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Wallenfang v. Havel

Court denies defendants’ motion to dismiss for lack of subject matter jurisdiction in copyright infringement action, holding that plaintiff’s claim arises under the Copyright Act because plaintiff is seeking remedies specifically provided by the Copyright Act.

Plaintiff Mark Wallenfang, a photographer, worked with the defendant Chris Havel to produce a book about the Green Bay Packers. The plaintiff was to provide photographs and design the cover while Havel was to provide commentary. The production and printing costs of the book were financed by defendants Pete Petasek and John Havel.

Petasek faxed a one-page agreement to the plaintiff that said the plaintiff agreed to grant Chris Havel a one-time use of his photographs for publication in the book for $7,500 plus royalties. The agreement contained a signature line for the plaintiff and one for Chris Havel. The plaintiff signed the agreement and faxed it to Petasek, but the next day he tried to revoke what he characterized as his offer before he received any notice of acceptance by Chris Havel. He told Petasek and Chris Havel that the agreement was “null and void” and sent defendants a counter agreement, but that was not signed by defendants.

After the book was published, the plaintiff filed suit for copyright infringement. The defendants moved to dismiss for lack of subject matter jurisdiction, claiming that the plaintiff’s claim was really a breach of contract claim. The court disagreed and denied the defendants’ motion. According to the court, the Seventh Circuit has adopted the rule outlined in T.B. Harms Co. v. Eliscu, 339 F.2d 823 (2nd Cir. 1964), to determine if copyright subject matter jurisdiction exists. In T.B. Harms Judge Friendly stated:

an action “arises under” the Copyright Act if and only if the complaint is for a remedy expressly granted by the Act, e.g., a suit for infringement or for the statutory royalties for record reproductions, or asserts a claim requiring construction of the Act ... or, at the very least and perhaps more doubtfully, presents a case where a distinctive policy of the Act requires that federal principles control the disposition of the claim.

339 F.2d at 828.

Applying that rule here, the court held that federal jurisdiction exists. “The sole claim asserted in the complaint is for infringement, and Wallenfang seeks remedies expressly granted by the Act. He seeks actual or statutory damages pursuant to 17 U.S.C. § 504, injunctive relief under 17 U.S.C. § 502, impoundment of the allegedly infringing Books under 17 U.S.C. § 503, and actual attorneys fees and costs pursuant to 17 U.S.C. § 505. Under the T.B. Harms test, federal jurisdiction under 28 U.S.C. § 1338(a) is present.”

The court acknowledged that contract issues are also presented. The defendants claimed that their use of the plaintiff’s photographs was with his permission, as set forth in the agreement he signed. The court explained that if this is true, the plaintiff’s copyright claim fails and the case will be dismissed, but the possibility that the copyright claim may fail does not mean federal jurisdiction is lacking. “It is the subject matter of the dispute that determines whether federal jurisdiction exists, not the outcome. Wallenfang has not sued for breach of contract; indeed he denies a valid contract even existed. The fact that the court will be required to decide a contract issue in order to resolve Wallenfang’s copyright claim does not deprive him of his right to a federal forum. Accordingly, the defendants’ motion to dismiss for lack of subject matter jurisdiction is denied.”

Both parties moved for summary judgment. In response to the plaintiff’s motion for summary judgment, the defendants argued that they were not liable for copyright infringement because the plaintiff signed the agreement granting Chris Havel a license to use his photographs in the book. However, the court held that this agreement was not a binding contract. “Had the Agreement been sent as an offer to Wallenfang by Chris Havel, the defendants would be correct in arguing that it constitutes a valid contract. . . . But Chris Havel did not draft the Agreement; nor did he send it to Wallenfang. Moreover, there is no contention that it was done on his behalf. As the record stands, the Agreement therefore cannot be considered Chris Havel’s offer to Wallenfang. By signing the Agreement and sending it back, Wallenfang in effect conveyed an offer to Chris Havel.” The court stated that in order to create a contract, Chris Havel needed to accept the offer while it was still open, but the plaintiff attempted to withdraw his offer before Havel accepted.

The court then turned to plaintiff’s argument that, assuming an enforceable contract was formed, the defendants exceeded any license he may have granted under the agreement because Chris Havel assigned his right to use the photographs to his co-defendants and because Havel’s right to use the photographs was conditioned upon payment of the royalties to the plaintiff. The court rejected both of these arguments, holding that the agreement was broad enough to encompass the use of the photographs in the single printing of the book. “The fact that Chris Havel and [Gilbert] Brown contracted with Petasek and John Havel to print the book, however, does not constitute a transfer of the purported license to use Wallenfang’s photographs. An author who is granted a license to use another’s photographs in his book does not transfer that license by contracting with another to underwrite the printing and publication of the book.” Regarding the plaintiff’s argument that defendants’ use of the photographs was conditioned on royalty payments to the plaintiff, the court held that this argument is without merit, citing Seventh Circuit precedent that “conditions precedent are disfavored and will not be read into a contract unless required by plain, unambiguous language,” I.A.E., Inc. v. Shaver, 74 F.3d 768 (7th Cir. 1996). The court held that nothing in the language of the agreement suggests that the license granted by the plaintiff was conditioned upon payment of the royalties promised in the agreement.

The court went on to say, “[f]or completeness, however, I also note that even if an enforceable written agreement was not reached by the parties, it is not clear that Wallenfang will prevail. . . . If an implied license were found to have arisen here, Wallenfang’s infringement claim would fail as a matter of law.” In addition, according to the court, it is arguable that the book itself constitutes a joint work under the Copyright Act. “This would also mean that Wallenfang’s claim would fail since ‘[t]he authors of a joint work are co-owners of copyright in the work,’ and a joint copyright owner cannot sue his or her co-owner for infringement. Under either scenario, Wallenfang’s copyright infringement claim would fail notwithstanding the validity of the Agreement, and any remedy he would have would arise under state law. Because the parties have not briefed these issues, however, I decline to address them further.” (citations omitted)

Finally, the court denied defendants’ motion for summary judgment based on the grounds that the plaintiff is not entitled to statutory damages because he did not timely register copyrights in the photographs and that the plaintiff waived his claim for copyright infringement or is equitably estopped from asserting it as a result of his failure to seek injunctive relief to prevent sales of the book or at least complain to the defendants. The court held that even though the plaintiff failed to timely register his copyrights in the photographs, he did timely register his copyright in the graphic design of the book cover, allowing him to sue for statutory damages. In addition, the court held that the Copyright Act allows a copyright owner to recover actual damages and the infringer’s profits as a remedy for infringement. Regarding delay in enforcing his copyrights, the court held that the record does not support summary judgment in favor of the defendants on this ground. “Not only did Wallenfang advise the defendants in emails sent before the book was published that in his view the Agreement was null and void, he also sent cease and desist letters to John Havel and Worzalla Publishing less than a month after publication. This is hardly conduct that would have led the defendants to believe that Wallenfang intended to induce them to continue the allegedly infringing conduct.”