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Hiring a third party to exercise the licensee’s rights does not convert that third party into an independent licensee

The appeal held that defendant Office Depot, Inc., did not become a licensee of a Creative Commons license, and become bound by its terms, or otherwise infringe Great Minds’ copyright by making copies of Eureka Math materials for a profit on behalf of school and school district licensees.

Office Depot provides copy services on request and behalf of public schools and school districts. It charges a fee for those services, and at times it makes copies of Eureka Math materials for the schools’ use. It does not sell those copies to the public in Office Depot stores. Great Minds claims, and Office Depot does not dispute, that Office Depot employs field representatives to advertise its copying services to schools and school districts that use Eureka Math.

In 2015, when Great Minds discovered that Office Depot was reproducing Eureka Math on behalf of the schools, the parties entered into a separate licensing agreement, whereby Great Minds permitted Office Depot to make the copies in exchange for royalty payments. After the court’s ruling in Great Minds v. FedEx Office and Print Servs, which held that the License could not “be read to preclude a licensee from hiring someone to make copies of Eureka Math so the licensee can use them for a ‘noncommercial’ purpose,” Office Depot terminated the royalty agreement.

As a result, on October 11, 2017, Great Minds filed suit against Office Depot in district court, alleging claims of copyright infringement and breach of contract. Great Minds does not dispute that the school districts’ own use and distribution of Eureka Math materials is “NonCommercial” and permitted by the License. Rather, it alleges that Office Depot was “deliberately and willfully infringing Great Minds’ copyrights by actively soliciting customers for commercial reproduction of Eureka Math,” and “by reproducing and distributing Eureka Math for profit without Great Minds’ authorization.”

Great Minds asserts that the “NonCommercial” restriction in the License requires commercial print shops like Office Depot to “negotiate a license and pay a royalty to Great Minds if they wish to use or reproduce Eureka Math for commercial purposes – i.e., for their own profit.” On December 6, 2017, Office Depot filed a motion to dismiss the copyright infringement claim, which the district court granted without leave to amend. The court found that the License did not prohibit the school districts from employing third parties like Office Depot to make copies of the Eureka Math curriculum on their behalf. Id. The appeal followed.

The issue was whether the school and school district licensees’ exercise of their rights under the License through the services provided by Office Depot results in Office Depot becoming a licensee. The appeal held that it does not. A licensee’s hiring of a third-party copy service to reproduce licensed material strictly for the licensee’s own permitted use does not turn that third party into a licensee that is bound to the License terms.

Under Great Minds’ reading of the License, third party contractors like Office Depot are “downstream recipients”, meaning they “automatically receive an offer from Great Minds to exercise the Licensed Rights,” they accept that offer the moment the copy store employee presses “copy” on a machine, and they become bound to the terms of the License. Office Depot is not a downstream recipient.

That Office Depot employed field representatives to advertise the availability of copying services for schools and school districts that use Eureka Math does not confer a licensee status on Office Depot. Its activities remain within the ambit of the schools and school districts’ license. Great Minds also contends that the “volitional” element, i.e., which entity’s employee does the copying, is determinative in this case. But that argument produces the following absurd results:

(1) a teacher may copy Eureka Math on an Office Depot-owned copy machine for a fee in-store, but cannot hand the materials to an Office Depot employee to be copied;

(2) a school may pay a copy machine provider a monthly fee to keep a machine on site to copy Eureka Math, but cannot pay Office Depot employees to make the same copies; and

(3) a school may permit teachers to copy Eureka Math on school-owned or leased machines, but cannot pay a high school student to make the same copies. Great Minds’ interpretation cannot be correct.

The License itself provides no basis to distinguish between permitted copies of Eureka Math made by a licensee’s own employees (e.g., school teachers or staff) versus those made by a third-party contractor (e.g., Office Depot employees). Under the License, a non-commercial licensee may hire a third-party contractor, including those working for commercial gain, to help implement the License at the direction of the licensee and in furtherance of the licensee’s own licensed rights.

The License extends to all employees of the schools and school districts and shelters Office Depot’s commercial copying of Eureka Math on their behalf. Holding differently would prevent proper non-commercial licensees from using relatively common means of reproduction to share, engage with, and exercise their rights to the licensed work in a way that would contravene the intent of the License and undermine its utility.

The court concluded that the licensees’ contract with Office Depot to exercise the licensees’ rights under the License does not impose an independent liability on Office Depot. As a result, Great Minds has failed to state a plausible claim to relief on its copyright infringement claim.

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