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Grant Heilman Photography, Inc. v. Pearson Education

April 30, 2012

GRANT HEILMAN PHOTOGRAPHY, INC. PLAINTIFF,
v.
PEARSON EDUCATION, INC., ET AL.
DEFENDANTS.



The opinion of the court was delivered by: Legrome D. Davis, J.

MEMORANDUM ORDER

AND NOW, this 30th day of April, 2012, upon consideration of Defendant Pearson Education's Motion for Protective Order (Doc. No. 18), Plaintiff's Response in Opposition Thereto (Doc. No. 19), Pearson's Motion for Leave to File a Reply Brief (Doc. No. 20), and the associated Reply Brief (Doc. No. 20-1), it is hereby ORDERED as follows:

1. Defendant Pearson Education's Motion for Leave to File a Reply Brief (Doc. No. 20) is GRANTED, and the associated Reply Brief (Doc. No. 20-1) has been considered.

2. Defendant Pearson Education's Motion for Protective Order (Doc. No. 18) is GRANTED as detailed below. Specifically, the Motion is GRANTED with respect to all three (3) categories of information at issue here: (1) Defendant's non-public financial information; (2) Defendant's non-public sales and marketing projections and forecasts; and (3) the print quantities and dates of Defendant's publications, including but not limited to the so-called "print quantity report" Defendant produced in this matter.

3. Accordingly, it is further ORDERED that documents containing Defendant's non-public financial data; sales and marketing projections and/or forecasts; and print quantities and dates, including the "print quantity report," shall be marked "CONFIDENTIAL," shall be used solely for the purpose of this litigation, and shall not be disclosed to any person except for the following individuals: (1) Attorneys actively working on this case and persons employed by or associated with them; (2) Witnesses and deponents of the disclosing party; (3) Judges, Magistrate Judges, law clerks and other personnel of this Court; (4) Court reporters recording or transcribing testimony; (5) Independent experts and persons employed by or associated with them who have been shown a copy of this Order and agree to be bound by it; (6) Parties in this action, including their employees or agents; and (7) Other persons agreed to in writing by and between counsel of record.

4. A party may object to the designation of particular information as CONFIDENTIAL by giving written notice, identifying the information to which the objection is made, to the party designating the disputed information. All counsel shall then confer in good faith in an attempt to resolve the dispute within five (5) business days of receiving the aforementioned written notice. Only if the parties cannot resolve the dispute among themselves may they move for a Court ruling on the disputed issue. Any such motion must be made within five (5) days of the parties' conference or the disputed information shall lose its designation as CONFIDENTIAL. The party designating the information as CONFIDENTIAL shall bear the burden of establishing that good cause exists for the disputed information to be treated as CONFIDENTIAL.

I. Factual Background and Procedural History

Plaintiff Grant Heilman Photography, Inc. ("Plaintiff" or "GHPI") is a stock photography agency that licenses its photographs for distribution, including to Defendant Pearson Education ("Defendant" or "Pearson"), a publisher of educational textbooks. (Doc. No. 1 ¶¶ 5, 8, 12). Relevant to this suit, GHPI is the owner and exclusive copyright holder of over 2,500 photographs (the "Photographs") depicted in Exhibit A to the Complaint. (Doc. No. 1 ¶ 10). The Photographs have either been registered with the United States Copyright Office or are pending registration. (Doc. No. 1 ¶ 11, Ex. A).

Between 1995 and 2010, GHPI sold Pearson limited licenses to use copies of the Photographs in Pearson's educational publications, but according to GHPI, Pearson's actual uses of the Photographs far exceeded the scope of the limited licenses. (Doc. No. 1 ¶¶ 12-14). GHPI has discovered at least seven (7) instances in which Pearson violated the terms of its license agreements, e.g., by printing more copies of the books containing GHPI's photographs than the licenses authorized. (Doc. No. 1 ¶¶ 14, 25). As one example, Pearson's license to use GHPI's Photographs in the 2001 Developmental Reading Assessment authorized up to 40,000 printed copies, but Pearson printed at least 350,000 copies without giving notice to or asking permission from GHPI. (Doc. No. 1 ¶ 14A).

GHPI's Complaint alleges that "[a]t the time Pearson represented to GHPI in its license requests that it needed specified, limited licenses to use the Photographs, Pearson knew its actual uses under the licenses would exceed the permission it was requesting and paying for." (Doc. No. 1 ¶ 14). Believing that Pearson may have surreptitiously violated the terms of its licensing agreements on a widespread basis, on July 1, 2011, GHPI asked Pearson to provide GHPI with information regarding Pearson's unauthorized uses of GHPI's Photographs, but Pearson refused. (Doc. No. 1 ¶¶ 23-29). GHPI then brought this suit, claiming that Pearson (1) infringed the copyrights to GHPI's Photographs and (2) committed fraud with respect to six of the particular transactions in which GHPI has discovered that Pearson exceeded the scope of its license agreements.

Pearson moved to dismiss GHPI's Complaint under Federal Rule of Civil Procedure 12(b)(6), and on October 12, 2011, we denied that motion in large part. (See Doc. No. 12). Now, the parties have apparently reached an impasse with respect to certain discovery-related issues. Pearson filed the instant motion for an umbrella protective order pursuant to Federal Rule of Civil Procedure 26(c), seeking to keep confidential three (3) categories of information produced during discovery: (1) non-public financial information; (2) non-public sales and marketing projections and forecasts; and (3) most importantly (judging by the parties' briefing), the print quantities and dates of Pearson's publications, including the so-called "print quantity report" Pearson generated, and then turned-over to GHPI, in this action.

Now, some context. These parties (or more precisely, their counsel) know each other well. Similar "print overrun"-type copyright infringement actions have cropped-up all over the country, oftentimes involving the same parties and/or lawyers. Until recently, Plaintiff's counsel and Defendant's counsel had a history of cooperation on the issue of protective orders. Plaintiff's counsel has now reversed course and refuses to stipulate to the confidentiality of certain documents Pearson would like to keep out of the public domain, most notably a "print quantity report" that Pearson compiled in connection with this suit.

From what we can tell, the "print quantity report" contains a manual compilation of all of Pearson's print run information with respect to the images at issue in this matter. Pearson does not maintain such a report in the normal course of business; rather, Pearson produced this report to show that Pearson has not, in fact, overrun its publication license limits with respect to many of the photographs-in-suit. In doing so, Pearson hoped to save time and resources; streamline discovery; and facilitate resolution (settlement) of this case.

At the Rule 16 conference, counsel for both parties agreed to keep the report "Attorney's Eyes Only" pending the entry of a protective order. While Plaintiff's counsel may not have explicitly consented to a protective order covering the report during the conference, the entire tenor of the conversation led this Court to believe that entry of such an order was a foregone conclusion. In other words, the parties' attorneys would work it out, as they had done many times in the past. Consequently, Pearson no doubt believed that Plaintiff would agree to a stipulated protective order encompassing, among other things, the print quantity report. Unfortunately for Pearson, Plaintiff's counsel changed tactics, thereby precipitating Pearson's Rule 26(c) motion for a Court-issued protective order. For the reasons ...


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