Tuesday, February 8, 2011
It's Not A Winning Ticket
Someone used my picture without permission! What do I win?
Post-Appeal: Going From Bad To Worse
Back before the lower court with the prospect of a trial on the horizon, Latimer’s fortunes didn’t improve. The court considered whether Latimer had enough evidence to proceed to trial on his claim seeking an award of Kawasaki’s and Hachette’s profits. After reviewing the evidence, in September 2010—a little more than a month before the case was set to go to trial—the court concluded that “Latimer...failed to meet his burden to show a reasonable relationship between the profits he seeks and the alleged infringement of his copyrighted photographs.” Although Latimer was permitted to pursue his claim for actual damages—what most likely would be a reasonable royalty—he had lost the ability to seek an award of profits.
The court’s decision limiting any potential damage award to actual damages effectively ended the case. At that point, the attorneys knew it was highly unlikely that they could recover enough to make going through trial worth their time and effort, much less the time already invested in the case. Latimer also faced the possibility that the defendants might be entitled to recover their attorney’s fees from him by virtue of his seeking an award of profits without any evidence to support the claim. (Given the amount of attorney’s fees incurred over a three-year period, it’s very likely that any fee award would have eclipsed any judgment Latimer might have been able to obtain.) All of these pressures created a situation where Latimer had no choice but to settle and end the case.
Lessons To Be Learned
As with any morality play, there are lessons to be taken away from the case. For starters, the case underscores the importance of using agreements. Even when time is short and there’s no time for a formal contract, any sort of letter agreement or e-mail confirming the terms of an agreement are better than nothing and may be sufficient to avoid having a court determine after the fact that a license was granted by implication. Likewise, transmitting a clear set of restrictions or limitations when transmitting the images may help limit the scope of any implied license.
As important as it is to use agreements and document relationships, and to understand the consequences of delivering images to someone in the absence of any documentation, it’s far more important to maintain realistic expectations. Had the case been evaluated from the point of view of what would have been reasonable based upon the actual use and prevailing law, a reasonable settlement might have been possible very early in the action.
As Jonathan Harr pointed out in his book A Civil Action, certain types of cases are riskier than others, and when certain types of cases go to trial, a “plaintiff can expect to lose, on average, two times out of three.” So why does anyone do it? They don’t. “Like most people, plaintiffs’ lawyers don’t like to take chances with their own money,” writes Harr. “They either settle or drop the vast majority of cases before trial.”
The statistics bear out Harr’s assessment that most cases never go to trial. According to federal court statistics, of the approximately 4,500 copyright infringement cases filed in the U.S. in 2005, only 40 or so (or about 0.9%—less than 1%—of cases) went to trial. The rest either settled or were resolved prior to trial.
Realistic expectations would have opened the door to an early settlement, which would have maximized returns by obtaining fair value for the use of the images while avoiding protracted and expensive litigation. Instead, the litigation continued to the point where the out-of-pocket costs exceeded the amount that anyone could have reasonably hoped to gain from the case. Where parties fail to maintain realistic expectations, nobody wins.
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