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Yellow Pages Photos, Inc. v. Ziplocal, LP

United States Court of Appeals, Eleventh Circuit

July 30, 2015

YELLOW PAGES PHOTOS, INC., Plaintiff-Counter Defendant-Appellee,
v.
ZIPLOCAL, LP, Defendant-Counter Claimant, YELLOW PAGES GROUP, LLC, Defendant-Appellant

Appeals from the United States District Court for the Middle District of Florida. D.C. Docket No. 8:12-cv-00755-RAL-EAJ.

AFFIRMED.

For Yellow Pages Photos, Inc., Plaintiff - Appellee (14-13355): John Todd Timmerman, C. Philip Campbell Jr., Duane Allan Daiker, Jeffrey Bruce Fabian, Shumaker Loop & Kendrick, LLP, Tampa, FL.

For Yellow Pages Group, LLC, Defendant - Appellant (14-13355): David Jon Wolfsohn, Karen C. Kline, Duane Morris, LLP, Boca Raton, FL; C. Douglas McDonald Jr., Carlton Fields Jorden Burt, PA, Tampa, FL; Robert M. Palumbos, Jeffrey S. Pollack, Duane Morris, LLP, Philadelphia, PA.

For Service, Defendant - Appellant (14-13355): James A. Scott Jr., Bogin Munns & Munns, S Daytona, FL; Nancy E. Brandt, Spencer Munns, Bogin Munns & Munns, PA, Orlando, FL.

For Yellow Pages Photos, Inc., Plaintiff - Appellant (14-13401): John Todd Timmerman, C. Philip Campbell Jr., Duane Allan Daiker, Jeffrey Bruce Fabian, Mindi Marie Richter, Shumaker Loop & Kendrick, LLP, Tampa, FL.

For Yellow Pages Group, LLC, Defendant - Appellee (14-13401): David Jon Wolfsohn, Robert M. Palumbos, Jeffrey S. Pollack, Duane Morris, LLP, Philadelphia, PA; Karen C. Kline, Duane Morris, LLP, Boca Raton, FL; C. Douglas McDonald Jr., Carlton Fields Jorden Burt, PA, Tampa, FL.

For Ziplocal LP, Defendant - Appellee (14-13401): Nancy E. Brandt, Spencer Munns, Bogin Munns & Munns, PA, Orlando, FL; James A. Scott Jr., Bogin Munns & Munns, S Daytona, FL.

Before MARTIN and ROSENBAUM, Circuit Judges, and COOGLER,[*] District Judge.

OPINION

COOGLER, District Judge:

Yellow Pages Group, LLC appeals from a $123,000 judgment against it in favor of Yellow Pages Photos, Inc., following a jury verdict in a copyright infringement trial. Yellow Pages Photos, Inc. cross appeals, arguing that it is entitled to a new trial on damages due to the alleged error of the district court in several of its discovery, evidentiary, and procedural rulings. After careful review of the record and briefs of the parties, and having the benefit of oral argument, we affirm the district court on all issues raised on appeal.

I.

A.

The facts presented at trial are as follows. In the late 1990s, Trent Moore (" Moore" ), an amateur photographer and former owner of a yellow pages ad production company, founded Yellow Pages Photos, Inc. (" YPPI" ), to create and license stock photographs tailored to the yellow pages industry. YPPI set out to create stock photos that were relevant to the directory industry from a subject matter perspective. By 2004, YPPI owned a library of over 4,000 copyrighted photos that for efficiency were grouped into collections--also referred to throughout as " headings" --that generally corresponded to yellow pages headings, such as " Plumbers," " Roofers," " Attorneys," or " Landscape." In Moore's words,

[S]ince I was going to provide imagery specifically to the yellow pages industry, the idea was to develop images such that when they were looking for the image and the heading and the artwork requested, everything has the same vernacular. And so efficiencies can be made by okay, I can go here and I'll have 50 of these, a hundred of these different looks.

[Doc. 423 at 66.] Moore also explained that the stock photos were not redundant in that every photo could be used by a publisher: " [T]hey were shot in such a way that each image could be used to its fullest. . . . What we wanted to do was have ten different photos of this, not one guy ten ways. We need ten guys one way." [ Id. at 65-67.]

In March of 2004, Moore met with John Woodall (" Woodall" ), the CEO of phone book publisher Ziplocal, LP (" Ziplocal" ), then called Phone Directories Company. Woodall found Moore's product interesting because it consisted of a large number of " images of things organized by Yellow Page headings." [Doc. 425 at 40-41, 77.] As Woodall put it, " I had never seen at that point a collection organized the way that we actually did business, which was dealing with businesses by heading." [ Id. at 41.] At that meeting, Moore and Woodall reached an agreement for the use of YPPI's photos. YPPI's contract with Ziplocal consisted of two documents, the terms of which were agreed to during the meeting. The first was titled " Site License Purchase Agreement" (" SLPA" ). The second was titled " End User License Agreement" (" EULA" ).

The SLPA is a one-page, bullet-pointed document signed on March 15, 2004, by Moore and Woodall that provided, among other things, that for the price of $875 per CD-ROM disk, " [Ziplocal] agrees to purchase all current titles as well as all new relevant headings as they become available, up to the first 200 Headings. YPPI will ship 1-2 headings per month." [Joint Trial Exhibit 2.] The SLPA thus contemplated an initial purchase of a license to use, and delivery of, YPPI's photos that were then available, followed by additional purchases and deliveries of an additional 120 headings over time. The SLPA provided for an unlimited number of " authorized users" of the photos, and although it permitted Ziplocal to use any type of " server or information system [necessary] to facilitate multiple user simultaneous access," it required Ziplocal to protect the photos from " unauthorized distribution to unlicensed users." [ Id. ] The SLPA, which refers to itself internally as " this agreement," also refers to another agreement called " the license agreement." [ Id. ] Both Moore and Woodall testified that this reference to " the license agreement" was to the EULA. There was no testimony to the contrary, and no dispute the SLPA was a binding contract between YPPI and Ziplocal.

The EULA is a two-page, unsigned document that contained terms in addition to, and that expanded upon, the terms of the SLPA, including the following, relative to the use and transfer of photos: " [Ziplocal] may not transfer these images to any outside parties or individuals unless authorized by YPPI. All users must be Employees of [Ziplocal]." [Joint Trial Exhibit 20.] The EULA also limited the number of users of the photos to 40, indicated that opening the package containing the photos " indicates your acceptance of the terms and conditions set forth," and stated that " if you do not agree with these conditions YPPI does not grant license and you should return the unopened packages within 10 days for a full refund." [ Id. ]

Moore testified that there were two contracts because, " There's the purchase agreement which details, you know, things like how many CDs or images are going to be purchased and there's a license agreement that details the restrictions and use." [Doc. 424 at 19.] Woodall's testimony was also that both the SLPA and EULA were contracts of YPPI and Ziplocal and that the EULA was simply " the detail of the license agreement behind the [SLPA]." [Doc. 425 at 44.] Notwithstanding persistent cross examination, Woodall repeated over and over that the EULA was an agreement between YPPI and Ziplocal. [ Id. at 98-100.] Moore and Woodall also testified that the SLPA and EULA were agreed to contemporaneously. Moore stated that " when I consummated the deal with John Woodall, [the SLPA and EULA] were together." [Doc. 424 at 19-20.] Woodall testified that he saw the SLPA and EULA around the same time. [Doc. 425 at 44.]

At their meeting in March 2004, Moore gave Woodall a hard drive with the first 4,000 photos, or 80 collections, on it. In April 2004, Moore sent the first CD of additional photos to Ziplocal, and the package contained the EULA. From 2004 to 2009, Ziplocal made payments and received in installments more collections of photos, until it had acquired YPPI's entire library of 10,411 photos grouped into 178 headings organized by subject matter. Each time Moore sent a new collection of around 50 photos burned onto a CD, he would enclose the EULA in the packaging. Moore testified that " [e]ach time I delivered images, there would be a license agreement attached to the disks." [Doc. 424 at 58.] Lee Lott, the Director of Production and later the Vice President of Operations at Ziplocal, testified that " [The EULA] was basically put in with his CDs when he sent them in a package. So it was there all the time." [Doc. 425 at 189-90.] Moore testified that he never changed the terms of the EULA.

Yellow Pages Group, LLC (" YPG" ) was not a party to either the SLPA or the EULA. YPG and Ziplocal did not start doing business until six years later, in 2010, when YPG sold its phone books to Ziplocal and subcontracted with Ziplocal so that YPG's employees could provide support in producing Ziplocal's phone books. YPG employees assembled and paginated the digital pages to prepare them for printing, modified existing ads by updating phone numbers and addresses, and created new ads, tasks that Ziplocal had previously done in-house. The relationship between Ziplocal and YPG was governed by an Outsourcing Agreement signed in November 2010. The agreement provided that any work performed by YPG for Ziplocal would not infringe third-party intellectual property rights. As part of their agreement, Ziplocal provided YPG with digital copies of its phone books that included photos that had been licensed from YPPI. In updating those books, YPG used some of YPPI's licensed photos. YPPI was never asked to consent to any transfer of its photos by Ziplocal to YPG, or to the use of its photos by YPG. In any event, and as Moore admitted at trial, Ziplocal's outsourcing to YPG resulted in YPPI's photos being used as intended under the SLPA, which was only in Ziplocal publications. [Doc. 424 at 225-26.]

In 2011, YPPI discovered that Ziplocal outsourced its graphics functions to YPG, and that YPG was using YPPI's photos without a license. YPPI sent Ziplocal a cease and desist letter, containing a copy of the EULA, which required all " users" of YPPI's photos to be employees of Ziplocal's. When YPG was notified of the particular ads that YPPI thought were infringing, Ziplocal and YPG removed them from the next edition of the phone books, substituting photos licensed from another company, Getty Images, for YPPI's photos. Moore testified that it took many months to identify which of his photos he thought YPG and Ziplocal were infringing because he had to compare them to his master set, and that he was working on identifying infringing photos right up until the time of trial. On April 9, 2012, YPPI commenced this action. Ziplocal and YPG were still using YPPI's photos to build ads after the commencement of the lawsuit.

B.

YPPI filed a two-count complaint, for breach of contract against Ziplocal, and for infringement against both Ziplocal and YPG under the United States Copyright Act of 1976, 17 U.S.C. § 101, et seq. After the claims survived cross motions for summary judgment, the case was tried to a jury from March 17 to 27, 2014. YPPI contended at trial that its contract with Ziplocal was comprised of two documents, the SLPA and the EULA, that both the SLPA and the EULA prohibited transfer of YPPI's photos and restricted use of the photos to employees of Ziplocal, and that the terms of both the SLPA and EULA were breached when Ziplocal transferred photos to, and permitted use of the photos by, YPG. On the other hand, Ziplocal and YPG claimed that only the SLPA was the operative contract between the parties, and that the EULA was invalid. In Ziplocal and YPG's view, since their conduct did not violate the terms of the SLPA, they could not have infringed YPPI's copyrights.

During trial, both parties requested that, before the case was submitted to the jury, the district court decide, based on the evidence introduced at trial, how many individual photos constituted a " work" as that term is defined in the Copyright Act for purposes of computing statutory damages. The court ruled that each of YPPI's 178 collections of photos relating to phone directory subject matter such as " Appliances," " Attorneys," etc., was a work for statutory damages purposes, rejecting YPPI's contention that each of its 10,411 individual photos was a work. The court reached this conclusion by considering how YPPI arranged the photos for marketing purposes, noting that Moore had testified that the purpose for grouping his photo collections by subject matter heading, rather than marketing individual photos, was for customer appeal and efficiency. The court also considered how YPPI registered the photos with the Copyright Office, under the 178 titles, grouping various title collections together on 44 different registration applications, how it delivered the photos to Ziplocal, in that the SLPA provided that YPPI would sell " up to the first 200 Headings" initially and would subsequently " ship 1-2 headings per month," and how it described the photos in its complaints as collections, pointing out that YPPI did not take the position until it filed its Third Amended Complaint that each photograph constituted a single work.

At the close of the evidence, the court used YPPI's proposed jury instructions and verdict form in submitting the case to the jury. In response to questions on the verdict form, the jury first found by a preponderance of the evidence that " the EULA is a valid and binding contract between YPPI and Ziplocal." It then found that Ziplocal breached " its contract" with YPPI. The jury then filled in a blank to award YPPI zero dollars on its breach of contract claim. In response to further questions, the jury found both Ziplocal and YPG to be willful infringers of YPPI's copyrights and that 123 of YPPI's 178 works had been infringed. The jury then awarded one dollar in actual damages and zero dollars in statutory damages against Ziplocal, and zero dollars in actual damages and $123,000 in statutory damages against YPG. Finally, the jury found that Ziplocal was a contributory infringer to YPG's copyright infringement and awarded $100,000 in actual damages and zero dollars in statutory damages to YPPI on the contributory infringement claim.

After trial, Ziplocal and YPG renewed their motions for a judgment as a matter of law, which were denied by the district court. YPPI made its election between actual and statutory damages, as it was authorized to do under the Copyright Act, electing to recover 1) $100,001.00 in actual damages from Ziplocal and 2) $123,000.00 in statutory damages from YPG. YPPI filed a motion for attorneys' fees and nontaxable and taxable costs, seeking over $2 million. The district court denied YPPI's motion without prejudice, pending the outcome of this appeal. YPG timely appealed the district court's denial of its post-trial renewed motion for a judgment as a matter of law to this Court. Ziplocal also appealed, but its appeal was dismissed for want of prosecution. YPPI cross appealed several of the district court's discovery, evidentiary, and procedural rulings. We have jurisdiction pursuant to 28 U.S.C. § 1291.

II .


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