Imageline Settlement Agreement Sent by Teri S.

I have seen versions of this email sent by Teri to different parties. This is where I got confirmation that Teri was dealing with more than one recipient and I believed she was negotiating on behalf of Mr. Riddick/ImageLine. The entire center portion of the email was written by Mr. Riddick which was passed on by Teri. Teri clearly encourages the letter recipient to settle quickly.

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Subject: Settlement Offer
Date: Fri, XX XXX 2009 XX:40:32 -0500
From: Teri SXXXXXX <teri@XXXXXXXXX.com>
Reply-To: teri@XXXXXXX.com
Organization: XXXXXXXXXXXXXXXXX
To: XXXXXXXXXXXXXXXXX

Hi XXXXXX,

Mr. Riddick has devised a settlement structure to be used for the people I am mediating with.  Please read below.  I haven’t changed anything except names of other designers, as this is all confidential.

Like virtually everything else I do, once I get something into my mind I have a hard time getting it out of there until I try to implement our newly proposed plans. You have gotten my attention in trying to be creative and structure deals that the average designer or digitizer could live with and yet still play an important role as we work together to change the disturbing trends we now see impacting the entire embroidery industry, and eliminate as much digital piracy as we possibly can. This will benefit everyone in the long haul. Even those we have discovered as infringing in our current campaign.

How can anyone effectively compete against goods and services that are stolen? The answer is simple. They cannot.

I truly do prefer amicable solutions as opposed to litigation, but we are committed to resolve each and every case we discover in one way or the other, Eight years ago we tried to simply warn people and slap people on the wrists while we asked them politely to comply. That strategy only increased the piracy rates in every industry sector we tried it in. It does not work. There needs to be consequences for unlawful actions, even if the infringer had no idea what they were doing was wrong. They must learn the law of the land. I also much prefer to have ADRs (a term we use in the industry for Alternative Dispute Resolutions) structured in a cookie cutter fashion so that creativity (and customization) does not begin to result in a lack of productivity and progress, which is also often the case when we are trying to resolve complex matters.

I am known industry-wide for my creativity in structuring deals that work for both sides, however. No sense in stopping now. Even the lawyers probably do not care this time around, as the number of cases we have for them already is enormous, and growing exponentially each month.

Here is what I am thinking. We’ll use Lucy(fake name) as an example below. This scenario could be played out to any member of the XXXXXXXXXX or anyone else we decide for you to handle through this process. We will be concentrating on giving you the cases where we feel honest mistakes were actually made. Just like we feel about you, XXXXXX, xxx, xxx, and the others we have thus far discussed.

Please note. These plans will be offered only to strong, ethical, members of the embroidery community. Those who made a bad choice or an uniformed choice somewhere along the way that caused them to have these current problems. Those who will not likely be engaged in copyright infringement activities again. These people must believe in the philosophy that “the customer comes first”, and that quality should come before all else. They must also believe that the protection of copyrighted work is essential in order for the industry to survive.

Scenario One: 1-3 Imageline designs discovered as infringing. Digital files posted and available for distribution

$7,500 per independent infringement (this is les than ½ what we know have our attorneys demanding in the cases in legal custody already)
1/3 cash, 2/3 products and/or services
$750 cash up front
12-month payment plan to make up remaining cash component*
Services include digitizing, consulting, administrative, investigative, or educational
Products include embroidery designs at $200 per design. Chosen from existing collections or digitized from scratch from existing Imageline artwork libraries

* payment plan payments can be exchanged for products and services with mutual consent. In no case should the payment plan be structured so that it would adversely impact infringers ability to earn a living and stay in the embroidery business if they choose to do so.

Scenario Two: 4-10 Imageline designs discovered as infringing. Digital files posted and available for distribution

$7,500 per independent infringement
1/5 cash, 4/5 products and/or services
$1,500 cash up front
12-month payment plan to make up the remaining cash component
Services include digitizing, consulting, administrative, investigative, or educational
Products include embroidery designs at $200 per design. Chosen from existing collections or digitized from scratch from existing Imageline artwork libraries

* payment plan payments can be exchanged for products and services with mutual consent. In no case should the payment plan be structured so that it would adversely impact infringers ability to earn a living and stay in the embroidery business if they choose to do so.

Scenario Three: 11 or greater Imageline designs discovered as infringing. Digital files posted and available for distribution.

$7,500 per independent infringement
1/5 cash, 4/5 products and/or services
$3,000 cash up front
12-month payment plan to make up the remaining cash component
Services include digitizing, consulting, administrative, investigative, or educational
Products include embroidery designs at $200 per design. Chosen from existing collections or digitized from scratch from existing Imageline artwork libraries

* payment plan payments can be exchanged for products and services with mutual consent. In no case should the payment plan be structured so that it would adversely impact infringers ability to earn a living and stay in the embroidery business if they choose to do so.

Specific case study example

So let’s apply one of the above scenarios to Lucy. I think she qualifies for consideration from what I have learned through my own research and what you have told me as well. She would fall into Scenario Two above, as we have discovered six (6) infringements thus far on her web site or in her collections.
Six times $7,500 results in a very large number, but we firmly believe this number equates to actual damages we suffer over time from an infringement of this magnitude. Remember, statutory damage claims can go as high as $150,000 per independent infringement if lawsuits come into play.

Our number here is $ 45,000

Lucy would need to come up with $1,500 cash up front. She would have $7,500 to finance/pay over time. That totals $9,000 or 1/5 of our negotiated settlement and claim. I know in today’s economic climate that coming up with extra cash can be really, really tough. However, I also know how important it is for someone who will be considered our “partner” going forward to have some “skin in the game”. I trust you will remember the long conversations (and yes, “debates”) you and I have had on this subject. Believe me, Teri, I know what works best over time. No one in the country has resolved more of these kinds of digital graphic arts content disputes than me and Imageline.

So we agree to acquire the rights to 200 designs that Lucy has produced (and owns outright) and that are not critical to her ongoing business plans. We agree to pay Lucy $200 per design.

So let’s see where that puts us.
$1,500 cash down payment;
$40,000 worth of goods;
for a total of $41,500.

That means that Lucy will only have to pay the remaining $3,500 (the total claim of $45,000 minus the $41,500 discussed above) to us over time. AND, if that becomes too much of a financial burden, you or Lucy, can tell us that, and we could always pay Lucy $200 per new design to digitize some of the thousands of designs in the Imageline archives to off-set further payments.

What could be more fair than this, Teri?

If Lucy were to try and hire an experienced intellectual property lawyer or litigator to assist her on this dispute if it went to court, the retainer fee, alone, would like exceed $10,000. If you don’t believe me on that, I’ll give you a dozen or so people to call and ask. These specialty attorneys are VERY expensive these days. We are fortunate. Since our designs are all copyright-registered with U.S. Copyright Office, we will likely be awarded all attorneys fess as well in court, along with the statutory and/or actual damage awards.

I am trying hard to make this a “no-brainer” decision for your friends and allies, Teri. No haggling. No cussing. No secret hideouts. No bankruptcies. No moving to China. No rants and rages, Just a fair deal under the circumstances and an opportunity for both parties to consider this a win-win proposition over time.

Please let me know your thoughts.

George

You have 2 designs involved here, XXXXX, so you would fall into the second scenario.

Today is the day he needs an answer from you as to whether you will agree to his offer.  The first group of these cases are going to the attorneys next week and I will no longer be able to mediate a settlement for you.  If you agree to this, I will need your business name and your contact information as it needs to appear on the settlement documents so they can be drawn up and signed and payment instructions will then also be sent. Let me know if you have any questions.  You are also free to phone me on my business cell at (XXX) XXX-XXXX.

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