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Fathers & Daughters Nevada, LLC v. Zhang

United States District Court, D. Oregon

January 17, 2018

LINGFU ZHANG, Defendant.

          Carl D. Crowell, Crowell Law Of Attorneys for Plaintiff.

          David H. Madden, Mersenne Law Of Attorneys for Defendant.


          Michael H. Simon, United States District Judge.

         Plaintiff Fathers & Daughters Nevada, LLC (“F&D”) brings this action against Defendant Lingfu Zhang. F&D alleges that Defendant copied and distributed F&D's motion picture Fathers & Daughters through a public BitTorrent network in violation of F&D's exclusive rights under the Copyright Act. Before the Court is Defendant's motion for summary judgment. Defendant argues that F&D is not the legal or beneficial owner of the relevant exclusive rights under the Copyright Act and thus does not have standing to bring this lawsuit. For the following reasons, the Court grants Defendant's motion.


         A. Summary Judgment

         A party is entitled to summary judgment if the “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party has the burden of establishing the absence of a genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The court must view the evidence in the light most favorable to the non-movant and draw all reasonable inferences in the non-movant's favor. Clicks Billiards Inc. v. Sixshooters Inc., 251 F.3d 1252, 1257 (9th Cir. 2001). Although “[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge . . . ruling on a motion for summary judgment, ” the “mere existence of a scintilla of evidence in support of the plaintiff's position [is] insufficient . . . .” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 255 (1986). “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citation and quotation marks omitted).

         B. Standing Under the Copyright Act

         “Under the Copyright Act, only the ‘legal or beneficial owner of an exclusive right under a copyright' has standing to sue for infringement of that right.” Righthaven LLC v. Hoehn, 716 F.3d 1166, 1169 (9th Cir. 2013) (quoting 17 U.S.C. § 501(b)).[1] The “exclusive rights” that can be held under the Copyright Act are enumerated in Section 106. “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 Pictures, Inc. v. John Wiley & Sons, Inc., 795 F.3d 997, 1002 (9th Cir. 2015). This list of exclusive rights is exhaustive. Id. It does not include the right to sue for infringement. See Righthaven, 716 F.3d at 1169 (“Absent from the list of exclusive rights is the right to sue for infringement.”). Thus, a copyright holder cannot assign or transfer a bare right to sue. Id.; see also DRK Photo v. McGraw-Hill Global Educ. Holdings, LLC, 870 F.3d 978, 987 (9th Cir. 2017) (holding that the substance and effect of the assignments and agreements purporting to assign ownership were “merely a transfer of the right to sue on accrued claims, which cannot confer standing” under the Copyright Act); Silvers v. Sony Pictures Entm't, Inc., 402 F.3d 881, 890 (9th Cir. 2005) (“The bare assignment of an accrued cause of action is impermissible under 17 U.S.C. § 501(b).”).

         Ownership, and how it can be transferred and parsed, is unique under the Copyright Act:

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.

17 U.S.C. § 101 (emphasis added). Thus, an owner of a copyright can transfer ownership of a copyright “via an assignment or an exclusive license” and both “constitute a ‘transfer of copyright ownership.'” Righthaven, 716 F.3d at 1170 (emphasis added) (quoting 17 U.S.C. § 101). “[I]f a copyright owner grants an exclusive license of particular rights, only the exclusive licensee and not the original owner can sue for infringement of those rights.” Id. (emphasis added) (citing 3 M. Nimmer & D. Nimmer, Nimmer on Copyright § 1202[C] (2012)); see also J. Ginsburg & R. Gorman, Copyright Law, Ch. 3.II.A (2012) (“Ginsburg”).

         An owner of a copyright who transfers exclusive rights may still have standing to sue on those rights if the owner qualifies as a “beneficial owner” of those rights. See Ginsburg, supra, at Ch. 3.II.A. 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.'” DRK Photo, 870 F.3d at 988 (alteration in original) (quoting Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1144 (9th Cir. 2003)). “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.” Broad. Music, Inc. v. Hirsch, 104 F.3d 1163, 1166 (9th Cir. 1997).


         A. Sales Agency Agreement

         F&D is the author and registered the copyright for the screenplay and motion picture Fathers & Daughters. ECF 36-1. On December 20, 2013, with an effective date of April 1, 2013, F&D entered into a sales agency agreement with Goldenrod Holdings (“Goldenrod”) and its sub-sales agent Voltage Pictures, LLC (“Voltage”). ECF 36-2. Under this agreement, F&D authorized Goldenrod and Voltage as “Sales Agent” to license most of the exclusive rights of Fathers & Daughters, including rights to license, rent, and display the motion picture in theaters, on television, in airplanes, on ships, in hotels and motels, through all forms of home video and on demand services, through cable and satellite services, and via wireless, the internet, or streaming. F&D reserved all other rights, including merchandising, novelization, print publishing, music publishing, soundtrack album, live performance, and video game rights. ECF 36-2 at 3.

         F&D further authorized Goldenrod and Voltage to execute agreements in their own name with third parties for the “exploitation” of the exclusive rights of Fathers & Daughters and agreed that Goldenrod and Voltage had “the sole and exclusive right of all benefits and privileges of [F&D] in the Territory, including the exclusive right to collect (in Sales Agent's own name or in the name of [F&D] . . .), receive, and retain as Gross Receipts any and all royalties, benefits, and other proceeds derived from the ownership and/or the use, reuse, and exploitation of the Picture . . . .” ECF 36-2 at 4. The “Territory” is defined as the “universe.” Id.

         The sales agency agreement sets forth how Gross Receipts will be distributed. ECF 36-2 at 6-8. There are eight enumerated payment categories, listed in payment priority order. The first is costs of production, with a capped amount that is redacted in the copy provided to the Court. The second is overhead and a producer fee equal to a lesser amount that also is redacted in the Court's copy. The third is a marketing fee to Goldenrod and Voltage. The fourth includes recoupable expenses (which were previously defined) to Goldenrod and Voltage. The fifth includes other described fees and costs. The sixth consists of certain payments to Goldenrod and Voltage that are redacted in the Court's copy. The seventh is box office bonuses or other deferments not assumed by third party domestic distributors. The eighth is approved deferments, which are redacted in the Court's copy. After ...

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