Masterfile v. Law Firm of Jerry Joseph Settled

[Matthew Chan]

I've known about this Masterfile case against a Washington DC patent lawyer for some time but thought this case might be settled quietly. It has not settled "quietly" because I found out about the settlement from National Law Journal (paid subscription):

http://www.nationallawjournal.com/home/id=1202720832518/Lawyer-Accused-of-Stealing-Stock-Images-to-Pay-8000

Essentially, we have a PATENT lawyer from Washington DC who tried a tactic that ELI occasionally discusses about laying low and going dark.  This tactic generally works only for people that are low profile, have extremely small business interests, and other circumstances that make filing a lawsuit financially not worthwhile or reputationally damaging.

Prior to 2013, ELI has discussed Masterfile's past aggressive use of litigation but it has dramatically slowed in recent years. I am quite confident that this was not because Masterfile was being nice. It likely had to do with the fact that filing several dozens of lawsuits resulted in the enrichment of its lawyers in legal fees, not Masterfile itself. I suspect many of those Masterfile wins were uncollectible.  They had paper wins but when it came to money collections, it was likely met with limited success.

Had the financial outcome lawsuit run for Masterfile been very profitable for those collective lawsuits before 2013, there is no reason they would not continue. After all, they don't have a reputation as sloppy as Getty Images in the details and copyright registrations.

But there are certain cases that cannot be ignored. I never consulted with Jerry Joseph but had he called me for an ELI Support Call, I would have warned him that he was potentially a juicy target to be sued especially since it was a Masterfile case and to advise him to sign up with Oscar's Defense Letter Program BEFORE a potential lawsuit hit.

There was another case where I warned another individual that I felt he might be at risk of getting a lawsuit filed on him during my ELI Support Call with him. He kept making weird "legal" arguments which I thought would never hold water if confronted. Normally, I am not a fear-monger but I was legitimately concerned for the logistics and circumstances of his locale and case which might make him a lawsuit target. I advised him to get "insurance" by hiring Oscar and getting on his Defense Letter Program for $250 (of which I get nothing). Contrary to what some might believe, I don't make recommendations of the kind because of any financial kickback. I do so because I try to do right by every person who speaks with me and that some cases are simply more "juicier" than others for a lawsuit filing.

Unfortunately for this person, I was correct. He could have hired Oscar and got on the Defense Letter Program for $250 but he was too cheap about it due to financial concerns. I understand that no one wants to pay $250 if you don't have to but where can you find a competent excellent lawyer like Oscar Michelen in the U.S. who will represent you and help you settle for a flat fee of $250? Very few in the U.S., I suspect. In any case, this guy got served and now he is in for much more in legal fees.  He tried to save on the Defense Letter Program but once a lawsuit is filed, that $250 is no longer on the table as far as Oscar is concerned. Certainly, Oscar still offers a favorable retainer agreement but it is to deal with a lawsuit, NOT just a settlement demand letter anymore.

Regarding Jerry Joseph's case, he was foolish to think that him being a PATENT lawyer in Washington D.C., he would be "low profile". I can see where Masterfile and Photo Attorney Carolyn Wright would want to make an example out of him.

In fact, the way they have settled is so unlike prior settlements. Most settlements are done quietly behind the scenes and the lawsuit is dropped. However, in his settlement, Jerry Joseph offered and Masterfile accepted a Consent Judgment of $8,000 to settle the claim.  All of this is in the official public record.

The court documents are here:

https://www.scribd.com/doc/259241749/Masterfile-v-Jerry-Joseph-Offer-of-Judgment

https://www.scribd.com/doc/259241663/Masterfile-v-Jerry-Joseph-Notice-of-Acceptance

I am fairly confident this was done as a calculated move on Masterfile's part for the public record. I debated whether to report on the results of this case on ELI after I found about it in the National Law Journal.

I decided to report on it because:

#1, I've never communicated with Jerry Joseph and he never utilized the ELI Support Call. As such, I have no particular loyalty to him. I have no problems in saying The ELI Support Call is one of the most powerful, high-value programs I've developed to quickly bring up to speed any extortion letter victim in a customized, personalized way. It is also one gateway and stepping stone who might consider Oscar and his law firm as part of the solution. I advocate very hard for people who choose to utilize the ELI Support Call.

#2, My instincts on these matters are very good because people need to know that good instincts are few and far between when it comes to matters of incomplete facts.  Anyone can make a good decision when presented with ALL information.  But good decisions are hard to make when dealing with uncertainty. I've had lots of practice over the years in MANY ASPECTS of my business life where I often deal with uncertainty. Over time, I have honed my instincts over many so-called professional over uncertain business and legal matters. A business friend hired me this past week over an urgent matter because he has seen the way I work, heard my analysis, and the results I deliver. He didn't call a lawyer first, he wanted MY assessment BEFORE speaking to any lawyer. And he asked me which lawyer to use for his situation.  I ended up going with him to a meeting with my local lawyer that I recommended and I even spoke up on my friend's behalf to connect my friend and my lawyer together.

In fact, overall, in my past experiences with MOST lawyers, my instincts are often better than their instincts because I look and have a feel on factors that transcend LEGAL ones.  There is far more than meets the eye than most people realize. Most novices simply don't know what to hone in on.

#3, On cases not relating to Jerry Joseph, I have a high track record of making the right call. As a matter of disclosure, I anecdotally track what I would do myself if I were in a client's shoes and see if my decision was the right call for the next 2-3 years as the statute of limitations runs out. I am happy to report that I frequently "get it right".

#4, ELI is committed to reporting the truth even if it "helps" the opposing side. People need to know the truth to make an informed decision. Masterfile and Photo Attorney get some free exposure from ELI in their "victory" here. But that victory was largely because Jerry Joseph was very foolish, uninformed, and ignorant in the way he handled it. I don't think Masterfile and Photo Attorney would have filed a lawsuit against him or that he would have to agree to a Consent Judgment had he had the courage and the right insights to deal with it. 

This just proves once again what I have said that many lawyers (even a patent lawyer who should have known better) are book-smart but not street-smart and flawed human beings that have plenty of weaknesses and stupidity in them. Too often laymen hold lawyers on a pedestal. I've dealt with many of them over the years both personally and online. Many are pathetically predictable and many of their weaknesses are bright as day to me. But there are smart, experienced lawyers also. And I have an instinct for sniffing them out over time.

#5, The National Law Journal article was terribly weak, basic, and offers none of the insights and commentary that I feel people need to make an informed decision.  There are layers of complexity and there are characteristics of each party that only ELI would know because we have been following such matters since 2008. As full disclosure, the knowledgebase in my head I have developed over the years is because of my good relationships with many active ELI Community members. I have several eyes and ears reporting back to me. And it goes both ways, I report to them what I have. I value and respect the ELI Community and I treat them with respect and give them the attention THEY deserve for their loyalties to me.

For so many reasons, the Masterfile vs. Jerry Joseph case had many teaching moments for the ELI readership and I felt it necessary to use that as opportunity to make my points.

Masterfile and Photo Attorney can have their public victory dance. They even get free ELI coverage from it.  But the greater good is served when people get smarter. That means being able to swallow and accept the "bad news" along with the "good news" that we frequently report on ELI.

[Jerry Witt (mcfilms)]

You know what I find interesting? Two of the more publicized wins against "infringers" came at the hands of attorneys. In fact the last attorney that simply chose to settle with Getty was one Oscar even reached out to and offered to help. This settlement, which is way higher than usual, also comes from a law practice.

One theory could be that MasterFile and Getty pushed extra hard on these cases because attorneys should know better.

But I have another theory. (And I must emphasize that this is sheerly cynical speculation on my part.) What if Getty or MF offers them some inducements to settle? They use quite a few attorneys. What if there were some sort of offer of work in exchange for a settlement. That wouldn't technically be illegal (I don't think). So an attorney agrees to  settle for an extraordinary high amount, but in exchange, they get to do the next patent filing. Meanwhile the image company can point to a concrete example of what others have settled for. Also, it looks less like abuse of the threat to sue, if they actually do settle once in a while.

Like I said, this is PURELY speculation on my part. But I do find it odd that the biggest settlements were at the hands of lawyers agreeing to settle.

[DavidVGoliath]

Tinfoil hat much, Jerry?

The most likely reason these cases settled at those particular junctures would be a combination of

a) Defendants, although attorneys, not having specialist knowledge of 17 USC
b) Lack of specialist knowledge resulting in a flawed defence strategy or ignorance of their true liability
c) The prospect of "professional suicide" if found guilty at trial

Yes, the general expectation is that attorneys should know better - and that applies with orders of magnitude to any attorney whose practice is even tangentially related to IP law.  In the eyes of a common jury, there's not much difference between patents, trademarks and copyrights; heck, people often get them mixed around in general conversation about the topics (e.g. thinking you have to actively defend your copyrights or you'll lose the protections, which is a hallmark of trademark laws)

That's really what this boils down to: when all possibilities are considered, it is usually the least complex one that will be correct . Your theory of a nudge-nudge, wink-wink arrangement between the plaintiffs and defendants stretches credulity to near breaking point. It's not that hard to believe that an attorney was simply guilty of an infringement and ultimately decided to settle rather than take a chance on a jury trial.

[stinger]

I agree with DavidVGoliath on the likely reasons for the settlement, but Jerry's off the wall idea should still be considered.  Stranger things have happened.

I think people should engage in the most creative thinking possible when formulating a strategy against these trolls.  That doesn't mean "go all-in tin foil hat" with 100% certainty, but just consider that there is an 80% likelihood that DVG's scenarios happened, but there might still be a 1-2% likelihood that Jerry's scenario happened.

Outside the box thinking is one of the reasons, Matthew has been so successful in leading the fight against trolls.

[Matthew Chan]

Stinger,

You went and did it by giving me an opening!

This feeds onto DavidvGoliath's comment how copyrights, patents, and trademarks blur for most people AND Stinger's comment about "out of the box" thinking. I do follow the occasional patent troll case which has been a huge strangulation on tech development.

I really enjoyed the tactic used by Life360 (defendant) to fight against a patent troll.

http://arstechnica.com/tech-policy/2015/03/how-life360-won-its-patent-war/2/

"I also resent him dragging AGIS and me through the mud because of ads," he said, referring to the Stop AGIS and malcomkbeyer.com websites. "I've never said anything bad about Mr. Hull and I don't intend to. I'm exhausted, and I'm going to have to take time to think about life, and this in general."

Essentially, the defendant Life360 took out online ads to promote and increase awareness of the fight.  Additionally, Life360 bought the domain "malcomkbeyer.com" and it was the OPPOSING CEO's name! They used that domain name to promote the defendant's position to put heat on the CEO to both criticize and drop the case.

In the context of the discussions on this forum, it would be like an extortion letter victim buying and launching a website JonathanKlein.com to put the heat on Getty Images or StevePigeon.com to put the heat on Masterfile. This is definitely a tactic I will keep in the back of my mind in the future in dealing with corporate bullies or corporate neanderthals.

That plays along the lines and extends the concept of "personalizing" the fight against a much larger corporation. 

I enjoyed Chris Hulls (CEO of Life360) early response to the patent troll extortion letter.

Dear Piece of Shit,

    We are currently in the process of retaining counsel and investigating this matter. As a result, we will not be able to meet your Friday deadline. After reviewing this matter with our counsel, we will provide a prompt response.

    I will pray tonight that karma is real, and that you are its worthy recipient,

    Chris

[stinger]

You're welcome, Matt.

[Greg Troy (KeepFighting)]

I actually was thinking along the lines of including JonathanKlein.com and variants when I purchased the domains for www.GettyImagesMustChange.com 

I decided against it as there were to many other high profile people with the same name including the CEO of CBS.  If it weren't for that I most likely would have gone that route as well.

[Matthew Chan]

Wow, Greg. You were considering that?  You are a bit more "pernicious" than I ever gave you credit for! I am allegedly an "out of the box" thinker but it never crossed my mind to use any CEO's name! Maybe YOU are the person people need to be worried about, not me. LOL!

[Matthew Chan]

How pathetically predictable.  Today, someone brought to my attention that Masterfile is now quoting the National Law Journal article of Jerry Joseph's case in addition to the three Summer 2014 lawsuits as part of the collection emails. AS I said, the consent judgment was likely a strategic move to PUBLICIZE the settlement.  In years prior, the goal was to SUPPRESS the terms of the settlement through a non-disclosure agreement.

Ironically, Masterfile's move will strengthen the support and need for ELI.  It is likely ELI readership and patronage will INCREASE with moves like this.

Jerry Joseph will likely avoid the spotlight here because this situation has made him look foolish. However, most non-lawyers would not have to run from this as it is easily explained and proven how Masterfile and their ilk operate.

Masterfile apparently is eager to join Getty Images and have a legion of people on the interwebs to hate them, provide negative publicity, and NEVER buy from them again. It is a winning formula. All the stock photo companies will continue to die a slow death. And golden-oldie Steve Pigeon who tried to sell Masterfile a few years ago will continue to see his company plummet to the bottom as his entire image database becomes a commodity and a DEPRECIATING asset.

They are now going to use this paid article as a club. ("Paid" means that the article is only semi-publicly available.  LOL.)

I thought that the National Law Journal article was pretty weak and completely lacked analysis and proper context. But that is why people read ELI for all things "extortion letter" related.

[Matthew Chan]

I want to remind Masterfile letter recipients that Masterfile is conveniently milking the so-called "Offer of Judgment by Jerry Joseph" for all it is worth.  Every time I see a Masterfile case, low-level, non-lawyer clerk, Michael Hilsheimer, is pushing the "Offer of Judgment by Jerry Joseph" and "Notice of Acceptance by Jerry Joseph" documents.

Masterfile includes these attachments to convince naive letter-recipients that it was a court win against a spectacular infringing lawyer by Mastefile.  It wasn't.  Jerry Joseph is a low-funded, sole practitioner lawyer who cried UNCLE and offered it up himself because he made not-so-smart decisions from the outset!  This was NOT a court-ruled or court-decided judgment!

This so-called "judgment" was OFFERED by sole practitioner lawyer, Jerry Joseph, after he responded to the situation with the intelligence of a 7th-grader. Sole-practitioner lawyers are typically not well-capitalized and they often lack common business sense. They might know more law than most of us but it doesn't mean they are any smarter in practical terms. After all, I don't see any non-lawyers offering up their names for Masterfile to use against others.  Most simply sign a non-disclosure agreement and pay their money quietly. 

Frankly, sole practitioner lawyers often don't have the stomach or finances for a protracted legal defense. And most lawyers don't have the luxury of ignoring or walking away from court judgments as non-lawyer types often do because it really looks bad on their record. And yet, here we have an allegedly smart lawyer who ran his case into the ditch and allows Masterfile to continue using his name to intimidate others into paying.

For me personally as a non-lawyer and aggressive self-defender, I have no qualms about not paying or avoiding wrongful or unreasonable judgments if it becomes necessary. In the U.S., people are allowed to avoid wrongful or unreasonable judgments (assuming you know the civil risks of doing so). But you don't go to jail for not cooperating with bad judgments. I know some of my enemies reading this are going to start jumping up and down on this but I am stating my OPINION of what I MIGHT DO if faced with the situation.  People can do whatever they want with my non-lawyer (but well-informed) opinions.

Masterfile does file lawsuits on occasion but only with the most egregious situations. They are not filing lawsuits like mad demons in years past.  In 2015, they filed a total of 3 lawsuits and they were hand-picked for effect. They were also hand-picked for the likelihood they wouldn't lose their financial ass by doing so.

It doesn't take a genius to figure out that after several dozens of stampede lawsuits prior to 2012 then suddenly dropping to ZERO lawsuits in 2013, 4 lawsuits in 2014, and 3 lawsuits in 2015, that Masterfile learned that filing extortionate lawsuits against a bunch of unwilling & uncooperative defendants became an extremely unprofitable venture. Masterfile didn't stop filing lawsuits because they suddenly got struck with a guilty conscience. They likely stopped filing lawsuits because they were likely losing their financial asses in attorney fees owed to their lawyers.  The only people who made out like bandits were Masterfile's lawyers "winning" their cases but not collecting enough real cash to justify the time, energy, and costs of the lawsuits.

Masterfile letter recipients should not be naive and ignorant about their sneaky, underhanded tactics. They only work for the legally-naive.

I felt the need to update this thread with the latest comments because I have seen one Michael Hilsheimer letter too many. This clerk is such a servant to Masterfile that he has thrown his career out the window.  He will never be able to leave the copyright extortion business because people who learn about what he does would never want to employ him again. That is his fate. Masterfile, like Getty Images, chew up their employees and throw them out.

Speaking about employees, as a side note totally unrelated to Masterfile, one Getty Images lawyer practically begged me to remove his name from ELI after he left employment a couple years ago. What a schmuck. He wasn't so proud to be with Getty Images after all if he felt the need to ask me to remove his name.

And the Getty Images employee (a lowly female clerk) who tried to bullshit me in 2008 begged one of her managers a few years ago to ask Oscar to ask me to remove her name from ELI. That female employee (C.S.) and the Getty Images manager were too much of a chicken-shit to ask me directly. She came to realize that I was correct about her looking bad being in the copyright extortion business or she would never have asked to have her name removed from ELI. Now that she has left, I don't think she will ever return to the world of copyright extortions.  Lowly clerks who do their "jobs" find out after they leave that they look like shit to the rest of the world of being in the copyright extortion business. Michael Hilsheimer will likely become the next C.S. at some point.

The upside of all this is that the female Getty Images employee (C.S.) can take credit that she was the one that helped give birth to ELI.