Determining Hypothetical License Fees When You Wouldn’t Have Licensed the Use

Tallac in Clouds - Copyright Carolyn E. Wright

Many infringers argue that they don’t owe, even at minimum, a license fee for a infringing use because the copyright owner wouldn’t have licensed the use, even if asked for permission in the first place. But that’s not correct. Instead, as the Court of Appeals for the Ninth Circuit recently held in Oracle v SAP, 12-16944, U.S. Court of Appeals for the Ninth Circuit (San Francisco):

We have never required a plaintiff in a copyright infringement case to show that it would have licensed the infringed material. We decline to impose such a requirement now. A copyright holder has the right to refuse to license its work and should not be penalized for exercising that right. See Stewart v. Abend, 495 U.S. 207, 228–29 (1990). If we were to require a copyright holder to demonstrate that it would have been willing to grant a license as a condition for recovering damages based on the fair market value of the license, the perverse result would be that some of the most assiduously protective copyright holders would be unable to recover the fair market value of their wrongfully appropriated copyrighted property.

Some would argue this is contrary to copyright goals, but the U.S. Supreme Court explained in Stewart:

“. . . [A]lthough dissemination of creative works is a goal of the Copyright Act, the Act creates a balance between the artist’s right to control the work during the term of the copyright protection and the public’s need for access to creative works. The copyright term is limited so that the public will not be permanently deprived of the fruits of an artist’s labors. See Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 429(1984) (the limited monopoly conferred by the Copyright Act “is intended to motivate creative activity of authors and inventors by the provision of a special reward, and to allow the public access to the products of their genius after the limited period of exclusive control has expired”). But nothing in the copyright statutes would [495 U.S. 207, 229]   prevent an author from hoarding all of his works during the term of the copyright. In fact, this Court has held that a copyright owner has the capacity arbitrarily to refuse to license one who seeks to exploit the work. See Fox Film Corp. v. Doyal, 286 U.S. 123, 127 (1932).

So, if a copyright owner wouldn’t have licensed a work, what should a court award as a license fee if statutory damages aren’t available for an infringement? In Oracle, the court looked for “hypothetical-license damages.” It stated:

An award of hypothetical-license damages is appropriate “provided the amount is not based on ‘undue speculation.’” Polar Bear Prods., 384 F.3d at 709 (quoting McRoberts Software, Inc. v. Media 100, Inc., 329 F.3d 557, 566 (7th Cir. 2003)). The touchstone for hypothetical-license damages is “the range of [the license’s] reasonable market value.” Id. “The question,” therefore, “is not what the owner would have charged, but rather what is the fair market value.” Jarvis v. K2 Inc., 486 F.3d 526, 534 (9th Cir. 2007) (quoting On Davis, 246 F.3d at 166). Thus, we do not ask what the owner would like to have charged if unconstrained by reality, but what a willing owner actually would have charged after negotiation with the buyer. That is, fair market value is based on “‘an objective, not a subjective, analysis.’” Jarvis, 486 F.3d at 534 (quoting Mackie v. Rieser, 296 F.3d 909, 917 (9th Cir. 2002)).

But the plaintiff/copyright owner still has a burden to proving what that hypothetical license fee might be, such as by showing past license fees charged or offered for similar uses by the copyright owner or others, expert testimony, or any other methodology and evidence that might make sense to a court for the situation. Whatever method you use, don’t let the infringer off the hook by claiming that you wouldn’t have granted a license for the infringing use.

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Q&A – When Your Photos Are Evidence

As a result of the recent unfortunate incident at the Reno Air Races, aviation photographers are wondering what are the laws and ethics for supplying images to the NTSB or other investigative body.  Larry Grace, Chairman of the International Society for Aviation Photography, recently contacted me to discuss the issues.  Our Q & A  is included below.  You may join ISAP’s discussion on this and other issues on its Facebook page.

Q.  What effect does turning copies of images to authorities have on ownership management and copyright of images?

A.  Transfer of copyright must be done in writing; therefore, providing a copy only of your image to the NTSB or other government entity does not give the government the copyright to the photos.  However, it’s best to provide the specifics of a license to the NTSB in writing and in the metadata of the image (such as “this image is provided to the NTSB for research and examination purposes only – all other rights, including the right of display, distribution, and reproduction, are reserved”), along with your copyright notice and contact information.

Q.  Can you be compelled to provide images?

A.  Only by a subpoena or search warrant.

Q.  Can you be legally detained or sequestered as a witness to an event?

A.  You may be questioned but not detained or sequestered without cause (such as for suspicion of committing a crime).

Q.  Would we as photographers advocate providing images to assist investigation?

A.  That’s a personal decision.

Q.  Does giving images to an investigative agency curtail any other use?

A.  No.  See the discussion above about giving a specific license for the government’s use and restricting all other rights to your photos.  Of course, it’s best to register the copyrights to your photos asap!

Q.  By providing copies of your images to NTSB /FAA or event organizer, can you as a photographer request that your images not be release to media outlet without media organization contacting you for permission to publish.

A.  Yes, see above.

To have a better understanding of your rights, review http://www.aclu.org/free-speech/know-your-rights-photographers and http://www.krages.com/phoright.htm

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Why You Should Use Conditions in Your Licenses

More than thirty years ago, the Lake Tahoe Wildlife Care center started raising, rehabilitating, and releasing orphaned and injured wild birds and animals.  I had the honor to attend the training session for volunteers this past weekend and look forward to helping the center with its mission.  The above photo is of an orphaned, injured baby red-tailed hawk being held by one of the rehabbers at the LTWC center.

While I was in training, Evan Andersen of our “Photo Attorney®” law office prepared the following blog post:

The Licensing Law Blog reported on a recent case where the court held that the language of the contract prevented the copyright owner from recovering damages for the unauthorized use of its copyrighted work (software, in this case).  The court found that because the language in the software owner’s license agreement was in the form of a covenant or promise (the “User agrees that it will . . .”) rather than a condition or a premise upon which the fulfillment of an agreement depends (the “User may use software provided that it . . .”), the court held that the software owner could not recover any copyright infringement damages for the alleged unauthorized use.  Check the August 15, 2008 blog entry for more information about conditions and covenants.

The court explained that the condition of a license agreement must be related to the exclusive rights of the copyright owner found in 17 USC 106 for the copyright owner to recover copyright infringement damages.  Significantly, the court noted that a licensee’s failure to pay the license fee would always meet the test to allow the  a copyright owner to recover copyright infringement damages.

What does this mean for photographers?  The language in your licenses can affect your options for recovery if your photos are used without your permission.  So, when preparing an agreement to license a photograph, include language such as “No rights are granted to Client until Photographer has received payment in full.”  That, and registering your photos with the Copyright Office, are great ways to protect your work.

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Have You Granted Your Client An Implied License?

Many photographers, after they are asked to take photos for a client, deliver the images and wait to get paid.  When the check doesn’t arrive, does the photographer have a copyright infringement or a breach or contract claim against the client?  It depends.

A license is a defense to a claim of copyright infringement.  An exclusive license to use your photos may be granted only in writing.  A nonexclusive license may be granted orally, but it’s always best to make a written record of it, including by email.

But the grant of a nonexclusive license also can be implied from your conduct. By granting an implied license, the copyright owner permits the use of a copyrighted work in a particular manner.

While each case is different, courts have found that photographers may grant an implied license when: (1) a person (the client/licensee) requests the creation of a work; (2) the photographer (the licensor) makes that particular work (takes the photos) and delivers the photos to the client who requested it; and (3) the photographer intends that the client use the photos as initially planned.

Even if you have granted an implied license to your client, you may terminate it when the client fails to pay you.  One way is to send a cease and desist letter to the client stating that the photos are protected by copyright and request that client cease using the photos.

You also need to register the images as soon as possible. It’s also always best to provide a written invoice before or with the delivery of your images that includes the condition that your license for the client’s use of your photos is not granted until the invoice is paid in full.

These are a few more important ways to protect your work!

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PA Blog Reader Adds to “How to Provide a Photo License to a Friend”

As a follow up to the blog entry on “How to Provide a Photo License to a Friend,” Photo Attorney blog reader, Joseph O. Holmes, submitted a great additional response:

I enjoyed your blog entry on tactfully requiring friends and family to abide by photo licenses. This comes up for me all the time — tricky subject.

In law school, one professor told us how to minimize requests for free legal advice: always answer with a smile, “Oh, of course, I’m happy to give you my special family rate for my services.”

That usually ends the issue right there.

Now that I’ve become a professional photographer, what I get are requests for photo licenses from non-profits who plead they have no budget. I adopt a similar answer: for my own accounting purposes, I do have to charge something, but I can offer you my nonprofit rate.

If it’s really a sympathetic nonprofit, I’ll quote a rate that’s quite low, but never free. It turns out to be a good way to weed out those who aren’t really serious.

Great responses!

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Music for Your Projects – Jewelbeat Royalty Free Background Music

Many photographers today are working with video or other presentations and need good music for their projects.  Of course,  photographers know that they shouldn’t use music without a license (see my 6.13.05 blog post for more information).  The options for good RF music are slim.  Fortunately, there is a new resource.

While I don’t expect to use their sound effects much, the music is top rate and the sound quality is superb.  You can check some of it on their website at JewelBeat Royalty Free Background Music.   To use their music for your projects, you only need to link to their website from yours the following: “Music by JewelBeat. Download your free music and free sound effects at www.jewelbeat.com.”

The first person who sends me an email at photoattorney (at) gmail (dotcom) wins a set of 1 CD and 1 DVD with their music and sound effects.  UPDATE:  WE HAVE A WINNER! It’s Shannon Herren! Congrats!

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How to Provide a Photo License to a Friend

Photographers often take photos for friends, such as of their kids or pets.  But how does the photographer limit the friend’s use of the photos with tact?

For example, some great friends invite my husband, his grandsons, and me to their plantation every year.  I love to photograph their horses, dogs, swans, the landscape, and other beautiful things while there.  After the trip, I send a link to copies of the photos posted on a photo website for the friends to see and to purchase prints at no upcharge.  I also send them a note to tell them that these photos are for personal use only and to let me know if they want to use them for anything else.

After this past year’s visit, the husband asked for a copy of a large digital file for one of my shots.  He wanted to give the wife a framed enlarged print of the photo for a Christmas present.  I replied:

Happy to do so at no charge for xxx’s gift.  Please let me know what format file the printer needs (.jpg, .tiff, or raw) and the specific use so that I can provide a license with the file.  The limitation is to keep up with uses so there is no misunderstanding with the printer.

He replied that he understood.  My email to the printer was as follows:

This is to confirm that you may make one 20″x30″ giclee print of the “Snow Horse Run,” Copyright 2010 Carolyn E. Wright, for [my friend].  All other rights are reserved.

So while I am giving the license to my friend at no charge, he knows that the license is limited.  That way, he’ll respect my copyright, I can give him a gift that he appreciates, and we can remain good friends.

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Don’t Get Fooled – New License to Cover for Old Infringements

As a follow up to the news about the copyright infringements by a textbook publisher, Michael Beasley of Picade has some good advice:

If you receive any communications from any existing client seeking to extend or renew licensing for any previously licensed or any newly licensed work, be careful about signing any paperwork without carefully reading all the clauses.  Many agreements may attempt to roll previous infringements into the new license and effectively prevent you from recovering for your claims or to add additional “rights granted” to their (not your) benefit. The infringer then would be allowed to silently increase the licensed usage in the future without either notification or additional fees for the past infringements.

While not as fun as taking the photos or cashing the checks for licensing them, reading and understanding all of the terms of a license is critical to protecting your rights.

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