Rights, Licensing and Endorsements

Joshua Bornstein writes:

U.S. Supreme Court building in Washington, DCPresident Trump’s recent nomination of Judge Brett Kavanaugh to fill Justice Kennedy’s seat on the United States Supreme Court has caused some concern about his potential impact on the future of copyright law. This is because Judge Kavanaugh could be joining the ranks of Justices Roberts, Thomas, and Gorsuch who are all noted skeptics of the doctrine known as “Chevron deference.” How this may impact copyright law requires a brief review of history.

In 1803, the United States Supreme Court held in Marbury v. Madison that it is was the role of the judiciary “to say what the law is.” In other words, Congress writes the law and judges determine what the law means whenever the law, as written, is ambiguous. In 1984, however, the Supreme Court loosened that rule in Chevron USA Inc. v. Natural Resources Defense Council by holding that courts should defer to administrative agencies that interpret the statutes that grant them their authority when the intent of Congress is ambiguous and where the interpretation is reasonable or permissible. Put differently, sometimes, the executive branch gets “to say what the law is” and judges should defer to those agencies so long as their interpretation makes sense. The deference courts give to administrative agencies is known as “Chevron deference.” How the Supreme Court approaches “Chevron deference” could affect the ongoing battle between cable companies and Internet-based streaming services.

A recent line of copyright cases has involved the issue of whether companies that stream content over the Internet fall within the meaning of a “cable system” under copyright law. Section 111 of the 1976 Copyright Act defines a “cable system” as any “facility” that retransmits shows “by wires, cables…or other communication channels.” What “other communication channels” Congress intended to include within the definition of a “cable system,” however, is seemingly ambiguous. The issue, then, is who gets to decide “what the law is” in the face of this ambiguity.

If a company is considered a “cable system,” then it is afforded certain rights. Specifically, a cable system is eligible for a so-called “compulsory license” that allows it to retransmit “a performance or display of a work” that had originally been broadcasted by someone else without having to get the consent of the copyright holder. To do this, the cable system need only pay a statutory fee to the Copyright Office.

After the cable system pays the fee and complies with other regulations, it is protected from infringement liability. In addition, the royalty payments cable companies pay through compulsory licenses are much smaller than what they would have to pay if they were forced to negotiate with individual content owners to obtain licenses. Simply put, it’s good to be a “cable system.”

In 2014, the Supreme Court decided a case called American Broadcasting Cos. v. Aereo, Inc. Aereo devised a novel means to deliver content over the Internet, which was to lease an individual antenna and DVR to each of its customers. In response to the inevitable infringement lawsuit by the copyright owners, Aereo argued that its retransmissions were not a “public performance” of the copyrighted content (which would constitute copyright infringement) but that it was merely an “equipment provider.”

The Supreme Court ruled that Aereo’s retransmissions were “performing” the broadcasters’ copyrighted material and it was, therefore, infringing. In reaching its decision, the Supreme Court noted Aereo’s “overwhelming likeness to cable companies.” This language – the “overwhelming likeness to cable companies” – opened up a new argument by likening streaming operations to cable companies.

Capitalizing on this, a company called FilmOn, which is an Internet-based television streaming service, sought a compulsory license from the Copyright Office, but was ultimately rejected. A lawsuit ensued and the case went before the Ninth Circuit Court of Appeals. FilmOn argued that “wires, cables…and other communications channels” found in Section 111 should include Internet-based retransmission services. The Ninth Circuit, however, recognized the statutory ambiguity in Section 111 and turned its attention to the Copyright Office’s interpretation for guidance. The Ninth Circuit concluded as follows:

FilmOn and other Internet-based retransmission services are neither clearly eligible nor clearly ineligible for the compulsory license § 111 makes available to “cable systems.” The Copyright Office says they are not eligible. Because the Office’s views are persuasive, and because they are reasonable, we defer to them.

In other words, the Ninth Circuit deferred to the Copyright Office to reach its decision; “Chevron deference” was applied. It is worth noting that the issues raised by FilmOn have been litigated in other circuit courts as well, and could, one day, make its way before the Supreme Court. It is very possible, therefore, that the Supreme Court will not afford the Copyright Office the same type of deference that lower courts have given it, especially because Justices Roberts, Thomas and Gorsuch have been noted skeptics of the doctrine of “Chevron deference.” Adding Judge Kavanaugh to the bench could mean that the Supreme Court may ultimately decide itself, rather than defer to the Copyright Office, whether Internet-based retransmission services fall within the meaning of a “cable system” under Section 111. The outcome of such a ruling could have a momentous impact on the entertainment industry.


Joshua A. Bornstein is an associate in the firm’s Entertainment Department, based in its Los Angeles office.

John Simson writes:

The House of Representatives unanimously passed the Music Modernization Act last week by a vote of 415-0! Imagine our divided Congress passing anything with no opposition. This is actually not uncommon with music industry issues when the interests of both the major user companies and major owner companies align so there is little or no opposition.

U.S. Capitol Building, Washington, D.C.What exactly is the Music Modernization Act? The House version is the combination of three separate bills, two of which have been percolating for several years: The CLASSICS Act and the AMP Act. The CLASSICS Act will “fix” a major loophole in U.S. Copyright Law, the protection of pre-1972 recordings; the AMP Act will fix a smaller loophole in the Copyright Law as to how Music Producers, Remixers and Engineers get paid by SoundExchange. (We will discuss the specifics of these two parts of the bill in another post). The third piece of the MMA, its main driver and the reason why it is so critical to the music industry going forward is an overhaul of Section 115 of the U.S. Copyright Act, the compulsory license for the use of compositions. For those unfamiliar with copyright law, a “compulsory license” means that a user such as a record company can license a composition by paying the owner a license fee that is determined by statue without the necessity of negotiating directly with the owner. The reproduction of compositions on records and CDs is a compulsory license, referred to as a “mechanical license.”

A Brief History In Time

Over a decade ago, before Spotify, Apple, Tidal and most other on-demand services were operational, the Recording Industry Association of American (RIAA) and the National Music Publishers Association (NMPA) reached an agreement: for a nominal payment by the record companies to the publishers, the publishers would allow the development of on-demand services and wait and see to determine what fees should be charged for this new kind of service. Most important in this deal: the publishers received recognition that this use would be treated as a mechanical license, even though this does not necessarily follow from the nature of on-demand streaming. It is certainly true that a user of these services does have temporary reproductions on their devices, sometimes called tethered downloads because they are tethered to your subscription. On the other hand, were you to cancel your subscription, these reproductions disappear. They are also limited in that you cannot legally make copies of them as you would for a permanent download. However, this new recognition of a mechanical right in an on-demand stream was not accompanied by any major change in the section 115 Compulsory License that governs such mechanical reproductions.

What resulted was a disaster. Trying to shoehorn a new streaming mechanical into a 1909 law that was created for the reproduction of piano rolls, essentially one song at a time licensing, did not work. The 1909 law had adapted adequately to the transition from piano rolls to 78’s to LP’s and other limited media, with a limit of 15-20 compositions unless a box set where it might balloon to 60-80 titles. But the application of the law to on-demand streaming services that needed to license 30 million songs was impossible.

For streaming services, the task was daunting to obtain all of these licenses one at a time. The music industry had also undergone a fundamental change. For all past distributions of recordings, the record company stood as the gateway to the payment whether from retail establishments or from digital download services like iTunes. The record label would receive payment for the recordings as well as the for the compositions on behalf of music publishers and then pass through the publishing monies to the appropriate publishers or their representatives based upon the Section 115 licenses or other similar licenses they had negotiated. But this practice ended with on-demand streaming mechanicals. Record companies in their licenses with Spotify and others specifically required the service to license the publishers separately as they realized how great the burden would be to handle the mechanical royalty payments for the streaming services.

A Massive Problem to Solve

Over the years, the Harry Fox Agency (HFA) administered many of the Section 115 mechanical license agreements. Their agreement was a bit easier than the Copyright Office license. The Copyright Office license required monthly accountings while HFA’s was quarterly. But HFA never represented all works so attempting to get full coverage through HFA licenses was spotty at best. Over the years, they quoted 60-70% coverage but frequently couldn’t tell you which of your tracks wasn’t covered. Other services were also created to administer this right but the main problem persisted: there was no industry-wide database to inform a user where to go to get a license and the different services administering licenses were incomplete in their coverage. A user was at grave risk of infringement lawsuits for distributing unlicensed works.

Closeup of earbuds and smartphone

The MMA’s Proposed Solution

Long after the 1909 Act was enacted to govern the reproduction of compositions, another compulsory license for music was passed in 1995: the Digital Performance in Sound Recordings Act (DPRA). The DPRA provided a new license for non-interactive webcasters, satellite and cable services to stream sound recordings. This license provided that any service that wanted to stream could do so if they followed certain rules and provided payments and data. Section 114 of the Copyright Act which created this new compulsory license was also distinct from Section 115 in one major way: while Section 115 requires notice to the publisher 30 days in advance of distribution, Section 114 had no notice requirement at all. Any non-interactive service could stream any commercially released sound recording without prospect of being sued by the owner of the recording if the service provided data of what they were streaming and made payments based upon the terms of their license. The organization that was created to administer the Section 114 license is SoundExchange. (In full disclosure, I assisted in the development of SoundExchange at the RIAA in 2000 and served as its Executive Director from 2001-2010.)

In recognizing that Section 115 needed an overhaul to survive in the digital age, both users and owners got together and created a proposal to essentially mirror the Section 114 provisions removing the requirement of notice to publishers in advance of distribution: the result is that if this law passes, on-demand services can simply pay and provide data and be immune from lawsuits. Another “problem” with the current section 115 is that if a songwriter/publisher does not register their work with the Copyright Office AND an on-demand service sends a notice to the Copyright Office that they can’t find that songwriter/publisher, the service owes the songwriter/publisher NOTHING until they finally register their work. While the service has to pay a filing fee to the Copyright Office of roughly ten cents ($.10), the songwriter/publisher gets nothing! The updated law will fix that. Now, the on-demand service provider pays the new collecting society, to be created by the MMA for everything, and content owners claim against what is paid into the society.

One major striking difference between Section 114 and the proposed MMA is that there is very little language in Section 114 about the collecting society that could be formed by content owners. Section 114 did provide an anti-trust exemption to allow all content owners to create an “agent” or multiple agents to negotiate compulsory license voluntary rates with users, participate in Copyright Royalty Board (CRB) proceedings to set rates if voluntary negotiations failed and to collect and distribute payments to those entitled to royalties. Initially, the collective under Section 114 was subject to Copyright Office regulation but that role now falls under the auspices of the CRB.

Statutory language in the proposed MMA not only authorizes the creation of a new collecting society but sets forth in great detail many aspects of the organization’s structure, including the composition of the Board, composition of various committees, retention periods for undistributed royalties and much, much more. Where SoundExchange grew somewhat organically, this new collective is being created by statute.

Some outside groups have pushed back against the composition of the Board that would be created by the MMA to govern the collecting society. They don’t like that it is overwhelmingly controlled by music publishers with very few seats given to songwriters. They point to the SoundExchange Board which is an equal board between recording artists and record label representatives as evidence that this new organization needs more songwriter members; but they fail to point out that mechanical royalties unlike performance royalties, have always been paid directly to music publishers who recoup advances from these royalties and then split the money with their songwriters. Given this historical backdrop and practice, this is essentially a land grab by songwriters. (It should also be pointed out that songwriters seem to have no problem affiliating with BMI which has no songwriters on its Board of Directors!)

One issue that should be fixed in the MMA concerns “black box” money: those royalties collected that can’t be distributed, either due to the failure of a publisher or self-published songwriter to register with the new collective or due to bad data being supplied by the user. Currently, the legislation provides a three-year holding period and then a distribution proportionate to the overall market share of copyright owners. SoundExchange’s early experience with black box money is illustrative and leads to the conclusion that the new collective should wait at least five years to flush its undistributed royalties. It will take time for songwriters and independent publishers to get up to speed, to try and find their repertoire which may be poorly reported. It will take time for older songwriters and publishers to learn about these new developments. Congress may be passing new legislation which affects rights but Congress typically doesn’t expend any money to educate the community about these new rights and how they may be exercised.

Hopefully, the on-demand services that want this new legislation so badly that they are willing to pay the costs of running the collective, will highlight the changes on their services. While these services are primarily consumer-facing, it would be highly appropriate for them to send messages to songwriters and music publishers telling them about the new regime and how to ensure they are collecting their rightful share.

Hearings on the bill have begun in the Senate Judiciary Committee.

The MMA is a long overdue fix to the problems of Section 115 and while it won’t cure all of them it is an important step in the right direction.


John Simson is counsel in the firm’s Entertainment Department, based in its Washington, D.C. office.

The jury has spoken. After a saga worth of Homer, Comic-Con is a valid trademark.

The battle began when, the organizers of San Diego Comic-Con (SDCC), the 50-year old grandaddy of fan conventions, sued the producers of Salt Lake Comic Con for infringement. As we previously reported, the defendants struck back by asserting that comic con (no hyphen) had become a generic descriptor for comic book conventions, citing the scores of events around the country that describe themselves the same way.

The case took a curious turn when the trial judge issued a gag order against the defendants prohibiting them from taking their case to social media, bringing First Amendment issues into what was otherwise a straightforward trademark case. The Salt Lake crew challenged this order by seeking a writ of mandamus from the Circuit Court, which agreed with them and vacated the order.

The case went to trial in early December, with a verdict in favor of the San Diego Comic-Con. The jury found both that the plaintiff’s mark is valid and also that it was infringed. It determined, however, that the infringement was not willful, and awarded only $20,000 in damages rather than the $12 million demanded by the plaintiffs. Nevertheless, armed with a finding of validity, SDCC could be emboldened to take action against other comic book conventions.

The defendants, meanwhile, have not laid down their weapons. They’ve announced an intention to appeal the verdict and are also pursuing an petition before the US Patent and Trademark Office to cancel the rival mark.

 

10066940 – super hero and a ninja doing battle.

I’ve blogged here and here about the pending trademark infringement case brought by SDCC, the registered owners of the San Diego Comic-Con mark, against the producers of Salt Lake Comic Con. The Utah group had launched an aggressive social media campaign to draw moral and financial support from fans and organizers of other Comic Cons around the country. The plaintiff persuaded the trial judge, Anthony Battaglia, to issue a gag order to halt against this campaign on the ground that the extensive posts would taint the San Diego jury pool.

The Utahans appealed to the Ninth Circuit, which ruled in an order issued on October 26 that the gag order was unconstitutional. The court noted that prior restraints on speech are highly disfavored except in the most extreme circumstances, such as a clear and present danger to safety or a serious and imminent threat to SDCC’s interest in a fair trial. The defendants’ social media campaign did not, the court held, rise to this level. The court compared the defendant’s Twitter following of 35,000 against the jury pool of nearly 2 million and concluded that the plaintiff would certainly be able to find 12 unbiased jurors out of that large group. Moreover, Judge Battaglia should have recognized that less restrictive and routine procedures such as voir dire, jury sequestration and jury instructions would be sufficient to protect SDCC’s rights. The court also expressed raised the specter of a slippery slope, in that allowing the order to stand would justify similar orders “in almost any situation where an article is written or a statement is made in a public forum.”

This interesting but collateral issue having been disposed of, the parties can resume their progress toward what will presumably be a well-publicized trial.

Closeup of earbuds and smartphoneLos Angeles-based IP lawyer Erin M. Jacobson recently penned a piece describing the ongoing dispute between members of the music industry and music streaming service Spotify, and arguing against Spotify’s attempts to limit the type of licenses it must obtain from copyright holders in order to maintain the service. She outlines the series of copyright infringement cases brought against the company and notes the ramifications for songwriters and publishers of a potential precedent-setting court decision in favor of Spotify’s argument that its streaming does not require a mechanical license.

To read the full piece, visit Erin’s blog. It was also published on the Forbes website on September 22.

1. Registration of a song with a PRO does not provide any copyright protection.

Closeup of earbuds and smartphoneThe most common misunderstanding I encounter from songwriters is that registering their songs with one of the U.S. music performance rights organizations (“PROs”), i.e. ASCAP, BMI, SESAC or GMR, gives the songwriter some protection of their intellectual property rights in their songs. That is simply not the case. Registration of a song with a PRO simply puts the song into the licensable database of the PRO and makes the proprietor information publicly available.

Music performance rights organizations, also known as performing rights societies, act as licensing agents for songwriters and music publishers with respect to the public performance of their songs. In order to play a copyrighted song on radio (over-the-air, satellite and internet), on television (network, cable, satellite and internet), perform it live (bars, concert halls and festivals) or digitally stream it (Pandora, Spotify, etc.), a public performance license must be obtained from the writer and publisher.

Registering a song or catalog of songs with a PRO will enable a songwriter or publisher to receive public performance rights and allow them to participate in events or take advantage of collective negotiating efforts, but that is all the registration does. The PRO registration does not register the copyright in a song or provide any licensing benefits other than public performance. In order to obtain the full benefits of copyright law protection, the writer or publisher should register their songs with the U.S. Copyright Office.

Although copyright registration is not a prerequisite to copyright protection, it is certainly “cheap insurance” from an intellectual property standpoint. If registration is made within three months of publication of the song or at any time prior to an infringement of the song, the copyright owner is entitled to seek statutory damages and attorney’s fees in federal court. That means a losing infringer may have to pay the owner’s legal fees and the damages awarded to the owner may be substantially increased based on the copyright law.

In addition to registering their songs with a PRO, songwriters and publishers should take the additional step of registering the copyrights in their songs with the Copyright Office. PRO registration is beneficial for searching writer/publisher information and for performance royalty collection purposes, but songwriters and publishers should not assume that registration provides any more expansive advantages than it actually does.

2. PROs issue licenses for public performance of songs and collect performance royalties (that is basically all they do).

The right of public performance is one of the exclusive rights granted to copyright owners under the U.S. Copyright Act (see 17 U.S. Code §106). Although copyright law allows songwriters and publishers to license performance rights themselves, it would be impossible (or at least impractical) for them to negotiate licenses with every radio station, television station, concert hall, etc. So, the concept of performing rights organizations arose. PROs aggregate the performing rights of writers and publishers, negotiate licenses with users of their music, collect the income from those licenses, and distribute that income to the applicable writers and publishers after deducting their operating expenses.

PROs track performances using various reporting and sampling techniques, and they offer both catalog licenses and per-use licenses. PROs do provide certain career development assistance, legislation advocacy efforts and philanthropic help for their members and outside musicians. They consistently present concerts, expos, seminars, workshops, camps and other activities for their members and the public, but that is where their efforts stop. PROs are not huge rights clearing houses for song catalogs.

3. Registration of a song with a PRO does not facilitate issuing mechanical licenses or synchronization licenses.

PROs do not issue mechanical licenses, synchronization licenses or any music publishing licenses other than public performance licenses. Registration of a song with a PRO makes the relevant writer/publisher information searchable for the song, which may help a potential licensee locate the proprietor of a song. However, the applicable PRO does not have any involvement in procuring, negotiating or issuing mechanical licenses for recordings of songs by recording artists or synchronization licenses for uses of songs in films, television programs, video games or other audiovisual productions. Those types of licensing must be handled separately by a songwriter’s music publisher and/or attorney.

Drug cartels are notorious for murder and extortion, but the family of the late drug lord Pablo Escobar has unleashed the scariest weapon of all–trademark litigation.

Escobar, Inc. has a longstanding grudge against the Netflix series Narcos, which dramatizes the late drug lord’s life. In a creative and brazen move, Escobar filed trademark registrations for the marks NARCOS and CARTEL WARS, and has threatened the producers, Narco Productions, LLC (“NPL”) with litigation if they won’t play ball. Escobar’s brother, Roberto De Jesus Escobar Gaviria, has been quoted to say he will “close their little show” if Netflix doesn’t cough up $1 billion to settle the infringement claims.

In a letter from its counsel, NPL responded that the Escobar claims are fraudulent. They assert that the specimens of use in commerce submitted in support of the Escobar trademark application were in fact taken from or copies of Netflix’s own advertising for its video game Narcos: Cartel Wars. Another red flag noted by NPL counsel was that Escobar claimed to have used the mark since 1986 in “operating a website” and “game services provided online from a computer network.” This despite that fact that the consumer internet did not exist in 1986, and was certainly incapable of streaming video games. There is also a question whether NARCOS is registrable at all, since the term is purely descriptive of anyone involved in drug cartels.

Perhaps coincidentally, the show Narcos was also in the news when its location scout was murdered in rural Mexico on September 11. Asked whether anyone at Escobar, Inc. had knowledge of the circumstances, the company’s president responded only “no comment.” Gaviria has been quoted, however, challenging the right of any production to film in Colombia regarding the Medellin cartel without authorization from Escobar, Inc., and recommending that Netflix hire hitmen to provide security to its crew.

Copyright: <a href='//www.123rf.com/profile_ericbvd'>ericbvd / 123RF Stock Photo</a>
Copyright: ericbvd / 123RF Stock Photo

A New York court of appeals last week declared the Orioles and Nationals will play extra innings in the teams’ longstanding dispute over fees the Orioles’ Mid-Atlantic Sports Network (MASN) owes the Nationals for broadcasting their games.

The teams have shared the network since the Nationals (formerly the Montreal Expos) arrived in Washington D.C. for the 2005 season.  The Orioles, incensed that the Nationals were consuming about a third of their market, broadcast Washington’s games at a substantial discount from 2005 to 2011 after which the MLB obligated Baltimore to pay fair market value.  After MLB’s Revenue Sharing Definitions Committee (RSDC) ruled MASN owed the Nationals $298 million for broadcast rights from 2012 to 2016, the Orioles cried foul and claimed the panel was biased.  MASN cited opposing counsel’s duel representation of Washington and the MLB in unrelated matters as a red flag, along with MLB’s $25 million advance to Nationals’ owner Ted Lerner to reportedly placate Lerner for having to sell MASN broadcast rights at a discount from 2005 to 2011.  MLB responded telling The Baltimore Sun the loans were “fully justified [and] done with the Orioles’ and MASN’s knowledge and encouragement.”

Associate Justice Richard Andrias, speaking for a 3-2 majority, found MASN’s claims unpersuasive because the panel will consist of new members and the Nationals will use new counsel.  Additionally, the Court found considerable significance in the teams’ decision to assign all disputes over telecast fees to the RSDC, an expert body with specialized knowledge on the apportionment of broadcast fees for sports teams, yet reserved other disputes for the MLB commissioner and/or American Arbitration Association (AAA).

The decision was not a complete loss for Baltimore, as the Court vacated an award MASN found to be unfair.  However, if performance has any impact on value, the Nationals appear to hold an edge.  After six consecutive losing seasons, the Nationals clinched playoff births in three of their last five campaigns, two of which came after the first RSDC panel rendered its decision.  Washington is also well-positioned for another post-season appearance with a comfortable 10.5 game lead over the rebuilding Braves in the National League East.

Counsel for the Orioles told The Hollywood Reporter that MASN will explore appealing the Court’s ruling before submitting to the RSDC for what would appear to be a final showdown for these crosstown rivals 12 years in the making.

The Jukebox musical is alive and well and living on Broadway. From the songs of Gloria Estefan to Carole King, from Frankie Valli to Abba, we are amidst a 20-year old trend to present pop music’s biggest hits on the live theatrical stage. Indeed, blockbusters like Jersey Boys, Mamma Mia and Rock of Ages have encouraged music rights holders to exploit their catalogues in what has proven for some to be a very lucrative market, and the 2018-2019 Broadway season continues to welcome jukebox properties to the Great White Way.

Woman singing with microphone
Copyright: arturkurjan / 123RF Stock Photo

The licensing of a non-dramatic musical composition (for example, a pop song) for use within a dramatico-musical stage play (aka a musical) is often misunderstood by creatives and rights holders alike. To debunk some commonly held misconceptions, here is my 60-second elevator summary:

  1. A grand right is a right that subsists in the entire dramatico-musical play as a single work – not the music in and of itself. As such, a “grand right” combines the elements of the music, lyrics and book of a dramatico-musical or operatic work into a single right. A grand right is usually owned and controlled by the theatrical producers and/or composers who create the dramatico-musical or opera. When your child’s middle-school performs Annie for the ninth year in a row, that performance is the exercise of a grand performance right.
  2. If you are looking to incorporate existing, non-dramatic compositions into a dramatic work, for example, in the creation of a jukebox musical, you will need to obtain a dramatic performance license. Whereas performance rights societies such as ASCAP are able to grant licenses for non-dramatic performances of non-dramatic compositions (e.g., to allow your gym to play Rihanna), only the copyright owner of the non-dramatic composition can grant a dramatic performance license – customarily, the music publisher.
  3. Always keep in mind, dramatic performance licenses do not include a grant of life rights and/or underlying rights to the story of the writers or performers of the non-dramatic compositions. If you intend on acquiring a dramatic performance license to tell the story of your favorite band, you will also need to obtain some kind of life rights and/or underlying rights agreement.

Understanding these distinctions can save creatives and producers time and expense in the long run, particularly in this evolving and competitive ancillary rights market.

Years ago, photographer Carol Highsmith gifted her photographs to the Library of Congress for its public use. But, as any savvy artist should do, she retained the copyrights to her works.  It then came as a surprise when she later received a letter from a Getty affiliated entity accusing her of copyright infringement for using one of her own photographs.  The letter demanded $120 to settle Highsmith’s “breach.”

Highsmith did some investigating and learned that Getty had been selling thousands of Highsmith’s photographs. The photographs had false watermarks and did not reference Highsmith.  Highsmith turned around and sued Getty for copyright infringement for the 18,755 of her images it is selling on its website.

The lawsuit for $1 billion, alleges that “[t]he defendants [Getty Images] have apparently misappropriated Ms. Highsmith’s generous gift to the American people…. [They] are not only unlawfully charging licensing fees but are falsely and fraudulently holding themselves out as the exclusive copyright owner.”

This is not the first time that Getty has been sued for copyright infringement. In 2013, a jury found that it had willfully infringed on Haiti earthquake photographs.  This prior willful infringement would likely increase the damages owed to Highsmith should this case go to trial.  Analysists expect this case to settle, but do not rule out the possibility that Getty may take this case to court in order to determine whether Highsmith’s photographs are in the public domain and change the rules for stock photo agencies using photos under similar circumstances..