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Caught Without a License: No Privilege for Companies to Reuse ‘Derivative’ Photos in Ads

Media Law Bulletin

June 2007

Companies routinely utilize third-party vendors to assist them with the creation of their advertising campaigns. It is common practice for companies (licensees) to obtain a license to use the images and pictures of independent photographers (licensors) as part of their print and online advertisements. Typically, the licensing agreement grants the licensee permission to use, modify and incorporate the licensor's images and photographs as part of its advertisements. However, the licensing agreements usually contain territory limitations (i.e., to be used only in the United States) and more importantly, time limitations (i.e., the right to use images for three years).

Generally, once the licensing period ends, the licensee is not allowed to reuse the images unless it obtains a new license. Occasionally, however, licensors continue to reuse the images after the expiration of the licensing agreement (without obtaining a new license) and argue that they are entitled to reuse the images pursuant to the collective works privilege of the Copyright Act.

However, the Ninth U.S. Circuit Court of Appeal held recently in Jarvis v K2, Inc., 2007 U.S. App. LEXIS 9909 (9th Cir. 2007), that a licensee who has modified and edited the original images of the licensor may not rely upon the collective works privilege and must cease all uses after the expiration of the licensing agreement.

Snap Shots

Chase Jarvis, a professional photographer, entered into several agreements with K2, Inc., a maker of outdoor sporting goods, in which Jarvis agreed to supply K2 with thousands of photographic slides to be used as part of K2's advertising campaigns. The agreements provided that K2 had the right to use the images through May 2003. K2, however, continued to use 82 of the images after May 2003. Jarvis filed suit.

The district court awarded damages to Jarvis for 58 of the 82 images at issue. However, the district court refused to award any damages for 24 images on the grounds that the use was covered by the collective works privilege of the Copyright Act.

Jarvis appealed, arguing that the 24 images were not protected by the collective work privilege.

Lower Court: Collages = Collective

The 24 images that the district court refused to award damages for were images that had been modified by K2 and incorporated into four "collage" advertisements. These collage advertisements were initially published during the time that K2 had the right to use the images. However, K2 continued to use these collages after the underlying license had expired.
Under 17 U.S.C. Section 101, a collective work is a "work, such as a periodical, issue, anthology, or encyclopedia, in which a number of contributions constituting separate and independent works in themselves, are assembled into a collective whole."

17 U.S.C. Section 201(c) of the Copyright Act provides that:

"in the absence of an express transfer of the copyright or of any rights under it, the owner of copyright in the collective work is presumed to have acquired only the privilege of reproducing and distributing the contribution as part of that particular collective work, any revision of that collective work, and any later collective work in the same series."

Relying upon Section 201(c) of the Copyright Act, the district court held that because the 24 images were used as part of a "collective work" (i.e., a collage) and that K2 was the owner of the collage/collective work, then under the Copyright Act, K2 had a privilege to republish the collective work even after the underlying license had expired.

Ninth Circuit: It's Derivative

On appeal, the Ninth Circuit reversed the district court, holding that the collage was not a "collective work" but rather a "derivative work," and as such, the collective work privilege did not apply. A "derivative work" is defined by the Copyright Act as:

"a work based upon one or more preexisting works such as a translation, musical arrangement … art reproduction, abridgement, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a derivative work."

The Ninth Circuit held that because K2, in creating the collages, had modified Jarvis' photos by distorting, shrinking, overlaying, expanding and otherwise editing Jarvis' photos, the K2 collages had become "derivative works," as opposed to a collective work. Therefore, K2, as the owner of the collages, was the owner of a derivative work.

Further, unlike collective works, a derivative work may not be republished or distributed after the expiration of the underlying license. Therefore, the Ninth Circuit held that under the licensing agreement between K2 and Jarvis, K2 had the right to make derivative works based on Jarvis' original images, and that K2's rights to republish the derivative works terminated once the licensing agreement expired.

The Ninth Circuit held that K2's publication of the collages after the expiration of the licensing agreement constituted copyright infringement, and remanded the case back to the district court to determine the damages that Jarvis should be awarded based upon K2's infringement of the 24 images.

Post-Jarvis World

The Jarvis opinion has clarified the distinction between a derivative work and a collective work. As outlined, this distinction is crucial because the owner of a collective work has the right and privilege to republish the collective work as a whole even after the licenses to any of the underlying images in the collective work have expired. To the contrary, the owner of a derivative work does enjoy such a privilege.

As a result of the Jarvis opinion, all licensees should review their advertisements to ensure that they are not infringing anyone's copyright and to further ensure that they have not mistakenly relied upon the collective works privilege with respect to any of their current advertisement campaigns.

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