DRK Photo v. McGraw-Hill Global Education Holdings, LLC

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DRK PHOTO, a sole proprietorship, No. 15-15106

Plaintiff-Appellant,

D.C. No.

v. 3:12-cv-08093-

PGR

MCGRAW-HILL GLOBAL EDUCATION

HOLDINGS, LLC; MCGRAW-HILL

SCHOOL EDUCATION HOLDINGS, OPINION

LLC,

Defendants-Appellees.

Appeal from the United States District Court

for the District of Arizona

Paul G. Rosenblatt, Senior District Judge, Presiding

Argued and Submitted December 14, 2016

San Francisco, California

Filed September 12, 2017

Before: Michael Daly Hawkins, Marsha S. Berzon,

and Mary H. Murguia, Circuit Judges

Opinion by Judge Hawkins;

Concurrence by Judge Berzon

2 DRK PHOTO V. MCGRAW-HILL

SUMMARY *

Copyright

The panel affirmed the district court’s summary

judgment in favor of the defendants in a copyright

infringement action brought by a stock photography agency.

The panel held that the plaintiff, a nonexclusive licensing

agent for the photographs at issue, failed to demonstrate any

adequate ownership interest in the copyrights to confer

standing. Distinguishing Minden Pictures, Inc. v. John

Wiley & Sons, Inc., 795 F.3d 997 (9th Cir. 2015), the panel

held that the plaintiff lacked standing as a legal owner

because its representation agreements with the

photographers did not grant the plaintiff an exclusive license

to authorize use of the photographs. The panel held that

under Silvers v. Sony Pictures Entm’t, Inc., 402 F.3d 881

(9th Cir. 2005) (en banc), the plaintiff’s assignment

agreements with the photographers did not confer standing

because they merely transferred the right to sue on accrued

claims. The panel held that the plaintiff also lacked standing

as a beneficial owner of the copyrights.

The panel affirmed the district court’s denial of the

plaintiff’s motion to modify the scheduling order for leave

to amend its complaint to join three photographers as

plaintiffs.

*

This summary constitutes no part of the opinion of the court. It

has been prepared by court staff for the convenience of the reader.

DRK PHOTO V. MCGRAW-HILL 3

Concurring, Judge Berzon wrote that Silvers, holding

that the transfer of the right to sue to a nonowner or

nonexclusive licensee of a copyright right can never confer

standing to sue for a copyright violation, controlled but was

wrongly decided.

COUNSEL

Maurice Harmon (argued), Christopher Seidman, and

Gregory Albright, Harmon & Seidman LLC, New Hope,

Pennsylvania, for Plaintiff-Appellant.

Christopher P. Beall (argued) and Thomas B. Kelley, Levine

Sullivan Koch & Schulz LLP, Denver, Colorado, for

Defendants-Appellees.

OPINION

HAWKINS, Circuit Judge:

This appeal raises the now often litigated issue of

whether a stock photography agency—here, the Arizona-

based agency DRK Photo (“DRK”)—has standing under the

Copyright Act of 1976 to pursue infringement claims

involving photographs from its collection. Ultimately, there

is no bright line answer to this question. Here, we affirm the

grant of summary judgment in favor of defendants,

McGraw-Hill Global Education Holdings, LLC and

McGraw-Hill School Education Holdings, LLC

(collectively, “McGraw-Hill”), because DRK is a

nonexclusive licensing agent for the photographs at issue

and has failed to demonstrate any adequate ownership

interest in the copyrights to confer standing. We also affirm

4 DRK PHOTO V. MCGRAW-HILL

the denial of DRK’s motion to modify the scheduling order

for leave to amend its complaint.

BACKGROUND

DRK is a stock photography agency that markets and

licenses images created by others to publishing entities,

including defendants McGraw-Hill. Since its inception in

1981, DRK has built a collection of hundreds of thousands

of photographs, primarily depicting worldwide wildlife,

marine life, and natural history. McGraw-Hill publishes K-

12 educational, post-secondary, professional, and trade

textbooks and publications. From approximately 1992 to

2009, McGraw-Hill licensed photographs from DRK to use

in its textbooks. Their agreements were reflected in

invoices, which set forth, among other terms, the fee

charged, the specific photographs licensed, and the number

and form of reproductions and distributions authorized under

each “[o]ne-time non-exclusive” license.

With regard to its own licensing of the photographs,

DRK historically has entered into “Representation

Agreements” with the photographers of the images that

make up its collection. These Representation Agreements

have generally taken two forms: (1) agreements appointing

DRK as the “sole and exclusive agent” to license and sell the

covered photographs, and (2) agreements appointing DRK

as a nonexclusive agent to license and sell the covered

photographs. Only the latter are at issue in this appeal. 1

1

McGraw-Hill moved for summary judgment on claims involving

photographs covered by DRK’s nonexclusive Representation

Agreements. The parties subsequently settled all claims involving

photographs covered by exclusive Representation Agreements and

dismissed those claims with prejudice.

DRK PHOTO V. MCGRAW-HILL 5

According to DRK’s owner, the majority of its

arrangements with photographers are nonexclusive. In

relevant part, those Representation Agreements provide that

DRK will act as the “agent with . . . respect to the sale or

leasing of the photographs or transparencies” delivered to

DRK. Many of the agreements further clarify:

DRK PHOTO will not require, nor ask a

photographer or agency for exclusivity of an

image until such time that DRK PHOTO has

made an exclusive sale of that image. . . .

Without this condition of an exclusive

license/sale being made, all parties are free to

promote and/or market all images without

restriction.

They also provide that DRK and the photographer will split

evenly the proceeds from all sales made by DRK.

In 2008, DRK endeavored to register copyrights for the

photographs in its collection. To that end, each of the

photographers whose images are involved in this litigation

executed identical agreements entitled “Copyright

Assignment, Registration, and Accrued Causes of Action

Agreement” (the “Assignment Agreements”). In relevant

part, the agreements provide:

The undersigned photographer . . . grants to

DRK all copyrights and complete legal title

in the Images. DRK agrees to reassign all

copyrights and complete legal title back to

the undersigned immediately upon

completion of the registration of the Images

. . . and resolution of infringement claims

brought by DRK relating to the Images.

6 DRK PHOTO V. MCGRAW-HILL

The undersigned agrees and fully transfers all

right, title and interest in any accrued or later

accrued claims, causes of action, choses of

action . . . or lawsuits, brought to enforce

copyrights in the Images, appointing and

permitting DRK to prosecute said accrued or

later accrued claims, causes of action, choses

in action or lawsuits, as if it were the

undersigned.

The Assignment Agreements also provide that DRK and the

photographers will share equally the proceeds of any

litigation award or settlement.

According to DRK, “[t]he primary purpose of the

assignments was to effect a transfer [of] copyright ownership

to DRK that was sufficient to support its copyright

enforcement efforts.” In an initial transmittal email to

photographers, DRK explained that with the Assignment

Agreements DRK would “receive the authorization

necessary to initiate and settle copyright infringement

claims.” In subsequent email correspondence, DRK

discussed the scope and effect of the Assignment Agreement

in response to questions from several photographers as to

how the Agreement would affect their dealings with other

agencies licensing the same or similar photographs. DRK

consistently confirmed that the purpose of the Agreement

was to put DRK “in a legal position to bring copyright

infringement claims against infringers” and to have an

agreement with the photographers as to how settlement

proceeds would be divided, “nothing more.” It further

clarified that the copyright registration would allow DRK to

bring infringement suits and that DRK had “no intentions of

using it in any other manner.” In another email exchange,

DRK explained that there was no “‘rights grab’ going on

DRK PHOTO V. MCGRAW-HILL 7

here.” And in yet another exchange, DRK assured a

photographer that he understood “correctly” that “the

registration of copyright [would] be [the photographer’s]

and not [DRK’s], only in case of infringement [would DRK]

then use it.”

Following execution of the Assignment Agreements,

photographers who were parties to nonexclusive

Representation Agreements with DRK continued to market

and sell their photographs on their own and through other

means according to the terms of the Representation

Agreements. DRK admits that the photographers had no

duty to account to DRK for their sales of the photographs

following execution of the Assignment Agreements.

PROCEDURAL HISTORY

In May 2012, DRK sued McGraw-Hill, asserting claims

for copyright infringement premised on allegations that

McGraw-Hill exceeded the scope of its licenses with DRK

by printing and distributing more textbooks containing

licensed images than authorized. In full, DRK alleged that

McGraw-Hill made 1,120 infringing uses of approximately

636 unique photographs.

The parties eventually cross-moved for summary

judgment, and the district court granted partial summary

judgment to McGraw-Hill on the basis that DRK lacked

standing to pursue infringement claims for photographs

taken by photographers for whom DRK was acting as a

nonexclusive agent. 2 In relevant part, the district court

determined that the Representation Agreements covering

2

The district court’s judgment covered 978 of the 1,120 alleged

infringements identified in the complaint.

8 DRK PHOTO V. MCGRAW-HILL

those photographs were nonexclusive licenses such that

DRK could not be deemed the legal owner of any exclusive

right pertaining to the images. The district court further

found that the Assignment Agreements in “substance and

effect” assigned “to DRK nothing more than the ‘bare right

to sue.’” Finally, the district court rejected DRK’s

remaining contentions that it was a beneficial owner of the

copyrights at issue and that recent case law had changed the

landscape of our court’s earlier precedent regarding the

assignment of infringement claims and standing.

Following the district court’s grant of partial summary

judgment, and after the deadline set by the scheduling order,

DRK sought leave to amend its complaint to join three

photographers as plaintiffs. The district court denied the

motion explaining that DRK had not shown good cause to

amend the scheduling order, joinder of the photographers

was not warranted under the circumstances, and DRK had

not been diligent in pursuing the requested amendment. This

appeal timely follows.

JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction under 28 U.S.C. § 1291. Standing

in a copyright case is a question of law we review de novo.

Minden Pictures, Inc. v. John Wiley & Sons, Inc., 795 F.3d

997, 1002 (9th Cir. 2015). We also review de novo a district

court’s grant of summary judgment and “determine, viewing

the evidence in the light most favorable to the nonmoving

party, whether there are any genuine issues of material fact

and whether the district court correctly applied substantive

law.” United States v. City of Tacoma, 332 F.3d 574, 578

(9th Cir. 2003). We review a district court’s denial of a

motion to modify a scheduling order for abuse of discretion.

Noyes v. Kelly Servs., 488 F.3d 1163, 1174 n.6 (9th Cir.

2007).

DRK PHOTO V. MCGRAW-HILL 9

DISCUSSION

Section 501(b) of the Copyright Act of 1976 establishes

who has standing to sue for infringement: “The legal or

beneficial owner of an exclusive right under a copyright is

entitled, subject to the [registration] requirements of section

411, to institute an action for any infringement of that

particular right committed while he or she is the owner of

it.” 17 U.S.C. § 501(b). 3 Section 106 sets forth an

exhaustive list of those exclusive rights. Id. § 106; Silvers v.

Sony Pictures Entm’t., Inc., 402 F.3d 881, 887 (9th Cir.

2005) (en banc). “They are the rights ‘to do and to authorize’

others to do six things with the copyrighted work: to

reproduce the work, to prepare derivative works based upon

the work, to distribute copies of the work, to perform the

work publicly, to display the work publicly, and to record

and perform the work by means of an audio transmission.”

Minden, 795 F.3d at 1002 (quoting 17 U.S.C. § 106).

3

Contrary to DRK’s contention, Lexmark International, Inc. v.

Static Control Components, Inc., 134 S. Ct. 1377 (2014), does not

expand the class of plaintiffs with standing to sue for copyright

infringement. When evaluating whether a plaintiff had standing under

the Lanham Act, Lexmark explained that, despite a statute’s expansive

wording, courts “presume that a statutory cause of action extends only to

plaintiffs whose interests fall within the zone of interests protected by

the law invoked.” Id. at 1388 (internal quotation marks omitted). Thus,

the “zone of interests” test applies as a logical limitation on “who may

invoke” a statutory cause of action that otherwise appears unfettered. Id.

at 1388–89. It is not, as DRK suggests, a tool for expanding and

overriding a clear statutory limitation on standing. The Copyright Act

expressly limits standing to two types of plaintiffs: (1) legal owners, and

(2) beneficial owners. 17 U.S.C. § 501(b). Lexmark does not alter that

express limitation.

10 DRK PHOTO V. MCGRAW-HILL

Here, DRK contends that it has standing as either a legal

owner or as a beneficial owner of the copyrights. We

evaluate each argument in turn.

I. Legal Ownership.

“Any of the exclusive rights comprised in a copyright,

including any subdivision of any of the rights specified by

section 106, may be transferred . . . and owned separately.”

17 U.S.C. § 201(d)(2). “[E]ither an assignment (which

transfers legal title to the transferee) or an exclusive license

(which transfers an exclusive permission to use to the

transferee) qualifies as a ‘transfer’ of a right in a copyright

for the purposes of the Act.” Minden, 795 F.3d at 1003;

accord 17 U.S.C. § 101. By contrast, a mere “nonexclusive

license” does not constitute a “transfer of copyright

ownership” and therefore cannot confer standing to assert an

infringement claim. See 17 U.S.C. § 101.

To support its claim of legal ownership, DRK points to

(1) the Representation Agreements, which grant DRK a

license to authorize use of the photographs; and (2) the

Assignment Agreements, which purport to transfer to DRK

the legal title to and copyrights of the photographs along

with accrued infringement claims.

A. The Representation Agreements.

We recently held in Minden Pictures, Inc. v. John Wiley

& Sons, Inc. that a stock photography agency that served as

the exclusive licensing agent for allegedly infringed

photographs had standing to sue for infringement under the

Copyright Act. 795 F.3d at 1004–05. DRK contends that

Minden creates a bright line rule that stock photography

agencies have standing to bring copyright infringement

claims by virtue of their agency agreements with their

DRK PHOTO V. MCGRAW-HILL 11

contributing photographers. However, DRK reads Minden

too broadly.

Minden indeed analyzed whether a stock photography

agency, Minden Pictures, Inc. (“Minden”), had standing to

sue a publisher for infringement after the publisher exceeded

the scope of its licensing agreement with Minden. Id. at

1001. Like DRK, Minden also entered into agency

agreements with its contributing photographers under which

the photographers authorized Minden to license and sell

certain photographs to third parties. Id. at 999–1000.

Importantly, in those licensing agreements, the

photographers agreed to appoint Minden “as sole and

exclusive agent and representative with respect to the

Licensing of any and all uses of [specified photographs].”

Id. at 1000. Although the agreements “permit[ted] the

photographers to issue some licenses themselves,” the

photographers were “prohibit[ed] . . . from hiring a licensing

agent other than Minden.” Id. The publisher argued that

Minden’s agreements with the photographers did not “grant

‘exclusive licenses’ to Minden to grant licenses to third

parties, because the photographers retain[ed] the right to

issue licenses themselves.” Id. at 1004.

Minden rejected that argument, and held that the

agreements at issue granted exclusive licenses of the right to

authorize, rendering Minden a “legal owner” with standing

to sue. Relying on “the divisibility principle embodied by

the 1976 [Copyright] Act,” Minden explained that the fact

that the photographers retained some ability to authorize use

did not render Minden’s license nonexclusive:

[W]e agree with the Seventh Circuit that the

essence of an “exclusive” license under the

Act is that “the copyright holder permits the

licensee to use the protected material for a

12 DRK PHOTO V. MCGRAW-HILL

specific use and further promises that the

same permission will not be given to others.”

I.A.E., Inc. v. Shaver, 74 F.3d 768, 775 (7th

Cir. 1996). Minden has been given just such

a promise. Under the Agency Agreements,

Minden is the “sole and exclusive agent and

representative with respect to the Licensing

of any and all uses” of the photographs. That

is, the photographers have promised that

Minden, and only Minden, will have the

power, as the photographers’ licensing agent,

to authorize third parties to reproduce,

distribute, and display the photographs. That

the photographers have retained some limited

degree of authority to grant licenses

themselves does not eliminate Minden’s

interest in the copyright as the sole entity to

act as the photographers’ licensing agent. It

merely means that both Minden and the

photographers, under the terms of the

Agreements, can prevent those third parties

who have not received permission to use the

photographs from using them.

Id. at 1004–05. As Minden explained, this concept of

exclusivity as the right to exclude third parties, even when

another entity can also exclude third parties, is consistent

with patent law treatment of similar arrangements. Id.

In so holding, Minden declined to apply a rigid test to

determine exclusivity and adopted a more flexible approach

that allows for a license to be exclusive even if the copyright

owner retains some subset of the rights at issue. See id. The

key to determining whether Minden’s agency agreements

conferred a nonexclusive or exclusive license thus was not

DRK PHOTO V. MCGRAW-HILL 13

whether the photographers retained some fractional right but

instead that the photographers promised “that Minden, and

only Minden, will have the power, as the photographers’

licensing agent, to authorize third parties to reproduce,

distribute, and display the photographs.” See id. at 1005

(emphasis added).

DRK’s Representation Agreements here at issue, on the

other hand, are devoid of that key provision. They also lack

any limitation whatsoever on the photographers’ authority to

contract with other licensing agents. 4 In the absence of any

such promise, DRK’s Representation Agreements confer

nonexclusive licenses and do not render DRK a legal owner

for standing purposes. Cf. Bourne Co. v. Hunter Country

Club, Inc., 990 F.2d 934, 937 (7th Cir. 1993) (nonexclusive

licensing agent not a necessary party because it was neither

a legal nor a beneficial owner of the copyright).

DRK suggests that it nevertheless possesses an

ownership interest merely because the Representation

Agreements pertain to the right “to authorize” as opposed to

one of the exclusive rights listed in section 106. Neither the

statutory text nor the analysis in Minden suggests that,

having been given the right “to authorize” others to exercise

the rights of copyright holders, a nonexclusive licensee

becomes a legal owner with standing to sue. Cf. Subafilms,

Ltd. v. MGM-Pathe Commc’ns Co., 24 F.3d 1088, 1093 (9th

Cir. 1994) (en banc) (“[W]e believe that ‘“to authorize”

[wa]s simply a convenient peg on which Congress chose to

4

We therefore need not consider whether a licensing agency

arrangement that limits the number of other licensing agents that will be

permitted is an exclusive licensing arrangement sufficient to permit

enforcement actions. See id. at 1004 (discussing authorities suggesting

that an exclusive licensee need not be a sole licensee).

14 DRK PHOTO V. MCGRAW-HILL

hang the antecedent jurisprudence of third party liability.’”

(quoting 3 David Nimmer & Melville B. Nimmer, Nimmer

on Copyright § 12.04[A][3][a], at 12–84 n.81 (1993))).

B. The Assignment Agreements.

DRK next contends that, even if it was not a legal owner

originally by virtue of the Representation Agreements, it

became the legal owner when the Assignment Agreements

passed full legal title of each photograph and copyright along

with all accrued claims to DRK. McGraw-Hill counters that

the Assignment Agreements are nothing more than invalid

attempts to transfer the bare right to sue.

In Silvers v. Sony Pictures Entertainment, 402 F.3d 881

(9th Cir. 2005) (en banc), we held that “an assignee who

holds an accrued claim for copyright infringement, but who

has no legal or beneficial interest in the copyright itself,

[may not] institute an action for infringement.” Id. at 883.

This conclusion naturally followed from the notable absence

of the “right to sue” from the list of exclusive rights set forth

in section 106 and was reinforced by the text and legislative

history of the Copyright Act as a whole. Id. at 885–90. 5

Later, we clarified that the purported transfer of legal

title coupled with the transfer of accrued claims does not

confer standing when the transaction, in substance and

5

Silvers suggested that a subsequent legal owner may have standing

to pursue accrued causes of action where the causes of action were

transferred along with full ownership of the copyright. 402 F.3d at 890

n.1. Silvers noted that the holding of a Second Circuit case to that end

“makes perfect sense, as it is consistent with the Act and with the

constitutional purpose of encouraging authors and inventors by creating

a limited monopoly on their works and inventions.” Id. (citing ABKCO

Music, Inc. v. Harrisongs Music Ltd., 944 F.2d 971, 980 (2d Cir. 1991)).

DRK PHOTO V. MCGRAW-HILL 15

effect, merely transfers a bare right to sue. Righthaven LLC

v. Hoehn, 716 F.3d 1166, 1169–70 (9th Cir. 2013). There,

the plaintiff Righthaven LLC “was founded, according to its

charter, to identify copyright infringements on behalf of

third parties, receive ‘limited, revocable assignment[s]’ of

those copyrights, and then sue the infringers.” Id. at 1168.

Righthaven asserted copyright infringement claims against

two defendants for their allegedly unauthorized online

posting of articles from the Las Vegas Review-Journal. Id.

Righthaven was not the owner of the copyrights of those

articles at the time of the alleged infringement. Id. Instead,

the copyrights were owned by Stephens Media LLC, the

company that owns the Las Vegas Review-Journal. Id.

After the alleged infringement, Stephens Media and

Righthaven executed a copyright assignment agreement for

each article. Id. Those assignments provided that, “subject

to [Stephens Media’s] rights of reversion, Stephens Media

granted to Righthaven all copyrights requisite to have

Righthaven recognized as the copyright owner of the Work

for purposes of Righthaven being able to claim ownership as

well as the right to seek redress for past, present, and future

infringements of the copyright . . . in and to the Work.” Id.

(internal quotation marks omitted).

Prior to executing the assignments, Righthaven and

Stephens Media executed a Strategic Alliance Agreement

(“SAA”), which clarified that following an assignment of

copyright Stephens Media would retain “an exclusive

license to exploit the copyrights for any lawful purpose

whatsoever” and upon thirty days prior notice could “revert

the ownership of any assigned copyright back to itself.” Id.

at 1169 (internal quotation marks omitted). The SAA further

provided that Righthaven had no right to exploit the

copyrights or participate in any royalties. Id. at 1168–69.

16 DRK PHOTO V. MCGRAW-HILL

Both defendants moved to dismiss for lack of standing.

Id. at 1169. Righthaven and Stephens Media then executed

a “Clarification and Amendment to Strategic Alliance

Agreement” in which they “purported to clarify that the

parties’ intent in entering the SAA was to ‘convey all

ownership rights in and to any identified Work to

Righthaven through a Copyright Assignment so that

Righthaven would be the rightful owner of the identified

Work.’” Id. Righthaven held that, despite their language

purporting to transfer title and ownership, the copyright

assignments in their substance and effect did no more than

transfer a right to sue. Id. at 1172. Looking to the combined

effect of the assignment and the SAA, Righthaven

recognized that Stephens Media retained all exclusive rights

to the articles and Righthaven had little if any right to exploit

the works absent Stephens Media’s consent. Id. at 1170–72.

Thus, for all practical purposes, the assignments did nothing

more than transfer a right to sue. Id.

Here, the parties similarly dispute whether the

Assignment Agreements actually transferred ownership of

the copyrights along with the accrued claims. As a

preliminary matter, we reject DRK’s contention that

McGraw-Hill is precluded from challenging the effect of the

Assignment Agreements. Although a third party may not

raise noncompliance with 17 U.S.C. § 204(a)’s writing

requirement as a defense to a copyright transfer where the

parties to the transfer do not dispute its existence, Jules

Jordan Video, Inc. v. 144942 Canada Inc., 617 F.3d 1146,

1157 (9th Cir. 2010), a third party is not foreclosed from

challenging a plaintiff’s ownership for purposes of standing,

see Righthaven, 716 F.3d at 1169. Indeed, it is the plaintiff

who has the burden of establishing a qualifying ownership

interest both as a substantive element of the infringement

claim, Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc.,

DRK PHOTO V. MCGRAW-HILL 17

499 U.S. 340, 361 (1991), and as a necessary predicate for

standing to bring the claim, 17 U.S.C. § 501(b). See Urbont

v. Sony Music Entm’t, 831 F.3d 80, 88 (2d Cir. 2016)

(“[E]ven courts that have precluded third parties from

challenging a plaintiff’s ownership rights under the statute

of frauds provision in Section 204 have permitted those

parties to challenge the validity of the underlying ownership

transfer.”).

Righthaven instructs that the assignment agreements’

use of “language purporting to transfer ownership . . . is not

conclusive . . . [and] [w]e must consider the substance of the

transaction.” 716 F.3d at 1170. Thus, as in Righthaven, we

must consider the Assignment Agreements in conjunction

with the Representation Agreements and the ongoing

relationship between DRK and the individual photographers.

The alleged acts of infringement occurred prior to the

execution of the Assignment Agreements. DRK concedes

that following the execution of the Assignment Agreements,

photographers who were parties to nonexclusive

Representation Agreements could continue to market and

sell the covered photographs themselves and through other

means under the terms of the Representation Agreements.

The photographers did not pay royalties or fees of any kind

to DRK following execution of the Assignment Agreements.

DRK’s admitted course of dealing with photographers

following the execution of the Assignment Agreements

demonstrates that each party retained the rights it had under

the nonexclusive Representation Agreements—meaning the

photographers retained the exclusive rights to the

photographs and DRK retained a nonexclusive license to

authorize their use. As the district court recognized, the

18 DRK PHOTO V. MCGRAW-HILL

email exchanges surrounding execution of the Assignment

Agreements further underscore this reality. 6

DRK argues it was error to interpret the substance and

effect of the Assignment Agreements contrary to DRK and

the photographers’ intent that DRK obtain the ownership

interest necessary to register and pursue infringement claims

on the copyrights at issue. 7 DRK relies upon declarations

submitted in opposition to McGraw-Hill’s motion for

summary judgment, which, like the clarification agreement

in Righthaven, stated that the photographers “intended to

transfer the copyrights to all . . . photographs” with the

“intent that DRK should retain an ownership interest in the

images until the full resolution of any infringement claims

relating to those images” and so that DRK could “protect, by

lawsuits if necessary, against unpermitted uses.” As in

Righthaven, however, “[t]he problem is not that the district

court did not read the contract in accordance with the parties’

6

DRK argues for the first time on appeal that evidence of its email

correspondence with individual photographers submitted by McGraw-

Hill in support of summary judgment is inadmissible under the parol

evidence rule. DRK failed to raise any objection to the admissibility of

this evidence before the district court. Under the circumstances, DRK’s

failure to raise any objection or argument on this issue before the district

court precludes it from doing so on appeal. See Getz v. Boeing Co.,

654 F.3d 852, 868 (9th Cir. 2011).

7

The validity of the registration of the copyrights or the

effectiveness of the assignment for purposes of registration is not at issue

in this case. A temporary transfer of ownership for the purpose of

registering a collection is valid for purposes of that registration. Alaska

Stock, LLC v. Houghton Mifflin Harcourt Publ’g Co., 747 F.3d 673,

676–77, 685 (9th Cir. 2014). Although a certificate of registration may

serve as “prima facie evidence of the validity of the copyright and of the

facts stated in the certificate,” the registrations here are entitled to no

such presumption because they were filed more than five years after the

first publication of the work. 17 U.S.C. § 410(c).

DRK PHOTO V. MCGRAW-HILL 19

intent; the problem is that what the parties intended was

invalid under the Copyright Act.” 716 F.3d at 1171. The

undisputed evidence shows that for all practical purposes,

the nonexclusive Representation Agreements continued to

govern who controlled the exclusive rights associated with

the photographs following execution of the purported

copyright assignments; thus, the substance and effect of the

Assignment Agreements was merely a transfer of the right

to sue on accrued claims, which cannot confer standing. See

Silvers, 402 F.3d at 890.

Finally, we reject DRK’s contention that Silvers has been

implicitly overruled by Sprint Communications Co. v. APCC

Services, Inc., 554 U.S. 269 (2008). A three-judge panel is

bound by prior circuit authority unless the authority is

“clearly irreconcilable” with intervening Supreme Court

precedent. Miller v. Gammie, 335 F.3d 889, 893 (9th Cir.

2003) (en banc). Sprint held that assignees of payphone

operators’ accrued claims under the Communications Act

had Article III standing to bring the collection suit at issue.

554 U.S. at 271, 275. Sprint did not involve the Copyright

Act, and its standing analysis was not predicated on any

statutory provision analogous to section 501(b).

Consequently, Sprint does not undercut the reasoning of

Silvers, which was grounded on the specific statutory

language and history of the Copyright Act’s standing

provision for infringement claims, and Sprint and Silvers are

not “clearly irreconcilable.” See Miller 335 F.3d at 893. To

be sure, Righthaven, which post-dates Sprint, also applied

the rule of Silvers, and a three-judge panel of this court is

bound by both Silvers and Righthaven.

Although we are certainly sympathetic to the practical

challenges attendant to policing infringement of

photographic art in the publishing industry, those practical

20 DRK PHOTO V. MCGRAW-HILL

considerations cannot override the Copyright Act’s

“carefully circumscribed” grant of the right to sue. Silvers,

402 F.3d at 885. The nonexclusive licenses and assignments

of the bare right to sue present here do not render DRK a

legal owner of the copyrights under controlling law and thus

are insufficient to confer standing.

II. Beneficial Ownership.

In the alternative, DRK contends that it is the beneficial

owner of the copyrights for the photographs at issue.

Although section 501(b) provides that a beneficial owner

of a copyright is entitled to bring an infringement action, the

Copyright Act does not define the term “beneficial owner.”

The classic example of a beneficial owner is “an author who

ha[s] parted with legal title to the copyright in exchange for

percentage royalties based on sales or license fees.” Warren

v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1144 (9th

Cir. 2003) (quoting H.R. Rep. No. 1476, at 159); accord

Broad. Music, Inc. v. Hirsch, 104 F.3d 1163, 1166 (9th Cir.

1997) (“Beneficial ownership arises by virtue of section

501(b) for the purpose of enabling an author or composer to

protect his economic interest in a copyright that has been

transferred.”). By contrast, an author who receives royalties

for a work created under a work-for-hire agreement, and thus

who never had ownership of the work, is not a beneficial

owner. Warren, 328 F.3d at 1144–45.

We have not previously explored the full extent of who

may qualify as a beneficial owner of copyright, and we need

not do so here. Indeed, to support its arguments that it is a

beneficial owner, DRK once again points solely to the

Representation Agreements and the Assignment

Agreements. Yet, under those agreements, DRK is a

nonexclusive licensing agent and an assignee of accrued

DRK PHOTO V. MCGRAW-HILL 21

causes of action. To hold that DRK is a beneficial owner

simply on the very bases that it cannot be deemed the legal

owner would effectively negate our holding in Silvers and

render portions of section 501(b) superfluous. Thus, on the

specific facts of this case, DRK has failed to demonstrate

that it is a beneficial owner. See Bourne, 990 F.2d at 937

(recognizing that a nonexclusive licensing agent is not a

beneficial owner).

III. DRK’s Motion to Amend.

Finally, DRK contends that the denial of its motion to

amend was erroneous. Where, as here, a party seeks leave

to amend after the deadline set in the scheduling order has

passed, the party’s request is judged under Federal Rule of

Civil Procedure (“FRCP”) 16’s “good cause” standard rather

than the “liberal amendment policy” of FRCP 15(a). In re

W. States Wholesale Nat. Gas Antitrust Litig., 715 F.3d 716,

737 (9th Cir. 2013). The central inquiry under Fed. R. Civ.

P. 16(b)(4) is whether the requesting party was diligent in

seeking the amendment. Id.

The district court did not abuse its discretion in

determining that DRK was not diligent in seeking leave to

amend. As the district court highlighted, McGraw-Hill

raised standing as an affirmative defense in its answer less

than one month after the litigation was initiated and nearly

two years before DRK finally sought leave to amend.

McGraw-Hill again raised its standing argument in the

parties’ Joint Case Management Report prior to the entry of

the scheduling order. And, DRK’s claims were dismissed in

a parallel litigation on the very standing theory that

McGraw-Hill raised in this case. Yet, DRK waited until

after the adverse grant of summary judgment to seek leave

to amend. Given these facts, the district court’s findings that

DRK had ample notice of the defense and failed to exercise

22 DRK PHOTO V. MCGRAW-HILL

diligence are not clearly erroneous, and the district court’s

denial of leave to amend was not an abuse of discretion. See

Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609

(9th Cir. 1992) (explaining that if party seeking amendment

“was not diligent, the inquiry should end”). 8

CONCLUSION

Ultimately, DRK failed to demonstrate or otherwise

create a genuine dispute of material fact whether it is a legal

or beneficial owner of any exclusive right under the

copyrights at issue. Accordingly, DRK failed to meet the

standing requirements of section 501(b), and summary

judgment in favor of the defendants was warranted. Further,

the district court’s determination that DRK failed to exercise

reasonable diligence in seeking leave to amend its complaint

was not erroneous, and thus, it was not an abuse of discretion

to deny DRK’s motion for leave to amend.

AFFIRMED.

8

Nor did the district court err by denying DRK’s request to join the

three photographers under FRCP 17(a). See Commonwealth of Pa. Pub.

Sch. Emps.’ Ret. Sys. v. Morgan Stanley & Co., Inc., 814 F.3d 641, 643

(2d Cir. 2016) (affirming denial of FRCP 17 motion as untimely where

the plaintiff waited until after the court granted summary judgment to

defendants on standing grounds to seek joinder of additional plaintiffs

even though the standing issue was raised in the defendants’ pleadings

more than one year earlier).

DRK PHOTO V. MCGRAW-HILL 23

BERZON, Circuit Judge, concurring:

As the main opinion explains, under Silvers v. Sony

Pictures Entertainment, Inc., 402 F.3d 881 (9th Cir. 2005),

the transfer of the right to sue to a nonowner or nonexclusive

licensee of a copyright right can never confer standing to sue

for a copyright violation, no matter the relationship of the

transferee to the copyrighted material. Main Op. at 14–15.

I write separately to reiterate my view that Silvers was

wrongly decided. In Silvers, I would have concluded that

Nancey Silvers, the creator of the copyrighted work, had an

interest in infringement sufficient to confer standing. By the

same logic, I would conclude that DRK photo has an interest

in infringement sufficient to confer standing to pursue the

causes of action here at issue. Because Silvers remains

controlling, however, I am compelled to agree with the

majority’s determination that DRK Photo lacks standing.

Section 501(b) provides that “[t]he 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.”

17 U.S.C. § 501(b). That provision, in my view, should not

be read to exclude categorically any party not the “legal or

beneficial owner” from bringing an infringement claim, even

if the legal or beneficial owner authorizes that party to sue

and even if that party has an independent interest in

enforcing the copyright other than assignment of the right to

sue.

The Silvers majority impliedly recognized that the

limitation on an owner of a copyright bringing suit “while he

or she is the owner of it” should be read pragmatically. It

acknowledged that a copyright owner may pursue claims

accrued before he or she acquired the copyright. Permitting

the new owner to sue for accrued claims “makes . . . sense”

24 DRK PHOTO V. MCGRAW-HILL

because “[w]hen one acquires a copyright that has been

infringed, one is acquiring a copyright whose value has been

impaired,” and “[c]onsequently, to receive maximum value

for the impaired copyright, one must also convey the right to

recover the value of the impairment by instituting a

copyright action.” Silvers, 402 F.3d at 890 n.1. A

construction of § 501(b) that allows an accrued cause of

action to transfer when copyright ownership transfers cannot

be reconciled with a construction that always precludes

assignment of the right to sue to any party not the legal or

beneficial owner.

As my dissent in Silvers explained, I believe the question

whether copyright claims are assignable should be similarly

informed by the overall purpose of the Copyright Act. Id. at

893 (Berzon, J., dissenting). The issue in Silvers was

whether an author of a script could bring an action for

infringement when the work was created as a work-for-hire

such that the author did not own the copyright. Disagreeing

both with the majority’s conclusion that only the present

legal or beneficial copyright owner has standing to bring a

claim, and with Judge Bea’s assertion in a separate dissent

that there ought to be “an entirely free market for accrued

causes of action in copyright,” id. at 891 (Berzon, J.,

dissenting) (citing id. at 905 (Bea, J., dissenting)), I proposed

that we chart a middle course. As I wrote, “I would hold that

Silvers, given her status as the original creator of the

contested ‘work-for-hire,’ may pursue the accrued claims

assigned by Frank & Bob Films, while a complete stranger

. . . could not.” Id.

In other contexts, this circuit looks to “the general goal

of the statute” in deciding whether to recognize assignment

of claims created by federal statute. Misic v. Bldg. Serv.

Emps. Health & Welfare Trust, 789 F.2d 1374, 1377 (9th

DRK PHOTO V. MCGRAW-HILL 25

Cir. 1986) (per curiam). For example, in the ERISA context,

we permit a health care provider, assigned accrued causes of

action for health welfare benefits by patients, to pursue

reimbursement claims, notwithstanding a statutory provision

identifying only “participants, beneficiaries, fiduciaries, and

the Secretary of Labor” as having standing. Id. at 1378

(citing 29 U.S.C. § 1132(a)); see Silvers, 402 F.3d at 892–93

(Berzon, J., dissenting). Derivative standing for the health

care providers, we determined, was “consistent with

Congressional intent.” Simon v. Value Behavioral Health,

Inc., 208 F.3d 1073, 1081 (9th Cir. 2000). We do not,

however, allow “health care providers to whom the

beneficiaries originally assigned their claims” to reassign

claims; doing so would “allow third parties with no

relationship to the beneficiary to acquire claims solely for

the purpose of litigating them” and be “tantamount to

transforming health benefit claims into a freely tradable

commodity.” Id.

Applying that logic to the assignability of a copyright

claim in Silvers, I maintained that “the relevant inquiry is

whether recognition of the assignment to Silvers is

consistent with Congress’ overall intent in enacting the 1976

Copyright Act.” 402 F.3d at 893 (Berzon, J., dissenting).

Based on the fact that Silvers had “a significant interest” in

“how her work was used,” I would have concluded that

assignment was, in that case, consistent with the

congressional purpose. Id. at 893–94.

In my view, DRK Photo, as the agency authorized to

license photographs on behalf of the photographers, has a

significant interest in the way the photographs it licenses are

used that should be sufficient to confer standing. That

interest arises not merely from the photographers’ grant of

the right to sue, but from DRK Photo’s position as the

26 DRK PHOTO V. MCGRAW-HILL

licensing agent. The licenses in question were issued to

McGraw-Hill by DRK, not by the individual photographers.

And DRK negotiated with McGraw-Hill to determine the

parameters of the permitted use, including the number of

copies, geographic distribution area, language, and

electronic use. Further, DRK received a portion of the

royalties paid by McGraw-Hill.

In contrast to patent law, the primary purpose of which

is to encourage invention and innovation, the goal of the

copyright system is to encourage the publication and

dissemination of copyrighted works: “For the author seeking

copyright protection, . . . disclosure is the desired objective.”

Eldred v. Ashcroft, 537 U.S. 186, 216 (2003). By serving as

a licensing agent, DRK Photo promoted that objective of

disclosure and so was not “a complete stranger,” Silvers,

402 F.3d at 891 (Berzon, J., dissenting), to the process of

“creation and publication of free expression,” Eldred,

537 U.S. at 219.

Under the pragmatic approach to the assignability of

infringement claims that I continue to favor, I would find

that DRK Photo could validly bring suit against McGraw-

Hill. That approach would “remove what would otherwise

be a significant practical disadvantage in seeking to protect

a copyrighted work”: Given “the expenses of litigation” and

“the burdens of coordination,” photographers may be

reluctant “to bring suit individually, either in individual

actions or in a single suit under Federal Rule of Civil

Procedure 20.” Minden Pictures, Inc. v. John Wiley & Sons,

Inc., 795 F.3d 997, 1005 (9th Cir. 2015).

For now, however, Silvers’ prohibition on assignment of

claims to any party other than the “legal or beneficial owner”

controls. Because I concur with the main opinion’s

determination that DRK Photo is not the legal or beneficial

DRK PHOTO V. MCGRAW-HILL 27

owner, I must conclude that DRK Photo lacks standing to

bring these claims.