IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF MISSOURI
`ST. JOSEPH DIVISION
`
`)
`)
`)
`
`
`))
`
`)
`)
`
`No. 08-6097-CV-SJ-FJG
`
`))
`
`)
`
`GARY LEON TETER, JR.,
`
`
`v.
`
`GLASS ONION, INC.,
`
`Plaintiff,
`
`
`
`Defendant.
`
`ORDER
`
`Pending before the Court is defendant Glass Onion, Inc.’s (“GOI”) Motion for
`
`Summary Judgment (Doc. No. 69) and plaintiff Gary L. Teter, Jr.’s Motion for Partial
`
`Summary Judgment (Doc. No. 70).
`
`I.
`
`BACKGROUND
`
`Teter is a renowned artist that paints fine art depicting historic scenes of
`
`American frontier life, and sells his work at selected art galleries. In January 2007, Brad
`
`and Diana Walpole, owners of Glass Onion, Inc. (“GOI”), entered negotiations with Jim
`
`Sanders, owner of Treasure Palace Ltd. (“TPL”) doing business as 83 Spring Street
`
`Gallery (“Gallery”), to purchase the Gallery and related assets. The real estate and
`
`asset purchase agreements were contingent, in part, on the Walpole’s obtaining a
`
`satisfactory agreement with Teter that he would continue his existing relationship with
`
`the Gallery. At the time, Teter sold artwork to TPL for resale at the Gallery, allowed
`
`advertisement of his artwork on the Gallery’s website and occasionally made personal
`
`visits to the Gallery.
`
`Case 5:08-cv-06097-FJG Document 139 Filed 07/12/10 Page 1 of 36
`
`

`
`A.
`
`Jamesport Meeting
`
`On February 27, 2007, Brad and Diana Walpole met with Lee Teter, his wife
`
`Barbara Teter, Teter’s daughter Shawnee Herbst and her husband Wyatt Herbst, at
`
`Teter’s home in Jamesport, Missouri. At the meeting, the parties came to an
`
`understanding that Teter’s relationship with 83 Spring Street Gallery would continue as
`
`it had existed under Jim Sanders’ ownership. Teter also informed the Walpoles that
`
`Shawnee would soon be joining the “family business,” Summer Field Fine Art (“SFFA”),
`
`and would handle publication of Teter’s work and generally act on his behalf. Any
`
`agreement reached between the parties was not reduced to writing. Nonetheless, being
`
`satisfied with the outcome of the Jamesport meeting, on March 30, 2007, Jim Sanders
`
`and the Walpoles executed the asset purchase agreement and real estate contract,
`
`through which GOI purchased the 83 Spring Street Gallery from Jim Sanders, which
`
`included the art inventory, the website, domain names and other real and intellectual
`
`property associated with TPL’s business.
`
`B.
`
`GOI and Teter’s Business Relationship
`
`Between May 18, 2007, and February 7, 2008, GOI and Teter entered into
`
`approximately eight sales transactions, through which GOI purchased original paintings
`
`and prints in various quantities at a time. Teter received payment upon GOI’s receipt of
`
`the artwork. Each time GOI completed a sales transaction with Teter, GOI posted an
`
`image of the newly acquired work on the Gallery’s website.
`
`During late Spring 2007, GOI began revamping the Gallery’s website. On June
`
`30, 2007, Brad Walpole sent an email to SFFA that stated, “we are about to begin our
`
`2
`
`Case 5:08-cv-06097-FJG Document 139 Filed 07/12/10 Page 2 of 36
`
`

`
`website overhaul in earnest. . . . [m]ay we use pictures from your website to display
`
`Lee’s work that we are carrying?” (Doc. No. 71-12). Shawnee responded on July 2,
`
`2007, and stated, “I wanted to answer your question about your website makeover: Yes,
`
`use any images from Summer Field’s website.” (Doc. No. 71-13).
`
`On January 4, 2008, Barbara Teter sent a letter on behalf of Lee Teter to the
`
`“Authorized Lee Teter Galleries,” including 83 Spring Street Gallery, which informed the
`
`dealers of Lee and Barbara Teters’ official retirement from the publishing business, and
`
`announced that Shawnee and Wyatt Herbst would be taking over SFFA. On March 27,
`
`2008, SFFA sent a proposed Dealership Agreement to GOI, which included the terms
`
`and conditions for becoming an authorized SFFA dealer, including minimum order
`
`requirements, assertion of rights over the advertisement of copyrighted material and
`
`terms of sale (Doc. No. 69-9).
`
`On April 24, 2008, GOI sent a letter to Shawnee informing that it would not agree
`
`to the terms of the proposed Dealership Agreement, as written. GOI asserted its
`
`position that it had an “existing verbal agreement covering our relationship with Summer
`
`Field Fine Art,” and referred to the February 27, 2007, meeting amongst the parties
`
`where Teter agreed that 83 Spring Street Gallery would continue to be an authorized
`
`dealer with an exclusive territory that included the State of Arkansas as well as the
`
`Branson, Missouri metro area (Doc. No. 69-10).
`
`C.
`
`Events Preceding the Instant Lawsuit
`
`On May 20, 2008, Shawnee sent a letter to Mr. and Mrs. Walpole that
`
`“conclude[d] the permissible use of copyrighted images of Lee Teter art,” since any use
`
`3
`
`Case 5:08-cv-06097-FJG Document 139 Filed 07/12/10 Page 3 of 36
`
`

`
`was a “privilege reserved for Authorized Dealers of Summer Field Fine Art.” (Doc. No.
`
`76-17). The letter requested that GOI remove all images of Teter art from any form of
`
`advertising, including websites. SFFA sent GOI a second notice on June 2, 2008,
`
`requesting that all copyrighted images be removed from the Gallery’s advertising (Doc.
`
`No. 76-18).
`
`Following the second notice, GOI temporarily removed the images from the
`
`Gallery’s website. On July 7, 2008, GOI sent a letter to Shawnee Herbst stating that,
`
`pursuant to the standing agreement with Teter, GOI was well within its legal rights to
`
`use “thumbnail” images for the purpose of advertising lawfully owned art, and that GOI
`
`would re-display such images on its website with digital watermarks reading “83 Spring
`
`Street” to protect Teter from unauthorized copies of the digital images from the website
`
`(Doc. No. 69-12). Teter commenced this lawsuit on September 24, 2008, at which time
`
`GOI maintained the watermarked images displayed on the Gallery’s website.
`
`GOI moves for summary judgment on all of Teter’s causes of action, which
`
`include: (I) copyright infringement, (II) false designation of origin, (III) unfair competition,
`
`(IV) trademark infringement (V) trademark dilution, and (VI) violation of the Visual Arts
`
`Rights Act (VARA), 17 § U.S.C. 106A.
`
`Teter moves for judgment as a matter of law on his copyright infringement claim,
`
`and on defendant’s counterclaims for (I) breach of contract,1 (II) promissory estoppel,
`
`1Based on GOI’s pleadings, the Court will assume its counterclaims originally
`styled as “(I) Breach of Contract (the TPL/Teter Agreement),” and “(II) Breach of
`Contract (Sale of Goods Contracts),” are now consolidated into one general
`counterclaim for breach of contract. Defendant’s Suggestions in Opposition to plaintiff’s
`Motion for Partial Summary Judgment states, “GOI’s motion for summary judgment
`clearly establishes that the UCC is the controlling substantive contract law . . .” and
`
`4
`
`Case 5:08-cv-06097-FJG Document 139 Filed 07/12/10 Page 4 of 36
`
`

`
`and (III) breach of covenant of good faith and fair dealing.
`
`II. SUMMARY JUDGMENT STANDARD
`
`Summary judgment is appropriate if the movant demonstrates that there is no
`
`genuine issue of material fact and that the movant is entitled to judgment as a matter of
`
`law. Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). The facts and inferences are
`
`viewed in the light most favorable to the nonmoving party. Fed. R. Civ. P. 56(c);
`
`Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-590 (1986). The
`
`moving party must carry the burden of establishing both the absence of a genuine issue
`
`of material fact and that such party is entitled to judgment as a matter of law.
`
`Matsushita, 475 U.S. at 586-90.
`
`Once the moving party has met this burden, the nonmoving party may not rest on
`
`the allegations in the pleadings, but by affidavit or other evidence must set forth facts
`
`showing that a genuine issue of material fact exists. Fed. R. Civ. P. 56(e); Lower Brule
`
`Sioux Tribe v. South Dakota, 104 F.3d 1017, 1021 (8th Cir. 1997). To determine
`
`whether the disputed facts are material, courts analyze the evidence in the context of
`
`the legal issues involved. Lower Brule, 104 F.3d at 1021. Thus, the mere existence of
`
`factual disputes between the parties is insufficient to avoid summary judgment. Id.
`
`Rather, “the disputes must be outcome determinative under prevailing law.” Id.
`
`(citations omitted). Furthermore, to establish that a factual dispute is genuine and
`
`sufficient to warrant trial, the party opposing summary judgment “must do more than
`
`simply show that there is some metaphysical doubt as to the facts.” Matsushita, 475
`
`does not advance a separate argument in support of the “Breach of Contract (TPL/Teter
`Agreement”) counterclaim.
`
`5
`
`Case 5:08-cv-06097-FJG Document 139 Filed 07/12/10 Page 5 of 36
`
`

`
`U.S. at 586. Demanding more than a metaphysical doubt respects the appropriate role
`
`of the summary judgment procedure: “Summary judgment procedure is properly
`
`regarded not as a disfavored procedural shortcut, but rather as an integral part of the
`
`Federal Rules as a whole, which are designed to secure the just, speedy, and
`
`inexpensive determination of every action.” Celotex, 477 U.S. at 327.
`
`III.
`
`DISCUSSION
`
`Teter claims copyright infringement in violation of the Copyright Act of 1976,
`
`trademark infringement, false designation of origin, unfair competition and trademark
`
`dilution under the Lanham Act, and violation of the Visual Artist’s Rights Act. GOI seeks
`
`judgment as a matter of law on all of Teter’s claims. Teter seeks summary judgment on
`
`his claim of copyright infringement, and on GOI’s counterclaims of breach of contract,
`
`promissory estoppel and breach of covenant of good faith and fair dealing.
`
`A.
`
`COPYRIGHT INFRINGEMENT
`
`Teter alleges defendant has “unlawfully reproduced, unlawfully distributed,
`
`unlawfully prepared a derivative work of LEE TETER Copyrighted Works, and unlawfully
`
`displayed LEE TETER Copyrighted Works.” (Doc. No. 1). Plaintiff adds that both the
`
`thumbnails and the higher resolution images displayed on the Gallery website are
`
`unauthorized works that infringe upon Teter’s copyright ownership rights.
`
`To establish copyright infringement, plaintiff must show: “(1) ownership and
`
`validity of the copyright, and (2) potential violation of the copyright owner’s exclusive
`
`rights by, for example, unauthorized reproduction and distribution of the copyrighted
`
`work.” Pinkham v. Sara Lee Corp, 983 F.2d 824, 830 (8th Cir. 1992). Here, Teter’s
`
`6
`
`Case 5:08-cv-06097-FJG Document 139 Filed 07/12/10 Page 6 of 36
`
`

`
`copyright ownership is undisputed; thus, the only issue is whether GOI infringed Teter’s
`
`exclusive rights under 17 U.S.C. 106 § (1)(2)(3) and (5) to reproduce, prepare derivative
`
`works, distribute copies, or display his work publicly. Section 106(1) grants the
`
`copyright owner an exclusive right to reproduce the work in copies, and to authorize
`
`such reproductions. A “copy” is defined as a tangible form or “material object” in which
`
`a work is “fixed by any method now known or later developed,” and from which that
`
`work “can be perceived, reproduced, or otherwise communicated, either directly or with
`
`the aid of a machine or device.” 28 U.S.C. §101.
`
`GOI does not dispute that it created digital images of Teter’s copyrighted works.
`
`Brad Walpole photographed the artwork, reduced the digital image in size and
`
`resolution, and uploaded it to the host for display on the Gallery’s website, which
`
`included thumbnail size and larger, low resolution images. Thus, creation and storage
`
`of the electronic images of Teter’s copyrighted works constitute copies within the
`
`meaning of the Act. See Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146,1160 (9th
`
` Cir. 2007) ( explaining “[a] photographic image is a work that is ‘fixed’ in a tangible
`
`medium of expression’ . . . when embodied (i.e. stored) in a computer’s server (or hard
`
`disk, or other storage device). The image stored in the computer is the ‘copy’ of the
`
`work for purposes of the copyright law.”).
`
`Based on the applicable law and the undisputed facts, Teter has not established
`
`that GOI infringed § 106(2) by creating derivative works because the copy images are
`
`not an “original work of authorship” that constitute a derivative work under § 101, nor
`
`has Teter established that GOI unlawfully distributed copies of the copyrighted work to
`
`7
`
`Case 5:08-cv-06097-FJG Document 139 Filed 07/12/10 Page 7 of 36
`
`

`
`the public by sale or other transfer of ownership under § 106(3). There are sufficient
`
`facts in the record, however, to support a finding that GOI infringed Teter’s exclusive
`
`rights under 17 U.S.C. § 106(1) and (5) of the 1976 Copyright Act by creating copies
`
`and publicly displaying the copyrighted works on the 83 Spring Street Gallery website.
`
`Finding Teter has established a claim for copyright infringement, the Court considers
`
`GOI’s affirmative defenses.
`
`1.
`
`Implied License
`
`GOI argues Teter granted an implied license to GOI to use Teter’s copyrighted
`
`works for advertising purposes, and, therefore, GOI was within its rights to display the
`
`digital images on the Gallery website.
`
`“A license is a defense to a claim of copyright infringement,” Oddo v. Ries, 743
`
`F.2d 630, 634, n. 6 (9th Cir. 1984), and must be affirmatively pleaded. Fed. R. Civ. P.
`
`8. While a copyright owner may expressly grant a license to use the copyrighted work,
`
`a nonexclusive implied license can be granted verbally or implied from conduct. See
`
`Pinkham, 983 F.2d at 831; Melville B. Nimmer & David Nimmer, Nimmer on Copyright
`
`§10.03[A] at 10-36.1 (3d ed. 1995). “Consent given in the form of mere permission or
`
`lack of objection is also equivalent to a nonexclusive license and is not required to be in
`
`writing.” I.A.E., Inc. v. Shaver, 74 F.3d 768, 775 (7th Cir. 1996). By granting an implied
`
`license, the copyright owner permits the use of a copyrighted work in a particular
`
`manner. See id.
`
`While the particular facts of each case are most relevant, an implied license may
`
`be granted when (1) a person (the licensee) requests the creation of a work, (2) the
`
`8
`
`Case 5:08-cv-06097-FJG Document 139 Filed 07/12/10 Page 8 of 36
`
`

`
`creator (the licensor) makes that particular work and delivers it to the licensee who
`
`requested it, and (3) the licensor intends that the licensee-requestor copy and distribute
`
`his work. See Effects Associates v. Cohen, 908 F.2d 555, 558-59 (9th Cir. 1990).
`
`GOI claims an implied license existed as early as the Jamesport meeting on
`
`February 27, 2007, where Teter agreed to continue his existing relationship with 83
`
`Spring Street Gallery, which, thus far, allowed for the Gallery to display images of
`
`Teter’s artwork on its website that it lawfully owned and had for sale. GOI argues Teter
`
`granted GOI an implied license because he remained silent and never objected to
`
`display of the images on the Gallery’s website until GOI refused to sign the SFFA
`
`Dealer Agreement.
`
`Teter responds that GOI only had permission to use images from the official
`
`SFFA website to use for advertising on the Gallery website, but did not grant GOI
`
`permission to create copies of his work for display. Teter claims he did not know, and
`
`had no reason to know, that GOI was creating its own electronic images for use on the
`
`Gallery website. Teter further contends that GOI did not inherit or acquire a right from
`
`TPL to create its own electronic images since it was Jim Sanders, the prior owner of the
`
`Gallery, who obtained permission to display electronic images of Teter’s work on the
`
`Gallery’s website.
`
`Based on its evaluation of the undisputed facts, the Court finds Teter granted
`
`GOI a nonexclusive implied license to display Teter’s copyrighted works on the Gallery
`
`website. In so finding, the Court relies most heavily on the third prong of the Effects
`
`test, which is Teter’s intent pertaining to the display and distribution of Teter’s work.
`
`9
`
`Case 5:08-cv-06097-FJG Document 139 Filed 07/12/10 Page 9 of 36
`
`

`
`Effects suggests several objective factors to determine whether an implied license
`
`exists, including deposition testimony and the delivery of the copyrighted material
`
`without warning that its further use would constitute copyright infringement. See
`
`Effects, 908 F.2d at 559 n. 6.
`
`The record makes clear that Teter did not restrict the use of the copyrighted
`
`works that he sold to the Gallery. When Sanders and the Walpoles entered into an
`
`agreement for the sale of 83 Spring Street Gallery, the general understanding that Mr.
`
`and Mrs. Walpole would continue to run the Gallery, including the aspects of website
`
`advertising, just as Sanders had run the business.2 At that time, the Lee Teter/SFFA
`
`website listed 83 Spring Street Gallery as an authorized dealer and included a direct link
`
`to the 83 Spring Street Gallery website. The Gallery’s website included the location,
`
`history and contact information as well as photo images of the artwork it had for sale.
`
`Jim Sanders had previously obtained broad permission from Barbara Teter to operate
`
`the website and use images of the artwork for advertising purposes.3 Teter provided
`
`A:
`Q:
`
`2Jim Sanders stated in his deposition:
`Q:
`When you turned over the keys to Brad and Diana Walpole in late March of 2007,
`you were selling to them your business, including your Web site, correct?
`Yeah.
`In other words, Mr. Sanders, you expected that once they started running 83
`Spring Street Gallery, they’d continue to run it essentially as you had before,
`correct?
`Yes.
`A:
`(Doc. No. 69-2).
`
`3Jim Sanders stated in his deposition:
`Q:
`Sir, before you used images of Lee Teter Art in your advertising, such as
`on your Web site . . . was your practice to first obtain permission from
`Teter before using the image?
`I do know that I had permission from Barbie to do the Web site to
`advertise his work . . . I didn’t call back each time and ask for permission
`each month for each specific image. . . .
`
`A:
`
`10
`
`Case 5:08-cv-06097-FJG Document 139 Filed 07/12/10 Page 10 of 36
`
`

`
`electronic images to Sanders to display on the website; however, Sanders also testified
`
`that he and/or his computer technician created electronic images for a few original
`
`paintings for which Teter did not provide electronic images.4 When Sanders informed
`
`Teter that he was going to sell the Gallery, Teter did not request his images be removed
`
`from the website, such that when the Walpole’s purchased 83 Spring Street Gallery, its
`
`website included the same Teter images that preexisted the sale. Teter sold new works
`
`to GOI with the understanding that GOI would advertise the newly acquired piece on its
`
`A:
`
`Q:
`
`Sir, did you believe it was necessary to have Teter’s permission before
`you could use an image of his artwork in your advertising?
`Well, once, yes. But once the Web site was set up, it was pretty much
`understood, I felt like. I felt like it was understood that each available print,
`as I bought them, was something that I could place on the Web site. It
`would be kind of silly not to. Each new item, as it became available, could
`be advertised in order to sell the piece.
`(Doc. No. 76-11)
`
`A:
`
`Q:
`
`A:
`Q:
`
`4Jim Sanders testified:
`Q:
`Sir, when you were using images of Teter artwork for use in your
`advertising, such as on your Internet site, did you obtain the images from
`Teter?
`We did have the image available from Barbie that we could put on the
`Web site early so that we could begin letting people know that it was
`coming, and this is a new piece. I don’t know what she sent us, I don’t
`know in what form it was sent. The technological part is out of my
`ballpark.
`So you believe you were using images provided by Teter to use in your
`advertising; is that right?
`Uh-huh. And they sent me some brochures to hand out.
`You were not taking photographs of the Teter work that you had and then
`using those photographs to use in your advertising; is that right?
`Well, I had some originals which are one-of-a-kinds that there were never
`any prints made. And I’m sure those images made it onto the film, and
`probably my Web site. . . . So those images were not provided by the
`Teters.
`Okay. Do you remember how many originals like that you had?
`Well, there’s two, and then there may have been another one or two.
`(Doc. No. 76-11).
`
`A:
`
`Q:
`A:
`
`11
`
`Case 5:08-cv-06097-FJG Document 139 Filed 07/12/10 Page 11 of 36
`
`

`
`website (Doc. No. 69-8, p. 193).5 The record plainly reveals Teter was aware that
`
`images of his copyrighted works were displayed on the Gallery’s website throughout
`
`TPL and GOI’s ownership of the Gallery (Doc. No. 69-8).
`
`The U.S. Court of Claims explains that by conveying a copyrighted work to
`
`another party with the understanding of how the party intends to use it, a copyright
`
`holder conveys an implied license to that use as a matter of law. See Herbert v. United
`
`States, 36 Fed. Cl. 299, 310-311 (1996). The Court finds Teter granted GOI an implied
`
`license to display the copyrighted works for advertising purposes; however, questions
`
`remain as to, first, whether the license included permission for GOI to create copies of
`
`Teter’s copyrighted work for display on the Gallery website, and, second, whether the
`
`license to display Teter’s work on the Gallery website was revoked.
`
`(a)
`
`Scope of Implied License
`
`Next, the Court examines the scope of use that Teter granted to GOI through the
`
`implied license, and whether GOI had permission to create copies of the copyrighted
`
`works for display on the GOI website.
`
`Since a nonexclusive license does not transfer ownership of the copyright from
`
`the licensor to the licensee, the licensor can bring suit for copyright infringement if the
`
`licensee’s use goes beyond the scope of the nonexclusive license. Effects Assocs.,
`
`908 F.2d at 558 n. 5. Under Missouri law, “[i]t is the actions, and not the intentions or
`
`Q:
`
`A:
`
`5Teter testified:
`You had told them [Brad and Diana Walpole] that they could use your images on
`their Web site; correct?
`I gave them permission to.
`(Doc. No. 69-8).
`
`12
`
`Case 5:08-cv-06097-FJG Document 139 Filed 07/12/10 Page 12 of 36
`
`

`
`suppositions, of the parties that determine whether or not there is a contract and the
`
`terms of the contract.” Don King Equipment Co. v. Double D Tractor Parts, Inc., 115
`
`S.W.3d 363, 369 (Mo. Ct. App. 2003) (citing B-Mall Co. v. Williamson, 977 S.W.2d 74,
`
`78 (Mo. Ct. App. 1998)). “The scope of an implied license takes its form from the
`
`circumstances and conduct that created them. . . . [t]he core focus lies in determining
`
`what scope of the parties’ conduct reasonably suggests as the range of permitted use
`
`of the licensed rights.” Raymond T. Nimmer, Jeff Dodd, Modern Licensing Law, §10:17
`
`(2009). Importantly, intent is not a factor in determining copyright infringement. See
`
`Pinkham 983 F.2d at 829 (“The defendant’s intent is simply not relevant: The defendant
`
`is liable even for ‘innocent’ or ‘accidental’ infringements.”).
`
`Teter argues GOI exceeded the scope of any license because GOI created its
`
`own images of Teter’s artwork for display on the Gallery website rather than only using
`
`images SFFA supplied or authorized. GOI took photographs of the newly acquired
`
`works, uploaded them onto the computer, modied the resolution and uploaded them to
`
`the server. Contrary to GOI’s fervent assertions, the record does not establish Teter
`
`had actual knowledge that GOI created its own copies of Teter’s works.
`
`In addition, the parties strongly disagree about the meaning of an email
`
`exchange between Brad Walpole and Shawnee pertaining to permission of use. On
`
`June 30, 2007, Mr. Walpole sent an email to the SFFA email account regarding the
`
`Gallery’s website, and asked, “may we use pictures from your website to display Lee’s
`
`work that we are carrying?” (Doc. No. 71-12). Mr. Walpole maintains he sought
`
`permission “as a courtesy,” since he believed the permission to display was part of the
`
`13
`
`Case 5:08-cv-06097-FJG Document 139 Filed 07/12/10 Page 13 of 36
`
`

`
`ongoing understanding with Teter, and inherent to GOI’s responsibility to promote
`
`Teter’s artwork. Shawnee responded via email on July 2, 2007, and stated in relevant
`
`part, “I wanted to answer your question about your website makeover: Yes, use any
`
`images from Summer Field’s website.” (Doc. No. 71-13). Teter maintains the email
`
`merely granted permission to use images from the SFFA website, but did not grant GOI
`
`permission to create and reproduce electronic images of Teter’s work. GOI argues
`
`Shawnee Herbst’s email does not exclude use of other images, nor specify that GOI
`
`may only use images from Teter’s website.
`
`The record supports the determination that Teter granted GOI an implied license
`
`to display the copyrighted works on the Gallery website, but there are disputed material
`
`facts upon which reasonable jurors may differ in determining whether the license also
`
`permitted GOI to create copies of Teter’s works or whether permission to display was
`
`limited to images SFFA and/or Teter supplied to GOI.
`
`(b) Revocation of License
`
`The Court need not determine the definite time when the implied license arose,
`
`yet Teter’s permission for use was made clear at the Jamesport meeting on February
`
`27, 2007. While Teter certainly acceded to GOI’s use of the copyrighted works, the
`
`license was not indefinite, and, as such, the Court must determine if and when Teter
`
`revoked the license.
`
`Where no consideration is given, a nonexclusive implied license is revocable.
`
`See Avtec Sys. Inc. v. Peiffer, 21 F.3d 568, 574 n. 12 (4th Cir. 1994) (noting in dictum
`
`that “an implied license is necessarily nonexclusive and revocable absent
`
`14
`
`Case 5:08-cv-06097-FJG Document 139 Filed 07/12/10 Page 14 of 36
`
`

`
`consideration”); see also Keane Dealer Services, Inc. v. Harts, 968 F.Supp. 944, 947
`
`(S.D.N.Y 1997) (“If no consideration was given, the license was revocable, and the
`
`institution of this lawsuit would constitute revocation.”).
`
` Neither party argues that GOI paid money or gave legal consideration for the
`
`license- that is, consideration for the specific licensing right to display images of Teter’s
`
`works on its website; therefore, Teter was free to revoke his consent at any time. The
`
`Court finds Teter revoked the license with the May 20, 2008, letter from SFFA to the
`
`Walpoles, which unequivocally revoked permission for use of the copyrighted works and
`
`directed GOI to remove Teter’s copyrighted works from the Gallery’s website.
`
`Accordingly, any display of Teter’s copyrighted work on the 83 Spring Street Gallery
`
`website after May 20, 2008, constitutes copyright infringement as a matter of law,
`
`absent successful pleading of GOI’s remaining affirmative defenses.
`
`2.
`
`Agreement for the Sale of Goods
`
`GOI contends it had a contractual right under the Uniform Commercial Code
`
`(UCC) to the continued use of the copyrighted images on its website and elsewhere.
`
`The UCC is adopted in Missouri through Mo. Rev. Stat. §§ 400, et seq. The
`
`statute applies to transactions in goods, and goods are defined as “all things which are
`
`movable.” Mo. Rev. Stat. § 400.2-105(1). Accordingly, artwork is a “good,” and the sale
`
`of artwork is governed by the UCC. Generally, a contract for the sale of goods must be
`
`in writing, but there is an exception for transactions in which payment has been made
`
`and accepted, or where goods have been received and accepted. Mo. Rev. Stat. §
`
`400.2-201(3)(c). Thus, an implied contract based on the parties’ course of dealing can
`
`15
`
`Case 5:08-cv-06097-FJG Document 139 Filed 07/12/10 Page 15 of 36
`
`

`
`arise even though it was not reduced to writing. See Smith-Scharff Paper Co. v. P.N.
`
`Hirsch & Co. Stores, Inc., 754 S.W.2d 928, 930 (Mo. Ct. App. 1998) (finding course of
`
`dealing for custom goods over period of 36 years gave rise to implied contract). An
`
`agreement is “the bargain of the parties in fact, as found in their language or inferred
`
`from other circumstances, including the course of performance, course of dealing, or
`
`usage of trade . . .” Mo. Rev. Stat. § 400.1-201(3).
`
`GOI contends the course of dealing between the parties gave rise to an
`
`enforceable agreement that includes permission for GOI to copy and display the Teter
`
`works that it lawfully owns on the Gallery’s website. The Court has already found the
`
`implied license granted GOI permission to display Teter’s copyrighted works; thus, the
`
`issue is whether any implied agreement that arose from the sale of goods between
`
`Teter and GOI included permission to make copies of those works.
`
`GOI claims an agreement was formed beginning with the events prior to the
`
`Walpole’s purchase of the Gallery. The real estate contract between GOI and TPL
`
`included a contingency clause that allowed GOI to “obtain satisfactory results with the
`
`contractual agreement with the artist[] . . . Lee Teter . . . in the Buyer’s sole discretion . .
`
`.” prior to executing the contract (Doc. No. 76-16). Jim Sanders had informed the
`
`Walpoles that Teter “did not do business in writing.” (Doc. No. 69-1). On February 27,
`
`2007, the Walpoles met with Teter at his home in Jamesport, Missouri, to “obtain
`
`assurances that [they] would continue with the same rights and privileges and
`
`expectations and personal appearances as had occurred with Sanders.” (Doc. No. 69-
`
`1). GOI claims Teter unquestionably assured the Walpoles that the same business
`
`16
`
`Case 5:08-cv-06097-FJG Document 139 Filed 07/12/10 Page 16 of 36
`
`

`
`relationship would continue under their ownership.
`
`GOI refers to the conduct of the parties subsequent to the February 27, 2007,
`
`meeting as evidence that the expected course of performance was realized in fact.
`
`After GOI purchased the Gallery, it entered into approximately eight purchase
`
`transactions with Teter between May 2007 and February 2008.6 Teter sent an invoice
`
`to GOI for each purchase, and GOI paid the invoice. After each purchase, GOI created
`
`an image copy of the newly acquired work and posted it on the Gallery’s website. In
`
`addition, Teter attended a marketing event at the Gallery in August 2007 for current and
`
`prospective clients interested in Teter’s work. Teter did not object to the images on the
`
`website until SFFA proposed the Dealership Agreement in May 2008, which required
`
`GOI to abide by new terms in order to remain an authorized SFFA dealer and be
`
`permitted to make use of Teter’s copyrighted works. GOI claims the parties’ conduct
`
`demonstrates Teter and GOI had an agreement that included permission to copy and
`
`display Teter’s works.
`
`Teter disputes any formal agreement, and further claims that any course of
`
`dealing between the parties did not give rise to implied license to reproduce or display
`
`the copyrighted works. Teter argues the purchase transactions did not give rise to any
`
`enforceable agreement in connection with the use of the copyrighted works,
`
`emphasizing that each sale was a single purchase transaction, which did not guarantee
`
`any future obligation. The transactions varied in quantity, type of work (i.e. original
`
`6There is a discrepancy amongst the parties as to the number of purchase
`transactions. Plaintiff states there were six (6) purchase transactions (Doc. No. 76),
`whereas defendant states there were eight (8) purchase transactions (Doc. No. 69).
`For purposes of the Court’s analysis, however, the discrepancy is immaterial.
`
`17
`
`Case 5:08-cv-06097-FJG Document 139 Filed 07/12/10 Page 17 of 36
`
`

`
`painting or prints), and occurred irregularly over a nine-month period. More importantly,
`
`plaintiff argues that any implied agreement under the UCC did not include a license to
`
`copy Teter’s copyrighted works.
`
`The applicable law supports plaintiff’s position. Any implied agreement between
`
`the parties for the purchase and sale of Teter’s artwork did not include a transfer of
`
`Teter’s exclusive rights under his copyrighted works because the Copyright Act
`
`mandates that ownership of the tangible object does not equate to ownership of the
`
`exclusive rights of a copyright.
`
`Section 202 of the Copyright Act provides:
`
`Ownership of a copyright, or of any of the exclusive rights under a copyright,
`is distinct from ownership of any material object in which the work is
`embodied. Transfer of ownership of any material object, including the copy
`or phonorecord in which the work is first fixed, does not of itself convey any
`rights in the copyrighted work embodied in the object; nor, in the absence of
`an agreement, does transfer of ownership of a copyright or of any exclusive
`rights u