In Great Minds v. Fedex Office & Print Servs., Inc., 886 F.3d 91 (2d Cir. 2018), the U.S. Court of Appeals for the Second Circuit considered whether Defendant's reproduction of educational materials for school district licensees violated a Creative Commons license strictly limited to non-commercial use. Although third-party copying was not addressed in the license, the Second Circuit declined to find ambiguity, instead holding that such third-party reproduction was permissible given the relevant common law agency principles.
Plaintiff Great Minds designed and sold (in book form) copyrighted educational curriculum called "Eureka Math," which it also released to the public for free under a Creative Commons license. Notably, the terms of the applicable Creative Commons license state that "[e]very recipient of the [Materials] automatically receives an offer from the Licensor to exercise the Licensed Rights under the terms and conditions of this [] License." Upon learning that Defendant was reproducing Eureka Math at the request of certain school districts, Plaintiff sued Defendant for copyright infringement. The District Court dismissed Plaintiff's complaint and Plaintiff appealed.
Affirming the District Court, the Second Circuit rejected Defendant's argument that it could commercially reproduce the licensed materials under the license's "reproduce and Share" language, finding such language only allowed licensees (not third parties) to engage in activities requiring the copyright holder's permission. The Second Circuit also rejected Plaintiff's argument that, under the "downstream recipients" provision, FedEx was also a licensee (because it received the materials) and thus obligated to refrain from commercial uses, as this "fail[ed] to account for the mundane ubiquity of lawful agency relationships, in which 'one person, to one degree or another . . . , acts as a representative of or otherwise acts on behalf of another person.'"
Relying on Seventh Circuit and First Circuit case law, the Second Circuit reasoned that, to construe every physical recipient of the materials as an independent licensee would be a "radical result," that was not warranted by the language of the license. The more reasonable construction, the Court found, was that school district employees that photocopy the licensed materials using the Defendant's services were acting as agents of the school districts, not as independent licensees, and that by extension, third-party copiers (such as Defendant) were also acting as agents of the school districts. Similarly, the Second Circuit rejected Plaintiff's argument that the reservation of rights in the license, which "specifically reserves Great Minds' right to collect royalties for all commercial uses," prohibited Defendant's commercial reproduction, finding that such argument "merely begs the question whether FedEx should properly be considered a licensee or an agent of the licensee school districts."
The Second Circuit summarily rejected Plaintiff's argument that Defendant engaged in volitional copying based on Cartoon Network v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008), finding that case irrelevant to whether the school district's could order third-party copies. It also rejected Plaintiff's reliance on fair use cases where ready-made copies (rather than copying services) were offered by defendants, noting that such cases were inapt given the nature of the services offered as well as the fact that FedEx disclaimed reliance on the fair use defense.
Notably, the Second Circuit declined to find ambiguity in a license that lacked any express language addressing whether third-party commercial copying constituted prohibited activity under the contract. In doing so, the Court based its decision on common law agency principles, permitting school district licensees to effectuate their non-commercial license by making copies, whether through employees or third-party agents.
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