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A win, but little payoff

It is a sad fact that even if you win a copyright lawsuit, you may not get as much money as you think your images are worth. Consider what happened in the case of IO Group v. Adkins, which was decided last month in the Northern District of California. The facts of this case are rather tawdry — both plaintiff and defendant are distributors of adult entertainment products — and the decision broke no new legal ground. But the court’s approach to calculating damages may be instructive.

The case. Early in 2004, IO Group noticed that two web sites owned by Duane Adkins were displaying copyrighted photos from IO Group’s various web sites. IO Group demanded that Adkins take the photos down, which he quickly did, and pay for the use he had already made, which he refused to do. IO Group filed a lawsuit that alleged copyright infringement for 101 images. Adkins failed to offer any defense and so automatically lost the case. The court then assigned the case to a magistrate judge to recommend the amount of damages that Adkins should pay.

IO Group’s copyrights were registered, which meant that it did not have to prove actual damages (as, indeed, it admitted it could not) and was eligible for statutory damages. But that’s not a fixed amount. Under copyright law, statutory damages for each work that was infringed can be anywhere from $750 to $30,000 “as the court considers just.” For willful infringements, those numbers can range from $200 to $150,000 per infringed work.

IO Group asked the court to assess $2,500 for each of the 101 images that were copied. To justify this figure, IO Group pointed out a statement on its web site that asserted that each photo there had a retail value of $2,500. It also submitted a preprinted license form that specified a penalty of $2,500 if the license terms weren’t honored.

In addition, IO Group asked the court to increase the amount to $7,500 per image because the copyright infringement was committed willfully. It argued that Adkins knew that the pictures belonged to someone else because many of the images on IO Group websites bear a copyright mark. Besides, said IO, Adkins had refused to negotiate a settlement.

The analysis. The magistrate judge didn’t think the pictures were worth that much. He noted that a paragraph on a web site and a blank license form didn’t prove that anyone had ever actually paid $2,500 for an IO Group image. Instead, he recommended that damages be set at $1,000 per image.

Why? He reasoned that, because Adkins had copied so many images, IO Group should get more than the $750 statutory minimum. On the other hand, there was no evidence that Adkins’ unjust profits were greater than $1,000 per photo. Part of the purpose of statutory damages is to deter future wrongdoing, and taking away the profits would sufficiently serve that purpose.

Was it willful? As to the notion that the infringement was willful, the magistrate judge simply did not buy it. He noted that refusing to settle is, at best, weak evidence. In contrast, the fact that Adkins had removed the offending images after receiving the cease-and-desist letter was strong evidence that infringement was not willful.

Besides, IO Group had not offered any evidence that the images Adkins took actually had copyright marks. To the contrary: IO Group had testified that there were at least a hundred other websites pirating its photos. IO had also stated that relatively few adult entertainment firms register their copyrights. Therefore, reasoned the magistrate judge, it’s possible that Adkins had lifted the pictures from another pirate who had stripped out the copyright marks, and it’s even possible he thought the photos were not protected at all.

But wait, there’s more. In addition to its copyright claim, IO Group had sued Adkins for violating its models’ right of publicity under the California Civil Code. That is, it claimed that Adkins had used the models’ likenesses for commercial gain without their consent. The California statute prescribes a minimum of $750 damages for this offense.

Again, IO Group could not prove that its actual damages were greater than the statutory minimum. So the magistrate judge recommended that IO Group be awarded $750 per picture, or $75,750 in all, for the violations of California publicity rights.

(Rights of publicity are a matter of state, not federal, law. But a federal court that is examining a case brought under federal law may exercise “supplemental jurisdiction” over state claims that arise from the same set of facts.)

Was justice done? It would seem that Adkins’ penalty for pirating porn pix was far from crushing: $1,750 per image. And by choosing not to defend the case, Adkins avoided legal bills. Meanwhile, IO Group did have to pay to litigate the case and, if Adkins were to stonewall rather than pay up, it might see still more expenses.

The court might have been much harsher on Adkins if it had found that his conduct was willful. But that wasn’t proved, and so the court simply took away his wrongful profits. When it looked at the separate issue of publicity rights, the court assessed the minimum. It was a victory for the copyright owner, but not a big one.

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