Masterfile Corporation

[henry]

Hello Oscar,

I am a webmaster and a client has just had communication from Masterfile asking for payment for 2 images I used on the website. I haven't seen the letter yet so I don't know full details.

I have taken the images off the website - together with several others that I used from the same source.

I originally got the images from AllWall.com in April 2000 and used them under the deal where I could show the thumbnails if I put a link to order posters of the pictures on the page on which they were displayed. I also had an affiliates account with AllWall so I could receive  a percentage from the sale of any pictures. I used quite a few pictures but made no sales.

Mid 2001, AllWall.com bought Art.com from Getty images and used the Art.com name, ditching the AllWall.com name.  I still get emails from art.com although I didn't sign on for the new terms of the affiliate scheme on the change over.

However the link on our website to one of the pictures in question still takes you to the same picture on Art.com. And Art.com still have the deal that you can display a thumbnail if it is linked to their site - so I don't see how there is a problem. Here is that link:

[I have omitted the http:// so it won't auto link]
allwall.com/asp/sp-asp/_/NV--/PD--10007289/SZ--2/posters.htm

I also found the same picture on Masterfile.com - photo number 700-00015941

The other picture in question isn't currently linked - I must have removed it during a page redesign - and I can't find it on Art.com but I have found it on Masterfile.com

I am taking all the pictures off the site now and looking for more links - but I'll keep the files as originally on display.

How do you think it looks for dealing with this case?

[Oscar Michelen]

It will depend on when Masterfile filed its copyright. One of the things I have found dealing with Masterfile and Getty is that sometimes even though the photographers promise not to to make their images available anywhere else other than the site that licenses it, they have forgotten or intentionally lied to Getty/Masterfile and in fact either previously or subsequently licensed their photos for other uses. if you can show a clear chain as you describe, you may be in a good position. I will be in my office tomorrow after 1030am (NYC time) 1-800-640-2000

[mgale]

Realtor in Utah,

We recently experienced what I call Internet extortion. I had purchased a product endorsed by the CRS as a good and viable product for Realtors. This product is used for Realtor web content. Real estate tools for buyers and sellers. Very good content, I paid around $599 for it. The content is hosted and provided by a vendor, so it is not actually on my website, just framed in. Just other day I received a FedEx package with a demand letter for copyright infringement by a company called MASTERFILE CORPORATION. They claim I owe money for the use of about 27 photos which were on the web content program I paid good money to get. There bill was over $75,000. Yes these Internet gangsters were asking for that much! I called them to find out what the heck was going on and told them I paid a web company for the content and there must me some misunderstanding. These extortion experts don’t seem to care about that or going after the provider of the content. Just the end user. Well after quiet a bit of research it was clear that MASTERFILE CORPORATION had figured out how match up photos with websites using some sort of program. Various artists have placed with this company digital artwork to file a copyright on. I am to believe that good honest web programmers and designers pay this company for the use of the stock photos. Ok all is good. However Masterfile runs their photo matching program and then asks the end user for copyright proof. Of course we don’t have the copyrights provided to us. Now we end up defending a potential lawsuit. Masterfile knows this but chooses to harass and extort money from end users that have not knowledge of any infringement issues. Apparently this is legal?

Masterfile most likely knows that copyright claims where the innocent 3rd party has no knowledge of a copyright has a maximum claim per copyright of $200.00 per copyright filing. Digital photos and artwork are commonly filed in copyright groups. Our exposure would at max be allegedly $2000.00. Masterfile most likely knows this. This is why i think they are a bunch of thugs.

We tried to come to some sort of settlement to avoid a legal battle an offered them $2000.00 (even though we don’t owe them anything). They now want about $36000.00! My wife and I just do not know what to do and are just sick about this. Hundreds or Thousands of users bought this same program content and i think Masterfile just wants to sue everyone thus getting big bucks for something that has been paid for the the original provider. The web content provider is doing damage control, and removing any photos it has on their site that get framed onto all the other Realtors sites. I am leaving the name of the producet off this blog for now in hopes the company that sold the content with me will settle with Masterfile.

Can Masterfile be prosocuted in criminal court for this?
Any helpful information is greatly welcomed.

[Oscar Michelen]

Dear mgale:
 
What Masterfile is doing is not illegal.  They have registered copyright in the images they protect so it should be fairly easy to prove whether they have a claim or not. As an end user, you are technically responsible for any copyright infringement though you would be able to go after the content provider for reimbursement of whatever you paid Masterfile. It would certainly be in the content providers interest to settle globally with Masterfile as opposed to have to handle each claim as it comes in.  There maybe a number of defenses to the claim as well. At the very least you are an "innocnet infringer" which could greatly reduce any damage award you would be facing.  I have handled many Masterfile matters so if either you or the content provider (or both)  want to discuss this with me please give me a call 1 800 640 2000. You should also review some of the posts on the issue to familiarize yourself better with the situation.

[rabmag]

Hi all!

A website client of mine recently received a notice of copyright infringement from Masterfile for two images. The kicker is that the client does not have any of the images on his website. A review of the letter sent from Masterfile shows screenshots of a pre-design prototype of his website but not his actual website. Moreover, the alleged infringing website is on a server that is not controlled by my client and has a URL completely different from his. The name of the URL also has absolutely nothing to do with the subject matter or industry of my client. I contacted the listed technical contact of that website and he claims he does not know who put the replication of the site on his server or why the URL was pointing to it. A Wayback Machine check of that website does not show any of the images. My client contacted the FBI and they said they were familiar with Masterfile Corporation and told my client it was a scam.

My client sent Masterfile a scathing letter informing them of the facts and that he is not liable for any content published or used by a third party with whom he has no associations or affiliations with and on a server over which he has absolutely no control over. It will be interesting to see how Masterfile proceeds.

In the meantime, I am curious as to what the FBI is investigating regarding Masterfile. One thing I think is that Masterfile knows that 90 percent of their images used online were sold by someone either directly or indirectly affiliated with them prior to 2006 (they claim 38 affiliations worldwide) and that those parties are no longer in business or affiliated, allowing Masterfile to now come back against all the innocent purchasers and claim infringement. The most telling thing is Masterfiles letter. It does not say anywhere "show us proof of ownership" or provide a receipt, etc. It just claims infringement. It would be great if someone actually saved their email payment receipt or credit card records from 2000 to present so they could prove something.

[Oscar Michelen]

I have found with Masterfile that when you show prior purchase from a valid source, they drop their request for damages.  The difficulty is in finding the proof of payment or connecting it to the exact images that they now claim are being infringed upon. While I have a great number of issues with their approach, they are light years ahead of Getty and are usually willing to listen to sound arguments.  That being said, I thnk a concerted effort to make this issue more public woul dgreatly help the situation asin the end I think both Getty and Masterfile's approach are bad for their own busniesses and bad for copyright law in general.

[rabmag]

I agree Oscar, but on the other hand, I went to Masterfile's site to look up the price of the two items they claimed were infringed and my conclusion that for those particular items, catalog numbers 700-00023992 and 700-00020568, I can only conclude that Masterfile either had no realistic intentions of trying to sell the images for the outrageous licensing prices of from $500 to over $2500 apiece (similar and sometimes better images were being sold on istockphoto for around $40!) . Maybe the person that sets the prices for Masterfile images is on bad drugs?

In any event it seems like Masterfile's business model is to make its money from threats and litigation rather than actual sales. I would love to find out how much of their revenue is from legal action (including from demand letters) versus people actually paying for their images which are several times the prices of other stock photo providers. I am sure that Masterfile may have a collection of images that people would buy, but the two in question I can guarantee no one would buy from them and would go to istockphoto instead. I guess if Masterfile is not guilty of extortion, they most certainly could be placed with those who price gouge customers!

[Oscar Michelen]

While I agree with your client's position that it is not liable under these circumstances, I find it unlikely that the FBI is investigating Masterfile for this program. At best this would be civil fraud, it would not rise to the level of a crime. My firm does a lot of federal criminal defense litigation as well and believe me the FBI have their hands full with true racketeering; terrorism; child pornography and identity theft. So I would love to hear about the actual contact with the FBI so I could follow up on it.

When clients maintain their receipts and can show proof of purchase of the images, Masterfile will normally back down. But your point about keeping the receipts is correct - most people don't do that  and if they do, they don't keep them for 7 years or so. I advise all clients to keep a hard copy file in their office of all the issue dealing with their website - registration; images; design purchases etc., so that they have a resource to go to if their computer crashes or they just buy a new one and don't transfer over the information.
     
Thanks for the post and please keep us updated.

[SteveOfNJ]

I was contacted by this firm as well indicating I had a pic on my web site that was being used without an agreement.   I was totally unaware of the use of the pic on my site as being or belonging to someone.  In fact I used a third party to design my site and for all I know we purchased the pic several years ago.  But that said, we only put it on the site in November of 2009.
 
Just tell me your thoughts. They are trying to get $3,000 from me.  They offered to settle for $1,200.  If I did something wrong I do not mind paying but I am not even sure I did and in some cases where a person was unaware of the infringement a judge will award $200 max per infringement which in my case I was unaware.  Now they also recently asked me to provide them proof it was in fact placed on the site in Nov of 09' and that may have an effect on the settlement.  They are charging me for one year.  Don't they have to prove that amount of time?  Is there any type of limit to the time you have a pic on where the court might say "four months, for get it", is there?  I am thinking that sending them anything acknowledging the use of the pic could be used against me and I should only produce such evidence when needed and if needed in a court.  Also, I have several clients/associates that would attest to the fact that the pic was not there prior to November, 09'.

Please advise.

[Oscar Michelen]

The $200 for innocent infringement is not automatic and you have to go through litigation to have a judge award that. The length of time is relevant and they would have to prove that if they wanted to use that as an element of assessment of damages, but the court can also just award a straight statutory amount along with attorney's fees. A court will also consider if you made a "reasonable" settlement offer in determining how much to award them in attorney's fees,so you may want to keep that in mind as well.

[SteveOfNJ]

Oscar, thank you for the reply.  We did actually settle it and I believe they are really trying to do the right thing for the artists they said they made a promise to that they will protect their work.  That said, I think the laws should be somewhat updated to allow a user a grace period to remove the image first.  I had a few conversation with the person I dealt with and I think he was quite reasonable.  I am not sure if this is what everyone wants to hear but try and see it from their side.  If you had your work used without your knowledge how would you feel?  Then and only then make the case with you on the other side.  Just try and imagine that.  I made a mistake and while it was an honest mistake it was one nonetheless. Now I say all this with the assumption that the image was not purchased and maybe just the records lost of the purchase or in some of the cases described above where the firms selling the images went out of business and so now these firms are going after people hoping they have no proof from images acquired years earlier.  But that said, I think they have a point.  People need to be careful to use images they are not sure where they came from.  Am I happy I am out some money?  Of course I am not but if I were on the other side I would not be happy either.

Thanks again.

[Oscar Michelen]

Glad it worked out and thanks for updating us.

[JHuse]

We are a small california based IT consulting company, our company website developed by one contractor in India for US $500, Got Similar demand letter in Dec 2009 from Masterfile for using 8 images for $20,640.00, I was surprised, because I do not know the contractor used copyright stuff, then I sent that notice to the contractor who developed our website, thought that he will respond with copyrights to me, but he did not respond to that notice. Our company is in deep losses in 2008 and 2009, also our company is not doing any busienss now - so planning to dissolve, but our website is up and running. I my self found job at some other company. So did not respond to that letter, later Masterfile sent another notice to our website hosting company about hosting 3 copyright images and stop hosting thme - how come they reduced copyright images from 8 to 3 ?

Then that contractor simply removed those 3 images from our website in March 2010, later we got another demand notice from Masterfile saying like"it is not done by removing the images - but you must pay" - then that contractor remvoed all the remaining 5 images from the website in May or June 2010. But in 2nd week of July 2010 Masterfile sued us for $1,220,000 in california federal court in San Francisco. We did not communicate with Masterfile till today. Please help.

[Oscar Michelen]

Give me a call after 230PM NYC time to discuss  516 248 8000

[Oscar Michelen]

See my response to you other post Lynn