`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF OREGON
`MICHAEL SCHMITT dba MICHAEL
`)
`SCHMITT PHOTOGRAPHY, an
`)
`individual,
`) No. CV-09-380-HU
`)
`
`Plaintiff,
`
`))
`
`))
`
`v.
`)
`VAG GROUP, INC., a foreign
`)
`corporation and VAG PERFOR-
`MANCE, LLC, a foreign limited )
`liability company,
`)
`Defendant.
` )
`Michael Schmitt
`Michael Schmitt Photography
`1420 NW Lovejoy
`Unit 627
`Portland, OR 97209
`Plaintiff Pro Se
`HUBEL, Magistrate Judge:
` Plaintiff Michael Schmitt, dba Michael Schmitt Photography,
`brings this action against defendants VAG Group, Inc. and VAG
`Performance, LLC, for copyright infringement. An Order of Default
`was entered against defendants on June 26, 2009. Plaintiff now
`moves for entry of default judgment.
`1 - FINDINGS & RECOMMENDATION
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`FINDINGS & RECOMMENDATION
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`I recommend that the motion be granted and that plaintiff be
`awarded $9,800 in damages.
`In support of the motion, plaintiff submits a declaration and
`several exhibits. In addition, I conducted a prima facie hearing
`on plaintiff's motion on November 16, 2009, at which plaintiff
`produced additional exhibits and presented testimony. Based on all
`of the evidence presented both in writing and at the hearing, I
`make the following findings and recommendation.
`I. Liability
`To prevail on a claim of copyright infringement, plaintiff
`must establish ownership of a valid copyright and copying of
`constituent elements of the work that are original. Feist Publ'ns,
`Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 360 (1991); see also
`Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1159 (9th Cir.
`2007) (two requirements for prima facie case of direct copyright
`infringement are proof of ownership of the allegedly infringed
`material and proof that the alleged infringers violated at least
`one exclusive right granted to copyright holders under 17 U.S.C. §
`106). Pursuant to 17 U.S.C. § 410(c), registration of the
`copyrighted works is prima facie evidence of the validity of the
`copyright. Under 17 U.S.C. § 106, copyright holders have display
`and distribution rights. Display of a copyrighted photograph on a
`webpage can violate a copyright holder's rights. Perfect 10, 508
`F.3d at 1160.
`Based on the Order of Default, the well-pled factual
`allegations in the Complaint are taken as true. Fair Housing of
`Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). Thus, the
`record establishes the following facts: Plaintiff, an individual
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`and citizen of Oregon doing business under the assumed business
`name Michael Schmitt Photography, is a photographer and owner of
`the copyright in a series of four photographic images at issue in
`this action. The copyright in the images was registered on or
`about October 24, 2008. A copy of the copyright Certificate of
`Registration is Exhibit 1 to the Complaint. Copies of the images
`themselves are in Exhibit 2 to the Complaint. Defendants VAG
`Group, Inc., a corporation, and VAG Performance, LLC, a limited
`liability company (referred to collectively in the Complaint as
`"Vital"), were formed under the laws of New York and have a
`principal place of business there. Defendants sell athletic
`apparel and equipment.
`In 2005, Schmitt began a business relationship with InSport
`International, Inc. ("InSport"), an Oregon corporation that sold
`athletic apparel. Schmitt twice contracted with InSport in 2005 to
`take photographs of people in athletic poses and then licensed the
`photographs to InSport for use in marketing. The marketing
`included use on InSport's website (www.insport.com). On or about
`November 25, 2005, defendants acquired InSport and continued to
`operate the InSport website to sell athletic apparel under the
`InSport name. Defendants also continued to use Schmitt's
`photographs to market the apparel under the InSport name.
`About one year later, on November 17, 2006, Schmitt contracted
`with defendants for a third time to take photographs. Schmitt
`licensed those photographs to defendants for marketing purposes.
`Under the terms of the license, defendants had use of the
`photographs for two years. Schmitt remained the owner and
`copyright holder of the photographs. Exhibit 3 to the Complaint is
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`a copy of the invoice/license granting defendants the use of the
`photographs.
`On or about December 27, 2007, InSport dissolved and
`defendants acquired all interests, assets, and liabilities of
`InSport, including Schmitt's license to InSport. Defendants
`continued selling athletic apparel under the InSport name at the
`InSport website and continued using the photographs to market
`athletic apparel on the InSport website under the terms of
`Schmitt's license.
`On or about November 17, 2008, the two-year license to use the
`four photographic images at issue here, lapsed. It was not
`renewed.
`On or about December 1, 2008, Schmitt learned that defendants
`were still using the four images on the InSport website to market
`athletic apparel even though the original two-year license with
`InSport had lapsed. Schmitt promptly notified defendants that they
`were infringing on Schmitt's copyright. Schmitt sent a proposed
`invoice which included a license allowing defendants to continue to
`use the images, but the parties did not resolve the dispute over
`defendants' infringement. Defendants' unauthorized use of the
`photographs ceased on January 28 or 29, 2009.
`Defendants have not paid Schmitt for use of the images after
`the expiration of the license. Schmitt is, and at all times was,
`the sole owner of the images. He did not and has not authorized
`defendants to use the images after the expiration of the license.
`Based on these facts, plaintiff has established defendants'
`liability for copyright infringement of the photographs. Plaintiff
`has demonstrated his ownership of the images and defendants'
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`unauthorized display of them.
`II. Relief Requested
`A. Money Damages
`Under 17 U.S.C. § 504(a), an infringer is liable to a
`copyright owner for either actual or statutory damages. Plaintiff
`elects statutory damages. The amount of statutory damages is to be
`"not less than $750 or more than $30,000 as the court considers
`just." 17 U.S.C. § 504(c)(1). "If statutory damages are elected,
`the court has wide discretion in determining the amount of
`statutory damages to be awarded, constrained only by the specified
`maxima and minima." Jackson v. Sturkie, 255 F. Supp. 2d 1096, 1101
`(N.D. Cal. 2003) (internal quotation omitted). Additionally, in a
`case where the copyright owner sustains the burden of proving, and
`the court finds, that infringement was committed willfully, the
`court in its discretion may increase the award of statutory damages
`to a sum of not more than $150,000. 17 U.S.C. § 504(c)(2).
`Plaintiff seeks a statutory damages award of $10,000 to
`$15,000 per image, inclusive of an enhancement for defendants'
`willful infringement. I first address the award per image without
`considering the enhancement.
`The record shows that before plaintiff submitted the invoice
`and license for the images at issue in this case, plaintiff
`submitted two other invoices for work done for defendants. Invoice
`#20374, dated April 27, 2005, was for a total of $14,900, including
`costs of digital processing, casting, models, stylist, etc. Pltf's
`Trial Exh. 1 at p. 3. The usage/license agreement was for two
`years of unlimited use for up to thirty images. Id.
`Invoice #20385-B, dated November 2, 2005, has total expenses
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`of $13,854.92, again including such costs as digital processing,
`casting, models, stylist, etc. Id. at p. 4. The usage/license
`agreement was also for two years, unlimited use, for up to thirty-
`one images. Id.
`On November 17, 2006, plaintiff issued Invoice #20449B to
`defendants for another photo shoot, with total costs of $9,300.
`Id. at p. 5. This photo shoot produced the four images at issue in
`this lawsuit. The usage/license agreement provides for two years
`of unlimited use for up to thirty-four images. Id.
`In February 2008, plaintiff discovered that defendants were
`using, on the InSport website, images licensed by plaintiff to
`defendants in 2005, beyond the licensing date. Id. at p. 8. On
`February 19, 2008, plaintiff sent an email to Mark Keegan at
`InSport notifying him of the out-of-license use of six images. Id.
`Plaintiff told Keegan that the license for these images expired in
`November 2007. Id.
`As plaintiff explained in the prima facie hearing, he valued
`InSport as a customer and thus, was willing to tolerate defendants'
`continued use of the images as long as plaintiff received some type
`of compensation. Plaintiff told Keegan in the February 19, 2008
`email to "[f]eel free to keep using these images and I will send an
`invoice for their use or you can let me know when they will be
`taken off the web site at what point we can talk about a fair usage
`price for the six images up until that point. If you are still
`using these images for hang tags or display please let me know and
`we can work out an agreement for that usage as well." Id.
`On April 21, 2008, plaintiff sent another email to Keegan
`about defendants' continued out-of-license use of the six images.
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`Id. at p. 9. By this time, plaintiff had discovered that
`defendants were actually using ten of plaintiff's image out-of-
`license. Id. With this email, plaintiff attached a proposed
`invoice for the out-of-license use. Id. This new invoice
`expressly noted that the ten images had been originally licensed in
`April 2005 in Invoice #20374, and in November 2005 in Invoice
`#20385B. Id. The job in the proposed invoice is described as ten
`images used on the InSport website, past the usage license
`agreement. Id. The allowed use in the proposed invoice was web
`use only until November 2008, or a period of approximately six to
`seven months. Id. The total requested was $950, or $95 per image.
`In the prima facie hearing, plaintiff explained that he
`deliberately proposed a very low price for each image in an effort
`to be paid for the images while preserving the work relationship he
`had with InSport. Plaintiff further explained this in a June 9,
`2008 letter to Keegan and Linda Pincus of InSport. Id. at p. 10.
`By that time, defendants were using eleven out-of-license images on
`the InSport website. Id. Plaintiff attached another new invoice
`to this letter, seeking payment of $125 per image, for eleven
`images, for a total of $1,375, for web use until November 2008.
`Id. at p. 12. In the letter, plaintiff explained that "[t]his
`invoice reflects a need to get paid something for this extended
`use, but not to charge a large amount that fair market value would
`dictate. Jupiter Media, who[m] I am represented by, would charge
`you mid $500.00 range for this usage. I have enjoyed working with
`InSport over the years and hope the relationship can continue with
`New Balance." Id.
`In the April 21, 2008 email to Keegan, and in the June 9, 2008
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`letter to Keegan and Pincus, plaintiff alerted defendants to the
`November 2008 expiration of the license for the images taken in
`November 2006 and licensed to defendants in Invoice #20449B. Id.
`at pp. 9, 10. Accordingly, on December 1, 2008, plaintiff wrote to
`Keegan and Maureen Kingsepp with InSport, to request payment for
`the eleven images previously noted as being used out-of-license by
`InSport, and to add that defendants were now using four additional
`images out-of-license. Id. at p. 15. Plaintiff enclosed another
`proposed invoice for the now fifteen images being used out-of-
`license on defendants' website. Id. at p. 16. There, plaintiff
`sought $290 per image for the four images at issue in this case,
`for two months' usage up to January 15, 2009. Id. He also sought
`the same per image price for the other eleven images he had
`previously addressed with defendants. Id. He noted that usage for
`up to one year would be $390 per image. Id.
`In the December 1, 2008 letter, plaintiff stated that the
`invoice was "fair and balanced." Id. at p. 15. He noted that he
`was charging a "book price" for the web use until January 15, 2009.
`Id. Finally, he added that four of the images were registered with
`the copyright office, entitling plaintiff to collect attorney's
`fees and statutory damages for defendants' copyright infringement.
`Id. He suggested that a typical infringement charge was ten times
`the amount he was requesting in the invoice and thus, defendants
`could owe $11,600 for the four images, plus attorney's fees. Id.
`Plaintiff explained at the prima facie hearing that the "book
`price" he referred to was the "bare minimum" his agency, Jupiter
`Images, would charge in a basic "stock sale." He testified that
`the invoice enclosed with the December 1, 2008 letter was fair and
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`balanced, but generous to defendants. Plaintiff was trying to
`entice defendants to pay plaintiff something and to stop using his
`images out-of-license.
`In addition to the evidence regarding plaintiff's business
`relationship with InSport, plaintiff submits exhibits showing more
`general information about prices for stock photographs and payments
`he received from other customers for such photographs. At the
`prima facie hearing, plaintiff explained that "stock" images or
`photographs are available to any purchaser, typically from a
`company that has thousands available and which can be used for
`hundreds of purposes. Plaintiff currently works with a company
`called Getty Images, which bought Jupiter Images, the company
`plaintiff previously worked with.
`Getty Images will offer plaintiff's images for sale as "stock"
`images or photographs which means that a customer can purchase the
`image, through Getty, for either a "rights managed" (meaning a
`restricted) use, or an unrestricted use. Plaintiff testified that
`with stock purchases, a customer can select a stock image from the
`Getty Images website and obtain a license for its use that day.
`While the customer may not receive a unique image specifically
`designed for that customer, certain risks and costs, such as
`production costs, are eliminated in stock sales. Plaintiff further
`explained that he considers the post-license use of his images by
`a client for whom he has performed a custom shoot, equivalent to
`stock photography.
`As examples of past stock photography sales, plaintiff submits
`evidence of payment in April 2007 of $536 per image for five
`images, for six months' "non-protected" website use by an
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`advertising company. Pltf's Trial Exh. 2 at p. 1. In April 2008,
`plaintiff received $500 for the use of an image on one banner in a
`retail running equipment store, for up to two years. Id. at p. 2.
`In October 2007, plaintiff received $2,450 for the stock sale to a
`small Portland business of a couple of images of its founder or
`chief executive officer. Id. at p. 3. The usage was unlimited,
`and for an unlimited amount of time. Id. In April 2006, plaintiff
`received $500 for one day use of a stock photograph in the Boston
`marathon as course signage. Id. at p. 4. Other examples of
`plaintiff's image sales are found in Plaintiff's Trial Exhibit 2.
`Additionally, plaintiff submits "Licensing Guide" information
`from the American Society of Media Photographers stating that there
`are only two factors to consider when pricing a license for stock
`photographs: the uniqueness of the image and the terms of the
`license, or the use. Pltf's Trial Exh. 2 at p. 8. At the prima
`facie hearing, plaintiff testified that in his opinion, a third
`factor is what the market will bear.
`The American Society of Media Photographers also publishes a
`list of pricing resources for its members. Id. at p. 9. One
`recommended resource is a software program called "Foto Quote Pro
`6" which offers pricing guides for stock and assignment
`photography. Id. Under that program, the middle price range for
`an image used in a catalog-type website, for three months, with a
`model's release, and occupying up to one-quarter of a computer
`screen, is $927, with the low-range beginning at $695 and the high-
`range going up to $1,390. Id. at p. 11.
`Finally, in support of his damages award, plaintiff submits
`evidence of a recent settlement of a lawsuit by Getty Images
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`against a business which had used a single photographic image from
`Getty's on-line image library without authorization. Id. at p. 13.
`The settlement was for approximately £2000 British pounds, or
`approximately $3,310 United States dollars. Id. The exhibit does
`not reveal the length of the unauthorized use. Id. Plaintiff also
`submits a copy of a boilerplate license agreement offered by Getty
`Images for Getty Images products for "Editorial, Rights-Managed and
`Rights-Ready Image and Footage." Id. at pp. 13-14. That agreement
`contains a provision in which Getty Images reserves the right to
`charge the licensee five times the standard license fee for
`unauthorized use of licensed material. Id. at p. 14.
`Based on the written evidence and plaintiff's testimony, I
`recommend concluding that the appropriate amount of statutory
`damages, before consideration of any alleged willfulness by
`defendants, is $490 per image for the approximate 2.5 months
`defendants used the images after the license expired. The most
`relevant evidence in the record establishing damages are the emails
`and letters written to defendant in 2008 in which plaintiff first
`sought payment for the out-of-license use of eleven photographs1,
`and then sought payment for those eleven photographs plus the four
`at issue in this case.
`At the prima facie hearing, plaintiff testified that the ten
`images referenced in his April 21, 2008 email to Keegan were not
`materially different from the four images at issue here. Plaintiff
`stated that all of the images had the same intrinsic value to the
`
`1 As described above, when plaintiff began corresponding
`with defendants about the out-of-license use of these images,
`there were six at issue, then ten, and finally eleven.
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`InSport website, although the four at issue in this case were
`larger and were with InSport clothing. In April 2008, plaintiff
`was willing to accept payment of $95 per image for six to seven
`months of use on the InSport website. In June 2008, plaintiff was
`willing to accept $125 per image for five months of use on the
`InSport website.
`Plaintiff's testimony that these prices were artificially low
`in an attempt to preserve his working relationship with defendants
`is completely credible. Nonetheless, in June 2008, he noted that
`were he not offering a good price, Jupiter Media, his
`representative at the time, would charge $500 per image for
`approximately five months' use. Thus, plaintiffs' evidence shows
`that the fair market value absent consideration of plaintiff's
`attempt to keep his relationship with defendants intact, was
`approximately $250 per image for 2.5 months' use.
`Additionally, in December 1, 2008, plaintiff sought only $290
`per image for the period November 18, 2008, to January 15, 2009.
`Although plaintiff was still attempting to offer defendants a good
`deal, there is no indication that by this time, with defendants now
`using an additional four images out-of-license, that plaintiff was
`still seeking to preserve his working relationship with defendants.
`Notably, he states that he is prepared to take legal action for
`copyright infringement if he is not paid by December 16, 2008. He
`also notes that should he pursue a copyright infringement action,
`defendants could be liable for attorney's fees.
`Plaintiff's evidence of pricing for stock images in other
`contexts has little bearing on the instant case. The uses of many
`of the other images are distinguishable from the webpage use by
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`defendants here. For example, the payment for the image on a
`retail store banner is not analogous to the payment for unlimited
`use of an image on a webpage. The same can be said for the payment
`for use of an image on race course signage, or for use in a
`catalog. Of the evidence relied on by plaintiff in Plaintiff's
`Trial Exhibit 2, the most closely related is the April 2007 payment
`of $536 per image for six months' "non-protected" website use by an
`advertising company. This would amount to approximately $233 for
`2.5 months of usage.
`Although the "Foto Quote Pro 6" software suggests a mid-range
`price of $925 for three months' use of a similar image, the
`software also indicates that the low-range is approximately $695
`per image. Given the payments actually requested by plaintiff from
`defendants for use of various images after the licenses expired,
`and the other relevant evidence of plaintiff's payments for use of
`other stock photographs by other customers, even $695 seems too
`high, and, using plaintiff's own factor of "what the market will
`bear," the $695 price appears to be more than what his business
`relationship with defendants would support. Thus, I select a per
`image price of $490 as being the appropriate amount of statutory
`damages. This figure is halfway between the $290 per image that
`plaintiff requested from defendants on December 1, 2008, and the
`$695 low-end price suggested by "Foto Quote Pro 6." The initial
`statutory damages award is $1,960.
`B. Enhancement for Willfulness
`As noted above, the statute allows for enhanced damages for
`willfulness. Plaintiff has successfully established that
`defendants' out-of-license use of the four images at issue in this
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`case, was willful. The evidence shows that beginning in April
`2008, approximately seven months before the license for these four
`images expired, plaintiff notified defendants of the November 2008
`expiration date. Plaintiff notified defendants again in June 2008.
`With both of these communications, plaintiff attached a proposed
`invoice which generally noted that plaintiff's photographs were
`copyrighted. Then, in December 2008, plaintiff wrote to defendants
`to inform them that they were now using the four images past the
`license expiration date. He also expressly stated that these four
`images were copyrighted. Defendants' use persisted until late
`January 2009.
`"Willful copyright infringement, for purposes of the award of
`statutory damages, requires the defendant's knowledge that his
`conduct constitutes copyright infringement." Jackson, 255 F. Supp.
`at 1101 (citing Columbia Pictures Tel. v. Krypton Broadcasting of
`Birmingham, Inc., 106 F.3d 284, 293 (9th Cir. 1997) (vacated on
`other grounds)). The evidence demonstrates that defendant knew of
`the expiration of the license, knew that the four images were
`copyrighted, but nonetheless continued to use them on the website
`for approximately two additional months.
`In his motion for default judgment, plaintiff requests that
`the damages be tripled as a penalty for defendants' willfulness.
`Given that defendants were notified of the expiration of the
`license seven months ahead of time, and nonetheless continued using
`the images, there is no explanation for defendants' conduct other
`than defendants' blatant disregard for, and infringement of,
`plaintiff's rights in the images. I conclude that enhancing the
`underlying damages award five times is a more appropriate sanction
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`for defendants' willful conduct in this case. Multiplying the
`initial award of $1,960 times five produces a total damages award
`of $9,800.
`C. Injunctive Relief
`A court may grant injunctive relief to "prevent or restrain
`infringement of a copyright." 17 U.S.C. § 502(a). Plaintiff notes
`that although defendants have removed the infringing images from
`their website, defendants retain the means to continue to infringe
`in the future. Thus, I recommend that the injunctive relief
`request be granted and that defendants and their directors,
`officers, employees, and representatives be permanently enjoined
`from any further use of plaintiff's four images on defendants'
`InSport website located at www.insport.com.
`D. Fees & Costs
`Plaintiff seeks an award of costs and attorney's fees.2 Under
`17 U.S.C. § 505, the court, in its discretion, may allow the
`recovery of costs and attorney's fees to the prevailing party. In
`deciding whether to award fees, the court considers "certain
`factors, including (1) the degree of success obtained; (2)
`frivolousness; (3) motivation; (4) objective unreasonableness (both
`in the factual and legal arguments in the case); and (5) the need
`in particular circumstances to advance considerations of
`compensation and deterrence." Halicki Films, LLC v. Sanderson
`Sales & Marketing, 547 F.3d 1213, 1230 (9th Cir. 2008) (internal
`quotation and brackets omitted).
`
`2 Although plaintiff is currently pro se, he was formerly
`represented by counsel in this action and incurred attorney's
`fees and costs in prosecuting this litigation.
`15 - FINDINGS & RECOMMENDATION
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`Case 3:09-cv-00380-HU Document 21 Filed 12/02/09 Page 16 of 16 Page ID#: 120
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`I recommend that plaintiff be awarded reasonable fees and
`costs. Under Federal Rule of Civil Procedure 54(d)(2), and Local
`Rule 54, plaintiff shall file a request for fees and costs within
`fourteen days of the entry of judgment by the Article III District
`Court Judge.
`
`CONCLUSION
`Plaintiff's motion for default judgment (#10) should be
`granted and plaintiff should be awarded $2,450 per image for
`defendants' willful infringement of plaintiff's photographs ($490
`per image multiplied by five for willfulness), for a total monetary
`award of $9,800 (four images multiplied by $2,450). Plaintiff's
`request for injunctive relief should be granted, as should his
`request for an award of reasonable attorney's fees and costs.
`SCHEDULING ORDER
`The Findings and Recommendation will be referred to a district
`judge. Objections, if any, are due December 17, 2009. If no
`objections are filed, then the Findings and Recommendation will go
`under advisement on that date.
`If objections are filed, then a response is due December 31,
`2009. When the response is due or filed, whichever date is
`earlier, the Findings and Recommendation will go under advisement.
`IT IS SO ORDERED.
`Dated this 2d day of December , 2009.
`
` /s/ Dennis James Hubel
`Dennis James Hubel
`United States Magistrate Judge
`
`16 - FINDINGS & RECOMMENDATION
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