Virtual Studios, Inc. v. Hagaman Industries, Inc.

984 F. Supp. 2d 830, 2013 WL 5744756, 2013 U.S. Dist. LEXIS 152158
CourtDistrict Court, E.D. Tennessee
DecidedOctober 23, 2013
DocketCase No. 1:12-cv-54
StatusPublished
Cited by1 cases

This text of 984 F. Supp. 2d 830 (Virtual Studios, Inc. v. Hagaman Industries, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Virtual Studios, Inc. v. Hagaman Industries, Inc., 984 F. Supp. 2d 830, 2013 WL 5744756, 2013 U.S. Dist. LEXIS 152158 (E.D. Tenn. 2013).

Opinion

MEMORANDUM

CURTIS L. COLLIER, District Judge.

Before the Court is Defendant Hagaman Industries Inc.’s (“Defendant” or “Hagaman”) motion for summary judgment (Court File No. 36) on Plaintiff Virtual Studios, Inc.’s (“Plaintiff” or “Virtual”) claims Hagaman violated Plaintiffs copyright in a number of “room scene images” produced pursuant to a license agreement. Plaintiff responded in opposition (Court File No. 42) to which Hagaman replied (Court File No. 55). For the following reasons, the Court will GRANT IN PART and DENY IN PART Hagaman’s motion for summary judgment (Court File No. 36).

I. RELEVANT FACTUAL AND PROCEDURAL BACKGROUND

A. Factual Background

Virtual is a graphic design company that creates virtual room scene images for car[833]*833pet and flooring manufacturers to display product (Court File No. 43 (“Sucher Aff.”), ¶ 3). Virtual photographs actual rooms in a studio or other location and then digitally manipulates the photograph in order to display multiple flooring options (id. at ¶ 4). Room scene manipulation involves the digital alteration of a photograph of a room so that a client’s flooring product is virtually displayed in the room scene without requiring the carpet to be physically present in the room (id. at ¶4). This provides Virtual’s customers the opportunity to display many different carpet styles without requiring they take numerous photos (id.). In late 2001 or early 2002, Virtual began performing this service for Hagaman, a small carpet manufacturer in north Georgia (id. at ¶ 5).

Virtual claims it offered Hagaman three different options to purchase room scene images (Court File No. 43-1, Virtual’s Response to Interrogatories, 5). Option One provided that Hagaman could buy a room scene outright and obtain ownership of the copyright (id.). Option Two provided that Hagaman could purchase the exclusive rights to a room scene for one year (id.). During that time period, no other client can use the room scene. Virtual retains ownership of the scene and retains the right to manipulate it. Finally, Option Three provided Hagaman a free non-exclusive access to a room scene for one year. Virtual retained the exclusive right to manipulate the image. Virtual claims Hagaman chose the third option. Virtual finds support for its argument Hagaman agreed to a one-year license in the “Terms and Conditions” provision of its invoices, which Hagaman paid. Each time Virtual sent an invoice, these terms and conditions were listed on the back of the invoices. The first term and condition stated “Virtual Studios will provide its Client with the unlimited use of all photographs for a period of one year from the day of completion and payment of services as stated below” (Court File No. 36-3, Sucher Dep., Ex. 10 (p. 46)).1 Virtual’s President, Tom Sucher, however, testified that he had no specific recollection of what was discussed at his meetings with Daniel Hagaman, President of Hagaman Industries, Inc., or Michael Hagaman (id. at p. 49).

Hagaman, however, disputes this interpretation of the license between the parties. Daniel Hagaman testified he met with Sucher, to discuss the use of Virtual’s images (Court File No. 36-1, Daniel Hagaman Dep.). He testified that, by his memory, “if they’re going to do the work, we’re going to own the images. And that’s the way I always do that. I always have” (id. at p. 26). Daniel Hagaman testified that Sucher agreed to this condition and “[i]f he had not agreed, we wouldn’t have gone any further” (id.). He could not, however, recall whether any specific correspondence about the terms had occurred or what the cost for each image would be (id. at p. 28). Daniel Hagaman also recalled a conversation with Sucher in which the distinction between a higher-price, exclusive-right agreement and a lower-price, nonexclusive-right agreement was discussed (id. at pp. 51, 73). Daniel Hagaman stated he chose the nonexclusive price because “it’s less expensive and we didn’t need exclusivity” (id. at p. 52). But he also indicated Sucher told him Hagaman would have the right to use the image forever (id. at p. 53), which he apparently based on the fact “[w]hen [he] said to [Sucher] we want to purchase [834]*834this stuff and own it, he said okay. That’s agreeable” (id. at p. 54). In discussing why this was so important to him, Daniel Hagaman stated

in the past I had paid for work and then maybe want to reprint and redo things and the people that do the work say, oh, no. We own it. You’ve got to pay for it again. So once we got burned that way, every time I’ve done anything like this, that’s what we do. We pay for the artwork. We pay to have this done. We want to own it. We want to be free to use it. Whatever the cost is for that, that’s what we’re buying. How much is it? If the price is right, we’ll pay it. If it isn’t, we don’t. We do something else. That’s the way we do business.

(id. at p. 69).

Daniel Hagaman indicated he and his son, Michael Hagaman, were responsible for approving payment of Virtual’s invoices (id. at p. 29). “Depending upon the nature of the invoice,” Hagaman’s policy might or might not require explicit review and approval of Daniel or Michael before the invoice was paid (id.). When asked directly if he had read the terms and conditions portion of the invoices he stated “[pjrobably” had but did not “[sjpecifically” contact anyone at Virtual about them (id. at p. 68) and he did not know whether anyone at his company did (id. at p. 71). When asked whether the provision that indicates Hagaman will have the right to unlimited use of the photograph for a period of one year conflicts with his understanding of the agreement, Daniel Hagaman stated “[n]o,” “[d]o I believe we could use those images for a year? Yes.... Do I believe we could continue to use them? If we owned them, yes, we can. That’s what I believe” (id. at p. 72).

Michael Hagaman, who described his position as an “inside salesman operations manager,”2 testified consistently with Daniel Hagaman’s position. According to Michael Hagaman, Virtual’s position that there was a time limitation on Hagaman’s use of the room scene images is “pretty ridiculous because [Virtual] took the pictures knowing what the final intention for the picture was and had to [] properly deliver the picture. And if they did [have such a limitation], then there should have been something in writing that they had us sign because they’re the only person in the industry that has that practice” (Court File No. 36-2, Michael Hagaman Dep., p. 28). He also testified to having a conversation with Sucher about pricing, in which two options were provided, ‘You could buy the room scene, which meant that nobody else could use it, so you would buy the exclusive, or for a lesser price you buy the room scene and they can sell it to somebody else again later” (id. at p. 35). He indicated the “lower cost option is the one we chose, which is we can purchase it and other people can as well” (id.). With respect to the invoices, Michael Hagaman indicated he was not in charge of the invoices and that the bookkeepers had to show all the invoices to Daniel Hagaman and that Daniel Hagaman had to approve all the invoices for payment (id. at pp. 32-33).

Hagaman also disputes the extent to which the invoices contained the terms and conditions language.

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Bluebook (online)
984 F. Supp. 2d 830, 2013 WL 5744756, 2013 U.S. Dist. LEXIS 152158, Counsel Stack Legal Research, https://law.counselstack.com/opinion/virtual-studios-inc-v-hagaman-industries-inc-tned-2013.