U.S. Court of Appeals for the Sixth Circuit, OVERDRIVE INC. v. OPEN E-BOOK FORUM dba International Digital Publishing Forum, Docket No. 20-3432

 

Copyright

 

17 U.S.C. § 106

 

License

 

Sublicense

 

IP Transfer

 

Contract Drafting

 

Copyright Infringement?

 

 

When International Digital Publishing Forum decided to license and potentially transfer its intellectual property to the World Wide Web Consortium, one of its members sued. OverDrive claimed that the arrangement violated its rights under the Copyright Act. The district court granted summary judgment to International Digital because it validly licensed its intellectual property and because it would be premature to resolve any claim about future transfers. We affirm.

 

A digital reading platform, OverDrive is a member of International Digital Publishing Forum, a nonprofit trade association dedicated to the development of electronic publishing standards. At one point, International Digital’s members worked together to develop EPUB, the leading eBook format.

 

International Digital has an intellectual-property policy. Approved by OverDrive and its other members, the policy says that International Digital’s members retain any copyrights in their separate and independent contributions to EPUB. But it also grants International Digital a license to “reproduce, adapt, distribute, perform, display, and create derivative works” of any copyrighted contributions to EPUB. R.16-2 at 11. And it allows International Digital to sublicense others to do the same.

 

In 2016, by a vote of 88% to 12%, International Digital voted to transfer its assets to the World Wide Web Consortium, an international organization committed to developing Webstandards. International Digital and the Consortium entered into an asset-transfer agreement the next year. The agreement granted the Consortium a “license to use” International Digital’s intellectual property to “carry out the digital publishing activities” of International Digital. R.37-12 at 5. And it provided that International Digital would commence dissolution within nine months, after which its intellectual property rights, including any in EPUB, would be owned by the Consortium.

 

The Consortium began developing improvements to EPUB, with an eye to creating an updated version. Nine months later, International Digital and the Consortium reached a second agreement, “further documenting and affirming aspects of the license” that International Digital had given the Consortium in the first agreement. R.37-13 at 2. The second agreement stated that the Consortium’s license to “use” International Digital’s intellectual property encompassed a broad license to “reproduce, adapt, distribute, perform, display and create derivative works.” Id. at 2–3. And it explained that the license included International Digital’s sublicensable rights to any copyrights its members retained. The agreement also delayed International Digital’s dissolution until it transfers its intellectual property to the Consortium.

 

OverDrive sued, seeking a declaratory judgment that International Digital had violated, and would violate in the future, its copyrights in EPUB. OverDrive claimed that International Digital infringed its EPUB copyrights by giving the Consortium access to EPUB. And it claimed that International Digital would infringe OverDrive’s copyrights once International Digital transferred its intellectual property to the Consortium. OverDrive sought various forms of relief, including damages, a declaratory judgment, and an injunction.

 

Past and Current Infringement. The Copyright Act says that a copyright owner has the exclusive right to “reproduce,” “distribute,” or “prepare derivative works based upon” its protected work. 17 U.S.C. § 106. The owner also can “authorize” others to do the same. Id. That means a licensee “authorized by the copyright owner to use the copyrighted work” does not infringe the copyright “with respect to such use.” Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 433 (1984).

 

So it happened here when OverDrive granted International Digital the right to use any copyrights OverDrive had in EPUB. By giving International Digital a license to “reproduce, adapt, distribute, perform, display and create derivative works” of its EPUB copyrights (to the extent it had them), OverDrive permitted International Digital to use the copyrighted work in these ways. R.16-2 at 11. Not only that, it also gave International Digital an unrestricted right to grant sublicenses with respect to those same copyrights. International Digital, in turn, permissibly sublicensed EPUB by granting the Consortium a “license to use” International Digital’s intellectual property. R.37-12 at 5. That gave the Consortium a sublicense to use any of OverDrive’s copyrights in EPUB. International Digital did not infringe OverDrive’s copyrights by doing with them what it was authorized to do. See Sony, 464 U.S. at 433. No infringement occurred.

 

In response, OverDrive acknowledges what the Copyright Act says, that International Digital has the right to sublicense OverDrive’s copyrights in EPUB. But it maintains that International Digital did not permissibly invoke this authority through the initial agreement and did not create a valid sublicense that permitted the Consortium to develop a new version of EPUB, a “derivative work.” Not true. The agreement granted the Consortium a “license to use” all of International Digital’s intellectual property. R.37-12 at 5. That intellectual property included a license to “create derivative works” (among other things) of any of OverDrive’s copyrights in EPUB. R.16-2 at 11.

 

Future Infringement. Even if International Digital did not violate the Copyright Act in the past through the initial agreement, OverDrive claims that the second agreement—which could transfer the assets of International Digital to the Consortium—will violate the Act in the future. The hiccup in this argument does not turn on the meaning of the Act; it turns on the meaning of Article III of the United States Constitution.

 

Ripeness, the matter at hand, asks two questions. One: Does the claim “arise in a concrete factual context and concern a dispute that is likely to come to pass?” Id. A claim is not ripe if it turns on “contingent future events that may not occur as anticipated, or indeed may not occur at all.” Trump v. New York, 141 S. Ct. 530, 535 (2020) (per curiam) (quoting Texas v. United States, 523 U.S. 296, 300 (1998)). Two: What is “the hardship to the parties of withholding court consideration”? Warshak, 532 F.3d at 525 (quoting Abbott Lab’ys v. Gardner, 387 U.S. 136, 149 (1967)). “No” and “none” are the answers to these questions. Because even one negative answer creates a ripeness problem, this claim was properly dismissed.

 

 

(U.S. Court of Appeals for the Sixth Circuit, February 5, 2021, OVERDRIVE INC. v. OPEN E-BOOK FORUM dba International Digital Publishing Forum, Docket No. 20-3432, Recommended for Publication)