There has been an explosion of copyright cases involving infringement of photographs, many involving small claims to one or a few photographs with little commercial value. How does one defend against such a case? A recent decision of a New York federal court points to an effective defense strategy.
Typically a case involves a professional photographer (or photograph licensing organization) alleging that it owns the copyright in a photograph that was then taken by a website or other user without paying a royalty fee. Some attorneys have even turned this into a cottage industry, leveraging the burden of litigation to extract large settlements. But the recent decision in Fameflynet, Inc. v. The Shoshana Collections, LLC (S.D.N.Y. 2018) may limit the effectiveness of such suits – and points to a strategy to defend them.
Fameflynet involved a typical claim − copying a celebrity photograph on the defendant’s website. The court found the infringement to be willful. But in awarding damages, it reasoned that the presumptive damages were only treble the license fee for the photograph − $75. And since the Copyright Act requires a minimum of statutory damages of $750 for willful infringement, that is what plaintiff was awarded.
The court also awarded about $17,000 in attorney’s fees – much less than the $68,000 sought. Apart from finding plaintiff’s hourly rates excessive, the court found many hours billed unnecessary, because the same firm had used form pleadings from prior similar cases.
The fairly nominal award points the way to an effective strategy in dealing with such cases: ascertain the license fee and proffer an offer of judgment under Rule 68 for treble the fee or $750, whichever is greater. Such an approach might have saved the defendant substantial fees, both its own and the plaintiff’s.
The Copyright Act provides a copyright owner with the exclusive right to make copies of a copyrighted work. 17 USC 106(1). Where rights are infringed, the owner can seek damages and profits, and, if the work was registered prior to infringement, statutory damages and attorney’s fees. 17 USC 504. Statutory damages range from $750 to $30,000 per work, increasing up to $150,000 per work if the infringement was willful. Although there is a broad range for statutory damages, courts generally hold that they should approximate the actual damages (to the extent known) and then multiplied by three to five for willful infringement.
The Fameflynet case was straightforward in terms of liability. The plaintiff was a “photojournalism corporation that provides entertainment related goods and services” including celebrity photographs. Though not stated in the opinion, the plaintiff has some arrangement with the photographers to acquire their rights in the photographs.
The defendant copied celebrity photographs and posted it to its website. The infringement was apparently willful – it seemed clear that they knowingly uploaded the photographs to their website without a license from a rival site (that had paid a license fee to the plaintiff).
The big issue was damages. The plaintiff had licensed the photographs for $75 to one website. Damages, therefore, were loss of that modest fee. Trebled for willfulness, the damages should have been $225. But since the minimum statutory damages are $750, that is what the court awarded.
The Court awarded attorney’s fees – but reduced them by 75% from $68,000 requested to $17,000.
From the perspective of a copyright owner, particularly for works licensed for modest amounts (like photographs), this decision is a disaster. After considerable effort, the copyright owner was left with much less than it spent.
From the perspective of those faced with suits such as these (and we have recently seen many), this decisions points to an effective way to deal with them: ascertain the license fee and then offer to settle for a multiplier of the fee (or at least $750). That will usually be far cheaper than litigating.
Strategic Use Of Rule 68
In some cases, strategic use can be made of Rule 68 of the Federal Rules of Civil Procedure, which allows a defendant to offer to enter judgment for a specified amount. If the plaintiff does not accept and later does not do better in the case, then it is barred from collecting further costs and may even be required to pay the defendant’s costs.
Although “costs” are usually only a small part of litigation, the Supreme Court greatly expanded the use of this device in Marek v. Chesny (1985). It held that where the fee-shifting statute defines attorney’s fees as “costs,” then the right to collect fees can be cut off by a Rule 68 offer if the plaintiff does not do better later in the case.
The Copyright Act is one statute that defines “costs” as including attorney’s fees. In one copyright case, a federal court, relying on Marek, held that a plaintiff that refused to accept an offer of judgment and then failed in the case, had to pay the defendant’s fees after the date of the rejection – which totaled over $330,000. Baker v. Urban Outfitters, Inc., 431 F. Supp.2d 351, 361 (S.D.N.Y. 2006).
In cases where the copyrighted work has been licensed for modest fees – the $75 in Fameflynet is typical of many photograph cases – the damages will likely be small. Rather than letting the plaintiff run up significant attorney’s fees, judicious use of a Rule 68 offer would in many cases dispose of the case relatively cheaply. The plaintiff who fails to accept the offer runs the risk not only of not being able to collect fees, but also of paying the defendant’s fees.
To illustrate, in Fameflynet, had the defendant offered, say, $3,000 on the first day (damages plus minimal fees expended to bring the case), then the court might not have awarded anything, and perhaps even required payment of the defendant’s fees. Faced with that possibility, the plaintiff and its counsel would have to “think very hard about whether continued litigation is worthwhile,” but that, the Supreme Court instructed in Marek, is precisely the purpose of Rule 68.
Even where Rule 68 and Marek do not technically apply for some reason, courts have the discretion to take offers of judgments into account. Attorney’s fees are generally discretionary, and courts are required to take into account the degree of success achieved. If a plaintiff could have done better by taking an earlier offer of judgment, then some courts have been reluctant to award fees for post-offer work which turned out to have accomplished little for the plaintiff.