Fathers & Daughters Nevada, LLC v. Lingfu Zhang

In copyright action involving motion picture "Fathers & Daughters", district court grants defendant’s summary judgment motion, finding plaintiff, author and registered copyright holder for screenplay and motion picture did not have standing under Copyright Act as legal or beneficial owner because it had previously granted exclusive license of rights in question. 

Fathers & Daughters Nevada LLC, sued Lingfu Zhang, alleging that defendant copied and distributed the film “Fathers & Daughters,” authored by F&D, through a BitTorrent network. Prior to the lawsuit, F&D authorized a sales agent to license its exclusive rights in the work, and the sales agent granted many of the exclusive rights enumerated under the Copyright Act to a distributor. In opposition to Zhang’s motion for summary judgment based on asserted lack of standing to sue, F&D argued that it had standing to bring an infringement claim as the legal owner of the work because it had not licensed all of its rights in the work, including “the rights to display the film on airlines and ships, rights to the movie clips, and rights to stock footage.” The district court rejected this argument, holding that the distributor was the legal owner of the relevant exclusive rights in the work because the distribution agreement fully transferred the exclusive rights to display or distribute copies of the film in the United States using “all other technologies, both now or hereafter known or devised,” which included distribution through BitTorrent.

F&D also argued that it was the beneficial owner of the copyrighted work and had standing to protect its economic interests because it could conceivably receive royalties from the film’s distributor. The court rejected this argument because F&D failed to offer evidence to demonstrate how it was entitled to funds that the sales agent received from the distributor. The agreement F&D entered into with the sales agent provided that the sales agent could collect money from the distributor in its own name, and the portion of the agreement that purportedly demonstrated that the licensing income should be considered F&D’s royalties had been redacted.

While the distribution agreement included a reservation of the right to sue infringers that used BitTorrent, the court held that a “reservation of right” to sue was ineffective because the right to sue is not one of the exclusive rights under the Copyright Act, and a reservation of such a right is no more effective in conveying standing than the granting of such a “naked” right, which has been held to be ineffective by the Ninth Circuit in Righthaven LLC v. Hoehn. (Read our summary of the Ninth Circuit’s decision here.) Further, even if such a reservation were effective, the court found that the contractual reservation belonged to the sales agent, not to F&D.

F&D sought to rely on an undated Anti-Piracy addendum to the distribution agreement, which provided that F&D reserved “all peer-to-peer digital rights” in the work to establish standing. The court found that this addendum did not convey standing because the context of the document conferred nothing more than a general right to sue. F&D also produced no evidence to demonstrate that this addendum was executed before the lawsuit was filed. The document was produced near the end of discovery, and no other agreement in the record was undated like this one. The court also denied plaintiff’s informal request during oral argument to amend the complaint to add additional plaintiffs because “[s]ummary judgment is not the time to amend pleadings.”

Summary prepared by Jonathan Zavin and Peter Pottier