A Masterfile Demand Letter Story

[dieselfish]

Matthew, Oscar, Buddhapi, SoylentGreen, and ELI community - thank you so much for your dedication and efforts.  I am currently at the wrong end of a Masterfile extortion letter and have learned a great deal from the wealth of information available here on ELI.  I am now into my third letter in correspondence with Masterfile and thought that I would share my story with you all thus far.  

I am a part time graphic designer.  I recently donated website design services to a friend who has just started an LLC devoted to helping autistic children.  My normal procedure as a designer (which I now realize is antiquated and needs to change), is to grab images using a Google search to use for composition purposes during the website development process.  After discussing the images with the client, we then either compose and photograph similar images ourselves or purchase rights for images from royalty free shops.  In this case, one of my composition images got away from me and Masterfile sent a demand letter to my friend’s LLC.  I felt really bad about putting her in this situation with Masterfile so am negotiating with Masterfile on her behalf.

I would love to post the letter exchange in it’s entirety here for you all to read, but I’m afraid it would be too long.  I’ll summarize the details here - for brevity I refer to myself (the designer) and the LLC (the recipient of the demand letter) as “we”.
  

• A single image appeared on our website as shown by a Masterfile screenshot on November 21, 2011.  We immediately removed the image in question upon receiving word from Masterfile on December 15, 2011 (25 days).  This is all that Masterfile can prove in terms of how long the image appeared on our site.  The site is too new and hasn’t even been indexed by most search engines yet.  I kick myself for admitting that we took it down on December 15 as in actuality, Mastefile can only prove that it was on our site for a single day.
• We have Google Analytics statistics showing that the page containing the image in question was only viewed by less than 20 unique visitors - and most of the visiting IP addresses are either me, or associates and employees of the LLC.  This, along with the short length of time that the image was on our site, would make it very difficult, I believe, for Masterfile to prove any damages or loss of value to their image.
• The image in question is a “rights managed” image for which Masterfile charges based upon time used and audience scope.  The minimum that Masterfile would charge for this particular image is $390 US.  This is for one (1) month’s use of the image!  We can show that when all tolled we will spend $300 US for development, hosting, and royalty free stock images... for three (3) YEARS of running this website.  Included in this is $75 US we spent on “royalty free” stock images (from a different company).  Clearly, we were not in the market to use a “rights managed” image from Masterfile.
• Masterfile has provided a copy of their approved copyright application dated September 26, 2006.  The copyright is for a large compilation of images.  They have not sufficiently proven that the image in question is, in fact, in the copyrighted compilation.  They also have not provided any proof that the original artist was or is still in contractual agreement with Masterfile.  I assume that they can provide all of this information - but have let them know that I need to see it.
• Masterfile originally demanded $2310.00 US in “retroactive licensing fees” for the “unauthorized use of [their allegedly] copyrighted image”.  I stated our case and offered them $100 US.  They rejected and came down to $600 US.  I reiterated the fact that they are going to have a very difficult time proving that any loss of value to their image took place and offered them $150 US. They rejected and have now come down to $500 US.

 

This third letter in the correspondence from Masterfile clearly takes a different tone from those previous.  It has become clear that the “Copyright Compliance Officer” is simply “copying and pasting” verbiage from other Masterfile letters and not really reading our responses at all.  Some of what he writes doesn't even make sense in this claim.  The tone of this “final” letter has become belligerent and threatening (completely unwarranted by the way).  This new “bullying” tone and the fact that they aren’t even taking the time to proof read their letters indicates that they are not willing to settle “amicably” (as they state).

I have drafted a response to their “final” letter and am prepared to offer them $200 US - simply out of respect for the artist’s rights in this situation.  Clearly, we were not in the market to use one of their “rights managed” images.  We have found comparable images on other stock image sites - and paid $75 for three “royalty free” images.  $200 would be 4 times what would pay for a “royalty free” image, represent two-thirds of the entire cost of our website (for 3 years), and 50% of what they would charge for 1 month’s use of their allegedly copyrighted image.  

So, I feel we have a pretty strong case and have tried to be reasonable with Masterfile in their claim.  But the thought of getting into a legal battle is surely intimidating.  And so is the thought of paying $500.00 to Masterfile for this - it burns me just thinking about it!  I’d love to hear the community’s thoughts on this.  Is $200 fair?  Is $500 fair?  Should Masterfile pound sand?  Thanks!

[Matthew Chan]

It would be much more helpful if you allowed us to post the letters to get a better reading of the situation in the proper context. We will, of course, redact your name. Feel free to email it to matt30060@gmail.com.

[Jerry Witt (mcfilms)]

This is a question only you can answer. I'm sure most everyone here would think paying $200 for one month's use of an image is more than fair. 'Course Masterfile will probably not agree.

Honestly, looking at what's "fair" is probably not the best way to look at it. Perhaps a better way to look at it is how willing Masterfile is to sue a start-up company that is in the business of helping autistic children. Balance this with how willing you are to fight with them and take the risk that you (or your client) will get dragged into court over this.

It is my personal opinion that MF will not accept your $200. However I think it is highly unlikely that they would file suit over this. This is especially true if they knew you were extremely vocal and there were likely to be collateral consequences. A blog headline that reads "Masterfile sues Autistic Children's Group Over Misplaced Image" cannot be good for business.

One last thing. You should check the MF terms. I was under the impression that you were allowed to use their images for layout and "FPO" use, but I may be mistaken.

[Matthew Chan]

Dieselfish (DSF) has submitted the cleanest copy of the Masterfile Settlement Demand Letter I have seen. Additionally, he has done a great job engaging Masterfile thus far.

DSF granted me permission to upload his redacted copies of his correspondence with Masterfile. 

http://www.scribd.com/my_document_collections/3425315

Warning: there is a lot to read and dissect here. However, I am confident that the ELI community will have many insights.

My first question is: who is Geoffrey Beal?  Is this some low, first-level Masterfile employee or is this someone higher up in the Masterfile food chain? What is this guy's background and who does he report to?

[Robert Krausankas (BuddhaPi)]

Mr Beal is not listed on the "Executive Team" page on MF site, so it's probably safe to assume that he works under Dan Pollack, who is the "General Counsel" and heads up MF's Copyright Compliance Dept., I did see Mr. Geoffrey Beal's mentioned in an article pertaining to Righthaven of all things, but  it was just a passing comment, that Beal and Getty Images should be added to the list of "bullies" along with Righthaven..

Kudo's to Dieselsfish for drafting an excellent response, well thought out and presented, thanx for sharing with us and the community, as it certainly helps the cause!

[Peeved]

I was thinking the same thing regarding the EXCELLENT responses to the demand letter!

Again, this registration number is a "group" registration and the questions were excellent regarding whether or not the image in question is protected under copyright for this type of registration. Masterfile claims to have the "exclusive rights" on this one which I found interesting.

Although personally I would not tell MF to "pound sand" as the recipient asked but I would definitely keep fighting!

[dieselfish]

Thanks all - for taking the time to read my letters to MF and for all of the time you put in here at ELI.  I hope that my story can help others in similar situations.   

@mcfilms - good thought on "FPO" use (for composition purposes), I looked in to that earlier.  MF states that images can be used for composition purposes, with "previous written consent" and as long as the image is in low resolution and contains the MF logo superimposed.  As I didn't take the image directly from MF and didn't know that MF claimed rights to it... unfortunately, not much to stand on here.  And as for tugging at the heart strings and publicizing the fact that they are going after a new business whose purpose is helping autistic children - I'm not sure that MF really cares about their image at this point.  Clearly, they weren't concerned about the David vs. Goliath image in going after Country Cycling.  They may think about it when considering to sue, but in terms of negotiating a settlement - probably not.  I think small LLCs are their bread and butter target. 

My thought at this point is to offer either $315 US based on a per diem usage or $390 which would be their full "up to 1 month" fee for a "rights managed" image.  Remember that the image allegedly appeared on our site for 25 days.  MF charges $390 for use of "up to 1 month".  $390 / 31 days = $12.58 per day | 25 days * $12.58 = $314.50.  This is about as reasonable as I can stomach in this situation.  $500 just doesn't seem fair to me, and I would lose all faith in our system of law if the courts found it to be so!

A few related questions for the forum...

• How strictly do the time limits imposed in the demand letters hold up?  The last letter from MF demands that we respond by January 12 or their offer gets rescinded and the matter gets escalated.  This seems to me to be another bullying tactic, preying on the already frazzled psyche of the letter recipient.  Is it reasonable to respond back stating that we need more time to consider their offer?  It would be nice to slow this thing down a little bit - I feel like my entire life over the last month has been dedicated to this issue.
• I'm not convinced that this guy, Mr. Beal, is a decision maker.  His letters are clearly quick "cut and paste" responses. I don't think he is really taking the time to even read my letters.  What happens next?  Does the correspondence get sent up the chain to someone with a little more knowledge/authority?  Or if we refuse their offer do we get sent right to the collection agency and then get sued once we deal with the collection agency?  It doesn't seem like they are really trying to negotiate or listening to my arguments.

   
I wish that I had the financial backing to see this thing through.  Unfortunately, I don't, and I feel like I'm right were MF wants me to be - smack dab in the middle of, "should I just pay the $500 because legal fees would be much more than that"!     

[Robert Krausankas (BuddhaPi)]

If I were in your shoes, I would respond 1 day before the dealine, ask some more questions and drag the deadline out, as MCFilms has pointed out, there is nothing wrong with asking questions, the more questions you ask the more time they have to invest to keep answering. I would bring up the registration again, and ask them to show proof that this image is actually in that group. It probably is as MF is known to be organized in terms of registrations..

As far as collections go, legally they cannot send it to collections, this is a "claim" not an invoice, if they do send it to collections, you can contact the collection agency in writing and refute the "claim", and they will send it back to MF. There is a thread here in regards to this:

http://www.extortionletterinfo.com/forum/getty-images-letter-forum/fair-debt-collection-practices-act-(eli-highlights)/

IMHO the deadlines are mere scare tactics, something else to consider is whether they would actually file suit over 1 image, chances are pretty slim I would think.

[SoylentGreen]

Just a few quick comments here.

The "deadlines" are mainly intended to give a sense of urgency, so that people will make knee-jerk decisions, and pay more money sooner.

Last time I checked, MF hadn't sued since Aug, 2011 when it started negotiations with Arius for a buyout.
So, that should delay lawsuits further in the short-term.
Additionally, that also means that there's surely a backlog of infringements much more egregious than what were discussing here.
In any case, the time between when "negotiations fail" and a lawsuit filing is usually several months.

The "cut and paste" responses that the alleged infringer has been receiving probably indicates that his/her file is of very low priority.

If you decide to settle, shoot fairly low at first.  Then, see what they say.
Of course, I'd prefer if you didn't settle...

S.G.

[Jerry Witt (mcfilms)]

My suggestion is that this would be bad publicity if it DID go to court. I'm not interested in settlement discussions. I think people start trying to "meet them half way" too quickly.

In the unlikely event that this did go to court, part of the discovery process would be to figure out how many licenses they have sold for $390 for one month. How many do you suppose that is. I am thinking zee-row.

By the way tineye shows one and only version of that image (on the MF site). You don't need to post it here, but how did you come across this image? If the watermark was removed by you, well... you're gonna have to pay them. If it was out in "the wild" unwatermarked, then I wonder how prevalent it is.

So you are already within $185 of what they want? Last I heard you were willing to pay $200, now it's $315. Well I guess if you keep dickering over the price and asking for more paperwork, that helps our cause a bit.

[Jerry Witt (mcfilms)]

Oh I see... the image was cropped.

[dieselfish]

Interesting update... Mr. Beal just called my client to notify us that by posting "confidential information" on the ELI site that we are infringing on copyright and confidentiality because he placed a message at the end of their emails... "WARNING: This e-mail message is intended only for the named recipient(s) above and may contain information that is privileged, confidential, subject to copyright and/or exempt from disclosure under applicable law. You are hereby notified that any unauthorized use of this transmission is strictly prohibited. If you are not the named recipient(s), please immediately notify the sender and delete this e-mail message."  It's been my experience that these warnings are useless in court.  I asked Mr. Beal to refrain from contacting my client by phone - he has already wasted enough of their time.

Though now that I think about it... all of the case information has been redacted.  How can he be certain that the letters are actually my client's posting?  How would he know to call my client?   

[Robert Krausankas (BuddhaPi)]

They really don't like being brought out into public...

a. You did not sign a confidentiality agreement.
b. Is one to assume because of that little disclaimer, you are prevented from sharing it with legal counsel??? I think not.
c. You were the intended recipient of the message, what you do with , is your decision ( see point a above )
d. I do not believe business communications are covered by copyright
e. He's "assuming" this is your case nothing more, as you stated it was all redacted.

At this point don't be surprised if they try to cut you out of the loop, as you are being a thorn in their side. They may decide to deal directly with your clilent.

[Robert Krausankas (BuddhaPi)]

not to mention, that the little blurb only appears on the last "Registered" email, as if that means anything being "registered"

[Jerry Witt (mcfilms)]

Their claim of Copyright protection is laughable to me. A business may be able to claim copyright of business correspondence in the US. But, I have not seen it tested here yet. (It does seem to be the case in the UK.) But more relevant is that publishing the redacted version of this letter on a site that is designed to discuss these types of letters, falls so squarely under "fair use" that it almost fits the very definition. This letter is not published to make a profit or steal content. It is published for informational and educational purposes on a site designed to inform and educate about this process. That a law firm wouldn't understand this seems very odd to me. Perhaps they want the EFF to get wind of this.

As buddhapi indicated, their move now is going to be to cut you out of the loop and concentrate on squeezing your client. Their goal is to try and embarrass you into paying up. That and maybe irritate your client enough so that they may want to just settle.

Depending on your relationship with the client, you can ask them to refer all contact regarding this issue to you. But I'm not sure how that would go. I think MF will still focus on pestering your client.

The only way to completely stop it that I know of would be to get a lawyer to represent you. Then all correspondence has to be directed to that lawyer.

But as I mentioned last night, you are so close to where they want you at this point, I imagine they are betting they can tip you over with this latest email. However I am very glad you decided to share this news here.