Masterfile Corporation

[jlucas111]

About month ago I received my first Settlement Demand letter from Masterfile Corporation notifying me of copyrignt infringement. There are five images on the Company Website they claim are copyrighted by Masterfile. They are seeking $32,160.00

The website was designed and created by a third party in 2005. I contacted the company who created the website and they claim they purchase all thier images through IStock photos. They were not able to locate thier records regarding the images in question. The third party company contacted Masterfile and explained to the complaince manager that the images were purchased through IStock, but they had no records of proof.

It appeared that the issue may end threre. It did not.

Even though the business ceased operations in 2006, the website was still up. I  took down the website the same day I received the first letter from Masterfile.

I contacted Masterfile via phone and spoke with the complaince officer handling the claim. I told her I was unaware the comapny violated any copyright infringement laws. I told her there was not willfull intent here. I told her I took action to remove the website and that the company ceased operations in 2006.

She said that did not matter and she expected payment in full within 15 days and that Masterfile does not offer any settlements less than the stated amount of $32,160.00  I explained to her the company is no longer operating and that we were incorporated, but since dissolved the corporation in 2006. I also mentioned that there are not any assets associated with the company. In another words, there is no cash or assets to lay claim on should you win a judgment against the company. My point to her is this is a waste of your time and resources to pursue.

She latered email papers showing they filed copyrights to the images with the US Copyright Offices in 2002.

She claimed Masterfile Corporation would pursue this case and will plan to file a lawsuit within 30 days. She also claimed Masterfile has won almost every case they have filed with US Federal Courts. She also stated Masterfile will pursue any and all company officers personally to obtain the $32,160.00. They are prepared to file leins and garnishments on all parties involved.

I told her you must do what is best for your organization and I must do what I need to do in this matter.

Yesterday, I received another letter from Masterfile demanding payment of $32,160.00. My response to the letter was via email,and told them that the company is not operating and has been dissovled. Even if I agreed to pay the monies, the company does not have any cash or assets.

In the email I communicated to the complaince officer it appears this matter will not be resolved. So please file the lawsuit and I will let the US Federal Court resolve this case.

My thought process is even if they do move forward with this lawsuit and win a judgment, there is nothing to get from the company. And since the company is longer operating, I could file bankruptcy on the Company to ensure they have no remedy.

What are your thoughts? Would your letter help in this matter?

Thanks

[Oscar Michelen]

We are dealing with Masterfile on about three matters right now.  They are a bit better to deal with than Getty in that they at least provide you with the information that forms the basis of the claim. We are expecting a response to the latest letter we sent them at the end of next week. Our position with Masterfile (who registers the images with the Copyright Office) is that the Copyright Law allows judges to reduces damages to $200 per image for cases of "Innocent infringement" In my opinion under the facts you present no Federal judge would award the amounts Masterfile demands. In a recent case, (2/4/2008) filed here in NY, Masterfile v. Country Cycling 06 Civ. 6363, Masterfile sought $5,500 per image. The defendant did not answer the complaint and only sent a letter into the court explaining its position. The court found innocent infringement and awarded $1,120 in statutory damages, the cost of a two year license through Masterfile. I think the court would have awarded less had the defendant had legal representation. What really hurt the defendant was that the court also awarded $4,860 in legal fees.  The court indicated that it would have awarded less had the defendant offered a reasonable sum before suit was filed.  

So unlike Getty, Masterfile does file for copyright.  Now, the  interesting thing (at least to us intellectual property geeks) is that to save money Masterfile compiles hundreds of photos into compilations  and files them as compilations.  That means though that even if you take 20 photos from that compilation, it is only one infringement.  Also unlike Getty, Masterfile does file suit if you are unwilling to settle. In your specific situation, if your corporation is dissolved, then Masterfile will not get paid.  They cannot go against officers or directors individually that's why you incorporate in the first place.   I think that  is a bluff on their part.

Our letter will help stop them from harassing you and we would try to get them to accept a reasonable settlement if you are willing to do so, but if they do file suit, and you wanted to retain us to represent you in court, we would reduce our hourly rate from $450 to $150 per hour Its really up to you in light of the situation with your company whether you want to invest any money. Probably worth the $150  for the letter to see if we can make it go away.

[jlucas111]

Oscar,

Thank you for your response. I will call you on Monday to discuss the letter further and my situation with Masterfile.

[dorim]

I thought a take down notice is suppose to be sent first and then a demand letter if the "stolen" images are not removed from a website.

[Oscar Michelen]

No, the law does not require a cease and desist notice at all. They can just proceed right with a lawsuit without any other notice.

[Lettered]

There seems to be some fairly common misconceptions among us laypeople about the protections afforded to Online Service Providers in the Digital Millennium Copyright Act ... requirements for takedown notices, safe harbor provisions and the like.  The key is, I think, that these DMCA protections apply to Online Service Providers to limit their liability for what thier users post on their website.  I dont think there is anything in the DMCA to limit liability of website owners for website content directly under their control.  Someone please correct me if I am wrong about any of that.

[Oscar Michelen]

That' s right lettered.. Here's the brief description Wikipedia version of DMCA II which gave OSP's the protection:

Title II: Online Copyright Infringement Liability Limitation Act

DMCA Title II, the Online Copyright Infringement Liability Limitation Act ("OCILLA"), creates a safe harbor for online service providers (OSPs, including ISPs) against copyright liability if they adhere to and qualify for certain prescribed safe harbor guidelines and promptly block access to allegedly infringing material (or remove such material from their systems) if they receive a notification claiming infringement from a copyright holder or the copyright holder's agent. OCILLA also includes a counternotification provision that offers OSPs a safe harbor from liability to their users, if the material upon notice from such users claiming that the material in question is not, in fact, infringing. OCILLA also provides for subpoenas to OSPs to provide their users' identity.

[jlucas111]

Update on Masterfile's infringement claim. Since my orginal posting I have communicated with Masterfile and have made several attempts to resolve this matter.

I proposed a settlement of $1,000.00 and they counter with $10,000.00. I counter back with $1,500.00 and they counter back with $2,500.00, which I agreed to if they would allow me to pay the settlement over in 12 equal monthly payments. I thought it was best to pay the $2,500.00 to put this situation behind me.

They declined my offer of settlement and plan to file a lawsuit for the full $32,160.00.

It surprise me they would not accept the offer because of the payment plan.

[Oscar Michelen]

Because they registered the images before your use, this amount is fair; not great, but fair. If they sought statutory damages you should be aware that the Copyright Act of 1976 lets a federal judge reduce all damages to $200 per infringement. Also please be aware that when Masterfile says they registered the images, they mean they registered them in bulk,not individually.  They take a couple of hundred or thousand images and register them as "compilations."  What that means is that the compilation becomes the "Work" and not the individual image.  What that means is that if you then take forty images from the compilation, you have infringed precisely ONE time. Keep that in mind and check to see if the five images all came from one compilation, then you have only one infringement not five.

[tj]

Hey Lucas, did you have any more correspondence with Masterfile?  Did they offer your payment plan?

[Oscar Michelen]

Masterfile does negotiate and depending on the circumstances may offer a payment plan.

[joel1947]

I'm another recent Masterfile casualty.  Not sure how to proceed.  Was your situation resolved?  Did they accept a negotiated payment?

[Oscar Michelen]

While every case is different, I have found that Masterfile operates very professionally when contacted by our firm.. They are responsive to our position and explain their position in a responsible manner.  It's funny that even dealing with NCS Recovery (which of course Getty also uses) is different when they are representing Masterfile.  I will say that the only gripe I have with them is that their original demand letters ask for extreme amounts ($2,000 - $4,000 per image) and that they seek individual amounts  of damage for each image even though most time the various images were registered as a collection.

I will be in my office tomorrow if you want to give me a call 1-800-640-2000 or email me at xxx

[eagle]

Hello,
I have a small I.T. company. I have contracted out a web designer on Elance.com to create a website for my company at the end of year 2008. About 2 months after the launch of my website, at the end of February 2009, I received 2 separate letters from Getty Images(via regular mail) and Master File Corp.(via Fedex) Mastefile Corp. claims to own 2 of the images and Getty Images claim to own 1 image. Needless to say my first reaction was to take off ALL the images on the website immediately after I received the first letter.

Getty Images asked for $1300 for an image that they sell for $49 on their website. Masterfile asked for $8000 for 2 images that they claim to lease for $1000 for a period of 3 months for each image.

According to Elance.com's policies it is illegal for contractors to use copyrighted material without paying for it. So, I have contacted this contractor who did the design job for me and he has been communicating and negotiating the price with both companies. He accepted that it was his responsibility to pay these damages.He has managed lower the amount Master file  Getty images but the amounts are still extremely high. (After all the whole website was created for around $150 . And I am not sure if he will be paying these amounts but he risks to have his Elance account closed if he doesn't do something about it. )

Further more , Masterfile was only able to send the copyright certificate for only one of the images they claimed that belongs to them. The second certificate that they have sent supposedly for the second image doesn't mention anything about the image in question or the author. Also, please note that the second image is a picture of what seems to be a modern Macintosh keyboard and Mouse. (I wonder if they have the right to sell such an image?) I have tried contacting Apple Inc. but they haven't replied any of my e-mails regarding to this image. With the exception of sending me an automated message telling me that they have received my e-mails.

Any thoughts please?

[Oscar Michelen]

The limited use you made of the images - just a few short months - will help in reducing your exposure as both Getty and Masterfile claim their damages' demands are based on use and the cost of a "retroactive license fee." Ultimately the contractor will be the responsible party if there is a finding of infringement, so its great that he has stepped up to the plate.  Understand that if Masterfile brings suit, it will register the unregistered image beforehand and then it will be entitled to statutory damages on the registered one and actual damages on the unregistered one. For a description of what those are, see our "Summary" post.  

Getty has filed lawsuits several times, but only for cases involving more than 20 images, that I have found.  Masterfile is much more likely to file suit (even for 2 images) if a settlement isn't reached.  I can't advise you as to what is a fair value as every case is different and both of these entitles have used many different settlement numbers.  As to the Apple issue, let me know if you hear anything back.