Case 1:12-cv-06595-LAP Document 97 Filed 07/27/18 Page 1 of 4
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`101 Park Avenue
`Suite 1700
`New York, NY 10178
`Tel (212) 878-7900 Fax (212) 692-0940
`www.foxrothschild.com
`CHRISTOPHER P. BEALL
`Direct No: 646.601.7635
`Email: CBeall@FoxRothschild.com
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`July 27, 2017
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`The Hon. Loretta A. Preska
`United States Senior District Judge
`United States Courthouse
`500 Pearl Street, Room 220
`New York, NY 10007-1312
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`Re:
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`Defendants’ Request for Pre-Motion Conference in Muench Photography Inc. v.
`McGraw-Hill Global Educ. Holdings, LLC, S.D.N.Y. Case No. 12-cv-06595 (LAP)
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`Dear Judge Preska:
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`We represent Defendants McGraw-Hill Global Holdings, LLC and McGraw-Hill School
`Education Holdings, LLC (collectively, “McGraw-Hill”) in the above-captioned action.
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`We write, pursuant to Your Honor’s Individual Practices 2.A and this Court’s July 9,
`2018 order (Dkt. No. 93) to request a pre-motion conference on Defendants’ anticipated motion
`for summary judgment with respect to all 24 copyright infringement claims listed in Plaintiff
`Muench Photography’s Exhibit 1 to the Second Amended Complaint (“SAC”) (Dkt. No. 38, Oct.
`17, 2018). Based on this Court’s prior order on McGraw-Hill’s motion to dismiss the First
`Amended Complaint, (see Dkt. No. 36, entered Oct. 9, 2012), which held that Plaintiff was
`barred from asserting infringement claims on photos where this Court previously had found the
`underlying copyright registrations insufficient as a matter of law, the vast majority of the case
`now comprises straightforward breach of contract claims. Plaintiff, however, continues to press
`24 copyright infringement claims as delineated in Rows 1, 17, 18, 33, 52, 62, 81, 135, 156, 157,
`161, 166, 177, 186, 200, 201, 205, 238, 299, 316, 318, 322, 324, 348 of Ex. 1 to the SAC.
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`McGraw Hill intends to seek a summary judgment finding that all of Plaintiff’s
`remaining copyright claims are barred by the covenant/condition doctrine because each of these
`24 remaining claims sound in contract rather than copyright. Moreover, even if the Court decides
`to sustain any of Plaintiff’s copyright claims despite the application of New York law with
`regard to the interpretation of contractual covenants, all of the infringement claims still fail
`because the preferred pricing agreements and invoices entered into between McGraw-Hill and
`Corbis Corp., the stock photo agency which represented all of Muench’s photos in this case,
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`Case 1:12-cv-06595-LAP Document 97 Filed 07/27/18 Page 2 of 4
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`District Judge Loretta A. Preska
`July 27, 2018
`Page 2
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`establish the incontrovertible fact that Corbis had authorized – that is, granted consent to –
`McGraw-Hill for its uses of the Corbis-represented photos.
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`1. Plaintiff’s Copyright Claims Are Barred Under the Covenant/Condition Doctrine
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`The Second Circuit has accepted the well-recognized doctrine that “a copyright owner
`who grants a nonexclusive license to use his copyrighted material waives his right to sue the
`licensee for copyright infringement.” Graham v. James, 144 F.3d 229, 236-37 (2d Cir. 1998).
`Under the New York law applicable to the Corbis invoices and preferred pricing agreements at
`issue in this case, the resolution of whether Plaintiff’s Corbis-based copyright claims here sound
`in copyright, as opposed to contract, depends on whether the terms which Plaintiff alleges
`McGraw-Hill exceeded are deemed to be conditions precedent to the exercise of the rights
`granted by those agreements between McGraw-Hill and Corbis, or merely covenants of
`performance controlling McGraw-Hill’s conduct with respect to the photos under those
`agreements. Graham, 144 F.3d at 236-37 (holding that a licensee’s breach of a covenant in a
`copyright license does not rescind the authorizations in that license to use the copyrighted work,
`but rather provides the licensor with a cause of action for breach of contract). Earlier this year,
`another court in this District affirmed this very principle in Sohm v. Scholastic, 16-CV-7098
`(JPO), 2018 WL 1605214 (S.D.N.Y. Mar. 29, 2018), a case on all fours with the Corbis/McGraw-
`Hill contractual relationship here. In Sohm, Judge Oetken held that the payment terms in
`substantively identical pricing agreements between Scholastic and Corbis constituted contractual
`covenants, as opposed to conditions precedent to the grant of permission for use of the plaintiff’s
`photos, and as a result, the plaintiff’s claims for copyright infringement arising from the Corbis
`invoices were barred because they sounded in contract. See id. at *13-14.
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`McGraw-Hill’s relationship with Corbis, which included not just the pleaded invoices but
`a series of preferred pricing agreements, just as in Sohm, makes clear that the copyright claims
`rest entirely on alleged violations of covenants in McGraw-Hill’s contracts with Corbis, rather
`than failures to meet conditions precedent. As such, these 24 remaining infringement claims
`cannot be sustained under the covenant/condition doctrine.
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`2. Plaintiff’s Claims Also Fail Because Any Overuse Was Anticipated by the Preferred
`Pricing Agreements
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`Each of Plaintiff’s claims of overuse here depend on assertions that McGraw-Hill exceeded
`the print run and similar parameters of the invoices that Corbis issued to McGraw-Hill for payment.
`However, these contentions of alleged overuse ignore the fact that the preferred pricing agreements
`between Corbis and McGraw-Hill, as well as McGraw-Hill’s decades-old contractual dealings
`with Corbis, establish that McGraw-Hill always had permission to use Corbis’ photos. Under the
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`Case 1:12-cv-06595-LAP Document 97 Filed 07/27/18 Page 3 of 4
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`District Judge Loretta A. Preska
`July 27, 2018
`Page 3
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`structure of the then-ongoing business relationship between McGraw-Hill and Corbis, McGraw-
`Hill always had authorization from Corbis to use Corbis’ photos. The question of payment, which
`was the reason for Corbis’ issuance of the invoices, was always resolved after Corbis actually
`provided McGraw-Hill with the actual photos and Corbis issued such invoices based on McGraw-
`Hill’s pre-publication estimates of its anticipated use. Thus, consent always preceded payment.
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`In this context, the evidence shows, without any credible dispute that might be ventured by
`plaintiff, that Corbis and McGraw-Hill shared a mutual understanding concerning the Corbis
`invoices, in that the invoices alone were not the sole basis of McGraw-Hill’s permission to use
`Corbis’ photos, and that all of McGraw-Hill’s transactions on the photos were in fact subject to
`Corbis’ preferred pricing agreements with McGraw-Hill.1 These successive pricing agreements,
`which were unbroken in duration from 2000 through the time period covered by all of the
`remaining copyright claims, established tiered fees for various potential uses of the photos,
`including all of the alleged overuses at issue here. In this regard, the fee paid by McGraw-Hill in
`a given invoice for a given photo meant that McGraw-Hill had fully compensated Corbis (and thus
`Corbis’ photographers, including in this instance, David Muench) for the full panoply of all of the
`various uses that were set out in detail in the applicable pricing agreement, such as for example,
`electronic use, or worldwide distribution, or distribution for the life of the edition in which the
`photo appeared. In addition, to the extent any of McGraw-Hill’s use of a photo exceeded the price
`paid on a particular invoice, such as, for example, printing more copies than had initially been
`estimated at the time the invoice was requested, the applicable pricing agreement also provided a
`mechanism to calculate any incremental additional fee that might be owed.
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`In this context, then, McGraw-Hill’s use of Corbis’ photos was never without Corbis’
`consent (i.e., permission) as a matter of copyright rights because Corbis had provided a preexisting
`contractual mechanism for payment of McGraw-Hill’s uses. Thus, Plaintiff’s copyright
`infringement claims must fail for the additional reason that all of the alleged overuses were the
`subject of Corbis’ consent, even if there might be a basis for a contractual claim for additional
`contractual payments based on the Corbis pricing agreements.
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`1 Indeed, this Court itself has already noted that “there is no dispute that valid contracts, Pricing
`Agreements, were formed between Defendant and Corbis, concerning Defendant’s use of the Photographs.” See
`Memo. & Order, at 6 (Dkt. No. 57, Aug. 15, 2013). The Court later noted in this Order that the contractual relations
`between McGraw-Hill and Corbis, and in particular, the Corbis pricing agreements, “lead this Court to doubt
`whether Plaintiff can recover successfully under both theories” of contract and copyright because of the apparent
`presence of consent from Corbis for McGraw-Hill’s uses of Corbis’ photos under the pricing agreements. Id. at 11.
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`Case 1:12-cv-06595-LAP Document 97 Filed 07/27/18 Page 4 of 4
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`District Judge Loretta A. Preska
`July 27, 2018
`Page 4
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`Respectfully submitted,
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`Christopher P. Beall
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`cc: All Counsel of record (via ECF)
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