The Ninth Circuit recently addressed the issue of whether parties can contractually agree to shorten the statute of limitations period for bringing a copyright infringement claim. In an unpublished opinion in the case, Evox Productions, LLC v. Chrome Data Solutions, LP (filed Feb. 10, 2023), the Ninth Circuit held that the trial court had properly enforced contractual provisions to find that the Plaintiff’s copyright infringement claims were barred by the agreed-to shortened, statute of limitations period.
Evox Productions creates and licenses images of cars. In 2003, it licensed its images to Chrome Data Solutions, LP, for a five-year period. Chrome, pursuant to that agreement, sublicensed the images to third parties. Thereafter, in 2016, Evox sued Chrome for contributory and/or vicarious copyright infringement, alleging that three of Chrome’s sublicensees, iPublishers, Potratz, and Webnet, infringed on Evox’s copyright by displaying the images after Evox’s license agreement with Chrome expired.
The license agreement between Evox and Chrome contained a provision that “[n]o action, regardless of form, arising out of this agreement may be brought by either party more than two years after the cause of action arose.” Normally, the statute of limitations for a copyright violation is three years. Given the contractual provision, the trial court found that it precluded Evox from bringing any copyright infringement claim for infringement that occurred prior to January 14, 2014, two years before it filed its complaint.
The Ninth Circuit recognized that California courts will honor an agreement to shorten the statute of limitations period “provided it is reasonable.” The Ninth Circuit noted that, although there was a line of older California cases that held that such agreements were disfavored, more recent cases had rejected this approach. Moreover, the Ninth Circuit found that under California law, a two-year statute of limitations is considered reasonable.
Evox tried to argue that the parties did not intend for this contractual provision to apply to copyright infringement claims. The Ninth Circuit rejected this argument, finding that because the claims against Chrome were for copyright violations arising out of the licensing agreement, “this copyright dispute `arises out of’ the license agreement,” and thus, a shortened statute of limitations period would apply.
Evox also tried to argue that because the license agreement with Chrome had expired years earlier, the provision shortening the statute of limitations period no longer applied. The Ninth Circuit likewise rejected this argument and found that the limitations provision, as with other obligations under the license agreement, had “already [been] fixed under the contract.”
The Ninth Circuit continued by holding that the trial court properly found that Evox had failed to present sufficient evidence that the three sublicensees had committed acts of infringement during the shortened limitations period. The Ninth Circuit noted that under the Copyright Act, “the owner of a copyright had the exclusive right to display its work publicly.” Furthermore, a claim for copyright infringement arising out of a public display “does not require proof that the protected work was actually viewed by anyone. Rather, the [Copyright] Act defines `publicly’ to merely require that the display is at ‘a place open to the public’… readily encompassing any publicly accessible server.” Therefore, the Ninth Circuit concluded that Evox would only have to show that the protected works were stored on a “publicly accessible server” during the limitations period to show evidence of infringement.
With respect to the sublicensee Potratz, the Ninth Circuit found that the emails and declarations offered by Evox were not sufficient. While some of the evidence may have shown that Potratz had access to Evox’s copyrighted images until April 2014, there was no evidence that Potratz had actually displayed or stored these images on a “publicly accessible server.”
Likewise, with respect to the sublicensee iPublishers, Evox offered similar evidence of emails between Chrome and iPublishers that suggested that iPublishers had access to Evox images until mid-2014. Once again, the Ninth Circuit found that this only showed that iPublishers had access to the copyrighted images, not that it had publicly displayed them in violation of the Copyright Act.
With respect to images that the sublicensee Webnet had available on a publicly accessible server, the Ninth Circuit ruled that the trial court properly found that Evox had granted “an implied sublicense to use its images until November 2014” to Webnet. Although there was no evidence of an express agreement of such a sublicense, the court agreed that Evox had granted “an implied license by not objecting to [Chrome’s] reports of its active sublicensees in accepting royalty payments for those sublicenses.” The Ninth Circuit continued by noting that grants of a nonexclusive copyright license did not have to be in writing but that they could “be implied from conduct.” Moreover, the Ninth Circuit reasoned that “[c]onsent given in the form of mere permission or lack of objection is also equivalent to a nonexclusive license and is not required to be in writing.” The Ninth Circuit agreed with the trial court that because Evox accepted royalties for the Webnet sublicense until November 2014 and never objected to its continued display of Evox’s images, Evox had impliedly granted a license to Webnet to use its images until November 2014.
Finally, even to the extent there could be evidence that Webnet had displayed the images after November 2014, the Ninth Circuit held that the district court properly found that there was no secondary infringement that would subject Chrome to liability. The Ninth Circuit agreed that “there is no evidence that [Chrome] knew of, induced or encouraged Webnet’s purported direct copyright infringement during the relevant time period.” Thus, the Ninth Circuit affirmed the grant of summary judgment to Chrome.
The Evox case is a reminder to parties negotiating license agreements, as well as other agreements involving intellectual property that the parties can contractually agree to shorten the limitations period for bringing any claims arising out of the agreement, including claims for copyright infringement. If a copyright holder wants to exclude claims for copyright infringement from such a provision, it needs to make it clear in the agreement that a shortened limitations period does not apply to claims of copyright infringement.