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New York State Court
upholds language in stock industry contract that includes limitation
of liability clause.
Adamo v. Corbis Corp. as successor in interest
to The Stock Market Photo Agency of New York, Supreme Court of the
State of New York, County of New York, Index No. 602063/02, Decision
dated 12/02/02, Filed 12/20/02, Justice Richard B. Lowe III
Photographer, Jeff Adamo had a long-term relationship
with the photo library The Stock Market (TSM). He had entered into
a serious of successive three-year contracts with TSM. In 2000,
the contract was not renewed. Subsequent to TSM's decision not to
renew the photographer's agreement, Corbis purchased TSM and was
responsible for completing the retrieval of the photographer's outstanding
photographs.
According to the contract, TSM was to use reasonable
efforts to return Adamo's photographs. It was agreed that after
termination, TSM would have 12 months to return images within the
TSM files in New York, 18 months to retrieve photographs located
in foreign offices and 2 years to return photographs in the possession
of clients.
Many returns were made to the photographer during this
period using return forms to track the number of returned photographs.
However, after the retrieval period ended, the photographer brought
a breach of contract claim against TSM alleging that TSM violated
the terms of the agreement by failing to return 135 of the approximately
2000 photographic transparencies submitted, and sought $205,500
in damages or $1500 per transparency.
The contract with TSM contained a limitation of liability
clause using language similar to the model PACA form contributor's
agreement that has been recommended over the years.
TSM shall provide a suitable environment for long-term
storage, care, and retrieval of your images and shall strive to
protect and care for your images that are on file with TSM. However,
if there is any damage, theft, or loss of your images, TSM shall
not be liable unless such damage, theft, or loss was a result of
TSM's willful or gross negligence. You agree that in no event shall
TSM's liability exceed one hundred ($100.00) dollars.
Relying on the language in the contract, I brought a
motion on behalf of Corbis Corporation to dismiss the claim. The
court considered the language in the contract as well as an affidavit
of a Corbis employee, stating the steps Corbis undertook to secure
the return of the photographer's work that had been distributed
worldwide. The court found that the steps Corbis took to retrieve
the photographs reasonable and successful a majority of the time.
These efforts included searching domestic libraries, searching international
libraries and notifying all worldwide offices of the photographer's
"inactive status" requiring outstanding photographs to be returned.
The photographer offered no statement to controvert Corbis' assertion
that these steps were reasonable or to establish that these efforts
were less than the reasonable standard in the photo stock library
industry. The court concluded that it was reasonable to assume that
any photograph that had not been returned after these efforts was
"lost". It was apparent to the court that it considered the return
to the photographer to be significant as it emphasized that only
135 of approximately 2000 had not been returned.
In examining the limited liability language the court
stated "This limited liability clause is accepted throughout the
stock photograph industry as standard practice, simply because over
the course of time and shipment all over the globe, the possibility
of loss, theft or damage exists to a large extent".
The court found that the agreement between Corbis (via
TSM) and Adamo limited Corbis' liability to $100 only if Corbis
or the TSM was grossly or willfully negligent. Simply negligence
results in no liability. However, the complaint did not allege that
TSM or Corbis was negligent, only that photographs were not returned
through reasonable efforts. Based on evidence of Corbis' efforts
to return the photographs, the court held that the agreement was
not breached. Consequently, the court granted the motion to dismiss
the claim with prejudice.
Photo libraries have relied on similar limited liability
language over the years in the event they are unable to retrieve
one hundred percent of a contributor's work after the end of a relationship.
However, no court has had the opportunity to review the language
and consider its validity. Since insurance for the full value of
transparencies is not available at any reasonable price, the exposure
a library would face in the event of a claim could be significant
if this limited liability language was not found to be valid. Of
course, the photo library must take reasonable steps to return contributors'
property, but as the court noted, the likelihood that some material
may be lost or damaged over time is inevitable.
Finally, this case reinforces the importance of written
contracts with all contributors that contain standard language to
protect the photo library from unnecessary risk. Without a contract
that provides for the limited liability in the event of a loss,
the photo library remains vulnerable to claims if property cannot
be returned to a contributor at the end of a relationship.
The decision can be found online by
clicking here.
Copyright Office
I just returned from the Mid-Winter meeting
of the Copyright Society of the USA, where the highlight, in addition
to the Miami weather is Mary Bet Peters remarks on "What's
New at the Copyright Office".
Mail Update:
Only mail delivered by the US Postal Service
is being irradiated. Mail delivered by special mode (FEDEX, UPS,
AIRBORNE, etc.) goes to on offsite facility to be tested for chemical
or biological material. It is said to add 2 days to receipt by the
Copyright Office but it really adds 3 to 5 days. If you need the
work delivered the same day, you need to have it hand delivered
by a person wearing a suit. There is a "spandex test".
If you look like a messenger, the material goes offsite.
If you write Mary Beth Peters (the Register of Copyrights),
her mail is delivered in 4 MONTHS. As she put it, "If we go
to war, all bets are off". We should communicate as much as
possible by email or fax.
Since no budget was passed by Congress, they have no
overtime and can fill no positions. If questions regarding claims
cannot be answered with a phone call and require correspondence,
you should expect delays.
The DMCA requires the Copyright office to review impact
on classes of work with regard to the anti-circumvention rules and
is keeping them very busy. Other areas on interest are the new rules
involving webcasting and rates, and filing Notice of Termination
of licenses.
Grey Advertising
A letter has been circulated by Grey Advertising,
informing stock libraries of the terms upon which it will do business.
The Art/Photography Purchase Order requires a total transfer of
copyright. Further, the agreement states that no deletions will
be acceptable.
Not only do most agreements with contributors prohibit
the complete transfer of copyright, the copyright act requires a
signed agreement by the copyright owner for a transfer to be valid.
I would recommend deleting this clause regardless of
the language prohibiting such deletion. Any license with Grey must
be in writing and signed by Grey, specifically modifying the terms
of its Purchase Order.
If Grey Advertising requires images under these terms,
it will be required to purchase the copyright, at a fee greater
that one would assume is required for the intended purpose. Certainly
broad rights or royalty free images would be unusable.
PACA's executive committee requested that I contact
Grey Advertising and offer to discuss the problem with the new terms
and conditions:
February 18, 2003
VIA FIRST CLASS MAIL AND FACSIMILE
Jayne Horowitz
V.P./ Manager of Art Producers
Grey Worldwide
777 Third Avenue
New York, NY 10017
Re: Art/Photography Terms and Conditions
Dear Ms. Horowitz:
I am counsel to the trade association Picture Archive
Council of America, a trade association comprised of most of the
stock photography, illustration and film footage archives located
within North America, in addition to many international affiliates.
I have been inundated by questions from members concerning
a recent notice that members have received from you regarding
a new Art/Photography Purchase Order. The letter informs members
that "...the terms and conditions on the Art/Photography Purchase
Order form shall be applicable to all purchases/licenses of stock
photography that we obtain from you on behalf of our clients or
ourselves. No changes, deletions or amendments to these terms
and conditions will be accepted or enforceable. In addition, notwithstanding
any terms to the contrary contained in any other documents submitted
by you, the attached terms and conditions shall govern. Fulfillment
of the orders by you shall constitute your acceptance of said
terms and conditions."
The first term on the back of the form says: "1. Supplier
hereby conveys all rights, title and interest, including the copyright
in and to the Material to Grey, as agent for Client. Such rights
include, but are not limited to: (a) the right to use, publish,
display or reproduce the Material in advertising or for the purposes
of trade or for any other purpose whatsoever; (b) the right to
alter, retouch, or crop or simulate the Material in any way; (c)
the right to secure copyright in the Material anywhere throughout
the world; (d) the right to license, exploit, sell, assign, or
otherwise dispose of the Material or any of the said rights included
therein for any purpose which Grey, Client and their assigns and
licensees may see fit, and; (e) any and all subsidiary rights
in the Material including characters or parts which are contained
in the Material."
I am assuming that Grey's legal department drafted
this language and you were instructed to inform your suppliers
of its terms. Because these requirements are legally impossible
for stock archives to comply with, I would appreciate it if you
would forward this letter to the appropriate party so we can begin
a dialog.
Stock archives represent the work of photographers,
artists, illustrators and motion film owners under a contributor
agreement. This contract does not transfer copyright to the stock
company; it only permits the company to grant licenses to the
work. Under most agreements, no grant for greater than a period
of time, for example two years, can be made, and certainly no
transfers of copyright can be made on behalf of the copyright
owner without written consent. The terms and conditions you receive
from stock companies inform you of this.
This is consistent with the Copyright Act as well.
Under the Copyright Act, in order to create a valid transfer of
copyright, there must be a writing, signed by the copyright owner
or authorized agent. This Art/Photography Purchase Order does
not satisfy the requirement of the statute and thus would not
be valid.
Stock libraries are now left with an impossible dilemma.
If any art buyer from Grey wishes to license a photograph for
any purpose, it must be quoted a "buy-out" fee, to cover
a complete transfer of copyright, according to your terms. The
copyright owner must be contacted, and a writing signed. Since
no one else could ever license the photograph or illustration
again, the fee for such use will be significant, most likely in
the tens of thousands of dollars or more. No one at Grey will
be able to take advantage of broad rights or royalty free images,
as they are priced and marketed for multiple users and cannot
be restricted in any manner.
In sum, stock images cannot be licensed according
to the new Purchase Order. Nor can the industry invalidate its
terms, which must be complied with since we have contractual restrictions
with contributors.
If Grey has concerns with licensing stock, we would
welcome an opportunity to discuss this and arrive at language
that is appropriate to our industry.
Thank you for your time and consideration,
Very truly yours,
Nancy E. Wolff
United States District Court
in Texas grants attorney's fees to prevailing accused copyright
infringer. [Compaq Computer Corporation v. Ergonome, Inc.]
Ergonome, a publisher of computer handbooks learned
an expensive lesson when taking on Compaq in a copyright dispute
concerning the publication of computer guides informing readers
about the ergonomics of healthy computer use. Ergonome's published
general audience works on computer ergonomics beginning in 1993.
When a potential licensing deal between Ergonome and Compaq to include
Ergonome's works with newly purchased Compaq computers was abandoned,
Compaq created its own ergonomic guides.
As a consequence, Compaq sought a court determination
that its publication did not infringe on Ergonome's handbook. At
the same time, Ergonome brought suit against Compaq in the Southern
District of New York for copyright infringement; however, this suit
was transferred and consolidated into the suit already pending in
the Southern District of Texas. The Texas District court found that
Ergonome's works were "original" based on Ergonome's arrangement
of the ideas through words and pictures and rejected Compaq's argument
that Ergonome's words and phrases were too short to be copyrightable.
Once the court found that copyrightability existed, it had to determine
whether Compaq's copying qualified as substantially similar to Ergonome's
handbooks or whether it was merely de minimis, and therefore not
infringing. This determination involved issues of fact to be resolved
by a jury trial.
At the outcome of the trial, the jury concluded that
while there were some substantial similarities between the handbooks,
on the whole they related to unoriginal material that was not copyrightable,
and that the original portions copied from were so minimal that
the copying was not infringing.
Since Compaq succeeded in defending the copyright claim,
under Û505 of the Copyright Act the court had discretion to allow
the recovery of full costs as well as reasonable attorney's fees.
Based on a Supreme Court decision (Fogarty v. Fantasy Inc.) an accused
infringer who prevails in a copyright lawsuit is to be treated the
same as a winning copyright owner under the Copyright Act. Additionally,
the award of attorney's fees in copyright cases, while within the
discretion of the court, is generally the rule rather than the exception
in the Texas court's jurisdiction.
The court awarded Compaq more than 2.7 MILLION dollars
in attorneys' fees. In its determination that Compaq be awarded
attorney's fees, the court considered several factors, mostly relating
to the frivolous nature of Ergonome's claims. First, Ergonome's
alleged damages were more than $800 million, a figure considered
unreasonably excessive and without substantiation. Second, Ergonome's
complaint listed an array of claims that were preempted by the Copyright
Act as they "flowed out of and were based on" the copyright infringement
claim. Third, Ergonome was delinquent in responding to discovery
requests from the outset of the litigation, leading to numerous
fines and holdings of contempt. Next, Ergonome filed a number of
claims that were completely without merit, and the testimony of
Ergonome's principals was found to be not credible by the court
in several instances. Finally, Ergonome rejected an early settlement
offer for $200,000 and the attorney's fees Ergonome would have requested
if its case had succeeded would have been more than 120 times the
fees requested by Compaq.
LESSON: Carefully consider the merits of any
copyright action, as well as possible defenses before bringing an
action; bring carefully crafted and narrowly defined claims; understand
that once in litigation you must cooperate with the other side and
provide documents; do not be blinded by emotions as to the true
value of your claim and finally, always consider reasonable settlement
demands, especially when you are in your adversary's home state.
Enough lecturing!
Grey Advertising Update
I received a fairly prompt response to my letter on
PACA's behalf regarding the Grey Advertising purchase agreement
from Grey's in-house attorney, Moshe Oppenheimer on February 24,
2003. We had a long dialog regarding the new contract.
Instead of talking about the copyright issue that was
the main subject of my letter, he complained that the stock industry
won't indemnify the user, that our online agreement says it can
be changed and that when he asks for model releases the name and
signatures are blacked out. He said that he understood that Grey
was only acquiring limited rights and not copyrights when licensing
from stock companies. He thought that the fact that the PO had limited
rights solved the copyright problem. I pointed out that the language
was clear that the contract could not be amended.
We ended up having an instructional talk. I explained
that PACA members have certain required clauses in our contracts
because of the relationship with contributors. Further, that insurance
to cover model release claims is prohibitive for many companies.
I questioned whether Grey would be willing to pay much higher fees
to cover the costs. He did admit that Grey does carry insurance
and that claims were infrequent.
I also explained that most claims are the result of
what the ad agency does with the picture, such as the caption, tagline,
or image manipulation. He said he would agree to indemnify the stock
company if we considered indemnifying Grey.
With respect to the crossed off model names on releases,
I explained that companies have policies to protect the privacy
of the models. He wanted to know how we knew the release was signed.
I thought a reasonable solution would be for the company to represent
that the release was signed. With respect to the online contract
I pointed out that all contracts can be modified in the future and
all online contracts in all industries mention that contracts are
subject to future change.
He said he would talk to the outside lawyer who drafted
the agreement regarding our concerns.
By the end of the conversation he stated that he thought
it was good that we started a dialog. He had started the conversation
by saying that perhaps Grey would only work with companies who accepted
indemnities and their terms. In reply I thought that his art directors
would complain of the lack of choice.
I mentioned that we had an annual meeting coming soon
and we could perhaps discuss these issues he raised but we could
not live with these terms as were written. He seemed eager to have
an opportunity in the future to have a forum to discuss these issues
with members. He said he learned a lot about the issues from our
discussion. I would advise that everyone continue to do business
based on your own terms and conditions, and cross out or reject
any terms or contracts that you do not agree with.
JUST
SAY NO (To Advertising POs)
As a follow-up to my prior updates involving the Grey Advertising
POs (Purchase Orders) that were recently sent to many members, you
should affirmatively reject contract terms and PO's that are in
direct conflict with your license terms. The content is yours to
license and should be under your terms. In an abundance of caution,
you should reply to the sender of the Grey Worldwide letter if you
received the letter, rejecting the attached terms and conditions
and notify Grey Worldwide that the terms of licensing are included
in your invoice.
If you are provided with POs from any user that has
onerous terms, (i.e. transfer of copyright, over broad indemnities,
jurisdictions other than yours), cross out such terms and state
that the license is subject to your terms and conditions, and if
there is any conflict between the two, the terms and conditions
of your company's license agreement controls.
NABBING THE ANONOMYOUS INFRINGER
District Court grants motion to enforce subpoena issued under
DMCA to ascertain identity of alleged copyright infringer.
[In re Verizon Internet Services, Inc.]
The Internet offers users the unique ability to operate anonymously,
whether sending emails, chatting or operating Web sites. Unfortunately
copyright infringers have learned how to hide behind the veil of
secrecy as well. (I personally have had the pleasure of trying to
serve someone for infringement who was making entire books available
for download online and was registered with its ISP under a phony
name and a birth date of 00/00).
As background, The Digital Millennium Copyright Act
("DMCA") limits the liability of various categories of
Internet service providers (ISP) for acts of copyright infringement
by the ISP's users so long as these ISP's meet certain criteria
set out in the law. A provision within the statute provides that
a copyright owner may request the issuance and enforcement of a
subpoena to a service provider in order to obtain the identity of
an allegedly infringing customer. The enforcement of this provision
was the subject of a recent court decision.
Not surprisingly, the case involves peer-to-peer music
sharing. The Recording Industry Association of America ("RIAA"),
on behalf its members, served a subpoena on Verizon Internet Services
("Verizon") under the authority of §512(h) of the
DMCA. RIAA wanted Verizon to reveal the identity of one of its subscribers
who was downloading more than 600 songs in a single day from the
internet through peer-to-peer software provided by KaZaA. The RIAA
knew the user's IP address, but only Verizon knew his/her identity.
Verizon failed to comply with the subpoena, stating in a response
letter that in its view, the subpoena power of the DMCA applied
only if the infringed material was stored or controlled on the service
provider's network, and in this instance, the network was only a
conduit for the infringing material. RIAA brought suit in the District
Court of DC to enforce the subpoena.
This action compelled the court to interpret the language
and structure of the DMCA in order to clarify the power and scope
of the subpoena provisions in §512(h). The Court was able to
ultimately determine that the subpoena power under §512(h)
applies to all internet service providers, and therefore it ordered
Verizon to comply with the RIAA's subpoena.
The Court went on to discuss in great length the policy,
purpose, and history of the DMCA. Congress, the Court stated, had
a dual purpose in enacting the DMCA. First, the DMCA is designed
to preserve copyright enforcement on the Internet and protect against
unlawful piracy, which is enabled by the subpoena power. The second
purpose is to promote the development of electronic commerce by
providing immunity to service providers from liability for copyright
infringement for actions initiated by online users without the knowledge
of the service provider. The Court said that this balance and dual
purpose were built into the DMCA, and that the best results can
only be reached if the statute is construed to extend the authority
of the subpoena provisions to all service providers within the DMCA.
Finally, the Court stated that the free speech guarantees
of the First Amendment do not protect copyright infringement and
that this is not an instance where the "anonymity of an Internet
user merits free speech and privacy protections." Although
the Internet provides an "unprecedented electronic megaphone"
for expression, and even though the right to speak anonymously is
protected by the First Amendment, the Court failed to see how anonymously
downloading 600 songs without authorization was protected speech.
Moreover, the Court agreed with the RIAA – "the alleged
infringer [was] not truly anonymous...Verizon knows the identity."
This decision should discourage other service providers
from refusing to respond to subpoenas served to learn the identity
of copyright infringers.
JURY AWARDS PHOTOGRAPHER
WILLFUL DAMAGES
IN NATIONAL GEOGRAPHIC CASE
A Miami District Court jury awarded photographer Jerry Greenberg
$400,000 in the damages portion of his case against National Geographic
Society for the unauthorized use of his images in the CD-ROM entitled
"108 Years of National Geographic on CD-ROM". The jury
also found that the infringement was "willful", which
permits the prevailing party to seek the recovery of its attorneys'
fees and costs. Greenberg had registered his photographs prior to
the infringement entitling him to seek statutory damages and attorneys'
fees.
The award was based on statutory damages in which the
copyright holder can seek (at the time) up to maximum of $100,000
per infringement if the infringement is willful. Since the commencement
of the action, The Copyright Act has been amended and the maximum
amount has increased to $150,000. Although 64 of his images were
republished in the CD-ROM, the court found that there were only
four infringements for purposes of statutory damages because the
photographs were published in four separate articles, viewing each
article as one work. He was awarded $100,000 for each of the four
infringements. NGS intends to appeal the award and will discontinue
sales of the product at this time, according to reports.
Federal court
upholds practice of photo library in sending contributors "requests
lists" and representing multiple photographers who shoot similar
subject matter in dismissing copyright infringement and breach of
contract action by photographer.
A federal district court in Chicago recently dismissed
on a motion for summary judgment, an action brought in January 2000
by a photographer, Penny Gentieu against her licensing agent, Tony
Stone Images/Chicago. (Summary judgment is a method of promptly
disposing of a case before trial where there is no issue as to any
material fact). Gentieu charged that the actions of Tony Stony Images
(TSI) violated her copyright, breached its fiduciary duty, and breached
her agency agreement. After carefully reviewing all the evidence
submitted, the court granted TSI's motion to dismiss the case in
its entirety. (For ease I will refer to the defendant as TSI in
most instances, as it was her original agent, although Getty Images
subsequently acquired TSI and was the party at the time of the motion.)
Briefly, (the decision is 68 pages), Gentieu is
a photographer, specializing in images of babies, and typically
shoots them against a white lit background, eliminating any shadow
so they appear to be floating. In 1993 Gentieu signed an exclusive
agency agreement with TSI, granting TSI the right to be her exclusive
stock photography agent. She was assigned an editor who would send
what TSI called "shoot briefs," essentially a list of
potential subjects that clients were interested in licensing. One
particular shoot brief suggested that the photographer submit baby
photographs such as a "baby shot straight on silhouetteable
clean white background." Without reference to any Gentieu images,
the art directors at TSI sent a similar shoot brief to other photographers.
As a result, other contributors submitted baby pictures to TSI that
were shot against a white background. Almost two years later, a
subsequent shoot brief indicated that baby pictures against a white
background were no longer needed, but provided other subject suggestions.
Apparently over 200 of Gentieu's shots were accepted
by TSI and she generated over $850,000 from approximately 7,000
transactions. However, her sales peaked in 1997, and she blamed
the decline on the way TSI handled her sales. In part, Gentieu refused
to sign a new contract that was introduced by Getty Images in August
1998 after it acquired TSI. The 1998 contract was intended to standardize
agreements among photographers of many acquired companies, as well
as change the commission due photographer's from 50% to 40% for
online sales. Photographers who did not agree to sign the 1998 agreement
did not have their images marketed on the TSI and Getty Images websites.
In 2001, Getty Images exercised its right under its 1993 Agreement
with Gentieu to terminate the agency relationship and removed her
images from its licensing systems.
The Copyright Claim:
Gentieu claimed that TSI violated her copyrights by reproducing
and making derivatives of her baby pictures and by commissioning
others to do so. Second, she alleged that TSI exceeded the scope
of its licensing agreement in the manner it conducted the licensing
of her images.
With respect to the allegations of unauthorized copying
and the creation of derivatives, the court was required to determine
whether the alleged "infringing" baby pictures submitted
by other TSI contributors were substantially similar. This required
the court to compare the images and conduct an "ordinary observer
test" to determine if an ordinary observer would find any taking
of protectible expression that was material. Since copyright does
not protect an idea (such as photographing babies), the protectible
expression is the elements of a photographer's composition such
as lighting, shading, camera angle, background and perspective.
Ordinary poses that follow from the choice of the subject matter
are not protectible, whereas contrived positions might be.
Consequently the court concluded that Gentieu could
not claim copyright in the idea of photographing naked or diapered
babies or in the poses that are the natural movement and facial
expressions of babies.
In carefully comparing 15 sets of photographs that Gentieu
asserted were infringed by other contributors, the court concluded
that in each case there was no copying of protectible elements.
The court described the copyright in her baby pictures as a "thin"
copyright. Since she limited the photographs in some cases to just
a head shot against a white background, and added nothing else that
was protectible in terms of copyright, near exact copyright was
required to find infringement or the court would risk granting a
monopoly on all naked babies against a white background to one photographer.
While Gentieu argued that her technique of creating a "high
white" background was unique, the other photographers employed
other techniques to create a white background and the court noted
that a white background is common for photographic portraiture and
well suited for stock photography.
In sum, all similarities between Gentieu's photographs
and the allegedly infringing works were in the idea of photographing
babies, but were expressed in different ways.
In this action, the accused infringing photographers
were located in London. These photographers provided testified to
rebut her allegations of infringement stating that they did not
use Gentieu's images as the basis for their photographs, but had
independently created the images, and simply selected the subject
matter based on the shoot briefs received from their art directors,
suggesting needed shots. The court found that these shoot briefs
were not suspect and were not evidence of copying.
The second part of Gentieu's copyright claim was to
hold TSI responsible for misuse of her images by customers of TSI,
such as use outside of a license or in the creation of derivative
images. TSI's contract with Gentieu protected it from this portion
of the claim. The contract granted TSI "in the event of loss,
damage or misuse to any of the Images" the sole right to bring
claims on her behalf and all settlements and litigation decisions
were at TSI's sole discretion. Further, the contract contained language
limiting TSI's liability for loss, damage or misuse of any images
and prevented TSI from being held liable for infringing acts of
third parties.
Finally, the court found that the myriad acts by TSI
that Gentieu complained of, such as permitting licenses after the
termination of the agreement, allowing cancellations, various reporting
issues, etc., did not exceed the broad scope of the license created
when Gentieu appointed TSI as her sole and exclusive agent and representative
throughout the world. These acts were also considered "de minimis"
by the court.
Breach of fiduciary duty
The complaint stated that TSI breached its fiduciary duty
by commissioning and accepting baby pictures by other contributors
and by telling Gentieu not to submit similar images. As a principal-agent
relationship was created under the 1993 Agreement, TSI had a fiduciary
duty to treat Gentieu with the utmost candor, rectitude, care, loyalty
and good faith. Gentieu argued that in inducing others to create
"Gentieu style photographs," TSI violated its duty. The
court noted that under agency law, an agent can act on behalf of
competing principals without violating its fiduciary duty as long
as the representation of competitors is disclosed. Gentieu did not
dispute the fact that she was aware that TSI would represent other
photographers who subject matter was "babies." Significantly,
the court stated that "the very nature of the stock photography
business requires that the stock agency solicit images on the same
subject so that it can offer clients a menu of images to choose
from."
The shoot briefs were not evidence of any misconduct
on the part of TSI (particularly given the Court's observation that
Gentieu herself had received art direction and shoot briefs) nor
the letter to Gentieu thereafter stating that TSI no longer needed
more pictures of babies, as TSI had provided three pages of ideas
for photographs that were needed. Consequently, the court dismissed
Gentieu's claim for breach of fiduciary duty.
Breach of Contract
Gentieu asserted that 1) TSI's same misconduct in licensing her
images that formed the basis of her copyright claim, breached the
1993 agreement, 2) that other conduct breached the contract's "best
efforts clause" and 3) all of TSI's acts breached an implied
covenant of good faith and fair dealing. (A claim for delayed royalty
payments had previously been resolved and was no longer part of
the claim). Based on the same contract language relied upon in the
copyright violation claim, granting TSI broad rights and unfettered
discretion in licensing and instituting actions, the court found
that the first part of the breach of contract claim failed as a
matter of law.
In part, Gentieu based the breach of the "best
efforts" clause on TSI's failure to market her images on the
web. In some jurisdictions, best efforts clauses are unenforceable
as too vague. Here the court interpreted the clause to require an
obligation to use good faith, reasonable efforts to promote Gentieu's
images. The court found that her claim failed in several respects.
In particular, the failure to market the images on the website was
not a breach of the best efforts clause. In 1993 there was no website
and TSI was not obligated to develop one. Even after the website
was created, the 1993 contract gave TSI the right and sole discretion
with respect to marketing and promoting images in any and all mediums
throughout the world. Finally, the court concluded that the unambiguous
terms of the 1993 agreement could not be nullified by an implied
covenant of good faith and fair dealing.
In sum, the court found that none of the conduct complained
of constituted a breach of the 1993 agreement.
Comment
This decision is significant as never before have common
practices of the stock industry, such as sending "wish lists,"
art direction, representing contributors who may shoot similar subjects,
litigation and marketing decisions, and liability for third party
misconduct had such judicial scrutiny. The court grasped the nature
of the stock industry and the need to present clients with relevant
choices of images that meet their needs, requiring various photographers
to shoot similar subject matter. It would be crippling if stock
libraries could not send multiple contributors similar wish lists,
or could not accept images from contributors who shoot the same
subject matter. In particular, a niche agency could not compete
if it could only represent one photographer that photographed, for
example, wild animals. However, with respect to providing art direction
and requesting photographs of particular subjects, I would recommend
using verbal descriptions of requested shots and would not provide
another contributor's image as an example of a "well-selling"
image.
From a copyright standpoint, the decision is favorable
to both photographers and their representatives. The court correctly
understood the distinction between the idea and the expression of
an idea, as the copyright act was not intended to grant any one
creator a monopoly over one idea. It is important when representing
many contributors that similarity in "subject matter"
in general does not expose stock libraries or individual photographers
to liability. Companies and photographers need to be competitive
with each other and provide clients with images of subject matter
that is in demand and to keep current with industry trends.
Finally, the decision was significant as the court upheld
the standard language used in most contributor agreements, including
the PACA forms, limiting agent's liability for third party acts
of loss or misuse. In addition, upholding the language granting
the agency or library discretion in pursuing claims and settlements
against third parties is important in that business discretion and
good judgment is needed in determining whether is makes sense from
a business perspective to pursue all claims, and to make a settlement.
Finally the ambiguous term "best efforts"
was defined in a way that makes business sense as it implies reasonable
efforts. Each library must make decisions on how to market and promote
images, and must have the discretion to use reasonable judgment
in doing so.
DON'T
SLEEP ON YOUR RIGHTS!
The importance of copyright notice for pre-Berne works.
(Or if you remember the 60's you were not part of it.)
Shea v Fantasy Inc. U.S District Court, Northern District of California
Decided February 27, 2003
A photographer learned the hard way that inaction
could cause result on his work entering the public domain. On June
3, 2002 Edmond Shea files a complaint against Fantasy, Inc., a record
company, alleging federal copyright infringement with respect to
a photograph he took in 1966 of the legendary comedian Lenny Bruce.
The beginning:
In 1971, defendant, Fantasy Inc. releases the Lenny Bruce
Album "Live at the Curran Theater" in a 3 LP set. The
album contained the photograph of Lenny and Kitty Bruce that Shea
took in 1966. The photograph in the album is not credited to Shea,
nor does it contain a copyright notice. In 1972 (after the album
was released) Shea has a conversation with Ralph Gleason, a Fantasy
employee, where he allegedly informed Gleason that no permission
was granted to Fantasy to publish the picture. According to Shea,
Gleason assured Shea that he would not publish the photo in the
future without permission and that he would receive payment for
any such future use. The LP was distributed to the general public
through retail outlets and by catalogue purchase from 1971 to 1991.
Shea acknowledged that that he was aware the album and accompanying
photograph were publicly available for several years after the Gleason
meeting.
Now we leave the 60's and travel forward in time. In
1999 Fantasy re-releases "Live at the Curran Theater"
on CD format. The photograph of Lenny Bruce appears on a page of
the liner notes. On September 20, 1999 Shea registers the photograph
with the Copyright Office as an "unpublished photograph".
In June 2003, Shea files a complaint for copyright infringement
against Fantasy. Fantasy filed a motion to dismiss the complaint
asserting that the work entered the public domain. In addition,
Fantasy argues that it is entitled to summary judgment based on
the defenses of laches and equitable estoppel.
Fantasy's public domain argument:
The 1909 Copyright Act was rife with formalities that if left unattended,
could thrust works into the public domain to the misfortune of the
unknowing creators. When a work was published was a significant
component of the 1909 Act. Under the 1909 Act, publication occurs
when by consent of the copyright owner, the original or tangible
copies of a work are sold, leased, loaned, given away, or otherwise
made available to the general public.
There was no issue that the album containing the Lenny
Bruce photograph was available from 1971 to 1991. The issue was
whether that publication was with consent. Remember that Shea had
a conversation with Gleason back in 1972, where they discussed the
use of his picture. The essence of the agreement between Gleason
and Shea was that Fantasy could continue to use Shea's photograph
when distributing the LP; however, Fantasy would have to pay Shea
royalties if it wanted to use the photograph in any other context
or format. Based on this arrangement, Fantasy's distribution of
Shea's photograph after his conversation with Gleason constituted
a consensual "publication" for the purposes of the 1909
Copyright Act. Because Shea failed to comply with the statutory
formalities of the 1909 Copyright Act (affixing notice of copyright
to every distributed work), the Court found that Shea forfeited
his copyright and the photograph was considered to be in the public
domain.
After the court determined that the photo was in the
public domain under the 1909 Act, the Court then looked to the 1976
Act to see if he could rely on any of the provisions to save his
copyright claim. The Copyright Act of1976, however, does not provide
protection for works that entered the public domain before January
1, 1978. The statutory presumption of validity under the 1976 Copyright
Act, 17 U.S.C. §410(c) applies only when the certificate of
registration is made before or within 5 years after first publication
of the work. Since the Court determined that the photograph was
"published" in the early 1970's, Shea is not entitles
to a presumption of validity.
The Role of Laches in Shea's infringement claim:
As if things weren't bad enough for Shea, the court barred his claim
for infringement by a doctrine known as laches. Laches is an affirmative
defense that must be proven by the party asserting the claim. To
prove laches, a defendant must show two things; 1- plaintiff's unreasonable
and inexcusable delay in asserting a claim and 2- prejudice or injury
to defendant as a result. This delay is measured from the time that
the plaintiff knew or should have known about the potential claim
at issue.
For laches to work in this situation, Fantasy records
would have to prove that Shea waited an unreasonably long amount
of time before he made any claim and because of that, they have
been injured. In this case, the album containing Shea's photograph
was first published in 1971. Shea stated that he believed he first
became aware of the Fantasy album in 1972. Construing the facts
most favorable to Shea, his photograph was in publication for at
least 16 years with Shea's knowledge. The CD "Live at the Curran
Theater" was published in August 1999. Shea did not file suit
until June 3, 2002. Do the math. Shea knew about Fantasy's allegedly
infringing conduct for roughly 30 years and failed to pursue copyright
remedies for that entire period. Thirty years was considered unreasonable.
Further, the court agreed that this long delay in commencing
and action did indeed cause prejudice, both in establishing evidence
after such a long time period, and in the conduct of the record
company. Gleason, the witness was long dead, memories had faded
and the likelihood of lost evidence was high. Further, the record
company testified that had it known that the use of the photograph
was infringing, it would have not used it in the liner notes. In
sum, the court agreed with Fantasy in all respects and found and
dismissed Shea's claim.
Unfortunately, the 1909 Copyright Act is a landmine
when it comes to protecting artists' works. The risk of non-compliance
with the notice requirement is high. Fortunately, when the United
States joined the Berne Convention in March 1989, the formalities
of notice were eliminated. The elimination of the requirement was
not retroactive, so proper notice is still a concern with older
works. However, if the publication without notice was truly without
consent, the publication will not be considered a "publication"
for purposes of the Copyright Act.
Forms Update
Including date of birth model releases
Some advertising agencies are requesting the age
of the model when licensing model released images. It appears that
for certain products, they are requesting that the model be at least
25.
Since 18 is the age of majority, the standard release
states that the model is over 18 years old. Otherwise a parent or
guardian must sign on behalf of the model.
I would recommend adding a line under the signature
for the date of birth of the model on the release.
I would also recommend retaining a photocopy of the
model's picture driver license or other picture ID that has both
the image and signature.
More Unilateral Letter Agreements
Conde Nast Publications is apparently
circulating a certified letter to picture libraries stating that
the company is no longer accepting original transparencies in response
to requests for images unless the magazine asks for the specified
originals in writing. Further, the letter stated that it will not
be responsible for lost and damaged original transparencies sent
without a specific written request beyond the reasonable replacement
costs of duplicate transparencies. Finally, the letter states by
merely providing images to Conde Nast you are agreeing to these
terms and "no contrary provisions contained in transmittal
notices, invoices or other documents shall override this limitation."
While I do not believe you can be contractually bound
to the terms of a letter by mere receipt, Conde Nast is setting
up a "battle of the forms" argument with respect to any
agreements you have with it and could use this letter as a defense
in a future dispute. The standard delivery contract states that
any changes must be in writing, but in most cases the delivery contract
is unsigned by the recipient. Under the UCC, if material terms are
in dispute, they can cancel each other out and you only have an
agreement based on the undisputed terms.
If, as a photo library, you routinely send originals
to Conde Nast, I would respond by certified mail placing Conde Nast
on notice that you routinely fulfill requests by sending originals
and if anyone at Conde Nast requests images from your library it
shall be deemed that the request includes a request for originals
and as a condition of delivery, the terms of your delivery contract
control, (specifically rejecting the terms of the letter).
Networks Recover Attorneys' Fees Against
Plaintiff in Copyright Infringement Case
(Video-Cinema Films, Inc. v Cable News Network U.S. District
Court,
SDNY March 30, 2002)
I previously wrote an update about a fair
use case heard in the Southern District of New York. Plaintiff,
Video-Cinema Films asserted a claim for copyright infringement and
for common law unfair competition against CNN, ABC and CBS for their
nationwide broadcasts of excerpted footage from the motion picture
"The Story of G.I. Joe" after the death of actor Robert
Mitchum, who had appeared in that film. Plaintiff claimed that Defendants
violated the Copyright Act when they broadcast this footage as part
of an obituary for the actor. The Court found in favor of networks
and granted their summary judgment motion. The Court found that
the networks produced news reports that served the public interest
in accordance with the Copyright Act's fair use provision. The Court
specifically noted that the public would be hindered by denying
Defendants' fair use defense and that the obituaries in question
contained information which, if the general public did not find
interesting, move aficionados would find informative.
After receiving a favorable decision, the networks filed
a motion to recover attorneys' fees as the prevailing party in the
copyright suit.
Pursuant to section 505 of the Copyright Act, the court
may award reasonable attorneys fees to the prevailing party as part
of their costs. It is within the court's discretion whether or not
to grant such an award. While there is no precise rule or formula
for the Court to follow in exercising this discretion, some of the
factors the court may consider are "frivolousness, motivation,
objective unreasonableness and the need in particular circumstances
to advance considerations of compensation and deterrence. Of these
factors, objective unreasonableness is a significant factor and
should be given substantial weight in determining whether fees are
warranted. Thus the court may award attorneys fees solely upon a
showing that Plaintiff's position is objectively unreasonable.
The court found that throughout the litigation, Plaintiff
made objectively unreasonable factual and legal arguments. As a
result, the networks motion for attorneys' fees was granted. As
you may recall from the original summary, the networks has used
small portions of the film clips and not movie stills to illustrate
significant movies Mitchum had performed in during his career. Furthermore,
Larry Stern, the sole president and shareholder of Video-Cinema,
prior to buying rights in the film and in anticipation that the
networks would show clips from G.I. Joe, spent ten hours watching
television on the date of Mitchum's death trying to find as many
potential litigation targets in the event he was able to buy the
copyright to the film. Stern then sent letters demanding $5,000
to $10,000 from each broadcaster for their use of the film clips.
This is a reminder that an overzealous pursuit of infringement
in a copyright case that is contrary to well confirmed principals
of copyright law can result not only in a denial of infringement,
but subject you to significant costs in terms of your adversaries
attorneys' fees. In other words, pick your battles wisely (and don't
look so greedy to the court!).
Penny Gentieu appeals decision
Penny Gentieu reports that she has filed an appeal
of the recent decision dismissing her complaint against Tony Stone
Images/Chicago (now Getty Images) for copyright infringement and
various breach of contract claims.
Nancey
Silvers v Sony Pictures
2003 WL 21264318 (9th Cir.(Cal.))
So you discover that a contributor's photograph
is "knocked" off and you want to bring a copyright infringement
claim against the infringer. As the representative, you want to
bring the claim on behalf of the photographer, but under the contract,
its clear that the photographer is the sole copyright holder. Is
it necessary to name the photographer as a party in the complaint?
What if the photographer does not want to be a named party? Well
according to a recent 9th Circuit Court of Appeals decision, the
contributor only need to "assign" to the stock library
all right, title and interest to any claims and causes of action
with respect to the photograph, and the stock photo library can
commence a lawsuit without having to join the photographer as a
party.
This is how it all came about…
In 1991, Nancey Silvers a writer and producer of television
movies began writing a script about the relationship between a mother
who discovers she has cancer and her ex-husband's wife who will
raise the mothers children when the mother dies. In 1995 the script
was made into a CBS movie called "The Other Woman". Silvers
completed the script as a work for hire for Frank and Bob Films
II, who owns the copyright to the movie.
In 1998 Sony released the motion picture "Stepmom",
starring Julia Roberts, Susan Sarandon and Ed Harris. After the
release of Stepmom, Frank and Bob Films II executed an "Assignment
of Claims and Causes of Action" selling, transferring and assigning
to Nancey Silvers "all right, title and interest in and to
any claims and causes of action against Sony Pictures, Columbia
Tri-Star and any other appropriate persons or entities with respect
to the screenplay "The Other Woman" and the motion picture
"Stepmom". The assignors retained ownership of all other
rights under the copyright.
On June 13, 2000, Nancey Silvers filed a complaint against
Sony for copyright infringement and unfair competition alleging
Stepmom was similar to a script she had written for a 1995 television
movie "The Other Woman". Silvers' claims that the creation,
production and release of Stepmom to the general public in numerous
venues and formats infringed the copyright of "The Other Woman".
On July 12, 2000 Sony filed a motion to dismiss. Sony
claimed that Silvers lacked standing to bring the copyright infringement
suit. (Standing is a legal term used to describe the status of one's
ability to bring a lawsuit. Because federal courts only have Constitutional
authority to resolve actual disputes, legal actions cannot be brought
simply on the ground that an individual or group is displeased with
a government action or law. Only those with enough direct stake
in an action or law – those who can show they have suffered
or will suffer direct harm as a result of a law - have "standing"
to challenge it. ) The court denied Sony's motion to dismiss but
granted their motion for an appeal.
DISCUSSION:
The question of law presented to the court is whether an accrued
cause of action for copyright infringement may be assigned to a
third party, without any other copyright rights accompanying the
assignment.
In the Assignment of Claims and Causes of Action signed
by the representatives of Frank and Bob Films II, Silvers was given
"all right, title and interest in and to any claims and causes
of action against Sony Pictures Entertainment Inc…with respect
to the screenplay "The Other Woman"…and the motion
picture "Stepmom". In no uncertain terms, the copyright
owner Frank and Bob Films II, by an assignment executed after the
release of the alleged infringing work "Stepmom" transferred
any accrued causes of action related to the two films to Silvers.
The all inclusive language of the assignment precisely and clearly
specified what rights Silvers obtained.
The court based much of its decision on interpreting
the intent behind the Section 501 (b) of the Copyright Act which
states:
The legal or beneficial owner of an exclusive right
under a copyright is entitled, subject to the requirements of section
411, to institute an action for any infringement of that particular
right committed while he or she is the owner of it….
The court disagreed with the precedent set by another
case in 1982, in which it was decided that the language of §501
b clearly limited the amount of people who had "standing"
to bring a copyright infringement suit to an owner of an exclusive
right under copyright. This court decided that nothing in the statute
prohibited the legal or beneficial owner of the exclusive right
under copyright from assigning an accrued cause of action for infringement
of that right. According to the language of the statute the legal
or beneficial owner of an exclusive right under copyright has the
legal right to institute an action for infringement of that right
while he or she is the owner of it. This language, as the court
held, indicates that the right accrues.
WHY IS THIS IMPORTANT:
This case is significant because it permits a photo library that
has acquired less than exclusive rights under copyright to acquire
through contract the right to sue on behalf of its contributor in
the event an image in its collection is infringed. The artist maintains
all of his or her rights under the Copyright Act without having
to worry about being drawn in to every lawsuit. Of course, the cooperation
of the contributor is necessary to proceed, but one legal hurdle
is removed.
COPYRIGHT OFFICE UPDATE
At a recent Annual Copyright Society meeting, Mary
Beth Peters, Register of Copyrights reports that applications for
registrations without problems are being processed more quickly,
and in many cases the processing time is now only six weeks.
Tiger Woods Loses,
Freedom of Expression Wins in Trademark/Right of Publicity Claim
for Use of Name and Likeness in Multiple Print Art
ETW Corporation v Jireh Publishing,
Inc.
Appeal from the United States District Court for
the Northern District of Ohio, June 20,
2003
Recap of the Background
Jireh Publishing publishes artwork by Rick Rush,
an artists who specializes in painting sports figures. In 1998 he
created a painting entitled "The Masters of Augusta" which
commemorates Woods' victory at the Masters Tournament in Augusta
in 1997. Jireh published and marketed a limited edition of 5000
lithographs of The Masters of Augusta. Tiger Woods name is used
in the narrative description of the work.
What the Picture Looked Like
The painting consisted of three views of Woods
in different poses. Behind the figures is the Augusta National Clubhouse.
In the background behind the clubhouse are likenesses of famous
golfers of the past looking down on Woods. The limited edition prints
distributed by Jireh consist of an image of Rush's painting which
includes Rush's signature at the bottom right hand corner. Beneath
the image of the painting, in block letters, is its title, "The
Masters if Augusta". Beneath the title, in block letters of
equal height, is the artist's name, "Rick Rush", and beneath
the artist's name, in smaller upper and lower case letters, is the
legend "Painting America Through Sports."
The Action Appealed From
ETW- the licensing agent of Tiger Woods- filed
suit against Jireh, alleging trademark infringement in violation
of the Lanham Act, dilution of the mark under the Lanham Act, unfair
competition and false advertising under the Lanham Act, unfair competition
and deceptive trade practices under Ohio Revised Code, unfair competition
and trademark infringement under Ohio common law, and violation
of Woods's right of publicity under Ohio common law. ETW owns a
trademark registration for the mark "TIGER WOODS" for
use in connection with art prints, calendars, mounted photographs,
notebooks and the like. Jireh counterclaimed, seeking a declaratory
judgment that Rush's art prints are protected by the First Amendment
and do not violate the Lanham Act. Both parties moved for summary
judgment and the district court granted Jireh's motion and dismissed
the case in 2000. ETW appealed.
And the verdict is….?
The same!
The U.S. Court of Appeals for the Sixth Circuit decided
that the district court properly granted summary judgment on ETW's
claim for violation of its registered mark, "Tiger Woods"
on the grounds that the claim was barred by the fair use defense.
The court held that as a general rule, a person's image
and likeness cannot function as a trademark.
Their reasoning is simple. ETW registered Woods' name
as a trademark but it didn't register any image or likeness of Woods.
The essence of a trademark is a designation in the form of a distinguishing
name, symbol or devise which is used to identify a person's goods
and distinguish them from the goods of another. ETW claimed protection
under the Lanham Act for any and all images of Tiger Woods. In effect,
they asked the court to constitute Woods himself as a walking, talking
trademark. Images and likenesses of Woods are not protectable as
a trademark because they do not perform the trademark function of
designation. They do not distinguish and identify the source of
goods. They cannot function as a trademark because there are thousands
of images and likenesses of Woods taken by countless photographers
which have been published in many forms of media, and sold and distributed
throughout the world.
False Endorsement Claim
The gist of ETW's false endorsement claim was that
the presence of Woods's image in Jireh's print implies that he has
endorsed Jireh's product. False endorsement occurs when a celebrity's
identity is connected with a product or service in such a way that
consumers are likely to be misled about the celebrity's sponsorship
or approval of the product or service.
In an ordinary false endorsement claim the controlling
issue is likelihood of confusion. However, both the Second Circuit
and the Ninth Circuit have held that in Lanham Act false endorsement
cases involving artistic expression, the likelihood of confusion
test does not give sufficient weight to the public interest in free
expression. The courts agreed that the public interest in free expression
should prevail if the use of the celebrity's image has artistic
relevance, unless it is used in such a way that it explicitly misleads
as to the source of the work.
Right of Publicity Claim
ETW -- the licensing agent of Tiger Woods -- claimed
that Jireh's publication and marketing of prints of Rush's painting
violates Woods's right of publicity.
The court analyzed this claim according to the Restatement of Unfair
Competition, which articulated a rule analogous to their rule of
fair use in copyright law. Under this rule, the substantiality and
market effect of the use of the celebrity's image is analyzed in
light of the informational and creative content of the defendants'
use. Applying this rule, the court concluded that Rush's work had
substantial informational and creative content which outweighed
any adverse effect on ETW's market and does NOT violate Woods's
right of publicity.
In addition, the Court stated that "Rush's work
is expression which is entitled to the full protection of the First
Amendment and not the more limited protection afforded to commercial
speech" The court concluded that effect of limiting Woods's
right of publicity was negligible and significantly outweighed by
society's interest in freedom of artistic expression.
Comments
The photography industry has been awaiting this
decision for nearly two years. Artists groups, including ASMP filed
briefs in support of the position that an artist/photographer should
be allowed to sell prints of his or her works without consent of
the celebrity. Briefs supporting Woods were filed by sports licensing
companies and companies that license celebrity rights. Their has
always been tension merchandising when selling prints of celebrities
between what is art and protected as free expression and what is
commercial requiring permission. Few cases have been decided in
this area. It was assumed that permission was needed for posters,
but no one knew how many prints could be sold by an artists before
the number of prints could be construed as commercial merchandise.
It appears after this decision that if a work of art is sold as
a print itself, the First Amendment will prevail and multiples in
the thousands will be permitted.
Court Replaces Decision in Kelly
v. Arriba: Involving the Fair Use of Thumbnail Images By a Visual
Search Engine
In February 2002, the US Court of Appeals for the
Ninth Circuit determined that the fair use defense applied to the
creation of a database of images by a visual search engine, obtained
by "crawling" through the web and copying images from
other web sites. This case was reported in the PACA update around
that time.
On July 7, 2003, the court withdrew its February 6,
2002 opinion and replaced it with a new opinion. The former decision
cannot be used as precedent by any other court.
As you may recall, this case involved Kelly, a photographer
who has been battling an Internet search engine owned by Arriba
. Arriba's site (now known as "Ditto") downloaded Kelly's
on-line images and generated "thumbnails" of them for
inclusion within a large database of other visual images. Using
this search engine, a user could type in a key word that would correspond
to Kelly's image and bring up the thumbnail of his image. By clicking
on the thumbnail, a user could view the original full-sized image.
However, the full sized image remained framed by Arriba's website,
which included its text and advertising. Kelly brought a copyright
infringement action against the search engine.
The court previously decided that the thumbnails fell
under the fair use exception to copyright infringement but the full-sized
images constituted infringing uses.
In the replaced decision, the court affirmed its fair use analysis
with respect to the use of thumbnails, but remanded the decision
with respect to the full size images. Because the issue of the large
size images was not properly brought before the lower court, the
court should not have decided that aspect of the case. The case
was sent back to the lower court to be decided.
In determining whether the defense of fair use applies,
the court weighs four fair use factors: 1. The purpose and character
of the use, 2. The nature of the copyrighted work, 3. The amount
and substantiality of the portion used in relation to the copyrighted
work as a whole, and 4. The effect of the use upon the potential
market for or value of the copyrighted work.
The court affirmed the lower court's decision in part
and found that creating a database of thumbnail images to search
for images on the web was fair use. Even though the thumbnails were
commercial uses of the images, the use was considered more incidental
and less exploitative than traditional commercial uses because the
images were not directly sold and were among thousands of images.
In addition, the use by Arriba was considered transformative because
the thumbnails were smaller, lower-resolution images that served
an entirely different function than Kelly's on-line images. The
database served an index function and Kelly's images on the website
served an illustrative, artistic function. In other words, Arriba's
use did not supercede the use for the photographer's images, because
if you tried to use them full size, the image quality would be insufficient.
It was the opinion of the court that the creation of a visual search
engine benefited the public. In looking at the fourth factor, considered
to be the most important factor, where the court examines the potential
market harm, the court found that it weighed in favor of fair use.
In viewing the full size image, the search engine guides the viewer
to Kelly's site. The court noted that the thumbnail use would not
harm his ability to license or sell his full size images.
The court revoked its decision rejecting the fair use
defense for Arriba's displaying of the full size images because
the issue was not brought to the court in the parties' motion. Therefore,
the earlier decision was too broad. This did not give the parties
the opportunity to contest or brief that portion of the case. In
essence it was error for the court to extend the decision to the
full size images.
It should be remembered that one should be careful in
over reading any "fair use" decision, as the court decides
whether fair use is a proper defense on a case by case basis, reviewing
the facts and applying the four factors. In other words, I would
not be comfortable stating that all thumbnail uses of images are
automatically fair use. The thumbnails in this case were part of
a large database. If thumbnail images were used to aesthetically
illustrate a web site, apart from a database that serves an index
function, and there is a market for the licensing of images in a
small size and at a low resolution, a court would likely treat that
type of case differently, rejecting a finding of fair use.
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