Case 3:16-cv-01443-SI Document 46 Filed 01/17/18 Page 1 of 17
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE DISTRICT OF OREGON
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`Case No. 3:16-cv-1443-SI
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`OPINION AND ORDER
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`Plaintiff,
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`v.
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`FATHERS & DAUGHTERS NEVADA,
`LLC,
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`LINGFU ZHANG,
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`Defendant.
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`Carl D. Crowell, CROWELL LAW, PO Box 923, Salem, OR 97308. Of Attorneys for Plaintiff.
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`David H. Madden, MERSENNE LAW, 9600 SW Oak Street, Suite 500, Tigard, OR, 97223. Of
`Attorneys for Defendant.
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`Michael H. Simon, District Judge.
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`Plaintiff Fathers & Daughters Nevada, LLC (“F&D”) brings this action against
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`Defendant Lingfu Zhang. F&D alleges that Defendant copied and distributed F&D’s motion
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`picture Fathers & Daughters through a public BitTorrent network in violation of F&D’s
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`exclusive rights under the Copyright Act. Before the Court is Defendant’s motion for summary
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`judgment. Defendant argues that F&D is not the legal or beneficial owner of the relevant
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`PAGE 1 – OPINION AND ORDER
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`Case 3:16-cv-01443-SI Document 46 Filed 01/17/18 Page 2 of 17
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`exclusive rights under the Copyright Act and thus does not have standing to bring this lawsuit.
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`For the following reasons, the Court grants Defendant’s motion.
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`A. Summary Judgment
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`STANDARDS
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`A party is entitled to summary judgment if the “movant shows that there is no genuine
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`dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
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`Fed. R. Civ. P. 56(a). The moving party has the burden of establishing the absence of a genuine
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`dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The court must view
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`the evidence in the light most favorable to the non-movant and draw all reasonable inferences in
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`the non-movant’s favor. Clicks Billiards Inc. v. Sixshooters Inc., 251 F.3d 1252, 1257 (9th
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`Cir. 2001). Although “[c]redibility determinations, the weighing of the evidence, and the
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`drawing of legitimate inferences from the facts are jury functions, not those of a judge . . . ruling
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`on a motion for summary judgment,” the “mere existence of a scintilla of evidence in support of
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`the plaintiff’s position [is] insufficient . . . .” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252,
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`255 (1986). “Where the record taken as a whole could not lead a rational trier of fact to find for
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`the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith
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`Radio Corp., 475 U.S. 574, 587 (1986) (citation and quotation marks omitted).
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`B. Standing Under the Copyright Act
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`“Under the Copyright Act, only the ‘legal or beneficial owner of an exclusive right under
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`a copyright’ has standing to sue for infringement of that right.” Righthaven LLC v. Hoehn, 716
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`F.3d 1166, 1169 (9th Cir. 2013) (quoting 17 U.S.C. § 501(b)).1 The “exclusive rights” that can
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`1 Section 501(b) states: “The legal or beneficial owner of an exclusive right under a
`copyright is entitled . . . to institute an action for any infringement of that particular right
`committed while he or she is the owner of it.”
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`PAGE 2 – OPINION AND ORDER
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`Case 3:16-cv-01443-SI Document 46 Filed 01/17/18 Page 3 of 17
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`be held under the Copyright Act are enumerated in Section 106. “They are the rights ‘to do and
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`to authorize’ others to do six things with the copyrighted work: to reproduce the work, to prepare
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`derivative works based upon the work, to distribute copies of the work, to perform the work
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`publicly, to display the work publicly, and to record and perform the work by means of an audio
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`transmission.” Minden Pictures, Inc. v. John Wiley & Sons, Inc., 795 F.3d 997, 1002 (9th
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`Cir. 2015). This list of exclusive rights is exhaustive. Id. It does not include the right to sue for
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`infringement. See Righthaven, 716 F.3d at 1169 (“Absent from the list of exclusive rights is the
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`right to sue for infringement.”). Thus, a copyright holder cannot assign or transfer a bare right to
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`sue. Id.; see also DRK Photo v. McGraw-Hill Global Educ. Holdings, LLC, 870 F.3d 978, 987
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`(9th Cir. 2017) (holding that the substance and effect of the assignments and agreements
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`purporting to assign ownership were “merely a transfer of the right to sue on accrued claims,
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`which cannot confer standing” under the Copyright Act); Silvers v. Sony Pictures Entm’t,
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`Inc., 402 F.3d 881, 890 (9th Cir. 2005) (“The bare assignment of an accrued cause of action is
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`impermissible under 17 U.S.C. § 501(b).”).
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`Ownership, and how it can be transferred and parsed, is unique under the Copyright Act:
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`A ‘transfer of copyright ownership’ is an assignment, mortgage,
`exclusive license, or any other conveyance, alienation, or
`hypothecation of a copyright or of any of the exclusive rights
`comprised in a copyright, whether or not it is limited in time or
`place of effect, but not including a nonexclusive license.
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`17 U.S.C. § 101 (emphasis added). Thus, an owner of a copyright can transfer ownership of a
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`copyright “via an assignment or an exclusive license” and both “constitute a ‘transfer of
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`copyright ownership.’” Righthaven, 716 F.3d at 1170 (emphasis added) (quoting 17 U.S.C.
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`§ 101). “[I]f a copyright owner grants an exclusive license of particular rights, only the exclusive
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`licensee and not the original owner can sue for infringement of those rights.” Id. (emphasis
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`PAGE 3 – OPINION AND ORDER
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`added) (citing 3 M. Nimmer & D. Nimmer, NIMMER ON COPYRIGHT § 1202[C] (2012)); see also
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`J. Ginsburg & R. Gorman, COPYRIGHT LAW, Ch. 3.II.A (2012) (“Ginsburg”).
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`An owner of a copyright who transfers exclusive rights may still have standing to sue on
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`those rights if the owner qualifies as a “beneficial owner” of those rights. See Ginsburg, supra, at
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`Ch. 3.II.A. The Copyright Act does not define the term “beneficial owner.” “The classic example
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`of a beneficial owner is ‘an author who ha[s] parted with legal title to the copyright in exchange
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`for percentage royalties based on sales or license fees.’” DRK Photo, 870 F.3d at 988 (alteration
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`in original) (quoting Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1144 (9th
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`Cir. 2003)). “Beneficial ownership arises by virtue of section 501(b) for the purpose of enabling
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`an author or composer to protect his economic interest in a copyright that has been transferred.”
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`Broad. Music, Inc. v. Hirsch, 104 F.3d 1163, 1166 (9th Cir. 1997).
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`A. Sales Agency Agreement
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`BACKGROUND
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`F&D is the author and registered the copyright for the screenplay and motion picture
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`Fathers & Daughters. ECF 36-1. On December 20, 2013, with an effective date of April 1, 2013,
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`F&D entered into a sales agency agreement with Goldenrod Holdings (“Goldenrod”) and its sub-
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`sales agent Voltage Pictures, LLC (“Voltage”). ECF 36-2. Under this agreement, F&D
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`authorized Goldenrod and Voltage as “Sales Agent” to license most of the exclusive rights of
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`Fathers & Daughters, including rights to license, rent, and display the motion picture in theaters,
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`on television, in airplanes, on ships, in hotels and motels, through all forms of home video and
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`on demand services, through cable and satellite services, and via wireless, the internet, or
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`streaming. F&D reserved all other rights, including merchandising, novelization, print
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`publishing, music publishing, soundtrack album, live performance, and video game rights.
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`ECF 36-2 at 3.
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`PAGE 4 – OPINION AND ORDER
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`F&D further authorized Goldenrod and Voltage to execute agreements in their own name
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`with third parties for the “exploitation” of the exclusive rights of Fathers & Daughters and
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`agreed that Goldenrod and Voltage had “the sole and exclusive right of all benefits and
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`privileges of [F&D] in the Territory, including the exclusive right to collect (in Sales Agent’s
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`own name or in the name of [F&D] . . .), receive, and retain as Gross Receipts any and all
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`royalties, benefits, and other proceeds derived from the ownership and/or the use, reuse, and
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`exploitation of the Picture . . . .” ECF 36-2 at 4. The “Territory” is defined as the “universe.” Id.
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`The sales agency agreement sets forth how Gross Receipts will be distributed. ECF 36-2
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`at 6-8. There are eight enumerated payment categories, listed in payment priority order. The first
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`is costs of production, with a capped amount that is redacted in the copy provided to the Court.
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`The second is overhead and a producer fee equal to a lesser amount that also is redacted in the
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`Court’s copy. The third is a marketing fee to Goldenrod and Voltage. The fourth includes
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`recoupable expenses (which were previously defined) to Goldenrod and Voltage. The fifth
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`includes other described fees and costs. The sixth consists of certain payments to Goldenrod and
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`Voltage that are redacted in the Court’s copy. The seventh is box office bonuses or other
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`deferments not assumed by third party domestic distributors. The eighth is approved deferments,
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`which are redacted in the Court’s copy. After these eight specified categories, any remaining
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`amounts are to be considered “adjusted gross receipts.” The adjusted gross receipts are to be
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`divided in a manner that is wholly redacted in the document provided to the Court.
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`B. Distribution Agreement with Vertical
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`On October 2, 2015, Goldenrod entered into a distribution agreement with Vertical
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`Entertainment, LLC (“Vertical”). ECF 36-5. Under this agreement, Goldenrod granted to
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`Vertical a license in the motion picture Fathers & Daughters in the United States and its
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`territories for the:
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`PAGE 5 – OPINION AND ORDER
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`Case 3:16-cv-01443-SI Document 46 Filed 01/17/18 Page 6 of 17
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`sole and exclusive right, license, and privilege . . . under copyright,
`including all extensions and renewal terms of copyright, in any and
`all media, and in all versions, to exploit the Rights and the Picture,
`including, without limitation, to manufacture, reproduce, sell, rent,
`exhibit, broadcast, transmit, stream, download, license, sub-
`license, distribute, sub-distribute, advertise, market, promote,
`publicize and exploit the Rights and the Picture and all elements
`thereof and excerpts therefrom, by any and every means, methods,
`forms and processes or devices, now known or hereafter devised,
`in the following Rights only, under copyright and otherwise
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`ECF 36-5 at 3 (¶ 7(a)). The “rights” enumerated include: (i) theatrical rights; (ii) non-theatrical
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`rights, meaning prisons, educational institutions, libraries, museums, army bases, hospitals, etc.,
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`but expressly excluding ships and airlines; (iii) videogram rights, meaning videocassettes, DVDs,
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`blue-ray discs, CD-ROMs, and similar media; retail channels including “through standard retail
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`channels by means of download to any tangible or hard carrier Videogram storage device using
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`any and all forms of digital or electronic transmission to the retailer,” and internet based retailers;
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`(iv) television rights; (v) digital rights, meaning the exclusive right “in connection with any and
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`all means of dissemination to members of the public via the internet, ‘World Wide Web’ or any
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`other form of digital, wireless and/or Electronic Transmission . . . including, without limitation,
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`streaming, downloadable and/or other non-tangible delivery to fixed and mobile devices,” which
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`includes “transmissions or downloads via IP protocol, computerized or computer-assisted media”
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`and “all other technologies;” (vi) pay-per-view and video-on-demand rights; and (vii) incidental
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`rights. ECF 36-5 at 3-5 (¶¶ 7(a)(i)-(vii)). The rights granted also include the right to assign,
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`license, or sublicense any of these rights. Id. at 5 (¶ 7(b)).
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`In addition to reserving the rights to ships and airlines to Goldenrod, the distribution
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`agreement also reserves to Goldenrod the clip rights, stock footage, merchandising, soundtrack,
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`sequel, prequel, remakes, spin-offs, and royalties from retransmission and other collection
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`agencies. ECF 36-5 at 5 (¶ 7(c)(i)). The distribution agreement also purports to retain to
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`PAGE 6 – OPINION AND ORDER
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`Goldenrod the right to pursue for damages, royalties, and costs actions against those unlawfully
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`downloading and distributing Fathers & Daughters via the internet, including using peer-to-peer
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`or BitTorrent software. ECF 36-5 at 6 (¶ 7(c)(iii)). This clause purports to retain “the right to
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`pursue copyright infringers in relation to works created or derived from the rights licensed
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`pursuant to this Agreement.” Id. Shortly thereafter, however, Goldenrod and Vertical confirm
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`and agree that “Internet and ClosedNet Rights (and all related types of transmissions) (e.g.,
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`Wireless/Mobile Rights) shall be included in the Rights licensed herein)” as long as Vertical uses
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`commercially reasonable efforts to ensure security. Id. (¶ 7(c)(d)). Vertical was required to use
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`commercially reasonable efforts to ensure that Vertical’s internet distribution and streaming
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`could only be received within its contract territory, was made available over a closed network
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`where the movie could be accessed by only authorized persons, and could only be accessed in a
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`manner that prohibited circumvention of digital security or digital rights management security
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`features. F&D does not assert that Vertical breached this provision of the agreement or did not
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`use commercially reasonable efforts to ensure digital security or its territorial limitations.
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`Similar to the sales agency agreement, most of the financial information of the
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`distribution agreement also is redacted in the copy provided to the Court. ECF 36-5 at 8.
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`Nevertheless, it appears that Vertical was to receive certain fees and costs first, and then
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`Goldenrod was to receive certain monies. The term of the distribution agreement was from the
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`initial release date of Fathers & Daughters to certain triggering events that have been redacted in
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`the copy provided to the Court. ECF 36-5 at 3. F&D does not assert that this agreement was no
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`longer in effect at the time this lawsuit was commenced.
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`DISCUSSION
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`F&D asserts that it is both the legal owner and the beneficial owner of the copyright to
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`Fathers & Daughters, which would give F&D standing to bring this infringement suit against
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`PAGE 7 – OPINION AND ORDER
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`Defendant. F&D misstates the law of legal ownership of copyright exclusive rights and thus its
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`argument that it is the legal owner of the exclusive rights at issue in this lawsuit is rejected. F&D
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`also fails to present evidence that create a genuine dispute of material fact that F&D is the
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`beneficial owner of the relevant exclusive right. Thus, that argument is similarly rejected. F&D
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`also argues that based on a reservation of rights in the distribution agreement with Vertical and in
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`a separate addendum to the agreements, F&D has standing. This argument also is without merit.
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`A. Evidentiary Objections
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`As a threshold matter, F&D objects on relevancy grounds to three exhibits submitted by
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`Defendant, Exhibits B, C, and D. Defendant concedes that Exhibit D may be disregarded.
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`Accordingly, F&D’s objection to Exhibit D is sustained. The Court overrules F&D’s objection to
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`Exhibit C. Exhibit C is an “Anti-Internet Piracy Authorisation” agreement dated April 1, 2015, in
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`which F&D empowers Voltage with a limited power of attorney to investigate and collect
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`evidence relating to copyright infringers of Fathers & Daughters, decide whether to file
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`lawsuits, choose counsel, decide on settlement, and make other related decisions. ECF 36-3. This
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`document is relevant to Defendant’s argument that a later Anti-Piracy Addendum relied on by
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`F&D was created after this lawsuit was filed. The Court also overrules F&D’s objection to
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`Exhibit B, the sales agency agreement. Exhibit B is relevant because it establishes Goldenrod’s
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`authority to enter into the licensing agreement with Vertical that provides Vertical with the
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`exclusive license to the relevant rights in Fathers & Daughters. It is also relevant to the financial
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`relationship between Goldenrod and F&D, which is relevant to F&D’s argument regarding
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`beneficial ownership.
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`B. Standing as the Legal Owner
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`The legal owner of a copyright has standing. F&D argues that it is the legal owner
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`because it registered the copyright and the copyright remains registered in its name. This
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`PAGE 8 – OPINION AND ORDER
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`Case 3:16-cv-01443-SI Document 46 Filed 01/17/18 Page 9 of 17
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`simplistic view of ownership of a copyright misunderstands that copyright “ownership” can be
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`transferred through an exclusive license (or otherwise), and can be transferred in pieces.
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`Righthaven, 716 F.3d at 1170; see also 17 U.S.C. § 101.
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`In the sales agency agreement, F&D authorized Goldenrod to license F&D’s exclusive
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`rights in Fathers & Daughters. In the distribution agreement, Goldenrod granted to Vertical a
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`license in many of the exclusive rights of Fathers & Daughters as enumerated under copyright
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`law. The first question is whether F&D, through Goldenrod, granted Vertical an exclusive
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`license, which is a transfer of ownership, or a nonexclusive license, which is not a transfer of
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`ownership. See 17 U.S.C. § 101.
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`The agreement is clear that Vertical was granted an exclusive license for the rights that
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`were transferred. It is true that not all rights were transferred to Vertical, but under the Copyright
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`Act of 1976, a copyright owner need not transfer all rights. See Minden, 795 F.3d at 1002 (“The
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`Copyright Act, however, eradicated much of the doctrine of indivisibility by permitting a
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`copyright owner to transfer [a]ny of the exclusive rights comprised in a copyright, including any
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`subdivision of any of the[se] rights, to someone else.” (alterations in original) (quotation marks
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`and citation omitted)). The copyright owner may also “subdivide his or her interest” in an
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`exclusive right by transferring “his or her share ‘in whole or in part’ to someone else.” Id.
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`(quoting 17 U.S.C. §201(d)(1)).
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`The critical inquiry is to consider whether the substance of the rights or portions of rights
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`that were licensed were exclusive or nonexclusive. Vertical plainly received exclusive rights.
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`Vertical received the exclusive right to “manufacture, reproduce, sell, rent, exhibit, broadcast,
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`transmit, stream, download, license, sub-license, distribute, sub-distribute, advertise, market,
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`promote, publicize and exploit the Rights and the Picture and all elements thereof and excerpts
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`PAGE 9 – OPINION AND ORDER
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`therefrom” in the United States and its territories for almost all distribution outlets, except
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`airlines and ships. This constitutes an exclusive license.
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`An exclusive license serves to transfer “ownership” of a copyright during the term of the
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`license. Righthaven, 716 F.3d at 1170; see also 17 U.S.C. § 101. Thus, for the exclusive rights
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`licensed to Vertical, Vertical is the “legal owner” for standing under the Copyright Act, and not
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`F&D. F&D argues that because it did not license to Vertical all of its rights in Fathers &
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`Daughters, including rights to display the movie on airlines and ships, rights to the movie clips,
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`and rights to stock footage, F&D remains the legal owner of the copyright with standing to bring
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`this infringement claim. F&D misunderstands Section 501(b) of the Copyright Act.
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`As Section 501(b) states, and the Ninth Circuit has made clear, after a copyright owner
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`has fully transferred an exclusive right, it is the transferee who has standing to sue for that
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`particular exclusive right. See 17 U.S.C. § 501(b); Righthaven, 716 F.3d at 1170; see also
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`Ginsburg, supra, at Ch. 3.II.A (noting that if a copyright owner licenses an exclusive right to
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`another, it is the licensee of the exclusive right “who can properly bring an action for
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`infringement of that particular exclusive right”). The copyright owner need not transfer all of his
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`or her exclusive rights, and will still have standing to sue as the legal owner of the rights that
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`were not transferred. See Minden, 795 F.3d at 1004-05; see also DRK Photo, 80 F.3d at 984. But
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`the copyright owner no longer has standing to sue for the rights that have been transferred. See
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`Righthaven, 716 F.3d at 1170 (“[I]f a copyright owner grants an exclusive license of particular
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`rights, only the exclusive licensee and not the original owner can sue for infringement of those
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`rights.” (emphasis added)); see also 17 U.S.C. § 501(b) (““The legal or beneficial owner of an
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`exclusive right under a copyright is entitled . . . to institute an action for any infringement of that
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`particular right committed while he or she is the owner of it.” (emphasis added)); 3 M. Nimmer
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`PAGE 10 – OPINION AND ORDER
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`& D. Nimmer, NIMMER ON COPYRIGHT § 12.02[c] (2017) (“Once the copyright owner grants an
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`exclusive license of particular rights, only the exclusive licensee, and not his grantor, may sue for
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`later-occurring infringement of those rights. Indeed, the licensor may be liable to the exclusive
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`licensee for copyright infringement, if the licensor exercises rights that have theretofore been
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`exclusively licensed.”).2
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`The second question in this case is whether the exclusive rights transferred to Vertical,
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`and for which Vertical is thus the “legal owner,” include the rights at issue in this lawsuit. This
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`lawsuit claims that Defendant illegally downloaded Fathers and Daughters over the internet, via
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`a computer, using BitTorrent software. This squarely falls within the digital rights exclusively
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`licensed to Vertical in Paragraph 7(a)(v) of the distribution agreement. Defendant is a “member
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`of the public” who allegedly obtained the movie “via the internet, ‘World Wide Web’ or any
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`other form of digital, wireless and/or Electronic Transmission . . . and/or other non-tangible
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`delivery or fixed and mobile devices, platforms and services, whether now known or hereafter
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`devised,” and the movie was allegedly transmitted via “electronic and/or data transmissions or
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`2 The Ninth Circuit may have created some confusion in this analysis with Minden’s
`holding that in an agreement where the copyright holder expressly retains legal ownership: (1) a
`copyright owner can retain some “limited degree” of an “exclusive right,” (2) a copyright owner
`can license the remaining portion of that “exclusive right” to another, and (3) the licensee would
`have standing to sue as the recipient of an exclusive license of the right transferred to the
`licensee. Minden, 795 F.3d at 1004-06; see also DRK Photo, 80 F.3d at 984 (describing the
`holding in Minden). The ability of an “exclusive right” to be held fractionally between two
`parties seems to be contrary to the meaning of “exclusive”—and contrary to Righthaven’s
`holding and the leading treatises’ conclusions that after an exclusive right has been transferred
`only the licensee and not the owner can enforce that exclusive right. The Court, however, need
`not address that tension here because Goldenrod did not retain any portion of the exclusive rights
`it licensed to Vertical. Accordingly, that aspect of Minden is inapplicable to the case at bar.
`Although Goldenrod did not license certain rights (such as display and distribution to airlines),
`for the rights that were licensed, they were licensed in their entirety and thus served as a transfer
`of ownership of the copyright for those exclusive rights. Moreover, the distribution agreement
`did not contain a clause expressly retaining copyright ownership to F&D (as did the agreement at
`issue in Minden).
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`streaming or downloads or embeds, including, without limitation, transmissions or downloads
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`via IP protocol, computerized or computer-assisted media.” ECF 36-5 at 4 (¶ 7(a)(v)). The
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`alleged violation also includes illegally viewing the movie in the United States, which is the
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`exclusive broadcast territory of Vertical, except for airplanes and oceanliners, which are not
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`relevant to this lawsuit.
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`F&D also argues that because Paragraph 7(d) of the distribution agreement requires
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`Vertical to use commercially reasonable efforts to ensure that its internet distribution and
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`streaming were limited to the contract territory (the United States and its territories), were on a
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`closed network, and were only accessible to networks prohibiting circumvention of digital rights
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`management security and other digital security, this means that the contract reserved BitTorrent
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`rights to Goldenrod. That is not, however, what Paragraph 7(d) provides. Paragraph 7(a) of the
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`distribution agreement grants Vertical extremely broad rights, including comprehensive digital
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`rights. Paragraph 7(b) grants Vertical the right to authorize others to the rights of Fathers and
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`Daughters. Paragraph 7(c) reserves certain rights to Goldenrod, not relevant here. Finally,
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`Paragraph 7(d) merely reaffirms that certain digital rights belong to Vertical and then applies
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`commercially reasonable requirements to Vertical’s exercise of those rights, primarily security
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`terms. Paragraph 7(d) does not reserve any exclusive copyright digital rights to Goldenrod.
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`Under the Copyright Act, F&D is not the “legal owner” with standing to sue for
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`infringement relating to the rights that were transferred to Vertical through its exclusive license
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`granted in the distribution agreement. These rights include displaying or distributing copies of
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`Fathers & Daughters in the United States and its territories. They further include displaying or
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`distributing via the internet, using IP protocol, using computers, and using “all other
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`technologies, both now or hereafter known or devised,” which includes using BitTorrent
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`PAGE 12 – OPINION AND ORDER
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`protocol. In the distribution agreement Goldenrod (and therefore F&D) did not retain any
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`fraction or portion of these digital rights. Because the infringement in this case relates to rights
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`transferred to Vertical and there is no alleged infringement relating to display on airlines, display
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`on ships, movie clips, stock footage, or any other rights that F&D retained, F&D does not have
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`standing as the legal owner to bring the claims alleged.
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`C. Standing as the Beneficial Owner
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`A beneficial owner of a copyright may also have standing. F&D argues that it has
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`standing as the beneficial owner of the copyright because it receives royalties for the licensing of
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`the movie to Vertical. In support, F&D summarily asserts that the distribution agreement with
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`Vertical states that F&D is entitled to “Licensor Net Receipts” from Vertical. The problem with
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`this argument is that the “Licensor” in the distribution agreement is Goldenrod, not F&D. So it is
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`Goldenrod who is entitled to those net receipts from the distribution agreement. F&D offers no
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`argument or evidence of how the money Goldenrod receives from Vertical qualifies as royalties
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`payable to F&D. Courts have “no independent duty ‘to scour the record in search of a genuine
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`issue of triable fact,’ and may ‘rely on the nonmoving party to identify with reasonable
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`particularity the evidence that precludes summary judgment.’” Simmons v. Navajo Cty.,
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`Ariz., 609 F.3d 1011, 1017 (9th Cir. 2010) (quoting Keenan v. Allan, 91 F.3d 1275, 1279 (9th
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`Cir. 1996)).
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`Nonetheless, the Court has reviewed the sales agency agreement to see if it elucidates
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`how Goldenrod’s receipts from Vertical might be payable as royalties to F&D. The sales agency
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`agreement provides that Goldenrod may enter into license agreements and collect monies in its
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`own name. Thus, Goldenrod may collect the monies from Vertical in Goldenrod’s name. The
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`sales agency agreement also provides, however, that monies obtained from licensing the movie
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`PAGE 13 – OPINION AND ORDER
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`Case 3:16-cv-01443-SI Document 46 Filed 01/17/18 Page 14 of 17
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`shall be deemed “Gross Receipts.” As described in the factual background section, the first eight
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`steps in distributing Gross Receipts could not be considered royalties to F&D.
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`It is conceivable that in the final step, after the monies become “adjusted gross receipts,”
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`there may be some type of distribution that might be considered royalties to F&D. That entire
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`section, however, is redacted in the copy provided to the Court. Thus, there is no way for the
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`Court to know whether the adjusted gross receipts are divided in such a manner that could be
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`considered royalties to F&D. F&D did not provide the Court with an unredacted copy or any
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`evidence showing how F&D can be deemed to be receiving royalties. The Court would have to
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`engage in pure speculation as to how adjusted gross receipts are divided, and the Court will not
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`do so. Accordingly, there is no evidence before the Court that F&D receives anything from the
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`sales agency agreement that looks like royalties, let alone that F&D receives royalties from the
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`distribution agreement with Vertical. F&D therefore fails to show a genuine dispute that it is the
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`beneficial owner with respect to the exclusive rights licensed to Vertical.
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`D. Contractual Reservation of Right to Sue Clause
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`F&D also argues that because the distribution agreement between Goldenrod and Vertical
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`contained a reservation of the right to sue for infringement via BitTorrent and other illegal
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`downloading via the internet, F&D has standing to sue. This argument fails for two reasons.
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`First, the reservation of rights was to Goldenrod and not to F&D. Thus, even if the clause could
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`convey standing, it does not convey standing to F&D.
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`Second, the Ninth Circuit has repeatedly held that agreements and assignments cannot
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`convey simply a right to sue, because a right to sue is not an exclusive right under the Copyright
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`Act. See DRK Photo, 870 F.3d at 987-88; Righthaven, 716 F.3d at 1169-70; Silvers, 402 F.3d
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`at 890. If a party cannot transfer a simple right to sue, the Court finds that a party similarly
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`cannot retain a simple right to sue. Just as Goldenrod (or F&D) could not assign or license to
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`PAGE 14 – OPINION AND ORDER
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`Case 3:16-cv-01443-SI Document 46 Filed 01/17/18 Page 15 of 17
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`Vertical or anyone else no more than the right to sue for infringement, it cannot transfer the
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`substantive Section 501(b) rights for display and distribution in the United States and its
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`territories, including digital rights, but retain only the right to sue for one type of infringement of
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`those transferred rights (illegal display and distribution over the internet).
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`E. Anti-Piracy Addendum
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`F&D also relies on an undated “Anti-Piracy and Rights Enforcement Reservation of
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`Rights Addendum.” ECF 36-7. This document provides that “all peer-to-peer digital rights
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`(BitTorrent, etc.) in the Picture, including international rights, are reserved to [F&D],” that F&D
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`shall be authorized to issue Digital Millennium Copyright Act take down notices against any
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`infringer, that F&D shall be authorized to “enforce copyrights against Internet infringers
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`including those that use peer-to-peer technologies in violation of U.S. Copyright law,” and that
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`there shall be no cost to Vertical with regards to these enforcement actions. This document does
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`not provide F&D with standing for two reasons.
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`First, the Ninth Circuit instructs courts in considering copyright assignments and
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`agreements to consider substance over form. See DRK Photo, 870 F.3d at 986-87;
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`Righthaven, 716 F.3d at 1169-70. From the context of this document, it is clear that the peer-to-
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`peer and BitTorrent rights being reserved to F&D are infringing rights. The substance of this
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`Addendum is to confer no more than the right to issue take down notices and sue for copyright
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`infringement for infringing peer-to-peer use through illegal downloading via the internet. The
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`rights to digital display and distribution, which are exclusive rights under the