right, the district court’s discretion is appreciable, and the
timeliness requirement retains considerable bite.” R & G Mortg.
Corp., 584 F.3d at 8. Therefore, here, regardless of whether
Federal Rule of Civil Procedure 24(a)(1) or 24(a)(2) applies,
OSI must demonstrate the timeliness of its motion to intervene.
II.
Timeliness
“A motion to intervene is timely if it is filed promptly
after a person obtains actual or constructive notice that a
pending case threatens to jeopardize his rights.” R & G Mortg.
Corp., 584 F.3d at 8. “Perfect knowledge of the particulars of
the pending litigation is not essential to start the clock
running; knowledge of a measurable risk to one’s rights is
enough.” Id. The timeliness inquiry “involves more than merely
checking off the pages of a calendar.” In re Efron, 746 F.3d at
35. It is “inherently fact-sensitive and depends on the totality
of the circumstances.” R & G Mortg. Corp., 584 F.3d at 7. “In
evaluating that mosaic, the status of the litigation at the time
of the request for intervention is highly relevant. As a case
progresses toward its ultimate conclusion, the scrutiny attached
to a request for intervention necessarily intensifies.” Id.
(internal quotations marks and citations omitted). To determine
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whether a motion to intervene is timely, the First Circuit
considers:
(i) the length of time that the putative intervenor knew
that his interests were at risk before he moved to
intervene; (ii) the prejudice to existing parties should
intervention be allowed; (iii) the prejudice to the
putative intervenor should intervention be denied; and
(iv) any special circumstances militating for or against
intervention.
Id. “Each of these factors must be appraised in light of the
posture of the case at the time the motion is made.” Id. The
first of these elements—“the length of time that the putative
intervenor knew or reasonably should have known that his
interest was imperiled before he deigned to seek intervention”—
is the most important. In re Efron, 746 F.3d at 35.
A. Length of Time that the Putative Intervenor Knew its
Interests Were at Risk
Here, PIC argues that the motion is untimely because OSI
has known that its interests in the 2006 Agreement were at risk
since spring 2014. OSI learned of the suit shortly after its
inception, but waited until after discovery on liability closed,
and until after the Court issued a summary judgment order, to
move to intervene. PIC highlights that OSI “again delayed filing
its motion even after the Court issued its summary judgment
opinion,” as OSI did not file its motion until nearly six months
after the Court issued that order. Docket No. 112 at 5.
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OSI retorts that it “saw no need to intervene in the case
until this Court issued its Decision interpreting the 2006
Agreement.” Docket No. 100 at 7. In the earlier stages of
litigation, OSI believed that the “defendants would have no
difficulty showing that they were properly authorized to use PIC
images because Orgill was an OSI customer that received images
from OSI.” Id. OSI emphasizes that the “very terms of the 2006
Agreement set forth that PIC was compensated millions of dollars
for very broad rights to use the images,” and “OSI obtained for
its investment a very broad right to sublicense, which did not
require PIC approval.” Id. In short, OSI argues that the light
did not go off that its interests were at risk until after the
Court ruled on summary judgment because OSI considered PIC’s
likelihood of success dim under the terms of the 2006 Agreement.
The First Circuit has twice rejected similar excuses for
not moving to intervene at an earlier date. See In re Efron, 746
F.3d at 35-36; Narragansett Indian Tribe v. Ribo, Inc., 868 F.2d
5, 7-8 (1st Cir. 1989). In In re Efron, the putative intervenor
knew about the case “virtually from its inception,” and waited
more than nineteen months to intervene because he thought that
the “suit was worthless and would surely fail at trial.” 746
F.3d at 35-36. In Narragansett Indian Tribe, the proposed
intervenors were aware of the suit for more than thirteen months
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before they moved to intervene. 868 F.2d at 7. Again, “they
believed that the lawsuit was frivolous; in their estimation, it
would never go to trial, but would be dismissed.” Id.
In both cases, the First Circuit emphasized that “[p]arties
having knowledge of the pendency of litigation which may affect
their interests sit idle at their peril,” and held that the
delay was inexcusable. In re Efron, 746 F.3d at 36; Narragansett
Indian Tribe, 868 F.2d at 7. “A party cannot wilfully blind
himself to facts that are perfectly apparent and then claim that
he lacked knowledge of what those facts plainly portended.” In
re Efron, 746 F.3d at 36. Here, OSI waited twenty months—even
longer than the parties in In re Efron and Narragansett Indian
Tribe—for the same faulty reason: due to the 2006 Agreement, OSI
did not think that PIC had a strong case against Orgill.
This argument, by its very terms, demonstrates that OSI was
aware of the importance of the 2006 Agreement to the suit
against Orgill from its inception. OSI attempts to
simultaneously maintain that it saw no need to intervene earlier
because it thought that the 2006 Agreement would protect its
rights, and that it did not realize its rights under the 2006
Agreement were at risk until after the Court ruled on summary
judgment and interpreted the agreement differently from OSI. In
other words, OSI failed to consider the possibility that the
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Court would disagree with OSI’s interpretation of the contract,
and find merit in PIC’s claims. The First Circuit has made clear
that “such a flimsy excuse simply will not wash.” In re Efron,
746 F.3d at 36 (internal quotation marks and citations omitted).
B. Prejudice to Existing Parties
OSI next argues that the procedural posture of the case
supports a finding of timeliness because discovery on damages
has not yet begun.2 Although discovery on liability closed on
January 30, 2015, OSI contends that no additional discovery on
liability is necessary because neither Orgill nor PIC chose to
depose or otherwise obtain discovery from OSI. However, as PIC
highlights, allowing OSI to intervene now, without reopening
discovery on liability, could materially prejudice PIC precisely
because neither existing party in the case sought discovery from
OSI. The Court granted summary judgment against PIC on its DMCA
claim in part due to OSI’s absence from the case: “Given the
existence of a third party that has not been deposed and is
otherwise absent from the case, it would be too speculative to
infer that Orgill removed [copyright management information]
simply because [PIC’s photographer] avers that OSI received
images containing copyright information.” Photographic
2
The Court issued a stay on damages discovery on September 5,
2014. See Docket No. 35.
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Illustrators Corp., 118 F. Supp. 3d at 408. Even if the Court
reopens discovery on liability, PIC could be materially
prejudiced, as the trial would likely be delayed beyond the time
period necessary for any remaining limited discovery. See
Caterino v. Barry, 922 F.2d 37, 41 (1st Cir. 1990).
C. Prejudice to Putative Intervenor and Special Circumstances
OSI alleges that it will suffer prejudice if its motion is
denied because “the actions taken by PIC in challenging Orgill’s
rights to use the photographs in question threatens to harm
OSI’s business relationships with entities like Orgill.” Docket
No. 100 at 10. OSI asserts that the Court’s interpretation of
the 2006 Agreement “could have ramifications on other cases
brought by PIC against OSI customers and business partners.” Id.
OSI also cites the fact that “PIC recently filed a number of
actions against OSI customers alleging copyright infringement,”
and that “PIC is attempting to gloss over the fact that it
already bargained away the rights it purports to sue under” in
the 2006 Agreement, as special circumstances that weigh in favor
of a finding of timeliness. Id.
All of these risks have been present in the case since its
inception. In the timeliness inquiry, “a preventable hardship
weighs less heavily in the balance of harms.” R & G Mortg.
Corp., 584 F.3d at 9; see also In re Efron, 746 F.3d at 36-37
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(“But any such harm is largely attributable to Efron's
lollygagging and, thus, Efron is in a peculiarly poor position
to grouse about it.”). OSI could have avoided any harm to its
business relationships by acting to protect its interests
sooner. The Court notes that OSI did move to intervene at a much
earlier stage in the litigation in several of the other suits
against OSI’s customers pending in this District, and has been
granted leave to do so.
OSI’s argument about exceptional circumstances reduces to
the fact that OSI disagrees with this Court’s interpretation of
the 2006 Agreement and the limitations it imposes on Orgill’s
use of the contested images. Thus, any prejudice to OSI if the
Court denies intervention is of OSI’s own making, and there are
no special circumstances that tip the scales on intervention.
Given that all four of the timeliness factors weigh in favor of
finding OSI’s motion to intervene untimely, I deny OSI’s motion
to intervene as a matter of right.
III. Permissive Intervention
Under Federal Rule of Civil Procedure 24(b), the Court may
permit anyone to intervene on “timely motion” who (1) “is given
an unconditional right to intervene by a federal statute;” or
(2) “has a claim or defense that shares with the main action a
common question of law or fact.” Fed. R. Civ. P. 24(b)(1). The
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First Circuit has held that “when a putative intervenor seeks
both intervention as of right and permissive intervention, a
finding of untimeliness with respect to the former normally
applies to the latter (and, therefore, dooms the movant’s quest
for permissive intervention).” R & G Mortg. Corp., 584 F.3d at
11. Furthermore, the timeliness inquiry applies more strictly,
and district courts have broader discretion, with respect to a
motion for permissive intervention. See id. at 8.
Here, OSI does not make any separate arguments as to why
its motion would be timely for purposes of permissive
intervention if it is untimely with respect to intervention as a
matter of right. Thus, the same analysis as to why the motion is
untimely discussed above applies to OSI’s request for permissive
intervention. I deny the motion to intervene in its entirety.
ORDER
OSI’s Motion to Intervene (Docket No. 99) is DENIED.
/s/ PATTI B. SARIS
Patti B. Saris
Chief United States District Judge
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