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Author Topic: Masterfile asking for +$9,000!!!  (Read 5865 times)

jefftd77

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Masterfile asking for +$9,000!!!
« on: May 19, 2011, 11:53:57 PM »
Hi Everyone!

I probably should have joined and posted in here before sending an email asking for advice... But I'm still interested in paying for some legal consultation (but I'm Canadian, eh... Don't know if an American lawyer can help us out up here ).

I'm at my desk today at work when I check my email and see a letter from Masterfile asking me for $2,100/pic at 4 pics = $8,400 PLUS HST (13%) ===== +$9,000... for my website that I use for my pastime (but it does generate a very minimal income).

Here is what happened:

I'm sure this is the common reason why there's copyright infringement...  we contracted out a complete redesign of our website to a design team in india (have all the email correspondence) Which went live in mid-November, 2010... and sure enough, it looks like the design team used the 4 pictures they (Masterfile) referred to in their email to me.
 
At first I thought the email from Masterfile was a scam (still think it's ridiculous) as I thought the proof they sent was 'doctored' as I had no recollection of my website ever looking like the website pages they sent to me in the email.

side note: our website has a main website (mainwebsite(dot)com) and three 'demo sites' we use as examples (mydemowebsites(dot)com).

After digging further through my server, I remembered the company that redesigned our site also did a redesign of our three 'demo sites'. Sure enough... that's where the problem was...

When we had our website redesigned... we sent the new design to our website coder to clean up the website coding... He then uploaded the site to our server. We decided before we went "live" with the redesigned site that we didn't want to use the new 3 'demo sites' that were created for us as they were too difficult to re-code for our clients. So We decided to use our old 3 'demo sites'.

I would have been sick to my stomach if someone found those 'never used' demo sites and asked us to create sites that matched them as I wouldn't know how to do it...

As it turns out.... Masterfile is referring to the 3 'demo sites' the design team did for us that we never used...

It ends up that the 'never used' demo sites were on our server as "never-used-demo1.html, never-used-demo2.html, never-used-demo3.html". I was still confused so I went through every page of our website (as there are links to our demo sites on almost every page).... I then noticed that on 2 pages that the links weren't updated (there were old links to the never used 3 'demo sites').

I still can't believe Masterfile could find these 'never used' demo sites as they have never been marketed, indexed in Google, or seen by anyone except the owners of our website (so I thought!).
 
After the site went live last November, we had problems with a few of our pages and had our coder rectify the issues as we were getting a lot of spam through our contact forms... My guess is that he must have accidentally used some of the old files with the old links... and that's why they were there earlier today.
 
I have removed those links but am at a loss... I know that there is no excuse for copyright infringement, but I think over $9,000 is 'out to lunch'. Also, I did my due diligence when contracting workers to ensure the design was unique and original with no copies from the internet.

Here's some correspondence I still have access to with the design team...

1. a copy of the posting I created when looking for the redesign:

"**EXPERIENCED WEB DESIGNERS ONLY** If you have only a few template examples, you won't be given any consideration.

**CUSTOM WEBSITE** Templates are not acceptable

I am looking for a complete redesign of our website including new layout, logos, colors, new pages, new content etc.

Our current site is 13 pages and our new one will be 16-18 pages

We are just looking for a quote now and will be making a decision within the next 2 months.

Please put in a minimum bid, then send me a PMB where I will give you our website address and examples of the direction we are wanting to go.

***** The new site design MUST NOT compromise any of the SEO work we have had done so you must have a GREAT knowledge of web design along with SEO for this job ******


2. After I selected a candidate and started correspondence... I asked him:

a couple questions....

1. Will your redesign include redesign our logo?

2. We want all graphics to be completely unique and do not want any designs that are used on the web (icons, graphics etc)


He assured me they would redesign our logo and that we wouldn't have any graphics that were already on the web.
 

Any thoughts?

Jeff

SoylentGreen

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Re: Masterfile asking for +$9,000!!!
« Reply #1 on: May 20, 2011, 08:23:18 PM »


Ah, yes.  Masterfile; the Somali pirates of the Internet copyright scamola. First off, I’m not a lawyer or anything of that sort.
$9000 is quite a high amount to ask for this, by the way.

From what I’ve heard, masterfile will usually send a fairly informal email as they did to you at first.  You’ll likely discuss the situation with them briefly.
You won’t hear from them for several weeks.  Then, you’ll receive about three letters via FedEX, one every three to four weeks.
The first one will contain a FAQ about copyright infringement, along with a “voluntary invoice” which informs you that the price has doubled.
The next one will have some bogus legal papers to scare you, etc.  Finally, you’ll receive a letter stating that you have 10 days to pay up.
Two weeks after that, some obnoxious boob will call you. 

No court judgment has been made against you, so you don’t really “owe” them a debt.
They’re pretty aggressive; I don’t think that masterfile could survive without this revenue.
They often don’t quit unless they a) get their money, b) find out that you have nothing of value, c) find out that it’ll cost more to fight you than it’s worth,
or d) they know that they’ll never win court and you’ll go there if you have to.  So, it’s your job to beat them over the head with points (b) through (d), until they give up.

They don’t really care what the reasons for the alleged infringement were.  So, save your breath. 
They just want some money as soon as possible.

They have sued people in the past; I don’t think that they make much (if any money) from this.
But, they have to sue people every once in a while, or people wouldn’t be scared enough to pay.
It costs only 50 measly dollars to file the papers, so it’s a cheap way to put pressure on people.
Even if one is sued, you can still settle later on rather than going through the courts.  The masterfile toads have a tendency to really make things move at a glacial pace.
Months go by between letters. They serve papers, then wait months before pursuing it, if at all.  Many of these lawsuits are simply dropped, or they expire on the court docket.
They go after a variety of different people (some with only one infringement, others with several) to give the impression that nobody escapes their “net”.
If serious money is involved (greater than 50k), they move much more quickly with court action.

Recently, they’ve spent some serious coin on going after the Pointts traffic paralegal business. 
I suspect that much of their potential lawsuit budget is being spent on this one.
That’s good news for smaller players caught up in this; there might not be a budget left to pursue other victims.
Pointts brought a “third party” action against its web design contractor, and this contractor in turn brought a third party action against what I take to be a freelancer.
I don’t think that the ‘States have a “third party” action provision like this.
Your web designer’s in India, so it might be impractical to consider a third party action against them if the need arises.
This Pointts thing is going to a mediation in June; this shows that masterfile isn’t completely confident in its legal case.
But, it wants some sort of large “win” on the books, even if it’s just a compromise.

Masterfile hasn’t done a good job of properly registering its content as copyrighted.
If they’re sending you registration numbers from the US Library of Congress, or the US Copyright Office as proof of ownership, you should know that it’s not worth much in Canadian court. 
Therefore, if they haven’t registered the photos in Canada, then you could claim “innocent infringement”.
I feel that it would apply in your case; do keep your evidence of this in the unlikely event that you need it.
If you wish to clear up the problem soon, you could offer $200 per image (the minimum often awarded under the Canadian innocent infringement provisions – it’s sometimes even lower).
They’ll balk at this, of course, and flat out refuse.  But, they’ll have to take it, unless they could get more by going to court.  But, I doubt that they could. 
In fact, if they took you to court, and they were awarded an amount similar to what you offered them, they would be responsible for your legal costs and then some.

They’ve registered some compilation books.  But, if the original source of the photos wasn’t one of the actual books (a CD-ROM for example), they might be out of gas on this one. 
Or, all photos may appear in one book, hence only one infringement.  So, feel free to be creative.
Be careful of legal advice from masterfile’s lawyers.  They have sent misleading letters to victims in the past. 
Such letters will have the law office letterhead and branding on them.  However, they’ll have a secretary sign it. 
An actual lawyer didn’t sign it, so they can say what they want, and not be exposed to legal trouble for misleading statements.

This is some information about masterfile’s scheme for Canadians:

http://blog.innovatellp.com/2011/02/masterfile-corporation-and-copyright.html


Here’s an interesting article about Canadian Copyrights:

http://www.rossmcbride.com/articles/Copyright-Registration-What-s-it-good-for/


Here’s the Canadian Copyright Act:

http://www.canlii.org/en/ca/laws/stat/rsc-1985-c-c-42/latest/rsc-1985-c-c-42.html#PART_VI_MISCELLANEOUS_PROVISIONS_401830


I’m not affiliated with the organizations in these links, or any of their people.  But, I did learn a lot from their sites.


Good luck,

S.G.



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Re: Masterfile asking for +$9,000!!!
« Reply #2 on: May 21, 2011, 03:06:57 AM »
SG,

I cannot confirm this but I have heard rumblings that Masterfile and other smaller stock photo sites specifically depend on their extortion letter program to generate the majority of their revenues to stay alive. It will be interesting to dig into a financial statement especially if it is a public company. Public companies typically reveal such major components of where their money comes from and also their losses.

Anyone want to help dig through the Internet and look for public financial statements that might be posted?  If it is a privately owned company, you probably won't find it.  But a big public company like Getty and the like might make some mention of it.

Matthew
I'm a non-lawyer but not legally ignorant either. Under the 1st Amendment, I have the right to post facts & opinions using rhetorical hyperbole, colloquialisms, metaphors, parody, snark, or epithets. Under Section 230 of CDA, I'm only responsible for posts I write, not what others write.

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Re: Masterfile asking for +$9,000!!!
« Reply #3 on: May 22, 2011, 01:08:33 PM »
Hey Matthew,

Thanks for your response.

Getty seems to have a more diversified business than masterfile (MF).
I would guess that their press photo business, archival and television efforts probably bring in revenue that MF cannot.
Now they have PicScout, too.

As we know, masterfile's private.
I would imagine that they keep their info closely guarded.
If it could be actually proven that they continue to exist because of copyright extortion, a savvy person could argue that they have purposely encouraged it.

Another poster on this forum did mention previously that MF gets 85 percent of its revenue from the extortion scheme.
If you type "masterfile revenue" into google, that post comes up first or second in the listing.  Fun times!

Another report estimates revenue of 6.2 million per annum for MF.
MF's president, Steve Pigeon mentioned in one of his troll rants that his company pursues over 7000 cases of infringement a year.
So, let's do the math.  85% of $6.2 million is $5,270,000.
Let's assume that only half of the people pay up...  7000/2 = 3500.
How much would each person have to pay up on average to make the 5.27 million in revenue?
ummm...  $5,270,000 / 3500 = $1505.71.
MF would incur some expenses to find and pressure their victims, of course.

But, it's quite plausible that copyright trolling/extortion is their primary business.
I hope that some disgruntled employee "spills the beans" some day...

S.G.


 

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