Can an Infringer Purchase a Retroactive License?

Many infringers attempt to purchase a license after the infringing act began. Does the “retroactive license” absolve the infringement?

No, said the court in Palmer/Kane, LLC v. Rosen Books Works, LLC, Case No. 15-cv-7406 (SD NY Aug. 31, 2016). There, Rosen, a book publisher, had regularly licensed photos, including Palmer/Kane’s, from the stock photography agency, Corbis, for use in its books. As a “matter of practice,” Rosen frequently would use images prior to obtaining licenses for them. Palmer/Kane therefore sued Rosen for infringing its copyrights for 19 images, which Rosen allegedly had used in 21 publications either without a valid license or beyond the scope of the license it had been granted.

For one of Palmer/Kane’s images at issue in the case (Image No. 2), Rosen had used the photo in a book, printing 3,000 copies in 2006 and 2,000 in 2007, without first obtaining a license. In February 2008, Rosen secured a license from Corbis for distributing 10,000 copies of Image No. 2 in the book. Rosen later printed another 2,100 copies of the book with Image No. 2.

Course of Dealing Defense

Rosen claimed that its “pre-license” use was consistent with industry custom and the parties’ course of dealing. Even Corbis agreed that it is customary practice in the book publishing industry for publishers to reproduce copyrighted stock photography before obtaining licenses for such use. However, the court held that “custom” and “course of dealing” cannot displace rights conferred by the copyright laws. See Dun & Bradstreet Software Servs., Inc. v. Grace Consulting, Inc., 307 F.3d 197, 211 (3d Cir. 2002) (“A defense of industry custom and practice in the face of the protective provisions of the Copyright Act could undermine the purposes and objectives of the statute and reduce it to rubble.”); Weinstein Co. v. Smokewood Entm’t Grp., LLC, 664 F. Supp. 2d 332, 348 (S.D.N.Y. 2009) (“[N]otwithstanding plaintiff’s claims about ‘custom and practice’ in the entertainment industry, federal copyright law dictates the terms by which an exclusive license can be granted.”).

Significantly, the court stated:

Infringement is infringement, regardless of what Corbis and Rosen may have chosen to call it.

Retroactive License Defense

Rosen also asserted that even if the use constituted an infringement, the February 2008 license retroactively cured the infringement. But the court rejected this defense, as well, noting that “a license or assignment in copyright can only act prospectively.” See Davis v. Blige, 505 F.3d 90, 104 (2d Cir. 2007).

While some other courts have recognized retroactive licenses, it really is a resolution for claims of infringement. Here, Rosen was not entering into a “negotiated settlement” with the February 2008 license. Neither Rosen or Corbis had acknowledged that infringement had occurred. The court warned against conflating settlements and retroactive licenses:

Licenses and assignments function differently from settlements and releases, and the use of the term “retroactive license” for “settlement” or “release” by the parties causes unnecessary confusion and potentially creates legal mischief.

In addition, the February 2008 license had a “License Start Date” of February 20, 2008, so the license could not have covered the 2006 and 2007 uses. The court then found as a matter of law that Rosen had infringed Palmer/Kane’s Image No. 2.

So don’t let infringers try to exonerate their infringements with a “retroactive license.” Stand up for your rights, regardless of their excuses.

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