Things to Consider When Responding to a Copyright Infringement Demand
The ease of access to images on the Internet has become a easy trap, falling unwittingly into a copyright infringement claim, for many a startup, and even some well established, publishers. And consequently, publishers are increasingly receiving copyright infringement letters, demanding in most cases, unreasonable settlements. Most rely upon the statutory damages provisions of the Copyright Act, warning that for infringements found to be willful, "the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000," under 17 U.S.C. § 504(c)(2). And if that were not enough, copyright owners add that infringers may also be liable for their attorneys fees, under 17 U.S.C. § 505. At this point, with a publisher's head spinning, owners will demand $5,000-$25,000 to settle. And many a publisher has paid that amount, and more.
Why not? Why pay an attorney to defend you, when the prospects of prevailing are low and the potential exposure so high?
There are a few reasons. Because publishers are not without defenses to these claims.
First, a number of the infringements are old. And under 17 U.S.C. § 507(b), liability is limited to three years, after the owner either discovered or should have discovered the infringement. If the publication is over three years, a statute of limitations defense may be available.
Second, and surprisingly, a number of copyright owners have not registered their copyrights, but still will send demands. But registration is a prerequisite to brining an lawsuit, under 17 U.S.C. § 412. If a copyright owner did not register his or her works prior to the alleged infringement, then they are not eligible for those head-spinning statutory damages or attorneys' fees. (But be wary of the three month grace period after the fist publication under 17 U.S. Code § 412(2).)
Third, even if a publisher is within the statute of limitations and the work was registered before the alleged infringement, still, both statutory damages and attorneys' fees will be limited. Most photographers are unable to sell or license their works for substantial amounts, even photographers who claim they are famous. Stock photography websites like ShutterStock.com and IStockPhoto.com, and even GettyImages.com, have substantially impaired the market for photography. And that does not include the free license websites like Pixabay.com.
Actual damages, the fair market value of a license for the photograph, serves as a substantial limitation on the amount a copyright owner can recover. See, e.g., Davis v. Gap, Inc., 246 F.3d 152, 172 (2d Cir. 2001) (stating that § 504 “permits a copyright owner to recover actual damages, in appropriate circumstances, for the fair market value of a license covering the defendant’s infringing use"). The fair market value is not what the copyright owner would have charged, and courts may consider the price of comparable images. But keep in mind, non-speculative injury to the copyright owner's ability to sell the photograph to others may also be considered.
Further, actual damages serves a substantial limit on both statutory damages and attorneys fees. For example, “[w]here the infringement was willful but not ‘truly egregious,’ courts in [the Second Circuit, covering New York and Connecticut, as well as others] frequently award statutory damages ‘of between three and five times the cost of the licensing fees the defendant would have paid.’” Reilly v. Plot Commerce, No. 15-CV-05118 (PAE) (BCM), 2016 U.S. Dist. LEXIS 152154, at *25 (S.D.N.Y. Oct. 31, 2016) (emphasis added) (quoting Broad. Music, Inc. v. Prana Hosp., Inc., 158 F. Supp. 3d 184, 199 (S.D.N.Y. 2016)). So if a copyright owner only regularly sells the photograph in question for $250, the threat of a $150,000 statutory damages award is probably a stretch.
And, if the copyright owner cannot establish substantial damages, a substantial attorneys' fee award is also questionable. As the United States Supreme Court found in Hensley v. Eckerhart, 461 U.S. 424, 440 (1983), “where the plaintiff achieved only limited success, the district court should award only that amount of fees that is reasonable in relation to the results obtained.” Reasonable does not mean proportional, but it does potentially limit the potential for extremely lopsided awards.
These are all factors to take into consideration when responding to a demand letter. The best advise, of course, is to consult an attorney, who can better explain these options. But you may want to negotiate before you reach into your pocketbook to write a big check.
This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. For more information, or to discuss potential representation, contact Ray & Counsel, P.C.