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ASMP files complaint with SEC against Getty Images, Inc.
Why did Getty not disclose suit in SEC-required reports?

The American Society of Media Photographers, ASMP, has filed a complaint with the US Securities and Exchange Commission, SEC, against stock photography giant Getty Images, Inc. for failing to report to the SEC a suit involving copyright infringement, false designation of origin, breach of fiduciary duties and breach of contract with a photographer represented by Tony Stone Images, TSI, an agency owned by Getty.

Until this point, ASMP’s role in the matter has been in providing assistance to leading baby photographer, Penny Gentieu of New York, in her suit against TSI and Getty. But now, according to ASMP executive director Richard Weisgrau who filed the complaint with the SEC, the trade association is going to the SEC because of the potentially industry-wide ramifications of the outcome of that suit and Getty’s failing to mention the suit in filing reports required by the SEC.

ASMP, which was founded in 1944, is recognized worldwide as the leading trade association which advocates for photographers who photograph for publication. ASMP has about 5,600 members throughout the United States and internationally. The trade association, which does not as a rule get involved in everyday business disputes, is taking special interest in the Gentieu suit because of its potential effect on the industry.

Photographer Penny Gentieu, who is well known for her distinctive style of baby photography, has based her suit on “copyright infringement resulting directly from many breaches of duties of Getty as an agent, its financial accountability to its principals, its breach of contract by misrepresentations and bad faith actions.” Weisgrau, who filed the complaint with Ms. Susan Wyderko, director of SEC, said that ASMP is supporting the Gentieu suit in the belief that the suit addresses issues of the rights of photographers under past and present contracts with Getty. The Gentieu litigation has been filed in the U.S. District Court for the Northern District of Illinois as Gentieu, et al v. Tony Stone Images/Chicago, Inc. and Getty Images, Inc. No. 00 C 0269 (N.D. Illinois).

The catalyst in the SEC complaint was ASMP’s concern that recent SEC-required reports filed by Getty failed to mention the Gentieu suit. “It is our understanding that a publicly traded company must disclose all lawsuits that are likely to have a material impact on the company. In its filings Getty listed a number of lawsuits that are covered by prior indemnification or current indemnification agreements and other suits, one of which - against another Getty company, art.com - did not even name Getty as a defendant. “In our opinion, it seems to be listing suits of little financial consequence to Getty by virtue of the indemnifications in place or being sought,” said Weisgrau. He went on to point out that the Gentieu suit, in which there is no possibility of indemnification, is not listed.

ASMP believes that if Gentieu prevails, the consequences for Getty are likely to be far reaching. “Not only will Getty and its subsidiary Tony Stone be liable for substantial monetary damages, but they will also be vulnerable to similar suits, perhaps even a class action suit, by other photographers whom they represent or have represented in the past,” said Weisgrau.

Gentieu has been represented by Tony Stone Images since 1993 and came under the Getty Images umbrella when Getty acquired TSI in 1995. In 1998, just after she refused to sign Getty’s new contract with TSI photographers, Gentieu began to notice both a slump in her sales and copying of the look and feel of her famous, distinctive baby pictures. Whereas other photographers were featured prominently in Getty’s web pages and catalogs, Gentieu’s photographs were being marginalized, even though her 1993 contract with TSI was an agency contract and included a “best efforts to sell” clause. Then, she found out that one company had licensed and paid TSI/Getty handsomely for rights to use one of Gentieu’s photographs. When she complained directly to the TSI/Getty accounting department that she had not been paid, TSI/Getty suddenly sent her a check for her share of the license proceeds.

Gentieu then started carefully reviewing all documentation sent to her by TSI/Getty and saw cancellations followed by re-issuance of licenses for less than original license sales, double subtractions from the Los Angeles and Chicago offices of Getty and many other discrepancies. Because her 1993 contract permitted it, she demanded an audit of her TSI/Getty account, but was prevented from seeing the very documents that would enable her to untangle the accounting snags she had already identified.

Subsequently, Gentieu sought assistance from ASMP and hired Chicago copyright attorney Patricia A. Felch of Banner & Witcoff, Ltd., to represent her. Felch also represents writer Jonathan Tasini in the highly publicized case against the New York Times over electronic re-use rights of freelancers’ articles.

From the outset, ASMP has been in Gentieu’s corner, even if it might appear a David v. Goliath battle. But the outcome from the case could reverberate throughout the stock photography industry. “We believe that a legal decision that is unfavorable to Getty could easily result in a host of similar suits from the photographers that in the past held or currently hold contracts to supply it with photography. If that were the case, it could result in Getty’s contracted sources of supply
withdrawing licensing authority from Getty and terminating the relationships. This could have devastating consequences on Getty’s financial position, in that, the case could result in an award in excess of $2 million, plus attorneys’ fees and costs,” said Weisgrau. He urged the SEC to investigate why Getty Images did not disclose this lawsuit, which does have the potential for substantial consequences.

“Getty might use the excuse for not mentioning the suit because, in their view, it would have no material effect on the company. ASMP would disagree strongly with such a position,” said Weisgrau.