Attorney Steve® - Copyright Law Essentials. A look at factors to consider/argue when settling a photo or copyright image case. Section 1202 CMI claims

What is the Fair Market Value?

Like anything else in life (buying a banana in the marketplace or a baseball card), Fair Market Value (FMV) can seem to be a bit arbitrary.  However, there is some case law in the realm of Copyright Law that seeks to provide some guidance on what a photo infringement case should or might settle for.  I do not see this as an exact science, but by applying the case law and reviewing the factors, courts may look at (if the case cannot be settled out of court and moves to litigation)

In one case, Davis v. Gap, Inc., 246 F.3d 152, 167 (2d Cir. 2001) the Court discussed that the issue is not so much what another photographer would be willing to sell a different license for a different image but what THIS seller is willing to accept for THE USE at issue.  The Court noted:

Once the copyright owner shows a connection between infringement and damage, uncertainty about the amount of damages will not bar an award."); Szekely, 242 F.2d at 269 (where "legal injury is certain... [w]e should not allow difficulty in ascertaining precisely the value of the right destroyed, which difficulty arises largely from the destruction, to enable the infringer to escape without compensating the owner of the right"

However, the FMV for a license is also only one factor among several in determining the Statutory Damages in copyright.  There are other things that should be examined. This case also gave a number of other examples which may be worth reviewing as legal precedent and is worth a read. 

For example, Courts looked at other cases, including architectural infringement:

• In Encyclopedia Brown, a cable television company and various cable operators infringed on the plaintiff's television program. The district court rejected the defendant's argument that the plaintiff's claim for a reasonable license fee was not cognizable as a matter of law. The court reasoned that if the lost sale of a product to a third-party customer constitutes "actual damages," then the lost sale of a license to a defendant who, absent the infringement, would have paid for a license may constitute "actual damages" as well. See Encyclopedia Brown, 25 F. Supp. 2d at 399-402. The court found authorization for such an award in Koons. See Encyclopedia Brown, 25 F. Supp. 2d at 401 (quoting Koons, 960 F.2d at 313).
• In Kleier Adver., Inc. v. Premier Pontiac, Inc., 1039 (10th Cir. 1990), the defendant automobile dealership infringed for twenty-two months upon an advertising agency's syndicated advertising program. The Tenth Circuit upheld the jury's award of damages, concluding that the jury had intended an award of actual damages that represented the plaintiff's lost license fees over the twenty-two-month period. See id. at 1040.
• In Sid & Marty Krofft Television Prods. Inc. v. McDonald's Corp., 562 F.2d 1157, 1174 (9th Cir. 1977), where the defendant had produced commercials infringing on the plaintiff's television show, the Ninth Circuit approved a jury instruction that allowed the jury to award an amount approximating "what a willing buyer would have been reasonably required to pay to a willing seller for plaintiffs' work."
• Szekely, Abeshouse, and Koons are supported by the decisions of other Circuits, as well as district courts. In Nucor Corp. v. Tennessee Forging Steel Serv., Inc., 152 (8th Cir. 1975), a 1909 Act case, the defendant infringed on the plaintiff's architectural plans. After a trial on damages, the jury returned with a verdict of no damages. See id. On appeal, the Eighth Circuit held that the district court had erred by failing to instruct the jury that the defendants were liable for the "fair value," or market value, of the infringed plans. See id. at 153 & n.3.
• In Aitken, Hazen, Hoffman, Miller, P.C. v. Empire Constr. Co., 542 F. Supp. 252 (D. Neb. 1982) the defendant construction company, after first engaging the plaintiff architectural firm to design an apartment complex, subsequently copied and used the plaintiff's plans in construction of an apartment complex on a neighboring parcel of land. The court determined that the fair market value of the modified architectural plans was the relevant measure for actual damages, and calculated that amount by determining "the amount [defendant] would reasonably have paid to the plaintiff and the plaintiff would reasonably have expected to receive for the revision and use of the [first set of] plans." Id. at 263. In Kleier Adver. Co. v. James Miller Chevrolet, Inc., 722 F. Supp. 1544, 1546 (N.D. Ill. 1989), where the facts were similar to the Tenth Circuit's Kleier case cited above, the court awarded lost license fees, which it characterized as "actual damages," as well as the infringer's profits. See also Curtis v. General Dynamics Corp., No. C89-566S, 1990 WL 302725, at *11 (W.D. Wash. Sept. 26, 1990) (awarding plaintiff photographer the fee he would have been paid had defendant hired him instead of infringing his copyright); Bishop v. Wick, No. 88 C 6369, 1988 WL 166652, at *5 (N.D. Ill. Dec. 29, 1988) ("Plaintiffs shall recover the fair market value of the [infringed computer program] in an amount equal to the ordinary licensing fees charged to licensees of plaintiffs, multiplied by each time that defendants illegally copied or utilized the [program]." (emphasis omitted)); Sherry Mfg. Co. v. Towel King, 220 U.S.P.Q. 855, 859 (S.D. Fla. 1983) (awarding actual damages based on reasonable royalty which should have been paid for license to use infringed design), rev'd on other grounds,(11th Cir. 1985).

Bryant v. Media Right Productions, Inc., 603 F.3d 135, 144 (2d Cir. 2010)

This is another case that can shed some light on the proper measure of damages in a photo infringement case.  In this case, the Court noted several important factors:

"When determining the amount of statutory damages to award for copyright infringement, courts consider:

(1) the infringer's state of mind;

(2) the expenses saved, and profits earned, by the infringer;

(3) the revenue lost by the copyright holder;

(4) the deterrent effect on the infringer and third parties;

(5) the infringer's cooperation in providing evidence concerning the value of the infringing material;

and

(6) the conduct and attitude of the parties.”), 

This type of approach can allow many opportunities for argument and analysis.

1202 violations can lead to additional damages

Another charge or allegation that may often be made in the context of a copyright infringement claim is "Removing Copyright Management Information" from the Work so that the artist rights holder does not get the credit (called "CMI" or "Copyright Mark").  This is against federal law under 17 USC 1202(b) which states:

17 U.S. Code § 1202. Integrity of copyright management information

(c) Definition.—As used in this section, the term “copyright management information” means any of the following information conveyed in connection with copies or phonorecords of a work or performances or displays of a work, including in digital form, except that such term does not include any personally identifying information about a user of a work or of a copy, phonorecord, performance, or display of a work:

(1) The title and other information identifying the work, including the information set forth on a notice of copyright.

(2) The name of, and other identifying information about, the author of a work.

(3) The name of, and other identifying information about, the copyright owner of the work, including the information set forth in a notice of copyright. 

The minimum award of damages for a claim such as this could be $2,500.  See 17 USC 1203.   Adding all this up and analyzing and applying the factors is not an easy task, but with some work, a sensible figure should arise.  Bear in mind an attorney fee may be appropriate where the work was registered prior to infringement or within three months of publication of the work.

If the infringer has their own copyright notice on the bottom of a page that contains infringing photos does that constitute a CMI 1202 claim?

According to recent holdings, no.  See Logan v. Meta Platforms, Inc., 3-22-cv-01847 (NDCA Oct. 25, 2022) (Charles R. Breyer)

For example, Facebook (Meta) was sued for having allegedly infringing photos on their social media platform.  At the bottom of each page was a copyright notice.  The Plaintiff photographer argued that was akin to Defendant claiming the images as theirs.  The Court said maybe.  Here is some language from the ruling on the motion to dismiss by Defendant.

False CMI, 17 U.S.C. § 1202(a) Meta argues that its copyright tag displayed at the bottom of each Facebook user page does not qualify as CMI as defined under 17 U.S.C. § 1202(c), because the information is not “conveyed in connection with” Logan's photos. Reply at 7–8 (quoting § 1202(c)); see FAC ¶¶ 48–50, 115, 125. Logan responds that Meta's copyright tag is false CMI because it provides information misidentifying Meta as the photos' author. Opp'n at 13–14. The Court concludes that Meta's copyright tag does not qualify as CMI “conveyed in connection with” Logan's photos. § 1202(c). 17 U.S.C. § 1202(a) provides that “[n]o person shall knowingly and with the intent to induce, enable, facilitate, or conceal infringement[,] . . . provide[, distribute, or import for distribution] copyright management information that is false.”

The DMCA defines CMI as any information identifying the work, its author or copyright owner, and the terms and condition of use, or “links to such information,” “conveyed in connection with copies . . . of [the] work.” Id. § 1202(c). The Ninth Circuit recently affirmed a district court's grant of summary judgment against a plaintiff's false CMI claim, finding that the defendants' copyright notice was not “conveyed in connection with copies” of the plaintiff's photos. SellPoolSuppliesOnline .com, LLC v. Ugly Pools Ariz., Inc., 804 F. App'x 668, 670–71 (9th Cir. 2020) (quoting § 1202(c)).

There, the defendants' copyright notice was generic; “not located on or next to [the] Plaintiff's photos,” which “were imprinted with their own copyright markings”; and “located at the bottom of the webpage in a shaded box, separating it from the rest of the content on the webpage.” Id. at 671. The facts here are indistinguishable: Meta's allegedly false CMI is “[a] [generic] copyright tag on the bottom of each Facebook user page,” separated from the rest of the content on the webpage, and is not located on or next to Logan's photos. Id.; see FAC ¶ 49.

Although SellPoolSuppliesOnline.com considered a false CMI claim on a motion for summary judgment, taking the facts of the FAC as true, Logan has failed to plead that Meta conveyed CMI in connection with his photos. 804 F. App'x at 669. Accordingly, the Court dismisses Logan's false CMI claim under § 1202(a) with leave to amend. 2. Improper Removal of CMI, 17 U.S.C. § 1202(b) The FAC also alleges that Meta intentionally removed Logan's CMI from his photos “with the knowledge or reasonable grounds to know that it would enable, facilitate, or conceal its own acts of infringement and infringing acts by others.” FAC ¶¶ 27–30, 120–29. Meta argues that the FAC fails to state a claim under § 1202(b), because it does not identify the CMI at issue, “or any removal or alteration by Meta of the CMI.” Mot. at 15. Meta also points out that the URL of the Newport Beach photo allegedly saved onto Facebook's servers retains Logan's name. Id. at 16; see also FAC ¶ 22 n.1.

Meta's arguments about the FAC's specificity are unpersuasive. The FAC clearly specifies the CMI removed—Logan's “name, the title of the Photograph, and a link to a Creative Commons website . . . setting forth the terms and conditions for use”—and the photos from which the CMI was allegedly removed. FAC ¶¶ 27–30, 56. While none of Logan's photos contain any copyright mark, his identifying information is provided immediately beneath each photo on Wikimedia. See id. ¶ 56. This placement is sufficiently close to qualify as CMI “conveyed in connection with” his photos. § 1202(c); see also Friedman v. Live Nation Merchandise, Inc., 833 F.3d 1180, 1187–88 (9th Cir. 2016) (finding that image credits near the photos but not on them qualified as CMI).

Nevertheless, the FAC fails to plead the requisite knowledge under § 1202(b) for both Logan's false CMI and improper removal of CMI claims. Section 1202(b)(1) prohibits any person, “without the authority of the copyright owner or the law,” from “intentionally remov[ing] or alter[ing] any copyright management information.” 17 U.S.C. § 1202(b)(1). Section 1202(b)(3) prohibits any person from “distribut[ing], [or] import[ing] for distribution, . . . copies of works . . . knowing that copyright management information has been removed or altered without authority of the copyright owner or the law.” Id. § 1202(b)(3). Additionally, “[b]oth provisions . . . require the defendant to possess the mental state of knowing, or having a reasonable basis to know, that his actions ‘will induce, enable, facilitate, or conceal' infringement.” Stevens v. Corelogic, Inc., 899 F.3d 666, 673 (9th Cir. 2018) (quoting § 1202(b)(1)(3)).

Courts within this District have diverged on the level of specificity required to successfully plead § 1202(b)'s mental state requirements. Compare Philpot v. Alternet Media, Inc., No. 18-cv-044979-TSH, 2018 WL 6267876, at *5 (N.D. Cal. Nov. 30, 2018) (dismissing the complaint's bald reiteration of the statutory language); Harrington v. Pinterest, Inc., No. 5:20-cv-05290-EJD, 2022 WL 4348460, at *5 (N.D. Cal. Sept. 19, 2022) (citing Stevens, 899 F.3d at 674) (dismissing the § 1202(b) claim absent “a sufficient factual basis from which to infer [the defendant] knew or had a reasonable basis to know that the removal or alteration of CMI . . . w[ould] aid infringement”); with Brown v. Stroud, No. 08-cv-02348-JSW, 2011 WL 2600661, at *6 (N.D. Cal. June 30, 2011) (finding general allegations of scienter sufficiently specific and that “arguments regarding knowledge and intent are better addressed by way of a motion for summary judgment”).

However, Federal Rule of Civil Procedure 9(b) provides that “intent, knowledge, and other conditions of a person's mind may be alleged generally.” See, e.g., APL Microscopic, LLC v. Steenblock, No. 21-55745, 2022 WL 4830687, at *2 (9th Cir. Oct. 3, 2022) (reversing dismissal of a § 1202(b) claim where screenshots of plaintiff's works without their watermark on defendant's social media pages raised a “reasonable inference” that defendant knowingly removed CMI). Language in Stevens stating that “specific allegations as to how identifiable infringements ‘will' be affected are necessary” under § 1202(b) does not indicate otherwise; there, the Ninth Circuit held that “a plaintiff bringing a Section 1202(b) claim must make an affirmative showing” of scienter in the summary judgment context. 899 F.3d at 674 (quoting United States v. Todd, 627 F.3d 329, 334 (9th Cir. 2010)).

Even so, the FAC falls short of pleading § 1202(b)'s “double scienter” requirement. Harrington, 2022 WL 4348460, at *3 (quoting Mango v. BuzzFeed, Inc., 970 F.3d 167, 171 (2d Cir. 2020)). Again, none of Logan's photos contain any watermark or copyright mark; the only identifiable CMI is on Wikimedia, where Logan's name, licensing information, and use permissions are listed directly below each photograph. See FAC ¶ 56. The FAC's theory thus seems to be that embedding the photos itself evidences Meta's intent to remove Logan's CMI from his photos. See id. ¶¶ 29–30. While plaintiffs may generally allege § 1202(b)'s knowledge requirements, embedding itself cannot establish that a defendant “intentionally remove[d] or alter[ed]” a plaintiff's CMI. § 1202(b)(1). Unlike editing a plaintiff's watermark out of a photo, automatically omitting CMI by embedding a photo out of the full context of the webpage where the CMI is found cannot itself plead intentionality as required by the DMCA. See, e.g., Bain v. Film Indep., Inc., No. 18-cv-4126-PA (JEMX), 2018 WL 6930766, at *5 (C.D. Cal. Aug. 9, 2018) (holding that alleging the removal of a watermark from a film sufficiently pleaded plaintiff's DMCA claim).

By alleging just that, the FAC pleads “threadbare recitals” that Meta “intentionally remove[d] or alter[ed] any copyright management information,” or that Meta “kn[ew] or . . . ha[d] reasonable grounds to know, that it w[ould] induce, enable, facilitate, or conceal an infringement of any copyright.” Iqbal, 556 U.S. at 678; Stevens, 899 F.3d at 673 (internal quotation marks omitted); see also Kelly v. Arriba Soft Corp., 77 F. Supp. 2d 1116, 1122 (C.D. Cal. 1999), aff'd in part and rev'd in part on other grounds, 280 F.3d 934 (9th Cir. 2002) (“[R]emov[ing] Plaintiff's images from the context of Plaintiff's Web sites where their [CMI] was located, and convert[ing] them to thumbnails in Defendant's index . . . [failed to] show[] [that] Defendant's actions were intentional, rather than merely an unintended side effect . . . .”). The FAC therefore defectively pleads Logan's DMCA claim under § 1202(b)(1).

The FAC fails to plead Logan's DMCA claim under § 1202(b)(3) for the same reason; embedding Logan's photos from Wikimedia does not itself establish that Meta “kn[ew] that copyright management information ha[d] been removed or altered.” § 1202(b)(3). Nor does the FAC successfully plead that Meta knew that third parties embedding Logan's work from his Facebook account removed any accompanying CMI: third parties embed “hundreds of thousands or even millions of registered copyrighted works” using Facebook's embed tool, and “[m]ore than 2 billion people use Facebook every month.” FAC ¶¶ 53, 61. These facts do not plausibly plead that Meta knew third parties removed Logan's CMI by embedding his photos onto other websites. Therefore, the Court dismisses Logan's DMCA claim with leave to amend. 

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