Tag Archives: infringement

3 MAJOR REASONS PHOTO TECH NEEDS TO BE CONCERNED ABOUT RIGHTS

by Robert Henson, Reprinted by permission from Talls Fir Media

The recent explosion of startups devoted to monetizing photography have revealed certain diversity of approach within the photo tech ecosystem, where business models are targeted largely on accelerated aggregation of imagery and either monetization of the audience (data, app charge, etc.) or of the images themselves (advertising, print on demand, licensing/use). Many, like Chute, provide tools for the aggregation of UGC to supplement their campaigns, while others, like 500px, focus on fine art enthusiasts and provide enhanced portfolio tools in a community setting. The variance unfurls like Instagram’s API subscribers: everything from consumer apps to B2B web solutions.

Most all share the view that online images are an untapped resource. In-image advertisers, like Znaptag, seek to push through ads on publisher sites (a similar tagging experience recently departed Stipple helped pioneer). The in-image ad market is heavily populated by incumbents from the ad industry – not photo tech – so often, like other photo tech startups, less emphasis is placed on image inventory and provenance thereof. It’s a volume game, and when the pipes are open wide – and where little regulation occurs – you can expect some trade-off around quality.

By quality, we don’t imply artistic integrity, technical attributes or commercial viability, but the rights associated with an image – the verification of source and the rights granted to an end user. There are many inferior images that reside with image licensing incumbents, just as there are many superior images being aggregated by photo tech startups. It’s how images are sourced, the process, that the industry needs to be vigilant over.

Platform does not equal inventory

The incumbents in photo licensing have the edge in inventory. Existing licensors like Shutterstock, Getty, and others have long placed barriers to entry that reduced-to-eliminated risk for their clients. It was a baked-in process that translated to client attraction and retention, and is still a critical cornerstone of their ability to productize their inventory. While photo tech platforms obsess (and stakeholders watch just as obsessively) over what rights are transferred by each user to them, very few actively qualify each image that is submitted to them.

For many, it’s an impossible task. They exist within the DMCA’s safe harbor provision, and cannot actively be aware of the types of images being submitted to them. With the foundation set, they’re reliant upon opt-in measures (500px, EyeEm, and now Flickr) to build inventory. While this might achieve some success, it is still a decentralized program apart from the main proposition of the platform. Few can create the foundation that a Shutterstock has, which focuses solely on aggregation and distribution for specific audiences. The initial proposition is key – once deviated from, noise level rises and mixed messages ensue.

Infringement claims are rising

Getty’s infringement business is big, and viewed by many pundits as “free” money. Sure, it doesn’t scale proportionately to inventory nor does it scale nicely against admin costs, but it’s growing and others are noticing and coming to the table. Claims aren’t only drawing solutions-minded intermediaries who promise to do the dirty work – this is also a photographer-driven incentive, and those who’ve been infringed upon demand retribution.

Adding to this trend is attention by the government to help copyright claims, which have long been out of reach by individuals due to court allocation and claim processes. Once the doors open up and help facilitate the claims process for infringing use, you can bet even more growth within the infringement industry will occur.

UGC is still perceived as the ‘unwashed masses’ by publishers…and it is

Photo tech startups view the world’s mobile captures as potential untapped inventory rife for exploitation, and in many cases it is, but major publishers are still quite wary of directly sourcing from UGC-based startups due to the inherent risks.

Publishers (and advertisers) will still require confirmation of source, or at least an end use license that provides warranties in instance of a claim. Even the incumbents slip up now and then (Morel), but such anomalies aren’t enough to produce a mass exodus of clients. Risk-aversion is still weighted heavily against startups, whose selection process is non-existent, and any automated or crowd-curated aspects to the platform don’t reflect the rigor expected by potential clientele.

Of course, photo tech isn’t aligned with rights on an image level. Notorious terms of services, of which Instagram’s was made famous, was created to be a rights grab. Most startups have adopted similar terms of service, as is common within the culture, but many are quite friendly and transparent. The commonality among them all is a decided pivot away from verifying rights of an image and providing assurances to end users, to shifting risk back onto participating parities on either side of their platform. Despite the volumes of images being added online every moment, copyright law still gives recourse to those who seek it.

Image Embedding

PACA’s mission has always been to support a healthy and sustainable market for licensing the use of photographic images, as well as to encourage and support innovative ways for photography to be legally used in the rapidly changing marketplace.  Clearly, models for licensing of photography have had a difficult time keeping pace with changes brought on by the Internet, social media, and the blogosphere.

Recently, Getty Images announced embedding technology that they believe can address a significant source of unauthorized use.  Getty Images’ embedding technology allows the free use of millions of images for “non-commercial” use by bloggers and other editorial websites.  While it is too early to forecast the impact of this new offering from Getty Images or other similar embedding technologies from Stipple, IMGembed, and others, PACA recognizes the need for new approaches to address the proliferation of infringing uses.

PACA believes from the perspective of the industry and photographer communities that there are intriguing opportunities as well as significant concerns from embedding technologies.  These technologies could potentially reduce infringing uses as well as generate new revenue for copyright holders, but there are still many questions to be answered including Getty Images’ definition of “non-commercial use” which appears to allow, not only use in personal blogs and websites, but also in a broader editorial context.  Also unclear is how any revenue from advertising or data monetization will be shared with copyright holders.  PACA also believes it is important for the industry to understand how Getty Images will enforce its terms of service, and what other benefits photographers would derive from the extension of free use.

As businesses explore new solutions to the rapid and revolutionary changes in the way people consume media,  PACA believes its role is more critical than ever to represent our collective interest in protecting the rights of content owners, in refining copyright law, and in educating creators and users in support of an ethical and sustainable marketplace.  As a forum and industry body, PACA will continue to support and promote a dialog around image embedding and other new business models.

United States Court Of Appeals Decision For Copyright Registration

After many years, the Ninth Circuit finally entered a decision in the Alaska Stock, LLC v. Houghton Mifflin Harcourt Publishing Company case.  Reversing the district court’s dismissal of Alaska Stock’s copyright infringement claim, the court definitively held that Alaska Stock had “successfully registered the copyright both to its collections and to the individual images contained therein” despite the fact that the name of the photographer and title of each component work was not included in the registration.

In doing so, the Court gave deference to the long-standing Copyright Office registration procedures that had been created in 1995 in conjunction with PACA.  Further, the Court specifically rejected the decisions in other courts that refuse to honor registrations because they fail to name all of the photographers and titles of each photograph in a collective work.

It is clear that the Ninth Circuit understood the repercussions of its decision.  In conclusion, the Court stated:

We are not performing a mere verbal, abstract task when we construe the Copyright Act. We are affecting the fortunes of people, many of whose fortunes are small. The stock agencies through their trade association worked out what they should do to register images with the Register of Copyrights, the Copyright Office established a clear procedure and the stock agencies followed it. The Copyright Office has maintained its procedure for three decades, spanning multiple administrations. The livelihoods of photographers and stock agencies have long been founded on their compliance with the Register’s reasonable interpretation of the statute. Their reliance upon a reasonable and longstanding administrative interpretation should be honored. Denying the fruits of reliance by citizens on a longstanding administrative practice reasonably construing a statute is unjust.

Request for prior art to help defeat Uniloc Patent Claim

By Nancy Wolff Esq., PACA Counsel

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On December 10, 2013, the patent troll Uniloc filed ten new patent infringement actions against image licensing companies based on United States patent 7, 099, 849 entitled INTEGRATED MEDIA MANAGEMENT AND RIGHTS DISTRIBUTION APPARATUS. The invention is described in a broad and ambiguous manner, which has enabled Uniloc to sue many companies that offer digital license in copyrighted content.  The patent summary describes the “invention”  as an integrated rights management and licensing system for storing, researching, buying, and selling intellectual property rights.” It was written with the film industry in mind, where one film will have multiple rights owners. As further described in the summary, the invention utilizes a rights owner application, a central repository, and a licensing application to integrate the management, researching and licensing of intellectual property. The patent contemplates that a request to license will be sent back to rights owner to determine if the rights can be granted and then negotiated.

PACA would like to assist in helping the companies that have been sued and their respective attorneys defeat this patent if possible.

One way to defeat a patent is to show that the process used by the image licensing industry is not infringing because it is not the same “invention” or process. While I am not a patent attorney, it appears from my read that the process of online licensing of images is not conducted in the same manner as outlined in the patent . But that is for a patent expert to review.

The other way to defeat a patent is to show that it is not novel an the process or invention is obvious because it only builds on what already was being done in the market. In patent speak this is called “prior art”.

This is where industry knowledge may be very effective. PACA would like to assist the industry in looking for companies that may have had databases where one could search for rights owner information and potentially license copyrighted work that existed prior to the filing of the invention and ideally one year before the invention was filed. The patent was granted in 2006 but the initial provisional patent was filed December 28, 2000. Ideally, if anyone has information about databases that search for rights owners for licensing purposes that existed prior to December 28, 1999 it would be very helpful in defeating this patent.

The more the industry can share information, the less expensive the patent will be to fight for all the individual parties. If anyone has any information or knows of databases that might be considered prior art for purposes of defeating a patent please contact Nancy Wolff nwolff@cdas.com as PACA Counsel.  We will make sure that his information is passed along to attorney’s representing the various parties.

Previously, the industry, thanks to Corbis and Getty Images cooperating in defending a patent claim, was able to defeat a similarly over broad patent, known as the Freeny patent.  Hopefully our cooperation will be a sign to patent trolls that the industry will fight them and may discourage others.

 

Sculptor granted royalties in Gaylord v. United States

by Nancy Wolff, PACA Counsel

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In the most recent ruling in Gaylord v. United States, the United States Court of Federal Claims determined the proper amount of damages due Frank Gaylord, (“Gaylord”) the sculptor who created “The Column” portion of the Korean War Memorial, from the United States Postal Service (USPS) for its unauthorized depiction of “The Column” on a commemorative stamp issued in 2003. [This case has been the subject of much litigation, as the District Court found that the stamp was a fair use of the underlying sculpture; the decision was then reversed on appeal and the stamp use found to be infringing of the Memorial; the initial amount of damages was capped at $5000, or reasonable license fee; this determination was reversed and set back to the lower court to determine the appropriate amount of actual damages under the Copyright Act. Statutory damages were not available in this case.]

Specifically, the United States Court of Appeals for the Federal Circuit vacated the award of $5,000, as it failed to adequately calculate the fair market value of a hypothetical license because it only considered what the USPS had previously paid for similar licenses. To properly calculate the fair market value, it directed that the Claims Court examine whether different license fees were appropriate for three categories of infringing goods identified in the 2010 opinion: (a) stamps used to send mail, (b) unused stamps purchased by collectors, and (c) commercial merchandise featuring an image of the stamp.

The Claims Court determined that Gaylord was entitled to total compensation of $684,844.94, concluding that a 10% running royalty rate “accurately captures the fair market value of a license to Gaylord’s copyright.” The court based its calculation according to the likely terms assuming Gaylord and the USPS had negotiated a price for a license on July 27, 2003—the date on which the stamp was released.

Turning to the three categories of infringing goods suggested by the Federal Circuit, the court first established that no damages were awarded for stamps used to send mail because of the difficulty involved in determining whether consumers purchased the commemorative stamps because it featured an image of “The Column” or simply because they needed stamps.

Next, the Court determined that Gaylord was entitled to a 10% running royalty on revenues collected by the USPS for unused stamps purchased by stamp collectors. The court arrived at this figure because Gaylord demonstrated at trial that he collected a 10% royalty for past licenses of “The Column” for various collectibles. The court further noted that calculation of Gaylord’s damage award should consider the fact that the USPS had “strong financial incentive to enter into a license with Gaylord,” noting that commemorative stamps sold to collectors “represents nearly pure profit for the USPS.” The court referred to a survey produced by the USPS that showed the Korean War Memorial stamp was in the “top 25% of its class of a 37-cent commemorative stamp with respect to projected retention value.” The court also stated that the USPS decided to print 86 million Korean War Memorial stamps, when the average print-run for commemorative stamps is 50-60 million stamps. Applying the 10% royalty rate to the USPS’s profits of $5.4 million, the court determined that Gaylord was entitled to $540,000.

The court also awarded Gaylord a 10% running royalty rate applied to the $330,919.49 the USPS received on merchandise featuring images of the Korean War Memorial stamp, determining that he was entitled to $33,092.

Finally, the court awarded Gaylord an additional prejudgment interest of $111,752.94 (based on a delay compensation interest factor of 19.5%), which was to be added to any damages assessed by the court.

In sum, Gaylord’s combined damages—which included $540,000 from USPS profits on unused stamps, $33,092 on USPS profits on merchandise, as well as a prejudgment interest of $111,752.94—totaled $684,844.94. The calculation was based on what the price of a license would have been had the USPS negotiated with Gaylord for use of “The Column,” a 10% running royalty rate, applied to unsent stamps purchased by collectors and on merchandise sold containing the image.

This case is interesting as the court rejected as a measure of damages the past licensing model used by USPS- a flat license fee- for material that was equivalent to merchandise. A royalty model is more customary when licensing artwork for products such as puzzle, posters and paper goods and was consistent with the artist’s licensing model. In other words, the court did not limit damages to the way in which the infringing party previously licensed work but looked to how the artist would have licensed the artwork if he had negotiated with USPS in 2003.

[The stamp was initially issued a decade ago, and as a side note it’s interesting to see how many millions of stamps were published. With the decrease in regular mail, it is unlikely that any artist would see royalties this high on the use of a contemporary stamp absent extreme popularity of the subject.]