Category: copyright

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Forming an Entity: Watch for Issues

Most creative professionals start their businesses without doing anything more than accepting the first freelance project offered. That is, they don’t bother to do anything about forming a legal entity like a corporation. That’s fine; if you don’t do anything and you work solo, you are a sole proprietor. After that first project, if you continue doing business, getting projects, cashing checks, you probably won’t think about your business structure any further.

At least for a while.

One day, you, the now-successful creative pro hires an accountant to do your taxes and that CPA tells you you should incorporate or form an LLC. The accountant is concerned about the relative tax burdens and, often, it does make immediate financial sense to form an entity; that is, you can save a bundle on your taxes. But, the accountant doesn’t (probably) know about the copyright ramifications, and (usually) neither does the average creative pro.

Yes, there are copyright ramifications.

Overall, there are a whole host of legal issues to consider when it comes to potentially forming an entity. Most people focus on the tax issues, and that makes sense, but there are other legal issues and I highly encourage anyone considering forming an entity to talk to a lawyer before taking that step. Anyway, for this post, I’m only going to focus on the copyright one as it is most often totally ignored, and it shouldn’t be.

So, let’s imagine you have formed a single-member LLC and, as per your CPA, you’ve made yourself an employee of that LLC. Your tax bill thanks you. Now, however, when you make your art (whatever kind of art you make–doesnt matter), who owns its copyright?

If you said you do, you’d be wrong. Even though you are the only member of your entity (the LLC), it’s that entity that owns the copyright in the art you make as an employee of that entity. It’s an automatic work-made-for-hire. No writing required.

Well, I hear you saying, but I am the entity so it’s the same thing. Nice try; but, under the law, no, you aren’t and no, it isn’t at all.

First, since the entity is now the author of the work, the length of the copyright is no longer life of the author plus 70 years. A copyright authored by an entity lasts either 95 years after its first publication or 120 years after its creation, whichever is shorter[1]. By the way, there is an exception to this to get back to the authors death +70 years length, but it requires more paperwork and I know how much y’all love paperwork.

Second, when you register that copyright, you need to do it correctly. You have to name the entity as the author and the claimant because you, as an individual, by law did not create and do not own the copyright. While screwing this up doesnt necessarily totally void a registration, it certainly will be an issue if you ever get infringed. You (and your lawyer) don’t want to have to fight about the validity of your registration. I’ve seen it in cases and it could result in a great case becoming a loser. Remember, if you sue for infringement and lose, you might end up being required to pay the other side’s attorneys’ fees and costs; you don’t want something like this to scuttle your otherwise watertight ship.

Third, let’s say you get hit by a bus and shuffle off the mortal coil, who gets the copyrights your entity owns? And what about existing licenses and royalties based off those copyrights–who gets the money? It’s not so easy, if you havent planned ahead. Do you have a succession plan in place for your entity?

None of these issues are insurmountable at all. For example, you can have a writing that keeps the copyrights created after the entity is formed as your own (if you want to do that and there are reasons to do that, or not). Overall, the issues beyond the tax ones that come up when you form an entity, including copyright ones, do require some thought and there are decisions that need to be made and new processes need to be learned if you decide to go ahead and incorporate.

Don’t go it alone and hope it all works out–thats a lousy business strategy. Talk to your own attorney and get good, personalized advice.

[1] 17 USC 302(c).

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Safe Harbors, Piracy, and Your Value

I could write on this issue, but I’ll save the time and point you toDavid Newhoff over at Illusion of More. In this post, Mr. Newhoff discusses the differences and, importantly, the similarities facing artists in the USA as compared to the Canadians when it comes to the (false) promises made by tech to improve the lives of artists. Miranda Mullholland made a wonderful and passionate speech to the Economic Clubof Canada about her (and others’) life as a musician–one who works her ass off but who barely makes a living. Watch her video and read Newhoff’s comments. I won’t reiterate it all here.

I will say this, though:

  • You make the art, be it music, photographs, design, illustrations, and it is art–the platforms can’t be successful without you.
  • Stop calling the art you createcontent and stop letting people rip you off both directly and by devaluing what you do (like, by calling it content).
  • Don’t rip off anyone else and support all other artists, yes, even (especially) when it costs you more.
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Registration? Application? What’s the deal?

Recently, there’s been a lot of discussion amongst us copyright law nerds about a circuit split on the requirement written in the statute that says you have to register the copyright before filing suit. The question is: what does “registration” mean in that statute? Seems obvious but, in law, we’re quite persnickety about word meaning so this is a big deal for us. I bet already some of you are fading out, thinking that this has little to do with you and your creative business. But it does! The good news is, you don’t need to know all the gruesome technical legal details.

Here is what you do need to know: if you want to sue someone for copyright infringement, you have to have registered the copyright before you file the lawsuit and the easiest way to make sure you’ve done that, no matter how they define it, is to register all yourworks as soon as possible after their creation. If you do that, then the complex legal question causing the circuit split won’t apply to you.

If you are one those who simplymustknow the details (and, if not, skip to the last paragraph), here’s the legal question: is applying for registration enough to mean “registered” or do you have to have the certificate in your hot little hands, before filing suit? We lawyer-types often call these two approaches application and registration, respectively. A couple of circuits have said that applying is enough to keep your lawsuit from being dismissed and a couple of others have said that you have to have the certificate.

So what? Well, thedifference means that, for example, if you file suit in California (9th Circuit), the courtswillsayif you’ve applied for your registration, you’re good to go; but, if you file the factuallyidentical* suit in Florida (11th Circuit) they will say you have to have the completed registration or your suit will be dismissed. So, you may be thinking, if you’ve only filed the application, you should just sue in one of the circuits that says that’s enough; but there is another part of the law that limits where you can file your suit, so that won’t work. That’s why I have an asterisk next to identicalabove, because one of the facts would bewhere the defendant is and if the defendant is only in Florida you can’t sue ’em in California.

Anyway, when there is a split like this, where some circuits say X and others say Y about the same statute, it falls on someone to appeal to the Supreme Court to get an answer. This means having a partywilling to do that (it’s not cheap) and then the court agreeing to review the case (which it probably would–SCOTUS likes to resolve circuit splits, usually). In other words, it’s not going to happen tomorrow so, for now, we have to live with the split.

Like I said at the beginning of this post, you can avoid all of this mess if you take the time to register your copyrights in your works as soon as you possibly can, after creation. That way you’ll make it impossible for the other side to bring up the application/registration question at all.

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The No-Pin Tag (who knew?)

I dont like Pinterest.

Anyone who knows me knows Ive complained about it since I first learned of it. In my opinion, its business model is based on exploitation of creative works, mostly without the authorization of the creators/copyright owners of the works. All its money has been generated on the back of creatives, few of whom ever get any real benefit from it.

One of the things I do not like about Pinterest is how it not only exploits the safe harbor of the DMCA (takedown process) to protect itself, but also it flips the entire idea of how copyright is supposed to work on its head. In short, rather than making its platform opt-in, it forces creators to opt-out.

Normally, to use (copy, publish, display, etc.) a creative work, first you have to ask permission. If Pinterest wanted to do things in a creator-friendly way, it would have set up its system so that creators could opt-in to have their works (that appear on their websites) eligible to be included on Pinterest. Instead, Pinterest will permit any work to be posted from any creators site onto its site unless the creator blocks her/his/its work or site. Essentially, that is an opt-out requirement. That is dirty pool, in my opinion; its flipping the burden.

Regardless of my personal feelings, that is how it works. According to Pinterest itself, if youd like to block your work, you can do so by virtue of including a bit of code into your websites code. That code is called the no-pin tag. See https://help.pinterest.com/en/articles/prevent-people-saving-things-pinterest-your-site, which says:

If you don’t want people to save things to Pinterest from your website, just paste this code into the <head> section of any page on your site:

<meta name=”pinterest” content=”nopin” />

When someone tries to save things to Pinterest from your site, they’ll see thismessage:This site doesn’t allow saving to Pinterest. Please contact the owner with any questions. Thanks for visiting!

You can also prevent any individual image from being used by (as the page cited above notes):

add this tag to [the single image]:

<img src = “foo.jpg” nopin = “nopin” />

Now, I had no idea until today that there was such a thing as a “no-pin tag.” I’m a copyright attorney and I’ve pursued infringers on Pinterest before, and yet even I didn’t know about this. Crazy. But now I do and that’s why I’m telling you about it, as soon as I could.

I honestly dont know any creative pro who is making money from her/his/their work being taken from her/his/their own site and used on Pinterest. At best, I know of a few who have shot for corporate or advertising clients who then used the work on Pinterest, but they got paid by their client(s) for the license. Pinterest is, I think, a trojan horse of a site that scares people into thinking “I have to let people pin my work so that they see it and I get hired!” but, really, it doesn’t work that way. Housewives in Podunk, USAare unlikely to hire you.

Putting on my marketing consultant hat for a minute, I would never recommend a creative permit work to be used on Pinterest without a paid license. Instead, keep your work on your own site, preferably with a watermark on each work and a proper copyright notice on or next to each work, too. Register the copyright in your works asap after creation. Embed the no-pin tag on your site. Then, if your work gets used, including pinned, without your permission, go after the infringer and protect your rights.

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Pursuing Infringers: Good For You & Your Clients, Too

I just read this interview with photographer Andrew Buchanan, on the Copyright Alliance site (by the way, if you aren’t a member of the Copyright Alliance, you should be, in my opinion). In it, he says that he pursues infringers not only because he deserves to get paid for his work, but also because his clients pay him for his original work and if infringers use the work, then his clients are getting hurt.

I love that attitude and smart business thinking. By pursuing infringers, you are serving your clients as well as protecting yourself. You can even use that in your marketing! Let your clients know that while you can’t get every infringer, you do make efforts to make sure that infringers don’t use the work you are licensing. That is an added service value.

Mr. Buchanan is right in that registration is still a pain in the ass in some ways (like the whole published/unpublished thing, to start), but it’s part of what you need to do to ensure the viability of your cases, especially the more minor value infringements. I read a case recently, Gonzales v. Transfer Technologies, Inc., 301 F. 3d 608, 609 (7th Cir. 2002), that noted:

No one can prosecute a copyright suit for $3,000. The effect of the district court’s decision if universalized would be to allow minor infringements, though willful, to be committed with impunity, to be in effect privileged, immune from legal redress. The smaller the damages, provided there is a real, and especially a willful, infringement, the stronger the case for an award of attorneys’ fees.

That’s great, and it also shows what I keep saying: you can (and should) go after small infringements and they don’t all cost $100K to do (not even close). But, and this is a big BUT, you can only possibly get attorneys’ fees if you have registered the copyright in your work before the infringement in question starts (or within a 3-month window of first publication for published work only).

So, register your work asap after creation, go after infringers, and tell your clients you are protecting them as well as yourself by doing so. You might even consider raising your rates to reflect your added value to your clients.
Just a thought. 🙂

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New Rules (probably)

The US Copyright Office is proposing new rules for registering photographs and it is asking for comments on these rules. There are three main categories with proposed changes: supplemental registrations, group registration of contributions to periodicals, and group registration of photographs.

The last one is likely the most important one for most photographers, so I want to talk about it, mostly, in this post. You can go here to read the official information(pdf), but I suspect most of you would rather poke yourself in the eye with a sharp stick as it’s written in governmental legalese. Here’re the basics you might want to know before wading into the Federal Register.

First, all group registrations of published photos (designated GRPPH) will have to be submitted electronically (no more paper options) with digital images submitted as deposit copies. Second, the maximum number of photos permitted in a single registration will be 750. Third, photographers would have to submit a separate list of all the photos being submitted as a part of the group “with a title, file name (matching the file name of the corresponding deposit copy), and in the case of GRPPH, the month and year of publication 29 (e.g., January 2016, February 2016, etc.) for each photograph in the group.” Finally, the deposit copies must be submitted in electronic form but you can send them on a disk or flash drive or upload them (with a 500MB limit per file uploaded).

Importantly, the last significant changeis that they are proposing a new category of Group Unpublished Photographs (designated GRUPH); before one could do an “unpublished collection” but this new category would replace that and have all the same requirements as the Group Published Photographs, including the 750 photos limitation and the list (but without publication dates, of course).

The only major difference between the two groups is that for published photos, the photos have to have been published within the same calendar year but the unpublished ones are not limited by time. Besides that, the groups must be only photographs and the photographs must be created by the same photographer–no mixing like 25 photos by Photo Bob and 32 photos by Photo Betty. Both the Group Published Photographs and the Group Unpublished Photographs registrations will be $55 per registration.

As always, you still may not mix published and unpublished in a single registration. That isn’t going to change with these rules chages, although I suspect that these changes may be a step in that eventual direction (maybe).

The Copyright Office is proposing to eliminate the pilot program for the Group Published registrations and to change the application process, to streamline it more. The Unpublished and the Published processes will be very much the same. Photographers will be encouraged to list the titles (and publication dates for published works) on the application itself as that will put them on the Certificate and that gives you advantages legally (I’m not going into that here, though–just do it) but, at a minimum, you’ll have to submit the list with all that information with the deposit copies (still, take the time to list the titles, it will be worth it).

Most importantly, the proposed rule would clarify that the single registration of a group confers full protection for each individual photograph in the group. That would eliminate the arguments that defendants use to try and limit the damages (or argue fair use) we see in court sometimes, like that using one image out of a registration of 500 items is de minimis since it’s only 1/500th of the whole. This is a very good thing.

To submit comments on these new proposed rules, first read the details in the pdf linked to above, then you can comment by going here. Note that comments are due by January 3, 2017.

The Supplementary Registration is used to correct errors or make changes to an existing registration. Hopefully, you’ll never need to file one, but if you do you’re very likely going to have to do it electronically in the future. For more information on the proposed changes or to make comments, go here.

If you make contributions to periodicals, you may use that form of registration (GRCP) and there are changes there as well. Mostly, it is about making the registrations electronic, much like the Group Photo options I described above (are you seeing a theme here?). Notably, the Copyright Office notes in the Group Registrations proposed changes that it encourages photographers to use those options instead of the GRCP as there are fewer limitations. Still, if you use this form of registration (and this applies to text as well as photos, by the way), you should go here to read about the changes and to submit comments.

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It’s not new if it’s the same

Here is yet another sad story of the timing ofregistrationbiting creatives in the butt. The short answer is that tattoo artists didn’t register the design in tats made on NBA players (including LeBron James) when theymade them, but instead after the first infringement of the tattoosby a video game company. That is, when the players were reproduced in video games, the tats were also reproduced, and since they weren’t licensed by the tattoo artists, the copyrights in the tats wereinfringed. In 2015, after the 2013 infringements (in NBA 2K14), the artists registered the work and when the same video game used the players (with tats) again but in the NBA 2K16game, theybrought suit seeking attorneys’ fees and statutory damages of up to $1.2 million.

The court said the “new”infringements weren’t actually new but rather the game was an iterationof the original one, with the original infringements. Sincethose started before the registrations, boom, statutory damages and attorneys’ fees were barred.

Ouch.

The artists are claiming the actual damages (still available under the law) are still significant, but they’regoing to have to prove up those damages; that is going to be a bear.

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Lift & Separate

(updated 12/2020)

Long before I became a lawyer, I advocated for two things when it came to photographers fees: raise them (particularly the license fee) and separate the creative fee from the license fee. The big push-back was often that buyers don’t like it. Well, the buyer has its self-interests but you must respect your own.

I bring this up because I’ve seen it repeatedly in my practice: a photographer comes to me with a possible infringement and, not having timely registered the copyright in the work (grrr!), leaves me no option but to see if there are sufficient actual damages in the form of lost licensing fees to make the case worth my efforts. When asked what her/his usual and customary license rate is for a similar use, the photographer will respond with something like, “Well, I would have asked $2000.”

My next question is, “Do you have invoices to back up this rate?” And the responses are either “No, but that is what I would have charged,” (ugh) or I am presented with an invoice for the creation of the work with a combined creative/license fee of $2000 (ick), or, worst of all, I get the invoice for the creation and licensing of the work where the photographer only charged $500 on some sort of mega-discount but it only shows as a $500 total fee (hurl!).

Obviously, none of these are good answers to a lawyer’s ears.

In the first case, no history of licenses, it could be worse. I can at least argue for the fair market value of a license and then, using common metrics like Fotoquote and online calculators for stock license rates, get a number. Sadly, as we all know, those numbers are likely to be low, particularly since there are more and more cheap stock sites out there. But still, at least I’ve got nothing the other side can use against my client.

In the last case, you’ve just set you price, forever. You are never going to get anyone to believe that a license similar to the original one is worth anything more than a few dollars because you have told the word that you’ll make and license it for so little! Now, if you are going to offer a super-mega-discount (and that’s totally cool, sometimes), make sure that you spell it out on the invoice like:

Creative fee: $2500
One-time Discount: -$2300
License Fee: $4500
One-time Discount: -$4200
Total Fees: $500

That way you are saying “my usual price for this license is $4500” and that can be used as evidence later of your actual fees. That’s great! But, if you just list the discounted price, you’ve only got your word that you normally would have charged more. That won’t hold up.

In case #2 above, all bets are off. The other side can argue that $500 was the license fee and $1500 was the creative fee, or worse. It is almost impossible to argue successfully that the majority of a combined fee is for the license and not the creation of the work, unless it is spelled out in the paperwork. I’m good, but I can’t make butter with a toothpick and there are plenty of good attorneys on the other side who can present evidence that the fair market value of the license is only $200. If you’ve got nothing in your records to show otherwise, then it’s quite possible that all you can get for actual damages will be that $200. At the very least, in court, it would cost a hell of a lot more in expert testimony to try and prove up your damages, and the other side knows it, so they can stonewall in pre-suit negotiations. You got no bat, as they say. Go home.

The best business practice, both for now and to protect your values in the future, is to separate out your fees on your paperwork and, very importantly, to make your license fee the higher portion of those fees. Later on, you can use those higher numbers to support getting higher actual damages. Also, if you do timely register your work, the courts will often look to the actual damages in setting statutory ones (like maybe doing a multiple of actual damages). If you can prove up substantial actual damages (a high license fee), you are more likely to get higher statutory ones. Proof of higher fees will make it easier for your attorney to argue for higher pre-suit settlements as well.

As for the argument that your clients want combined fees, well duh–and you’d like a million bucks for the shoot. They don’t get to tell you how to run your business–they are not doing you a favor by hiring you. They’re hiring you because you are good at your job; moreover, you have to run your business your way, not how they want it. Besides, they can’t complain if you do as in the example above: that is, you can give a final number that is combined, just make sure that the line items are separate. If they argue for a higher creative fee and lower licensing one, you know they are thinking of the future when they want to re-license; so should you and a higher license fee now means higher re-license fee later.

Run your business like a business. That includes thinking about future value and long term effects.

It’s not hard, it just takes some guts. You can do this.

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I Do. What Did I Do?!

Ah, love. I love love.
Marriage, however, well, let’s say I am not such a fan. The idea of getting married gives me Humback-whale-sized willies, just as a concept. But I’m odd in that–most people want to get married at some point, including creative pros.

Many traditional wedding vows point out that a marriage shouldnt be entered into lightly or unadvisedly. Good advice, but it’s given too late, while you’re standing there in front of friends and family, sealing the deal. For creative professionals, there is an extra wisdom to that advice that you need to think about long before saying,”I do.” If you are a creative professional, particularly a self-employed one, then marriage may affect you in ways you never dreamed.

As a creative pro, you create intellectual property: copyrights. When a creative work is made, fixed in a tangible (including digital) medium, the copyright automatically comes into being. I like to tell photographers that every time the shutter clicks, a copyright is created, but its the same for any creation; when I finish writing this post, its copyright will come into being.

The initial owner of the copyright is usually the author/artist who made the work. There are exceptions, like if you are an employee and make the work as a part of your job, or if you have signed a work-for-hire agreement before creating the work; but, for independent artists, the initial owner is usually the artist. That means, if you are a self-employed creative pro, you automatically own the copyright in each work you make. You make art; boom, you make its copyright.

Copyrights are assets. They are property (there is a reason copyright, trademarks, etc., are called intellectual property). They have value separate from the art-object itself. You can buy a painting, but that does not mean you own the painting’s copyright[1]. Copyrights can be bought and sold all on their own, separate from the art-object, too. The rights associated with copyright, like to reproduce a work, can be licensed to others. If you register your copyrights (and, please, register your copyrights), you get extra tools if they are infringed but, even without registration, copyrights are valuable assets, just like a car or a house.

Because copyrights are property and are like any property acquired during a marriage, if you divorce, they can become part of the calculations for spousal support, child support, or even be a part of the actual division of assets.

If you live in a community-property state, except for California (where copyrights still matter, but differently so, and well get back to that bear–pun intended–in a minute), the value of your copyrights has to be included in the division of property calculations. They also may affect spousal support and child support, but I’m not going into those support issues in this post (trust me, it’s a nightmare). In a community-property state, virtually all assets[2] acquired (or created) during a marriage must be split 50-50 at divorce. Very roughly speaking, this means adding up the value of all the assets in the marriage and dividing by 2.

As a massively simplified example: imagine you created only 2 copyrights during your marriage and they are valued at $5000 and $45,000; your soon-to-be ex gets half that total value, that is, $5K + $45K = $50k 2 = $25,000[3]. Get out your checkbook.

Now, think about how many copyrights you create in just a month or a year. Yup, we’re talking a ton of potential value. Just determining the value of the copyrights is going to be costly. You don’t get to say They’re worthless! Nope, you will need to hire experts and it is likely your ex will as well, adding to the costs and the legal fees as this is all hashed out.

Now, if that isn’t bad enough, even more concerning is that if you get revenue from the copyrights, your ex may also be entitled to a share of that revenue. This may betrue even for future revenue, after the divorce, as long as the copyrights were created during the marriage[4]!

Turning back to the California bear, things here are even more troubling for the creator-spouse. In my adopted state, not only does the non-creator-spouse (if you split) get the (ahem) gift bag described already, the state courts have decided that the non-creator spouse, at the moment of the copyright’s creation, automatically owns an undivided half of the actual copyright in any work created by the creator-spouse during the marriage[5]. You read that right–you create and your spouse magically becomes the joint owner of the copyright, right then.

Whats the big deal with that? Well, lots (including that I think that is contrary to federal law) but, practically speaking, it means that, even without divorce, the creator-spouse loses control over her/his work. I don’t care how much you love your partner, this can really suck. The non-creator spouse in California can sell or bequeath his/her half interest in the work to anyone, without the creator-spouses permission. S/he can also license the work to anyone (assuming that thelicense is otherwise legal), again, without the creator-spouses approval; the only requirement is that revenues must be (equally) shared.

The final California insult: at divorce, if you are the creator-spouse, you’re going to have to negotiate ownership with your soon-to-be ex, which will likely mean buying him/her out. Ouch. If not that, then agreeing to transfer halves to each other, meaning that you lose ownership of some of your own work. Ouch again.

Most states are not community-property states, luckily. However, even under their various laws, the value of your copyrights may significantly affect any financial settlements in your divorce.

You can avoid much of this by getting a prenuptial agreement that includes provisions to keep copyrights as separate property and describes how revenues related to them will be handled, in the event of a split. If you are already married, you can still have such an agreement drafted (a post-nup) and (hopefully) executed by you and your spouse. As in all things, consult with your own attorney before doing anything–preferably one who does primarily family law (so, um, not me) but who understands IP law or who can collaborate with someone who does (like me).

_______________

[1] Unless you bought that too, and that transfer has to be in a signed writing.

[2] There are some exceptions, depending on the state.

[3] See, e.g., Berry v. Berry, 277 P. 3d 968 (Hawaii 2012)

[4] See, e.g., Rodrigue v. Rodrigue, 218 F.3d 432, 443 (5th Cir. 2000)

[5] In re Marriage of Worth, 195Cal App. 3d 768, 241 Cal. Rptr. 135 (1987) is the controlling case in California.

 

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Breach or Infringement?

I’ve heard that some photo organizations may be suggesting that the way to avoid the costs of litigating an infringement claim is to have a liquidated damages clause in your site’s terms of service (TOS), because then (they say) it’s a breach of contract rather than an infringement. For example, if you put something on your site’s TOS like “If you use any of the work from this site without a license, you agree to pay to PhotoBob three times his usual fees for the license” and someone uses your work, then you can bring a breach of contract case in small claims court and avoid the cost of litigating infringement in federal court.

I have to say, I think this is very bad advice. I hope that pro groups are not recommending it. Short answer? It probably won’t work and, even if it could, it’s not a good choice. Let me explain.

First, it is very possible that your TOS are not binding on your visitors. There is case law that says that in order for TOS to be binding, a user has to either click to agree to those terms (called a clickwrap agreement) or those terms have to be so obvious as to, essentially, be on each page of your site–just having a separate page with your TOS won’t cut it. (Lawyers reading this, yes, I’m generalizing from the cases–we need to know the nitty gritty but creatives really don’t.)

Second, even if you could make the TOS stick, you would be limited to winning no more than your 3X number, and you’d have to prove that you usually got $X as a license fee in the first place. 3X is likely not going to be much money. In fact, it’s going to have to be under like $5,000 if you want to stay in small claims, depending on what the small claims court rules are where you are–that is, there are limits on how big a case you can bring in small claims. Oh, and you probably can’t use a lawyer (many small claims courts bar representation) so you’re going to have to do it all yourself.

Oh, and let’s say you win a judgment in small claims and the defendant doesn’t pay. You can’t then go marching into federal court claiming that it’s now an infringement and demand a lot more money. Even if by some miracle you did pull that off, that is that the court didn’t dismiss the case immediately, the court would likely say your damages are limited to the judgment you got already or darn close to it.

Third, how are you going to prove that the infringer got the work from your website? Have you posted it anywhere else, like Instagram? Good luck enforcing your site’s TOS, then.

Fourth, and this is the big one (yes, I buried the lede): copyright pre-emption will likely make your breach claim a loser. See, copyright is exclusively federal law and can only be adjudicated in federal court; so, if you bring a claim that is really an infringement claim, a smart defendant is going to tell the small claims court “Hey, this is really infringement we’re talking about here so you have to dismiss this case because this court doesn’t have jurisdiction.” I think a defendant is going to win with that and, boom, you’ve just waisted all your time (and filing fees).

There is one possible exception to pre-emption here, but it’s a narrow window and one I don’t like anyway. That is, if you agreed to license the work to the defendant and it later failed to pay for the license, then courts have said that is a breach of contract rather than an infringement (unless the terms of the written license stated that the license was contingent upon full and timely payment). See Effects Assocs., Inc. v. Cohen, 908 F.2d 555, 559 N.7 (9th Cir. 1990). Now, I think you should have written licenses and those licenses should specifically state that no license is granted until full and timely payment is received; but, if you have that, then the courts say it is not a breach of contract and, so, there you go… pre-emption again.

Really, I think it’s cutting off your nose to spite your face to try and convert an infringement claim into a breach of contract one. I mean, if you register your work in a timely manner (before the infringement) then you have the right to elect statutory damages and you have a decent chance at being awarded your attorneys’ fees as well. That is very, very likely going to be a much larger number than what you’d ever get in small claims court. More importantly, if you want to avoid litigation (and I always say: you want to avoid litigation), you have a better chance at negotiating a better result if you have statutory damages and maybe attorneys’ feesto back up your claim. A breach of contract claim is almost always some kind of wonky and the damages are limited–why do that to yourself?

 

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