Case 17-673, Document 68, 05/31/2017, 2047426, Page1 of 71
`
`17-0673-cv
`
`United States Court of Appeals
`
`for the
`Second Circuit
`
`
`
`PAUL SPINELLI, SCOTT BOEHM, PAUL JASIENSKI, GEORGE NEWMAN
`LOWRANCE, DAVID STLUKA, DAVID DRAPKIN, THOMAS E. WITTE,
`
`Plaintiffs-Appellants,
`
`– v. –
`
`NATIONAL FOOTBALL LEAGUE, NFL VENTURES, L.P.,
`
`(For Continuation of Caption See Inside Cover)
`
`––––––––––––––––––––––––––––––
`ON APPEAL FROM THE UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF NEW YORK
`HONORABLE ROBERT W. SWEET, U.S. DISTRICT JUDGE
`
`REDACTED JOINT BRIEF
`FOR DEFENDANTS-APPELLEES
`THE ASSOCIATED PRESS AND REPLAY PHOTOS, L.L.C.
`
`
`
`
`
`
`
`
`
`JURA C. ZIBAS
`WILSON ELSER MOSKOWITZ EDELMAN
`& DICKER LLP
`150 East 42nd Street
`New York, New York 10017
`(212) 915-5756
`
`ANDREW L. DEUTSCH
`TAMAR Y. DUVDEVANI
`DLA PIPER LLP (US)
`1251 Avenue of the Americas
`New York, New York 10020
`(212) 335-4500
`
`Attorneys for Defendant-Appellee
`Replay Photos, L.L.C.
`
`Attorneys for Defendant-Appellee
`The Associated Press
`
`
`
`
`
`
`

`

`Case 17-673, Document 68, 05/31/2017, 2047426, Page2 of 71
`
`
`
`
`
`NFL PRODUCTIONS, L.L.C., NFL ENTERPRISES, L.L.C., REPLAY
`PHOTOS, L.L.C., ASSOCIATED PRESS, NFL PROPERTIES, LLC, ARIZONA
`CARDINALS HOLDINGS, INC., ATLANTA FALCONS FOOTBALL CLUB
`LLC, BALTIMORE RAVENS LIMITED PARTNERSHIP, BUFFALO BILLS,
`INC., PANTHERS FOOTBALL, INC., CHICAGO BEARS FOOTBALL CLUB,
`INC., CINCINNATI BENGALS, INC., CLEVELAND BROWNS LLC,
`DALLAS COWBOYS FOOTBALL CLUB, LTD., DENVER BRONCOS
`FOOTBALL CLUB, DETROIT LIONS, INC., GREEN BAY PACKERS, INC.,
`HOUSTON NFL HOLDINGS LP, INDIANAPOLIS COLTS, INC.,
`JACKSONVILLEJAGUARS LTD., KANSAS CITY CHIEFS FOOTBALL
`CLUB, INC., MIAMI DOLPHINS, LTD., MINNESOTA VIKINGS FOOTBALL
`CLUB LLC, NEW ENGLAND PATRIOTS, LP, NEW ORLEANS LOUISIANA
`SAINTS, LLC, NEW YORK FOOTBALL GIANTS, INC., NEW YORK JETS
`FOOTBALL CLUB, INC., OAKLAND RAIDERS LP, PHILADELPHIA
`EAGLES FOOTBALL CLUB, INC., PITTSBURGH STEELERS SPORTS,
`INC., SAN DIEGO CHARGERS FOOTBALL CO., SAN FRANCISCO FORTY
`NINERS LTD., FOOTBALL NORTHWEST LLC, RAMS FOOTBALL CO.
`LLC, BUCCANEERS LIMITED PARTNERSHIP, TENNESSEE FOOTBALL,
`INC., WASHINGTON FOOTBALL INC.,
`
`GETTY IMAGES (US), INC.,
`
`Defendants-Appellees,
`
`Defendant.
`
`
`
`
`
`
`
`
`

`

`Case 17-673, Document 68, 05/31/2017, 2047426, Page3 of 71
`
`
`
`STATEMENT PURSUANT TO FED. R. APP. P. 26.1
`
`The Associated Press is a not-for-profit news cooperative. It has no parent
`
`corporation and no publicly-held stock. No publicly-held corporation owns 10%
`
`or more of any interest in The Associated Press.
`
`Replay Photos, LLC is a limited liability company and a subsidiary of Lulu
`
`Enterprises, Inc. No publicly-held corporation owns more than 10% of its stock.
`
`
`
`
`EAST\143075474.1
`
`
`
`

`

`Case 17-673, Document 68, 05/31/2017, 2047426, Page4 of 71
`
`Table of Contents
`
`Page
`
`
`
`
`
`COUNTERSTATEMENT OF ISSUES PRESENTED ............................................. 1
`
`COUNTERSTATEMENT OF THE CASE ............................................................... 2
`
`A.
`
`B.
`
`C.
`
`D.
`
`E.
`
`AP’s Photo Library Agreements With the NFL ........................ 2
`
`The NFL’s Use of Plaintiffs’ Photos Under an AP Sublicense . 5
`
`AP’s Contributor Agreements with Plaintiffs ............................ 7
`
`1.
`
`2.
`
`Execution of the Contributor Agreements ........................ 7
`
`Terms of the Contributor Agreements .............................. 7
`
`a.
`
`b.
`
`c.
`
`General Terms ........................................................ 7
`
`License of Plaintiffs’ Copyrights to AP .................. 8
`
`Royalty Provisions .................................................. 9
`
`The Economics of the NFL-AP-Plaintiffs’ Relationships ....... 10
`
`Plaintiffs’ Continued Performance of their Contributor
`Agreements .............................................................................. 11
`
`F.
`
`Relevant Procedural History .................................................... 13
`
`STANDARD OF REVIEW ..................................................................................... 15
`
`SUMMARY OF ARGUMENT ............................................................................... 15
`
`ARGUMENT ........................................................................................................... 21
`
`I.
`
`PLAINTIFFS FAILED TO PLAUSIBLY PLEAD CLAIMS FOR
`COPYRIGHT INFRINGEMENT ....................................................... 21
`
`A.
`
`B.
`
`C.
`
`D.
`
`E.
`
`A License Defense May Be Determined on a Rule 12(b)(6)
`Motion to Dismiss .................................................................... 21
`
`The Licenses Granted by Plaintiffs to AP are Unambiguous
`and Co-Extensive with Plaintiffs’ Own Copyright Rights ...... 22
`
`AP Was Entitled to Issue Non-Royalty-Bearing Sublicenses to
`the NFL .................................................................................... 24
`
`AP’s Sublicense to the NFL Is Not Retroactive ...................... 27
`
`Davis v. Blige Does Not Invalidate AP’s Sublicense to the NFL
` .................................................................................................. 28
`
`1.
`
`The Language in Davis on Which Plaintiffs Rely is
`Dictum and Not Precedential .......................................... 29
`
`EAST\143075474.1 i
`
`
`

`

`
`
`Case 17-673, Document 68, 05/31/2017, 2047426, Page5 of 71
`
`Table of Contents
`(continued)
`
`Page
`
`2.
`
`Davis Should Not Be Extended to Invalidate Retroactive
`Licenses Authorized by a Single Copyright Owner ....... 33
`
`F.
`
`The Court Should Affirm the Dismissal of the Copyright
`Claims. ..................................................................................... 39
`
`II.
`
`PLAINTIFFS FAILED TO PLAUSIBLY PLEAD A CLAIM THAT
`THEIR CONTRIBUTOR AGREEMENTS WERE INVALID ......... 41
`
`A.
`
`B.
`
`Plaintiffs Waived Their Contract Invalidation Claims By
`Continued Performance of and Accepting Benefits Under Their
`Contracts .................................................................................. 41
`
`Plaintiffs Failed to State a Claim for Duress, Fraud, or
`Unconscionability .................................................................... 44
`
`1.
`
`2.
`
`3.
`
`Duress ............................................................................. 45
`
`Fraud .............................................................................. 47
`
`Unconscionability ........................................................... 50
`
`III. PLAINTIFFS’ OTHER CLAIMS WERE PROPERLY DISMISSED
` ............................................................................................................. 53
`
`A.
`
`B.
`
`C.
`
`Breach of Duty of Good Faith and Fair Dealing ..................... 53
`
`Breach of Fiduciary Duty ......................................................... 54
`
`Violation of the Sherman Act .................................................. 56
`
`CONCLUSION ........................................................................................................ 58
`
`
`
`EAST\143075474.1
`
`ii
`
`

`

`Case 17-673, Document 68, 05/31/2017, 2047426, Page6 of 71
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`
`
`
`CASES
`
`Allen v. WestPoint-Pepperell, Inc.,
`945 F.2d 40 (2d Cir. 1991) ................................................................................. 48
`
`Almeida v. Holder,
`588 F.3d 778 (2d Cir. 2009) ............................................................................... 34
`
`Appel v. Ford Motor Co.,
`111 A.D.2d 731, 490 N.Y.S.2d 228 (2d Dep’t 1985) ......................................... 47
`
`Ariel (UK) Ltd. v. Reuters Grp. PLC,
`No. 05 Civ. 9646 (JFK), 2006 WL 3151467 (S.D.N.Y. Oct. 31, 2006),
`aff’d, 277 F. App’x. 43 (2d Cir. 2008)................................................................ 22
`
`Astoria Fed. Sav. & Loan Ass’n v. Solimino,
`501 U.S. 104 (1991) ............................................................................................ 34
`
`Barclays Capital Inc. v. Theflyonthewall.com, Inc.,
`650 F.3d 876 (2d Cir. 2011) ......................................................................... 30, 33
`
`Boosey &. Hawkes Music Publishers, Ltd. v. Walt Disney, Co.,
`145 F.3d 481 (2d Cir. 1999) ............................................................................... 24
`
`Bourne v. Walt Disney Co.,
`68 F.3d 621 (2d Cir. 1995) ................................................................................. 22
`
`Brentmore Estates v. Hotel Barbizon,
`263 A.D. 389, 33 N.Y.S.2d 331 (1st Dep’t 1942) .............................................. 34
`
`Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc.,
`98 F.3d 13 (2d Cir. 1996) ............................................................................. 49, 50
`
`Canon Inc. v. Tesseron Ltd.,
`146 F. Supp. 3d 568 (S.D.N.Y 2015) ..........................................................passim
`
`Cetacean Cmty. v. Bush,
`386 F.3d 1169 (9th Cir. 2004) ........................................................................... 30
`
`EAST\143075474.1
`
`iii
`
`

`

`Case 17-673, Document 68, 05/31/2017, 2047426, Page7 of 71
`
`
`
`Davis v. Blige,
`505 F.3d 90 (2d Cir. 2007) ..........................................................................passim
`
`DiRose v. PK Mgmt. Corp.,
`691 F.2d 628 (2d Cir. 1982) ......................................................................... 42, 43
`
`Doctor’s Associates, Inc. v. Jabush,
`89 F.3d 109 (2d Cir. 1996) ........................................................................... 51, 52
`
`Don King Productions, Inc. v. Douglas,
`742 F. Supp. 778 (S.D.N.Y. 1990) ..................................................................... 51
`
`Elisa Dreier Reporting Corp. v. Global Naps Networks, Inc.,
`84 A.D.2d 122, 921 N.Y.S.2d 329 (2d Dep’t 2011) ........................................... 42
`
`Equitable Lumber Corp. v. I.P.A. Land Development Corp.,
`38 N.Y.2d 516, 381 N.Y.S.2d 459 (1976) ......................................................... 51
`
`Ernst Iron Works Inc. v. Duralith Corp.,
`270 N.Y. 165, 200 N.E. 683 (1936) .................................................................... 49
`
`Faulkner v. Arista Records, LLC,
`602 F. Supp. 2d 470 (S.D.N.Y. 2009) ................................................................ 56
`
`Faulkner v. Nat’l Geographic Enters., Inc.,
`409 F.3d 26 (2d Cir. 2005) ................................................................................. 40
`
`Fishoff v. Coty Inc.,
`634 F.3d 647 (2d Cir. 2011) ............................................................................... 53
`
`Gerstein v. 532 Broad Hollow Road Co.,
`75 A.D.2d 292, 429 N.Y.S.2d 195 (1st Dep’t 1980) .......................................... 45
`
`Gillman v. Chase Manhattan Bank, N.A.,
`135 A.D.2d 488, 521 N.Y.S.2d 729 (2d Dep’t 1987), aff'd, 73 N.Y.2d 1,
`537 N.Y.S.2d 787 (1988) .................................................................................... 51
`
`Global Network Commcn’s, Inc. v. City of New York,
`458 F.3d 150 (2d Cir. 2006) ............................................................................... 15
`
`Graham v. James,
`144 F.3d 229 (2d Cir. 1998) ........................................................................passim
`
`EAST\143075474.1
`
`iv
`
`

`

`Case 17-673, Document 68, 05/31/2017, 2047426, Page8 of 71
`
`
`
`Granirer v. Bakery, Inc.,
`54 A.D.3d 269, 863 N.Y.S.2d 396 (1st Dep’t 2008) .......................................... 56
`
`Great Minds v. Fedex Office and Print Servs., Inc.
`16-cv-1462, 2017 WL 744574 (E.D.N.Y. Feb. 24, 2017) .................................. 22
`
`Hard Rock Café Int’l (USA) Inc. v. Morton,
`No. 97 Civ. 9483 (RPP), 1999 WL 717995 (S.D.N.Y. Sept. 9, 1999) ............... 24
`
`Harris v. Provident Life & Accident Ins. Co.,
`310 F.3d 73 (2d Cir. 2002) ................................................................................. 54
`
`In re Literary Works in Elec. Databases Copyright Litig.,
`654 F.3d 242 (2d Cir. 2011) ......................................................................... 30, 31
`
`In re Livent, Inc. Noteholders Sec. Litig.,
`151 F. Supp. 2d 371 (S.D.N.Y. 2001) ................................................................ 15
`
`In re Rezulin Prods. Liability Litig.,
`392 F. Supp. 2d 597 (S.D.N.Y. 2005) ................................................................ 55
`
`Interpharm, Inc. v. Wells Fargo Bank, N.A.,
`655 F.3d 136 (2d Cir. 2011) ......................................................................... 45, 47
`
`Jacobson v. Sassower,
`66 N.Y.2d 991 (1985) ......................................................................................... 26
`
`Kamerman v. Curtis,
`285 N.Y. 221 (1941) ........................................................................................... 42
`
`Kent v. Quicksilver Mining Co.,
`78 N.Y. 159 (1879) ............................................................................................. 42
`
`King v. Fox,
`418 F.3d 121 (2d Cir. 2005) ............................................................................... 44
`
`King v. Fox,
`7 N.Y.3d 181, 818 N.Y.S.2d 833 (2006) ............................................................ 42
`
`Kramer v. Vendome Group, Inc.,
`11-cv-5245 (RJS), 2012 WL 4841310 (S.D.N.Y. Oct. 4, 2012) ........................ 46
`
`EAST\143075474.1
`
`v
`
`

`

`Case 17-673, Document 68, 05/31/2017, 2047426, Page9 of 71
`
`
`
`Lamie v. U.S. Trustee,
`540 U.S. 526 (2004) ............................................................................................ 34
`
`Laureyssens v. Idea Grp., Inc.,
`964 F.2d 131 (2d Cir. 1992) ............................................................................... 21
`
`Lawrence v. Kennedy,
`113 A.D.2d 731, 979 N.Y.S.2d 347 (2d Dep’t 2014) ......................................... 42
`
`Lawrence v. Miller,
`11 N.Y.3d 588, 873 N.Y.S.2d 517 (2008) .......................................................... 42
`
`Madison Ave. Leasehold, LLC v. Madison Bentley Ass. LLC,
`8 N.Y.3d 59, 828 N.Y.S.2d 254 (2006) .............................................................. 23
`
`Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd.,
`545 U.S. 913 (2005) ............................................................................................ 40
`
`Morad v. Morad,
`27 A.D.3d 626, 812 N.Y.S.2d 126 (2006) .......................................................... 51
`
`New Millennium Consulting, Inc. v. United Healthcare Servs., Inc.,
`695 F.3d 854 (8th Cir. 2012) .............................................................................. 55
`
`Old Clinton Corp. v. 502 Old Country Road, LLC,
`5 A.D.3d 363, 773 N.Y.S.2d 410 (2d Dep’t 2004) ............................................. 49
`
`Pallonetti v. Liberty Mutual,
`No. 10 Civ. 4487, 2011 WL 519407 (S.D.N.Y. Feb. 11, 2011) ......................... 43
`
`Palmer/Kane, LLC v. Rosen Book Works LLC,
`204 F. Supp. 3d 565 (S.D.N.Y. 2016) .......................................................... 30, 36
`
`Pani v. Empire Blue Cross Blue Shield,
`152 F.3d 67 (2d Cir. 1998) ................................................................................. 22
`
`Papa's-June Music, Inc. v. McLean,
`921 F. Supp. 1154 (S.D.N.Y. 1996) ................................................................... 50
`
`Pope v. New York Prop. Ins. Underwriting Assn.,
`112 A.D.2d 984, 492 N.Y.S.2d 796 (2d Dep’t 1985) ......................................... 49
`
`EAST\143075474.1
`
`vi
`
`

`

`Case 17-673, Document 68, 05/31/2017, 2047426, Page10 of 71
`
`
`
`Ragone v. Atlantic Video,
`595 F.3d 115 (2d Cir. 2010) ............................................................................... 52
`
`Reading Int’l, Inc. v. Oaktree Capital Mgmt.,
`317 F. Supp. 2d 301 (S.D.N.Y. 2003) ................................................................ 57
`
`Revson v. Cinque & Cinque, P.C.,
`221 F.3d 59 (2d Cir. 2000) ................................................................................. 23
`
`Reznor v. J. Artist Mgmt., Inc.,
`365 F. Supp. 2d 565 (S.D.N.Y. 2005) ................................................................ 52
`
`Riverside South Planning Corp. v. CRP/Extell Riverside, L.P.,
`13 N.Y.3d 398, 892 N.Y.S.2d 303 (2009) .......................................................... 24
`
`Rodgers v. Roulette Records, Inc.,
`677 F. Supp. 731 (S.D.N.Y. 1988) ..................................................................... 56
`
`Rosenberg v. Cleary, Gottlieb, Steen & Hamilton,
`598 F. Supp. 642 (S.D.N.Y. 1984) ..................................................................... 58
`
`Royal Society of Medicine v. Int’l Soc. for Preventative Oncology, Inc.,
`602 F. Supp. 794 (S.D.N.Y. 1985) ..................................................................... 45
`
`Russian Entm’t Wholesale, Inc. v. Close-Up Int’l, Inc.,
`767 F. Supp. 2d 392 (E.D.N.Y. 2011), aff’d, 482 F. App’x. 602 (2d Cir.
`2012) ................................................................................................................... 27
`
`Schering Corp. v. Roussel-UCLAF SA,
`104 F.3d 341 (Fed. Cir. 1997) ............................................................................ 35
`
`Schron v. Troutman Sanders LLP,
`20 N.Y.3d 430, 963 N.Y.S.2d 613 (2013) .......................................................... 24
`
`Silberstein v. Fox Entm’t Corp.,
`424 F. Supp. 616 (S.D.N.Y. 2004), aff’d sub nom. Silberstein v. John
`Does 1-10, 242 F. App’x 720 (2d Cir. 2007) ..................................................... 31
`
`Smith v. Barnesandnoble.com,
` 839 F.3d 163 (2d Cir. 2016) .................................................................. 21, 24, 44
`
`State St. Bank & Trust Co. v. Inversiones Errazurika Limitada,
`374 F.3d 158 (2d Cir. 2004) ............................................................................... 54
`
`EAST\143075474.1
`
`vii
`
`

`

`Case 17-673, Document 68, 05/31/2017, 2047426, Page11 of 71
`
`
`
`Steen & Hamilton,
`598 F. Supp. 642 (S.D.N.Y. 1984) .................................................................... 58
`
`Stewart v. Jackson & Nash,
`976 F.2d 86 (2d Cir. 1992) ................................................................................. 49
`
`The Original Great Am. Chocolate Chip Cookie Co., Inc. v. River Valley
`Cookies, Ltd.,
`970 F.2d 273 (7th Cir. 1992) ............................................................................. 51
`
`Thomas v. Price,
`631 F. Supp. 114 (S.D.N.Y. 1996) ..................................................................... 26
`
`Times Mirror Magazines, Inc. v. Field & Stream Licenses Co.,
`294 F.3d 383 (2d Cir. 2002) ............................................................................... 54
`
`United States Naval Inst. v. Charter Communications, Inc.,
`936 F.2d 692 (2d Cir. 1991) .......................................................................... 38,40
`
`United States v. Rubin,
`609 F.2d 51 (2d Cir. 1979) ................................................................................. 29
`
`Van Valkenburgh, Nooger & Neville v. Hayden Publ’g Co.,
`33 A.D.2d 766, 306 N.Y.S.2d 599 (1st Dep’t 1969), aff’d, 30 N.Y.2d 34,
`330 N.Y.S.2d 329 (1972) .................................................................................... 56
`
`VKK Corp. v. Nat’l Football League,
`244 F.3d 114 (2d Cir. 2001) .................................................................... 42,43, 45
`
`Wells v. John Wiley & Sons, Inc.,
`No. 14-cv-6745, 2016 WL 889786 (S.D.N.Y. Feb. 17, 2016) ..................... 31, 38
`
`William Kaufman Org. v. Graham & James,
`269 A.D.2d 171, 703 N.Y.S.2d 439 (1st Dep’t 2000) ........................................ 56
`
`Wood v. Lucy, Lady Duff-Gordon,
`222 N.Y. 88 (1917) ............................................................................................. 26
`
`Wu v. Pearson Educ., Inc.,
`No. 10-cv- 6547 (KBF), 2013 WL 145666 (S.D.N.Y. Jan. 11, 2013) ........passim
`
`Young-Wolff v. John Wiley & Sons, Inc.,
`No. 12-cv-5230, 2016 WL 154115 (S.D.N.Y. Jan. 12, 2016) .....................passim
`
`EAST\143075474.1
`
`viii
`
`

`

`Case 17-673, Document 68, 05/31/2017, 2047426, Page12 of 71
`
`
`
`STATUTES
`
`17 U.S.C. § 106 .................................................................................................. 21, 23
`
`17 U.S.C. § 201(d)(2)............................................................................................... 33
`
`OTHER AUTHORITIES
`
`1 Melville B. Nimmer and David Nimmer, Nimmer on Copyright § 6.10
`(1990) ............................................................................................................ 35-36
`
`3 Melville B. Nimmer and David Nimmer, Nimmer on Copyright § 10.15[A]
`(2017) ...................................................................................................... 27, 35, 37
`
`3 Melville B. Nimmer and David Nimmer, Nimmer on Copyright § 12.02
`(1990) ................................................................................................................. 38
`
`3 Melville B. Nimmer and David Nimmer, Nimmer on Copyright § 12.02
`[C] (2017) ........................................................................................................... 38
`
`"Black’s Law Dictionary,(10th ed. 2014) “Condition,” available at Westlaw
`BLACKS ............................................................................................................. 27
`
`Fed R. App. P. 28(i) ........................................................................................... 14, 55
`
`Fed. R. Civ. P. 12(b)(6) ............................................................................................ 22
`
`Pierre N. Leval, Judging Under the Constitution: Dicta about Dicta, 81
`N.Y.U. L.Rev. 1249 (2006) ................................................................................ 30
`
`EAST\143075474.1
`
`ix
`
`

`

`Case 17-673, Document 68, 05/31/2017, 2047426, Page13 of 71
`
`
`
`
`
`Defendants-Appellees The Associated Press (“AP”) and Replay Photos,
`
`LLC (“Replay”) respectfully submit this brief in response to Plaintiffs’ appeal from
`
`the dismissal of the Second Amended Complaint (“SAC”).1 As shown below, the
`
`district court correctly held that Plaintiffs had failed to state plausible causes of
`
`action against AP or Replay, and dismissed the SAC. This Court should affirm.
`
`COUNTERSTATEMENT OF ISSUES PRESENTED
`
`I.
`
`Did the district court correctly dismiss Plaintiffs’ claims for copyright
`
`infringement, where (a) Plaintiffs, in written contracts, granted AP broad licenses
`
`to exercise all copyright rights in their photographs and to sublicense those rights
`
`to commercial users of the photographs, and (b) all uses of Plaintiffs’ photographs
`
`by Defendants that are alleged to be infringing were authorized by Plaintiffs’
`
`licenses to AP?
`
`II. Did the district court correctly dismiss Plaintiffs’ claims that their
`
`contracts with AP were invalid for duress, fraud, or unconscionability, where (a)
`
`
`In
`this brief, Defendants-Appellees National Football League, NFL
`1
`Properties, LLC, NFL Ventures, L.P., NFL Productions, LLC, and NFL
`Enterprises, LLC are collectively referred to as the “NFL.” The NFL and its 32
`member teams are collectively referred to as the “NFL Defendants.” AP, the NFL
`Defendants, and Replay are collectively referred to as “Defendants.” Defendant
`Getty Images (US) Inc., which is not a party to the appeal, is referred to as “Getty
`Images.” The SAC, located at Joint Appendix (“JA”) 95-164, is referred to by its
`paragraphs. Other abbreviations used herein are: “CA” (Confidential Joint
`Appendix); “CSA” (Confidential Special Appendix); “SA” (Special Appendix);
`“FAC” (First Amended Complaint), and “Pl. Br.” (Brief of Plaintiffs-Appellees).
`
`EAST\143075474.1
`
`1
`
`

`

`Case 17-673, Document 68, 05/31/2017, 2047426, Page14 of 71
`
`
`
`Plaintiffs ratified those contracts and waived the claims by continued performance
`
`and acceptance of contract benefits after knowledge of the alleged grounds for
`
`voiding the contracts and (b) Plaintiffs failed to plausibly plead such claims?
`
`III. Did the district court correctly dismiss Plaintiffs’ remaining claims
`
`against AP (breach of implied covenant of good faith and fair dealing, breach of
`
`fiduciary duty, and violation of the Sherman Act)?
`
`COUNTERSTATEMENT OF THE CASE
`
`A. AP’s Photo Library Agreements With the NFL
`
`Plaintiffs are professional photographers who take and license photographs
`
`of NFL games and events, as well as photographs of other sporting events, (SAC
`
`¶ 1). AP is a not-for-profit news cooperative owned by and made up of over 1,400
`
`newspapers and media organizations. (SAC ¶ 23). Plaintiffs are parties to
`
`“Contributor Agreements” with AP (JA894-977), which are discussed in greater
`
`detail below.
`
`The intellectual property at the heart of this case is not Plaintiffs’
`
`photographs, but the marks owned or managed by the National Football League or
`
`its 32 member teams (“NFL Marks”).
`
`
`
`
`
` the NFL
`
`holds and administers exclusive licensing rights in the NFL Marks for a variety of
`
`EAST\143075474.1
`
`2
`
`

`

`Case 17-673, Document 68, 05/31/2017, 2047426, Page15 of 71
`
`
`
`uses,
`
`
`
`
`
`
`
`
`
` No third party may
`
`commercially exploit this intellectual property without permission from the NFL.
`
`Most professional photographs of NFL game action and events show the
`
`NFL logo and one or more marks of a NFL club on players’ jerseys. This use of
`
`the NFL Marks is vividly illustrated in the hundreds of pages of Plaintiffs’ own
`
`photographs attached as exhibits attached to the SAC. For a photographer to be
`
`able to commercially exploit such photos without infringing the NFL Marks, he
`
`must hold a license from the NFL or distribute his photos through an entity that
`
`holds such a license.
`
`Starting in 1965, the NFL issued licenses to freelance photographers to take
`
`NFL-related photos, then licensed third parties to make commercial use of these
`
`photos. (SAC ¶¶ 42-43). In 2003, the NFL began to outsource this commercial
`
`licensing function to photo stock companies, including Getty Images. (SAC ¶ 45).
`
`Since outsourcing began, the licensor chosen by the NFL has entered into
`
`individual contracts with independent contractor sports photographers. (SAC
`
`¶ 48), whom it credentials and assigns to attend NFL games and take photographs
`
`from the sidelines (both Getty Images and AP have also used their own employee
`
`photographers to cover NFL games). The company then licenses the photographs
`
`to commercial users. The independent photographers benefit from the agreement
`
`EAST\143075474.1
`
`3
`
`

`

`Case 17-673, Document 68, 05/31/2017, 2047426, Page16 of 71
`
`
`
`between the NFL and the company, because it permits them to sell “higher-value
`
`commercial licenses” for their NFL photography. (SAC ¶ 51).
`
`In 2008, the NFL decided to seek bids for the exclusive right to grant
`
`commercial licenses for NFL-related photo content. (SAC ¶ 49). AP was selected
`
`as the winning bidder. (SAC ¶ 50). AP and the NFL entered into a “Photo Library
`
`Agreement,” effective as of April 1, 2009 (“2009 Photo Library Agreement”),
`
`under which AP became the NFL’s exclusive photo distributor for commercial
`
`licensing for a term of three years. (
`
`). The parties entered into a new
`
`three-year agreement effective as of April 1, 2012, following another competitive
`
`bidding process (“2012 Photo Library Agreement”). (
`
`). AP and the NFL
`
`entered into a new “Interim Agreement”
`
`
`
`
`
`2
`
`
`2
`Two other agreements are relevant here: (1) the “NFL Photo Store License
`Agreement” (Dkt. 61, Ex. C), between the NFL Defendants and AP, under which
`AP is to operate and supply NFL-themed photos to the “NFL Photo Store,” a
`website where consumers may review and purchase prints of such photos, and (2)
`the “NFL Photo Store Services and License Agreement,” also effective as of April
`1, 2012 (
`), between AP and Replay, under which Replay is to operate the
`“NFL Photo Store” for AP and fulfill customer orders.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
` If, as alleged in the SAC, AP provided Replay
`with the Plaintiffs’ photos for purposes of making and selling prints, those photos
`
`
`
`EAST\143075474.1
`
`4
`
`
`
`
`
`
`
`
`
`

`

`Case 17-673, Document 68, 05/31/2017, 2047426, Page17 of 71
`
`
`
`
`
`
`
`B.
`
`The NFL’s Use of Plaintiffs’ Photos Under an AP Sublicense
`
`Plaintiffs allege that after they signed their Contributor Agreements in 2009
`
`and transferred their photos to AP, AP “immediately allowed,” “permit[ted], and
`
`“facilitated” the NFL Defendants to use those photographs, with “full knowledge”
`
`of those uses. (SAC ¶¶ 139-41, 267-68). They also allege that from 2009-2012,
`
`the NFL Defendants “systematically used thousands of Plaintiffs’ photos between
`
`2009 and 2012 for promotional, marketing, and commercial purposes without a
`
`license” (SAC ¶ 167), on television, in publications, and on the Internet (SAC
`
`¶¶ 169-172), and that the NFL even draped one of the Plaintiffs’ enlarged photos
`
`on the side of the stadium where Super Bowl XLV was played (in February 2011).
`
`(SAC ¶ 173).
`
`Plaintiffs allege that for three years after they signed their Contributor
`
`Agreements, they did not know that the NFL was using their photographs without
`
`paying royalties, despite the NFL’s alleged widespread use, the fact that Getty
`
`Images, prior to April 2009, also allowed the NFL to make “free or
`
`‘complimentary’ use of Plaintiffs’ copyright photos” (SAC ¶ 135), and the monthly
`
`royalty statements that AP was required to provide to each Plaintiff listing “sales of
`
`
`were within the scope of the license and right to sublicense granted by Plaintiffs to
`AP.
`
`EAST\143075474.1
`
`5
`
`

`

`Case 17-673, Document 68, 05/31/2017, 2047426, Page18 of 71
`
`
`
`licenses for [his] Final Photos.” (Contributor Agreement § 5.1). Plaintiffs claim
`
`that they did not learn that that AP had granted the NFL a royalty-free sublicense
`
`for the April 2009-March 2012 period until September 2012, when AP stated that
`
`such a sublicense was “built into the NFL’s [2012] RFP and [was] a non-
`
`negotiable mandatory element in the [NFL] contract.” (SAC ¶ 154).
`
`
`
`In addition, in the 2012 Photo Library Agreement, AP and the NFL
`
`recognized in writing that the NFL had:
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`EAST\143075474.1
`
`6
`
`

`

`Case 17-673, Document 68, 05/31/2017, 2047426, Page19 of 71
`
`
`
`C. AP’s Contributor Agreements with Plaintiffs
`
`1.
`
`Execution of the Contributor Agreements
`
`After AP became the NFL’s exclusive licensing agency in April 2009,
`
`Plaintiffs, in order to continue to benefit from the NFL’s license to AP for use of
`
`the NFL Marks, each entered into a Contributor Agreement with AP. (SAC ¶ 51).
`
`The negotiations for these agreements were conducted at arm’s length, and
`
`Plaintiffs were represented throughout by an experienced copyright attorney.
`
`Declaration of Paul Spinelli ¶ 20 (CA111). Plaintiffs Drapkin, Jasienski, Spinelli,
`
`Stluka, and Witte signed their Contributor Agreements before the start of the NFL
`
`2009-2010 season. (JA893-945, 956-970). Plaintiff Lowrance signed his
`
`Contributor Agreement before the start of the NFL 2011-2012 season (JA971-977),
`
`and Plaintiff Boehm signed his Contributor Agreement before the start of the NFL
`
`2012-13 season. (JA946-955).
`
`2.
`
`Terms of the Contributor Agreements
`
`a.
`
`General Terms
`
`The Contributor Agreements are governed by New York law. (Contributor
`
`Agreements § 10).3 The photographer agrees to “provide contributing photography
`
`
`Most of the contract terms are materially the same in all Contributor
`3
`Agreements. In some Contributor Agreements, the terms are divided only by
`section numbers, while other Contributor Agreements further divide some sections
`into subsections. For economy of space, materially common terms will be
`referenced as, e.g., “Contributor Agreements, § 7 or § 7.1”. References to a term
`
`EAST\143075474.1
`
`7
`
`

`

`Case 17-673, Document 68, 05/31/2017, 2047426, Page20 of 71
`
`
`
`services to AP.” (Id., § 1 or § 1.1). In return, AP agrees to assign the photographer
`
`to cover NFL games or events and to obtain NFL credentials for him. (Id., §§ 2 or
`
`2.2-2.3). AP agrees to make efforts to license to commercial users photos from the
`
`photographer’s selection of photos taken at the games or events. (Id., §§ 3 or 3.1-
`
`3.4). Either AP or the photographer is entitled to terminate hi