ASMP

Home > News > Special announcements > Announcement

Resnick et al. v. CCC, Inc.
ASMP Questions Regarding Support

ASMP has been indirectly and informally asked to support the case of Resnick et al. v. CCC, Inc. All decisions regarding ASMP's support or non-support of cases, whether involving financial contributions or other forms of support, are based on the formal, general criteria set forth in the memo that appears at the end of this document. In addition to those general questions, ASMP's staff sees the following specific concerns that need to be addressed before a decision to support or not support the case can be made by the Board. Our basic inquiries are to determine whether the case is meritorious and whether it is sustainable. These questions should be read in the context of ASMP's starting presumption that it generally does not support cases at the trial level except for unusual instances. When exceptions are made, they generally occur when there are precedent-setting legal issues in dispute, and the facts are either agreed upon by both sides or relatively insignificant to the outcome.

I. Advantages of the Lawsuit to Photographers

A. If the plaintiffs win:

1. There may be a minimal award to the members of the class (assuming that the Court grants class action status to the case), or there may be no net payment. The complaint filed with the Court states, "... the damages suffered by individual Class members, while not inconsequential, are relatively modest" (emphasis added). From that starting point, see the discussion of "Parties and Costs," below. In addition, a court could find an infringement but need not necessarily award money damages.

2. A win for the plaintiffs would give photographers the ability to negotiate the creation of licensing systems within CCC to handle royalties in the future. However, that is no gain, since there were negotiations in process, with a meeting of representatives scheduled for later this month, when the suit was filed.

B. If the plaintiffs lose, there is no advantage to photographers.

II. Disadvantages of the Lawsuit to Photographers

A. If the plaintiffs win:

1. There will be the same kind of aftermath that always follows lawsuits like Reid and Tasini: Publishers will impose increased requirements of Work-for-Hire and transfers of copyrights in their agreements, on a take-it-or-leave-it basis.

2. Any award of money damages will be small for each, individual photographer and will most likely not produce any net recovery (see discussion of "Parties and Costs" below).

B. If the plaintiffs lose:

1. Photographers will have lost the ability to negotiate the creation of systems to provide a continuing stream of royalties that was being pursued prior to the filing of the suit, for no gain.

2. At least as significantly, the court has the discretion to make the losing side pay the legal fees of the winning side. That is true no matter which side wins or loses. If the plaintiffs lose, they could be facing a judgment of staggering proportions (see discussion of "Parties and Costs," below).

III. Responsibility of Defendant

A. If there has been any infringement, who is the responsible party? CCC is operating as an agent, acting under warranties and representations from the publishers and authors that they have all of the rights necessary to authorize the photocopying that is the subject of the lawsuit. We are not aware of anything that routinely would impose on an agent a duty to verify the representations made to it by the entities it represents. We understand that in the past, if any copyright owner claimed that CCC had licensed his or her work without authority, CCC has gone back to the publisher to make a due diligence investigation of the claim.

B. Because of this, if there has been any infringement, CCC appears to us to have been, at most, an innocent infringer. This, in turn, means that any court award against CCC would be likely to be minimal in amount. E.g., the maximum statutory damages for infringement of an image are $150,000; however, for an innocent infringer, the court has the discretion to reduce that amount to $200.

IV. Parties and Costs

A. The discussion of responsibility above is crucial to an analysis of costs. In the view of ASMP’s staff, if the suit were to be filed at all, it has been filed against essentially the wrong party. Because of the publishers’ representations and warranties under which CCC has been operating, CCC will most likely move to have the lawsuit dismissed. If that is not granted, the next likely move will be the joinder of probably every one of the approximately 9,600 publishers represented by CCC as additional defendants.

B. The effects of having nearly 10,000 additional defendants, including some of the largest and wealthiest corporations in the world, on the costs of litigation are extraordinary. We know that a copyright infringement case against one or a few defendants will often cost in the area of $100,000. in legal fees and costs. A significant portion of the fees and costs involved in a lawsuit come from pre-trial discovery, such as taking depositions. These include the lawyers’ fees, the travel expenses of everyone involved in the depositions, the costs of the court reporters transcribing the depositions, and the costs of making copies of those transcripts for everyone involved. When you add nearly 10,000 defendants, the multiple on costs boggles the mind. Even if the defendants are treated as a class, there will still be depositions numbering in the thousands, each deposition probably costing thousands of dollars.

This case appears to ASMP’s staff as having the potential, in fact the likelihood, of costing millions of dollars to finance, without even taking into account the possibility of being ordered to pay the other side’s legal expenses.

C. Whether there are almost 10,000 individual defendants or only one class consisting of nearly 10,000 publishers, the defendants have enormous resources available, particularly legal and financial resources. They will be represented by multiple counsel, all of whom will be specialists in major copyright litigation. Those lawyers will be either from large firms or intellectual property specialty firms. In either case, the standard approach of lawyers in their position will be to overwhelm and exhaust the resources of the plaintiffs. They will file every motion and take every procedural step imaginable. They will depose everyone that ever had anything to do with any of the parties. They will demand copies of every document that has anything even remotely to do with the case.

All of these actions will require responses from the plaintiffs’ lawyers, who will have a fraction of the resources of any one of the defendants’ lawyers, let alone all of them combined. These actions will also cost the plaintiffs extremely large sums of money for costs, as discussed above. The costs of litigation are driven by the side that wants the costs to escalate the most, because even if the other side wants to minimize costs, it must always respond to its opponent at every step.

D. This has been characterized as the largest copyright infringement action ever filed. The largest copyright suit must necessarily generate close to, if not the, largest amount of legal fees and costs ever incurred. There appears to be real question as to whether the plaintiff class (if certified) and their attorneys will be able to sustain this litigation through to the end of trial, either in terms of dollars or of staffing. In addition, there is the question discussed earlier of the possibility of having the other side’s legal expenses awarded against the plaintiffs if they lose.

E. This discussion has been based on the addition of the publishers as parties to the suit. In fact, the addition of parties would probably not stop there. Since each publisher operates under representations and warranties from its contributors, it appears likely that the contributors, in turn, will be made parties to the suit, thereby drastically increasing the numbers and complexity of the litigation. In fact, it is not inconceivable that the entities making photocopies could end up being joined, as well.

F. A further concern is that this case will most likely not end at the trial level. If the plaintiffs win, there is no way that the CCC and publishers will allow that decision to stand unless and until every avenue of appeal has been exhausted. That will cause the litigation to stretch out over many years (Tasini took approximately seven years to work its way through the courts) and to cost multiples of what the trial stage alone will cost.

V. Liability

A. We know that the majority of the revenues from photocopying that CCC collects for distribution to publishers and authors comes from copying scientific and trade journals. We also know that articles in those publications:

1. Tend to have far fewer photographs than general circulation periodicals,

2. Always are accompanied by representations and warranties that the author has all of the necessary copyrights, and

3. Typically are accompanied by a transfer of the copyright to the publisher.

We do not know how much of that material is created as work-made-for-hire, in which the publisher owns the copyrights to the material from the outset.

B. We do not know whether the acts alleged in the complaint in this case constitute copyright violation. We do not believe that to be a certainty. Based on general principles of copyright law, we know that the publisher of an issue of a magazine owns the copyright to that publication. It appears that the publisher has the legal authority and power to grant someone the right to make a photocopy of that issue. If the publisher could grant that license, could it not legally grant a license to make a photocopy of one of the articles in that issue? Of one of the pages in that article? We do not know the definitive answers to these questions, but they raise issues about the likelihood of success of the lawsuit.

C. For an analogy to a further question, imagine that a photographer makes an environmental portrait of an executive in his or her office. On the wall behind the executive are paintings and photographs that appear in the background of the portrait. Is the portrait an infringement of these other works? Most likely, it is not. The photographs and paintings are incidental items, perhaps de minimis in extent. It appears likely to ASMP’s staff that such a use would be permitted without authorization as a fair use. Isn’t it equally probable that in most cases of photocopying, the real subject of the photocopying is the text, and the reproductions of the photographs are merely incidental and perhaps de minimis? Only a court can tell us the definite answer to that, but it strikes us as a potentially effective, fair use defense in this suit. Fair use analysis always requires an examination of all of the facts, and it is precisely that sort of fact-gathering and presentation that drives up the costs of trial-level litigation.

D. Fair use becomes a factor in another context, as well. Most photocopying is done by departments, companies and institutions involved in research and development and/or education. Research and education are two areas in which fair use defenses can often arise. In this case, it may well turn out that the publishers do not wish to raise a fair use defense because it is potentially a double-edged sword, but the court could consider that issue on its own, if it wishes. Again, only the court can tell us whether these cases would qualify for fair use, but the fair use argument appears to be an issue that needs to be addressed and resolved.

E. Another kind of fair use defense could prove fatal to the case and could easily be raised by the court. That argument would be based on the "public good." Essentially, the court could take the position that there is no way to permit photocopying of articles if photographers have the power to refuse permission to photocopy the images in those articles; photocopying is in the public interest; the copyright laws exist for the public interest under Article I §8 of the Constitution; so fair use must permit photocopying even without permission from the photographers. It is our view that such an analysis was at the root of the decision in Kelly v. Arriba Soft Corp (now Ditto.com) and could easily arise here. We are currently appealing the decision in Kelly, but only time will tell us whether the 9th Circuit will overrule or affirm that decision.

F. Fair use could also be bolstered by the legislative history behind the Copyright Act of 1976. Until that Act, photocopying was not a copyright violation. It became an exclusive right of the copyright owner only as a result of the deal to create a central copyright licensing clearing house, the CCC. If the court sees its choice as between prohibiting photocopying and fair use, it may well opt for fair use. It must be remembered that two U.S. Supreme Court Justices felt that way and filed dissenting opinions in Tasini, and that case involved a use that affected far fewer people than photocopying currently does.

It must also be remembered that, depending on the exact nature and context of a fair use ruling, a finding of fair use could effectively destroy the entire system of licensing photocopying. It could mean, not just that the plaintiffs in this case would not get any money, but that nobody would be entitled to royalties for photocopying ever again. That is why we suggested earlier that the CCC and publishers might be reluctant to raise the issue of fair use.

G. Another potential defense is that of an implied license. If, in fact, CCC has been authorizing photocopying of photographs without direct permission, the fact that this practice has been going on for more than at least two decades without complaint could be used as an argument that the custom and practice of the trade is to allow such photocopying, and that custom and practice constitute an implied license.

VI. Conclusion

Finally, we are concerned about the legal representation of the plaintiffs in this case, which is obviously a significant one and has been characterized as the largest copyright infringement action ever filed. Plaintiffs are represented by only a few lawyers from two small firms. As discussed above, the potential for being overwhelmed by the demands of this case appears very real. Even more of a concern is the fact that none of the lawyers or firms representing the plaintiffs in this case is an intellectual property or copyright specialist. We do not question their competency, but we are concerned over the breadth and depth of their experience and expertise in this specialized area of practice.

ASMP’s staff expects accusations that we are defending CCC. On the contrary, we are not defending any entity or position. While we do acknowledge and appreciate the major efforts and investments made by CCC to create primary licensing systems for photographers, and while we appreciate their commitment to explore the construction of secondary licensing systems, our responsibility is to protect and promote the interests of photographers. We are simply evaluating the situation and raising questions over what we see as potential problems. We do that in every case that is submitted for consideration for support by ASMP. If the plaintiffs wish to make a formal request for ASMP’s support, we ask that the questions raised in this paper, as well as the general information described below, be addressed so that the Society can make a decision. We have no position here, pro or con anyone or anything, beyond being 100% pro photographer and pro ASMP.

ASMP MEMORANDUM

American Society of Media Photographers, Inc.
150 North Second Street
Philadelphia, PA 19106-1912
Phone: 215-451-ASMP Ext. 1207 Fax: 215-451-0880

DATE: 9/5/01
TO: SETH RESNICK, PAULA LERNER AND MICHAEL GRECCO
FROM: VICTOR S. PERLMAN, MANAGING DIRECTOR AND GENERAL COUNSEL
RE: LEGAL ACTION FUND REQUEST CRITERIA

You have inquired about assistance from ASMP's Legal Action Fund. The following are the criteria that ASMP's Executive Board uses in evaluating such requests. Please let me know if you have any questions after you have had a chance to review this memo and discuss it with your attorney.

The establishment of the ASMP Legal Action Fund has brought many requests for aid from ASMP in the form of financial and/or legal assistance. Members should be aware that the following criteria (in no particular order) are considered, among others, in evaluating their requests for legal and/or financial assistance in legal controversies:

Quality of the photographer's paperwork
Membership in ASMP
Overall industry impact
Precedent-setting possibilities
Nature of the offender's conduct
Nature of the grievance

We examine the following items:

All transactional paperwork
Formal written request for aid, including an outline of the claim

We also seek the following:

Discussion with the lawyer involved
Copies of all pleadings
What aid is requested and how it will be used
Budget for the potential or actual litigation
Proposed course of action to resolve the situation
Copies of all settlement correspondence

Generally, ASMP does not assist in simple collection cases or contract disputes, or in cases where there are already many decisions on the books establishing the law fairly clearly. Also, ASMP does not assist in cases where the only dispute is how much money the photographer should receive. Further, there is a rebuttable presumption against assisting in cases at the trial level because the facts of the case tend both to be uncertain and to control the result in the case.

ASMP does not seek to promote or prolong litigation, but rather seeks to assure that the outcome of cases involving major principles or practices is fair and favorable to photographers. Finally, the expenditure of any funds on behalf of a photographer is made on the condition that, if the photographer is successful in the litigation, the funds will be repaid out of the proceeds of the judgment or settlement.

We will look forward to receiving your material and hope that we can be of assistance.