Legalmatter

By: Brian J. Meli

To be, or not to be, that is the question—
Whether ’tis nobler in the mind to suffer
The slings and arrows of outrageous fortune,
Or to take arms against a sea of troubles,
And by opposing, end them?

~Prince Hamlet

Google ‘Getty Images’ and ‘demand letter’ and you’ll have your pick of vitriol-laced horror stories to choose from. The storylines vary case-by-case, but the narrative is usually the same: Getty Images is a predatory company that’s made an unscrupulous art form out of extorting millions of dollars from unsuspecting Internet-goers. Most of the accounts you’ll read go something like this: someone unwittingly uses an image from the company’s library without permission on his/her website, social media page or blog, triggering a pernicious demand letter containing sweeping allegations of copyright infringement. The demand letter then seeks compensation in an amount significantly above what most consider reasonable—but below what’s usually worth hiring a lawyer to mount a defense over—in exchange for the matter being dropped; leading ultimately to the response de rigueur of “just pay the bastards.”

It’s this perceived extortion as a business model that invokes such public hostility, has given rise to entire online gripe communities, and why, I suspect, if you’re conducting an opinion poll among Internet users asking what word best describes the Seattle-based company, you’ll get responses like “unreasonable,” “bully” and maybe even “criminal.” The negative sentiment runs deep, and was on full display recently when a particularly able-bodied recipient of one such demand letter (an intellectual property law firm), responded with a lawsuit of its own. The public’s jubilant response to the prospect of Getty getting some comeuppance sent a loud and clear message: Getty Images is the company everyone loves to hate.

But is Getty really the villain people make it out to be? Or is it merely a misunderstood company doing what it can to protect its interests and guard its digital property in this age of point, click and copy?

A Getty state-of-mind

Getty, along with its network of subsidiaries like iStock and Thinkstock, own the rights to over 80 million images in their combined libraries and archival collections. These images range from the mundane and everyday, to the timeless and truly iconic. Combine these still images with millions of hours of stock video footage and stock music, and the profile of a company with a lot of capital invested in intellectual assets—and a lot to lose from the theft of those assets—becomes apparent.

But unlike the prized assets of most companies, Getty’s aren’t locked away in a secret vault or safeguarded behind multiple firewalls. They can be stolen at any time, by anyone, at the click of a mouse, from the comfort of a person’s favorite easy chair. And that’s the problem. It’s the combination of the sprawling size of the company’s IP portfolio and the ease with which it can be raided that has caused it to take what many view as extreme enforcement measures. The most notorious of those measures, and the one drawing the most widespread indignation, is the use of automated web-tracking software to police unauthorized image use. This is software that uses image recognition technology to scour the Internet for infringing images, relieving the human beings charged with minding the store of the time-exhaustive monotony of policing tens of millions of random IP addresses.

The technology though, like most, isn’t beyond the influence of mechanical error, creating false positives that can lead to serious misunderstandings. Such was the case when the aforementioned IP law firm decided to download a third-party plugin to syndicate its blog feed. Unbeknownst to the firm, the plugin displayed an embedded thumbnail of a Getty image on its site; one that hadn’t been licensed. The law firm received a settlement demand letter a few weeks later, which it responded to by promptly suing Getty for an injunction to get the automated practice declared deceptive and unlawful (and unwittingly thrusting itself in the role of cult hero among Getty-haters for giving the company a dollop of its own medicine).

Getty’s response was essentially “Our bad, but if you had called us first we would have made things right.” A reasonable response given the circumstances, but one that begs the question: would Getty have been just as contrite if the person on the other end of such a call wasn’t an IP attorney? If you believe the online majority, that’s unlikely. Of course we can’t be certain.

What we can be certain of though is that IP owners have increasingly turned to web crawlers and other automated systems to ferret out infringement and initiate enforcement actions. The operating efficiencies that come with using these systems are hard to overstate. For Getty, a company standing guard over a mountain of intellectual assets that’s raided every minute of every day, such technologies aren’t just necessary; they’re essential. So the issue for Getty isn’t whether to continue using them or not. It’s how to improve the technology and fine-tune its internal processes to reduce error frequency, and to correct the errors when they are made. But that’s easier said than done in an environment where technological leaps in how content is shared online are measured in months, not years, and where competition for low price image downloads is fierce.

A picture is worth…a lot less than it used to be 

While automation in IP enforcement isn’t going away, cutting down on the amount of mea culpas it causes takes a major investment in the kind of manpower that walks, talks and demands a competitive salary; something that, absent a corresponding jump in revenue, tends to crimp profit margins and make companies less competitive. As copyright holder’s labor costs rise, the price points of the licenses they issue tend to rise too. And that’s something Getty and every other stock photography site can ill-afford right now.

The stock business is experiencing significant change, much of it due to the widespread acceptance of crowd sourcing and user-genrated content (UGC) as legitimate tools for sourcing stock imagery. Not so long ago Getty competed primarily against other stock photography giants like Shutterstock and Corbis for content dollars. Not so anymore. The stock game is getting a lot more competitive, as UGC sites like Foap, Twenty20 and Scoopshot gain popularity among causal downloaders. These sites offer images at a fraction of the price of Getty by giving anyone with a camera phone and the photography itch the ability to upload their work to searchable online catalogues that users can incorporate into their creative projects. These sites can significantly undercut the major stock houses because they offer these images “as-is.” In other words, they make no claims as to the legality of using the images that are downloaded from their sites. They offer no warranties or indemnifications in the event the rights to an image turn out to belong to someone another than the uploader, or if an image infringes the rights of any third parties, like a model or a property owner.

Because Getty does give its customers such legal assurances, it’s higher price points are justifiable. But these sites have still cut into the segment of its customer base that licenses images primarily for personal use. Getty has made inroads at dulling the effect these new arrivals have had on its bottom line, keeping non-commercial users interested in Getty by offering free services like its new Embed image tool. And professionals and institutional customers that license images for commercial purposes will continue to require the contractual guarantees that only Getty and the big stock houses can provide. But the larger point is that Getty needs to be focused on cutting costs right now, not allowing them to rise because of ballooning enforcement budgets. The last thing Getty wants to do is allow sticker shock to give its customers the final push they need to switch to alternative content sources. And, quite frankly, neither do proponents of strong IP regulations. Because if higher costs scare customers away from Getty, Shutterstock and Corbis, odds are that many will turn to less reputable image sources. If that happens infringement is likely to rise, leading to an online environment that’s even less hospitable to copyright holders than the current one.

Giving infringers no quarter 

So if a major boost to its enforcement budget isn’t in the cards, what’s a company like Getty to do?

Well, the most obvious thing is to make the consequences of infringement so punitive that users are forced to think long and hard before they download, which is essentially what the demand letters are all about. It’s a tactic the U.S. Border Patrol and Internal Revenue Service learned long ago. If you can’t catch every person sneaking across a 2,000 mile-long border, or every tax cheat among the 230 million returns submitted every year, then you have to establish penalties for the ones you do catch that are severe enough to hopefully discourage the ones you wouldn’t.

Of course this strategy only works when the infringers are acting knowingly. All the fines in the world won’t stop kids from distributing pictures online if they don’t know that what they’re doing isn’t allowed. We learned this the hard way back when online music piracy was the practice du jour, and six-figure complaints were routinely showing up in parent’s mailboxes.

But Getty does have another card to play, and judging by recent headlines, it intends to play it.

Direct infringers, or the end-users who actually engage in the unlawful copying, are just one group that copyright holders can focus their enforcement efforts on. The third party services that provide the means for those end-users to do the copying (read Napster, Grockster et al.) is another. And going after these so-called middlemen is usually preferable for two reasons. First, the fact is that getting an online platform shutdown is easier and more efficient than chasing the thousands, or even millions, of people who use it. And second, because the damage awards can be exponentially greater when the defendant is an established company, the time and money investment is usually easier to justify.

On August 22nd of this year another Seattle-based company, this one named Microsoft, launched a beta test for its new Bing Image Widget app, which allowed users to incorporate images found via their Bing web search—many of them belonging to Getty—into an image panel on their websites. It wasn’t a breakthrough concept by any means, but it was significant enough to stir Getty to action. It filed suit against Microsoft a week later to have the app disabled. Of course this being Getty, the move drew stark criticism from all corners of the Internet, with many ridiculing the Internet’s most notorious villain for trying to suppress free and open search functionality. But the hyperbole aside, it was a reasonable response to a legitimate concern—one that may be part of a larger strategy to de-emphasize its demand letter practice by shifting the focus away from direct infringers.

In truth, services like the Bing Image Widget are more likely than not protected under long-standing Supreme Court precedent concerning services that can facilitate infringement, but which also have significant, non-infrnging uses. But Getty didn’t pick this fight because it was a clear-cut winner. It did so to send a message: that it will tirelessly protect it’s rights, however and wherever they are threatened. And for now it seems like that message has been received. Only days after the Microsoft suit was filed, the tech giant acquiesced and voluntarily shut down the service pending an investigation into the complaint. Though whether this truly marks the beginning of a notable shift in Getty’s enforcement tactics remains to be seen.

When a bully becomes the bullied

It may come as a shock to many of Getty’s critics that while the company does spend a considerable amount of time on the left side of the “V” (for non-lawyers, that’s the side of the case caption where the plaintiff resides) this is one bully who isn’t immune to having his lunch money taken either.

In 2011, in one of the more vexing interpretations of trademark law, Getty was the defendant in a suit filed by the Car Freshener Corporation in New York District Court. At issue was Car Freshener’s iconic “Little Tree” air freshener product, which appeared in 11 downloadable images on Getty’s iStock site. Car Freshener claimed the images constituted trademark infringement, but Getty maintained (and many IP experts concurred) that merely showing a branded product in a picture, even one being licensed to others, without anything more, is a fair use. The court disagreed however, and ordered Getty to pay damages to Car Freshener. The monetary award aside, the precedent this decision set was particularly troubling for Getty, which now must screen all of its images using heightened scrutiny, and reject any that contain even the incidental presence of any commercial trademarks.

Then there’s the case of Avril Nolan, the model who sued Getty last year when her picture appeared in a now infamous New York State Division of Human Rights (DHR) public service ad, which depicted her as being HIV positive. For the emotional stress she claims to have suffered, she is seeking half a million dollars in punitive and compensatory damages, despite the fact that Getty had gone by the book in securing a model release from the photographer, granting it the use of Ms. Nolan’s likeness for commercial purposes. Getty’s terms and conditions also clearly state that if any image featuring a model is used in connection with an unflattering or controversial subject matter, it must be accompanied by a statement that it is being used for illustrative purposes only–something the DHR failed to do. Still, because the release the photographer submitted was improper, the case against Getty is moving forward in New York Supreme Court.

And of course there was the federal jury that awarded photojournalist Daniel Morel in excess of $1.2 million for what it decided was Getty’s willful infringement of the copyrighted photos of his native earthquake-ravaged Haiti. The ‘willful’ finding was suspect given Getty’s infamously uncompromising regard for copyright law, and because they had sourced the images from the Agence France-Presse, a well-respected news organization that is France’s version of the Associated Press. Nonetheless, the maximum statutory penalties were awarded for what Getty maintained was an honest mistake.

These cases demonstrate that Getty isn’t the only rights holder on the Internet unapologetically enforcing its rights, and arguably going to extreme lengths to do so. It just happens to be one one of the largest, and for that it receives the bulk of the criticism. But it too can fall prey to contractual errors, legal ambiguity and the occasional honest mistake. Right or wrong though, nobody’s going to feel sorry for Getty. Such is life when you’re the Internet’s biggest bully.

To be the villain or the victim?

And so we ultimately come to the dilemma Getty faces. It may be conspicuous in Getty’s case, but it’s certainly not unique. More and more, online distributors of intellectual property are finding themselves faced with a similar choice. Whether to do what needs to be done to preserve profit margins by rigidly applying severe enforcement strategies; strategies that will be derided by a vocal public as draconian assaults on individual freedom of expression, and cause an organization to draw comparisons to all manner of autocratic thug. Or to relax one’s standards, play nice, try to educate those who are ignorant or indifferent to intellectual property theft, and by giving infringers a chance to correct their wayward behavior, cultivate a reputation for being reasonable, compassionate and understanding—all the traits possessed by a company that people want to do business with. And in the process open oneself up to the threat of the steady erosion of a sustainable business model, and risk losing everything that has been built.

It’s the copyright dilemma of the digital age. To be victimized, or to be vilified?  Take arms against one at the cost of the other.

Which, perchance, will it be?

The content of this blog is intended for informational purposes only. The information provided in this blog is not intended to and does not constitute legal advice, and your use of this blog does not create an attorney-client relationship between you and attorney Brian J. Meli. Under the rules of certain jurisdictions, the material included in this blog may constitute attorney advertising. Prior results do not guarantee a similar outcome. Every case is different and the results obtained in your case may be different.