Skechers Photo Copyright Case
When a photo is modified for use in an advertisement, who owns the copyright on the final product? A recent case involving the shoe company Skechers illustrates the value of making sure all contractual provisions are carefully thought out before the advertisement is produced.
Richard Reinsdorf, a professional photographer, took photos to be used in Skechers advertisements. He delivered the raw images, which were altered in various ways, from color correction to the addition of graphic effects to the substitution of models’ body parts. A comparison can be seen above – the ad is on the left, the original is on the right.
The original agreement between Reinsdorf and Skechers specified that the images were only being licensed to Skechers for six months, in North America, and only for a specific set of purposes. Nonetheless, Skechers ran the advertisements from 2006-2009, prompting Reinsdorf to file suit for copyright infringement in the U.S. District Court for the Central District of California.
Skechers came up with a creative response: they asked the court for Summary Judgment (which would essentially end the case) on the grounds that the advertisements were joint works by Reinsdorf and Skechers – and, as the court points out, it is settled law that “[c]o-authors in a joint work cannot be held liable to one another for infringement of the copyright in the joint work.”
If Reinsdorf takes a photo by himself, without anyone else being involved, by default he is the sole author of the photo for copyright purposes. A joint work, on the other hand, is “a copyrightable work prepared by (1) two or more authors who (2) make independently copyrightable contributions and (3) intend that those contributions be ‘merged into inseparable or interdependent parts of a unitary whole.’”
Skecher’s position amounts to an argument that, with respect to the advertisements, all of the three elements for a joint work are satisfied, and therefore Reinsdorf should have no valid copyright claim against Skechers.
The first two elements were easily satisfied – at first. The court found that advertisements were prepared by two authors (Reinsdorf having created the initial photos; Skechers having created the ads), and each of their contributions would have been independently copyrightable.
In the most recent court ruling in this matter, Skechers argued that the record showed that the intent of the parties was to create a unitary work. Meanwhile, Reinsdorf challenged the joint work theory on the grounds that he had no authorship in the finished advertisements whatsoever. This goes to the first element – whether there are two or more authors.
Now we’ll journey down the rabbit hole. Reinsdorf attacked the first element of the “joint works” test – i.e., whether the work was prepared by two or more authors. Of course, there is yet another three-part test for joint authorship:
The criteria for joint authorship include whether 1) an alleged author exercises control over a work, serves as “the inventive or master mind,” or creates or gives effect to an idea; 2) there exists an “objective manifestation of a shared intent to be coauthors;” and 3) “the audience appeal turns on both contributions and the share of each in its success cannot be appraised.” (Citing a prior case, Aalmuhammed v. Lee.)
Strolling through those three criteria, the court found that the first factor – the “control” factor – satisfied in that “both parties had creative control over separate and indispensable elements of the completed product” (citing yet another case, this one involving the band Smashing Pumpkins, whose show I walked out of at Lollapalooza ’94 because they couldn’t possibly follow the Beastie Boys.) As for the third factor – whether the relative values of audience appeal can be appraised – the court found that Skechers “failed to demonstrate that the share of appeal attributable to each element can be appraised.”
So now that’s one for Skechers (control), one for Reinsdorf (audience appeal). How about the remaining factor – was there an “objective manifestation of a shared intent to be coauthors?” This one leaned more in Reinsdorf’s favor. Essentially, they found that the parties were not acting like joint authors when Reinsdorf was contracted to produce the photos:
A party intending to jointly produce a finished work generally would not require payment from a co-author and, conversely, would not likely agree to pay for a purported co-author’s contribution. More importantly, a co-author would not attempt to constrain an intended co-author’s use of a collaborative work.
OK, so one factors went in favor of joint authorship (Skechers’ position) and two went against (Reinsdorf’s position). As a result, the court found that there is “a genuine dispute of material fact as to whether Skechers’ finished advertisements are the products of multiple authors.” Skechers’ motion for summary judgment was denied, and this point presumably remains to be resolved, either through settlement or at trial.
Not only was Skechers’ “joint authorship” theory bold, it was dangerous as well. If they had prevailed, they would have owed an accounting to Reinsdorf – as a joint author, he would have been entitled to a share of the profits arising from the works. Skechers was willing to take this chance in order to avoid a successful copyright infringement claim, which would have carried larger statutory damages. In this case, as we’ll see, it seems to have worked out for them even though the joint works issue remains to be resolved.
Reinsdorf made a claim for indirect profits on the grounds that he could establish the value of Skechers’ allegedly infringing conduct. He commissioned a survey and introduced the testimony of several expert witnesses, one of which stated that 50-75% of Skechers’ profits during the period in question were attributable to Reinsdorf’s efforts, at a value between $161 million and $241.1 million. None of this information was found to be persuasive by the court, so Skechers’ motion for summary judgment on that point was granted.
Skechers also advanced an argument that its invoices to Reinsdorf were not copyright licenses, but rather ordinary contracts. Again, this theory would defeat any opportunity on Reinsdorf’s part to pursue a copyright infringement claim for Skechers’ alleged breach of the copyright license, which, as noted above, was limited both in time and scope. This led to a discussion by the court on which terms in a contract genuinely amount to conditions that affect a copyright license, and which are simply terms to be resolved under contract law (as opposed to under the U.S. Copyright Act or similar state laws). Here, the court stated that:
…[C]ontractual terms that limit a license’s scope are “conditions,” the breach of which constitutes copyright infringement…All other license terms are covenants, “the breach of which is actionable only under contract law.”…”Wherever possible, equity construes ambiguous contract provisions as covenants rather than conditions.”
…
The issue presently before this court is not whether Reinsdorf’s licenses constitute copyright licenses or non-copyright contracts, but whether Skechers’ conduct violated a condition or a covenant of the agreements between the parties. The parties appear to agree that Skechers was licensed to use Reinsdorf’s photographs for only six months…Reinsdorf alleges that Skechers copied his photographs beyond the temporal, geographical, and media limitations of the licenses…Such unauthorized use would encroach upon Reinsdorf’s exclusive right to copy his works, conferred upon him by the Copyright Act, and would therefore violate a condition of the license rather than a covenant. Thus, the breaches at issue here give rise to a copyright infringement claim. (Emphasis mine.)
That sounds good for Reinsdorf, right? Yes…except that he failed to register the copyrights in the photos with the U.S. Copyright Office. Oops. Accordingly, Reinsdorf’s claims for statutory damages (under the U.S. Copyright Act) and attorney’s fees were thrown out.
Looking forward, Skechers certainly did not enjoy a complete win on the joint authorship issue, but because of Reinsdorf’s error in failing to obtain copyright registrations and the unpersuasive nature of his expert testimony, Skechers’ exposure is limited to “direct damages” – meaning, the licensing fees for the photos, to the extent Skechers’ use of the photos exceeded the time and use limitations found in the original license. Reinsdorf may be able to obtain what he would have received from Skechers if they had originally agreed on the scope of use that Skechers ultimately enjoyed, but he will not receive the many millions of dollars in statutory damages, attorney’s fees, and indirect profits that he was seeking.
