Case 1:20-cv-02551-CNS-KLM Document 134 Filed 10/05/22 USDC Colorado Page 1 of 8
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLORADO
`Judge Charlotte N. Sweeney
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`Civil Action No. 1:20-cv-02551-CNS-KLM consolidated with 1:21-cv-00068-CNS-KLM
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`CAPTURE ELEVEN LLC, a California limited liability company,
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`Plaintiff/Counter Defendant,
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`Defendant/Third-Party Plaintiff/Counter Claimant, and
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`v.
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`OTTER PRODUCTS, LLC, a Colorado limited liability company,
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`TREEFROG DEVELOPMENTS, INC., a Delaware corporation d/b/a LifeProof,
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`Defendant/Counter Claimant,
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`v.
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`VERITY HOSKINS PRODUCTION, INC.,
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`Third-Party Defendant.
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`ORDER
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`This matter is before the Court on the parties’ submissions regarding choice of law. On
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`September 1, 2022, the Court held oral argument on Plaintiff’s Motion for Summary Judgment,
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`which was denied. (ECF Nos. 88, 126). During the hearing, it became clear that the parties were
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`in dispute about choice of law and the Court ordered supplemental briefing on whether a certain
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`state or federal law applied to the revocability of a nonexclusive copyright license with an
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`undefined duration. (ECF No. 127, pp. 61-69).
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`I. FACTS
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`Plaintiff filed an Amended Complaint on October 27, 2020, raising the claims: (1) all-uses
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`infringement, (2) post-termination infringement, (3) outside-scope infringement, and (4) indirect
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`infringement, all in violation of 17 U.S.C. §§ 106, 501 et seq. (ECF No. 23). Defendant Otter
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`Products, LLC (Otter) raised ten affirmative defenses and three counterclaims. In particular, Otter
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`raised the affirmative defense of non-infringement due to the doctrine of implied license. (ECF
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`No. 91). On July 16, 2021, Plaintiff filed a motion for summary judgment, which this Court
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`denied. (ECF Nos. 88, 126). In the motion, Plaintiff argued that it was entitled to summary
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`judgment under four theories: (1) all-uses infringement and no implied license; (2) outside-scope
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`infringement of the implied license with limited rights; (3) post-termination infringement of a
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`revoked implied license; or (4) outside-scope infringement of an irrevocable license with beyond-
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`scope uses. (ECF No. 88, pp. 18-25). As the Court previously noted during oral argument, the
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`issues of whether there was an implied license or if the license was revocable between 2016 and
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`2018 are issues for the factfinder.1 The Court will limit its analysis to whether state or federal law
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`controls the issue of revocation, regardless of the legal theory. (See ECF No. 127, pp. 57-69).
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`The Court ordered briefing on the issue of whether state or federal law applies to revocation
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`in this case, with optional briefing on whether California law or Colorado law applied. (Id., pp.
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`66-67). Plaintiff argues that (1) state law applies to the determination of duration and termination
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`of implied copyright licenses and (2) there is no conflict between the laws of California and
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`Colorado, (but applied California law to the majority of its analysis) and that contracts of an
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`1 There is also the issue of whether Plaintiff is a co-owner of the copyrights, as Defendant Otter argues that it is a co-
`author of the images. (ECF No. 100, p. 24).
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`indefinite duration are terminable at will. (ECF No. 129). Defendants argue that (1) federal law
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`preempts state law regarding the revocability of implied licenses and (2) California law is limited
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`to the issues of formation and breach. (ECF No. 130).
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`II. ANALYSIS
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`The primary issue is whether there is a conflict of laws and if the choice of law matters.
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`“When more than one body of law may apply to a claim, the Court need not choose which body
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`of law to apply unless there is an outcome determinative conflict between the potentially applicable
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`bodies of law.” SELCO Cmty. Credit Union v. Noodles & Co., 267 F.Supp.3d 1288, 1292 (D.
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`Colo. 2017) (internal quotations omitted). “If there is no outcome determinative conflict in the
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`potentially applicable bodies of law, the law of the forum is applicable.” Iskowitz v. Cessna
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`Aircraft Co., No. 07-CV-00968-REB-CBS, 2010 WL 3075476, at *1 (D. Colo. Aug. 5, 2010)
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`(internal citation and quotations omitted). The parties agree that there is an outcome determinative
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`conflict between federal law and state law on the issue of revocation of a copyright license with
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`an undefined duration. Additionally, Defendants contend that there is no nexus of events tied to
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`Colorado, thus the Court will proceed with its analysis.
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`A. Federal Preemption for a Copyright Claim
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`The main debate between the parties pertains to whether federal law preempts state
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`common law when determining if a nonexclusive copyright license of an unspecified length is
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`terminable at will by either party. The Tenth Circuit has not addressed this issue. Plaintiff, citing
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`Walthal v. Rusk, 172 F.3d 481 (7th Cir. 1999), argues that state contract common law generally
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`controls the formation, duration, and termination of a nonexclusive license with no specified
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`length. (ECF No. 129, pp. 4-7). Conversely, Defendants, citing Rano v. Sipa Press, Inc., 987 F.2d
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`580 (9th Cir. 1993), argue that California contract common law directly conflicts with Section 203
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`of the Copyright Act (17 U.S.C. § 203), the state common law is preempted by federal law, and
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`the revocability of a licensing agreement with a non-specified duration is controlled by the
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`Copyright Act. (ECF No. 130, pp. 2-4).
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`In Rano, the Ninth Circuit examined Section 203 and California common law as it
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`pertained to an oral non-exclusive copyright license of unspecified duration between the parties
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`for photographs and negatives. 987 F.2d at 585. Under state common law, an agreement that did
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`not contain a specified duration was terminable at will by either party. Id. However, under Section
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`203, the Ninth Circuit held that unless the licensing agreement specified an earlier termination
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`date, the agreement was only terminable at will during the final five years of a thirty-five-year
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`license period. Id. Federal courts in the Ninth Circuit have further determined that the existence
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`of an implied license is analyzed using state contract common law. Furie v. Infowars, LLC, 401
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`F. Supp. 3d 952, 968 (C.D. Cal. 2019). But courts in the Ninth Circuit have determined that if the
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`implied, nonexclusive license is unsupported by consideration, it is revocable at will; if supported
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`by consideration, it is only revocable as defined in Rano under Section 203. Sprengel v. Mohr,
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`No. CV 11-08742-MWF SPX, 2013 WL 645532, at *9 (C.D. Cal. Feb. 21, 2013).
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`Conversely, Plaintiff relies upon Walthal, wherein the Seventh Circuit disagreed with the
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`Ninth Circuit and determined that state contract common law pertained to the transfer of interests
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`under the Copyright Act. 172 F.3d at 484. The Seventh Circuit noted:
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`In this context it makes no sense that a 35–year period be considered a minimum
`under the statute. If the term of the license originally granted was less than 35 years,
`the statute simply does not compel that the license be effective for 35 years. And
`even the Rano court did not go so far. The Ninth Circuit said that § 203 means that
`agreements are terminable only after 35 years “unless they explicitly specify an
`earlier termination date.” But the court nevertheless determined that if the
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`agreement contained no termination date, it must continue for 35 years because
`§ 203 preempted state contract law providing for termination at will of contracts of
`unspecified length. By this reasoning, a contract for a specific term of less than 35
`years does not conflict with the 35–year period but a contract which is terminable
`at will by operation of law does.
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`Id. at 485 (citations omitted).
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`This Court agrees that the Rano decision does not clearly articulate its reasoning for why
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`Section 203 preempts state common law. The Seventh Circuit further highlighted that Section
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`203(b)(5) specifically provided that termination of a grant under the Copyright Act “in no way
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`affects rights arising under any other Federal, State, or foreign laws.” 17 U.S.C. § 203(b)(5).
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`Indeed, the Ninth Circuit itself has held that federal courts rely on state law to fill in the gaps of
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`federal statutes. Scholastic Ent., Inc. v. Fox Ent. Grp., Inc., 336 F.3d 982, 988 n.2 (9th Cir. 2003)
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`(“The decision in Rano has been called into serious question by courts as well as commentators.”);
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`see also Milne ex rel. Coyne v. Stephen Slesinger, Inc., 430 F.3d 1036, 1045 n.8 (9th Cir. 2005)
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`(citations omitted) (“Whatever views one may have regarding the correctness of the narrow
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`holding of Rano, it cannot be said that Rano suggests a ruling that would nullify a mutual decision
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`to revoke a grant of rights.”); Korman v. HBC Fla., Inc., 182 F.3d 1291, 1294-97 (11th Cir. 1999)
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`(rejecting Rano and holding that state common law rather than Section 203 governs the
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`revocability of a license with an undefined duration). The Court finds that the Seventh Circuit is
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`correct in its holding that the Copyright Act does not preempt state common law in determining
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`the revocability of a nonexclusive license with an undefined duration. See Walthal, 172 F.3d at
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`485. Ultimately, the Court finds that “[c]opyright licenses are a type of contract and, therefore,
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`governed by common law contracting principles.” Bitmanagement Software GmBH v. United
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`States, 989 F.3d 938, 946 (Fed. Cir. 2021) (citing Dep’t of Parks & Recreation for State of
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`California v. Bazaar Del Mundo Inc., 448 F.3d 1118, 1130 (9th Cir. 2006)).
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`While Defendants argue that courts in this district have consistently relied upon Ninth
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`Circuit authority when examining implied licenses and finding that consideration renders the
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`implied license irrevocable, it also appears to this Court this might be because no prior party has
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`contested the application of Ninth Circuit caselaw. See Xtomic, LLC v. Active Release Techniques,
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`LLC, 460 F. Supp. 3d 1147, 1152 (D. Colo. 2020) (“The Tenth Circuit has not adopted the Effects
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`test but the parties agree that it is determinative of the issues here.”). Regardless, this Court is only
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`rejecting the holding in Rano, wherein the Ninth Circuit held that an agreement was only
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`terminable at will during the final five years of a thirty-five-year license period under Section 203
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`of the Copyright Act. See Rano, 987 F.2d at 585. Nonetheless, prior decisions by a federal district
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`court judge are “not binding precedent in either a different judicial district, the same judicial
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`district, or even upon the same judge in a different case.” Camreta v. Greene, 563 U.S. 692, 709
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`n.7 (2011). Having determined that state common law controls the analysis surrounding
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`revocability, the Court next turns to what state law should apply.
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`B. California Law Versus Colorado Law
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`“A federal court applies the choice of law rules of the state in which the district court sits.”
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`U.S. Aviation Underwriters, Inc. v. Pilatus Bus. Aircraft, Ltd., 582 F.3d 1131, 1143 (10th Cir.
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`2009). The Court has subject matter jurisdiction under both 28 U.S.C. §§ 1331 and 1332. In a
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`diversity action, the Court applies the substantive laws of the forum state, including its choice of
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`law rules. See Elliot v. Turner Constr. Co., 381 F.3d 995, 1001 (10th Cir. 2004). The forum state
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`in this case is Colorado. Under Colorado’s choice of law rules, the law of the state with the “most
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`significant relationship” to the claims is used. Morgan v. United Air Lines, Inc., 750 F. Supp.
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`1046, 1054 (D. Colo. 1990); Chemiti v. Kaja, No. 13-CV-00360-LTB-KMT, 2015 WL 585594, at
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`*2 (D. Colo. Feb. 11, 2015) (“Absent an effective choice of law by the parties, the Restatement’s
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`approach is to locate the jurisdiction having the most significant relationship to the particular
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`issue.”) (citation and internal quotations omitted). Under Section 188 of the Restatement, a court
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`looks to the following factors to determine what state has an interest in the transaction: (1) “the
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`place of contracting”; (2) “the place of negotiation of the contract”; (3) “the place of performance”;
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`(4) “the location of the subject matter of the contract”; and (5) “the domicil, residence, nationality,
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`place of incorporation and place of business of the parties.” Restatement of Conflict of Laws
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`§ 188.
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`The nexus of events occurred in California and the Court finds that California has the most
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`significant relationship to the claims in this case: Plaintiff is a California limited liability company,
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`a significant number of the photoshoots took place in California, the disputed photographs were
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`delivered to parties located in California, the LifeProof brand is based in California, and several
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`of Defendants’ employees were either based in California or traveled between Colorado and
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`California for work. (ECF No. 127, pp. 64-65). Here, the only connection to Colorado is that
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`Defendant Otter is a Colorado limited liability company. Accordingly, the Court finds that
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`California law is appropriate. The Court will not go further in its analysis to determine whether
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`there is an implied license or if it was revocable, as these matters are appropriate for determination
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`by the factfinder at trial.
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`DATED this 5th day of October 2022.
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`BY THE COURT:
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`___________________________________
`Charlotte N. Sweeney
`United States District Judge
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