Category: copyright

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Copyright Small Claims: A Bad Solution to a Non-Problem

Many of you may have heard about the small claims copyright system that is being encouraged by several organizations. Many of those groups are artists groups and, while they have very good intentions, the idea of a small claims system for copyright is, in my opinion, a very bad one. It is a fix to a problem that does not exist. And, in exchange, artists are going to lose rights and remedies they should not give up.

Here’s the underlying argument that proponents of a Copyright Small Claims system share, over and over again: litigating a copyright suit costs a plaintiff at least tens of thousands if not over a hundred thousand dollars.

That argument is not correct in so many ways. Its a scare tactic and too many artists groups are buying into it. Allow me to explain the errors.

First, assuming that a case is litigated all the way through trial and judgment is an unfair metric for the average cost. Why? Because according to the Federal Courts own statistics (the most recent ones I found were for a 12-month period ending March 31, 2016), only .07% of all copyright cases filed are terminated (settled or a judgment is entered) during or after trial. To put that into more concrete terms, in that 12 months there were 4836 copyright cases filed in the USA; of those, only 32 were terminated either at trial (settlement after trial started but before judgment entered) or at the end of trial (judgment entered). In the 12 months ending March 31, 2015, it was 26 out of 4253 filed (.06%).

In other words, the chances that a case is fully litigated are incredibly slim! In fact, in the 2016 statistics, 37% of the filed cases are terminated before there is any court action and another 54% are terminated before the pre-trial phase (that is, by the close of discovery). So, 91% of copyright cases get settled by the close of discovery and virtually all the remaining cases settle before trial.

What does this mean? It means the cases that get fully litigated are really hard cases. Parties don’t take a case to trial unless either someone refuses to accept that s/he/it is sitting on a loser (rare) or there is a real question of how the matter might turn out (almost always). When there is a real question especially, then there are lots of experts and more extensive discovery overall and, well, of course the costs are going to be large!

But, going back to my original point, that just doesnt happen hardly at all. Instead, most parties are smart enough (or at least their lawyers are) to settle and to settle pretty early in the process. Usually there have already been pre-litigation settlement negotiations of some sort so when a suit is actually filed, the parties generally know that this is serious now and get their shit together and work it out.

Often, this just happens on its own. In my own experience, I’ve seen it happen over and over–a case gets filed after months of trying to get the defendant to settle, the defendant (finally) gets a lawyer, the lawyer wisely advises Settle, now! and we work it out. And we should, frankly. Most copyright cases are pretty clear cut and most of them should settle before suit is even filed but, if not, then shortly after.

When the parties don’t settle on their own, though, the federal courts have put in mandatory Alternative Dispute Resolution (ADR) procedures into the litigation process. These processes save the court time and money and it saves them both for the parties, too. For example, here in the Southern District of California, we have a Early Neutral Evaluation (ENE) system that means no later than 45 days after the defendant(s) file its answer(s), the parties meet with the Judge Magistrate to look at the case and try to work it out. Often the case will settle at the ENE and, even when it doesn’t, cases usually settle shortly after. This all happens before you get into discovery (or it has barely started in some cases) and so costs are very limited.

The second major error in the scary math is that proponents of Small Claims don’t mention that, overwhelmingly, plaintiffs win copyright suits that go to trial. The latest statistics I saw on that (2009) put it at over 80%. When you win a copyright suit, you may be awarded your attorneys’ fees and costs (assuming you have registered your copyright before the infringement). While that award isn’t guaranteed, courts tend to make that award when it is a smaller plaintiff (like an individual artist) bringing suit, particularly when there is not a really unusual legal question at issue and/or the infringer is a big company that should know better. So, if you go through trial you have a very good shot at winning and, if you do win, you have a shot at having much of the out-of-pocket reimbursed. If your attorney is working on a contingency-fee-basis, you haven’t even been paying her yet anyway (just paying costs, like filing fees, etc.).

Okay, to recap, filing and litigating a copyright suit usually does not cost a terrifying pile of money. It is rare when it does and most of those suits are complex cases (and, by the way, often ones with large corporate plaintiffs like a movie studio). Small artists don’t need a system to reduce those costs because it is unlikely any small artist will get hit with them by filing an action[1].

What do small artists give up if they use the proposed Small Claims system? They give up their right to a jury trial (very bad thing), appeals are very limited, and most disturbingly, the system would limit the amount of money they can win–in fact, the maximum is cut in half (again, assuming the work is properly and timely registered). That depression in awards will affect those who opt out of the Small Claims system, too, even though the rulings of the tribunals would not be precedential. Artists would be giving up way too much for a protection they don’t even need!

The final argument made for a Small Claims system is that attorneys won’t take on small matters on contingency. That is just untrue. Some attorneys might not, but I know plenty who do, including me. In fact, that was a big part of my mission in becoming an attorney: to serve artists. Sure I can’t take every case, but I take a lot of very small ones. If the work is timely registered and the defendant looks solvent, there is a good chance I’ll take the case.

So, rather than give up your rights, use them to your advantage! Register your works, find an attorney who will work with you (it doesnt have to be me–I can recommend others, too), and go after infringers.

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[1] Before you even go to the Monkey Selfie case and the photographer being bankrupted by it: the photographer did NOT file that suit–he has been the defendant in a suit filed by PETA.

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Don’t Lash Out

I heard about a case recently that made me think about all the people, especially the small artists, who get angry when they find a (potential) infringement and go onto social media to rip the, um, lets just call em badguys. Short answer is, even though you think it will help or at least make you feel better, youd be wrong. In fact, you could be inviting a lawsuit filed by the badguys.

Heres the very generalized skinny on the case (because really, unless you are a geeky lawyer like me, it is a dull read). One business (a kind of review site) publicly published that another business was a copyright infringer and that it had adult movies on its site. That arguably hurt the second business, so that onesued the first for various things that roughly amount to the business version of defamation. The court threw out that suit, under the California Anti-SLAPP law, which which exists so that people cant use the judicial system as a way to silence legitimate speech.

Okay, you may be thinking, the allegedly name-calling business didnt lose so whats the big deal? The big deal was that it wasnt a slam-dunk. Proving that the publication of something (potentially) defamatory was protected speech and that the lawsuit had to be dismissed under Anti-SLAPP wasnt easy. Similar cases have not been dismissed and you don’t want to be one of those.

Lots of people think they have a First Amendment right to say[1] whatever they want about whomever they want. Trouble is, that isnt so. There are limits. You cant defame someone (or a business), for example. And if someone sues you in California[2] for what you said, then, to get the case kicked out, you are going to have to prove that your speech was (1) an exercise of your First Amendment free speech right and (2) that it was made in connection with a public issue or an issue of public interest. Thats a pretty high bar to get over. In fact, youre going to have to show that the subject person (business) was famous/a pubic figure, or that the subject matter of the speech is of great interest to enoughpeople not affected by the case, or that the topic was of general widespread interest. Just because you and your drinking buddies think something is important isnt going to cut it.

After you, as the defendant in the original law suit, prove all that, then the other side (plaintiff in the defamation suit) gets a chance at a save–if it proves that it would probably win, then, even after you proved the above, the case will not be dismissed. See, not so easy.

So, going back to anaggrieved artist who tweets about the evil bastard Joe Doe who stole my illustration and then, worse, follows up with No one should shop at his store because he is a lying thief! well, that artist may be facing a lawsuit for those tweets and one s/he may not win. Think about that second part of the Anti-SLAPP–the potential save for the plaintiff–maybe Joe Doe had an implied license or a legitimate fair use defense that you, as a non-lawyer, didnt know would gut your infringement claim.

Better to sit on your tweeting/social media hands than run the risk of getting sued. Even if you did win, youd have to go through the unpleasantness of litigation. Instead, register your copyrights regularly and, if something gets used without your permission, talk to an attorney about your infringement claim and what your options are.

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[1] And by say I mean speech made in any medium–wrote, recorded, painted, shouted in a public space, etc.

[2] Some other states have similar laws.

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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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