More than two years after Prepared Food Photos sued Pool World in federal court in Spokane Washington, alleging that a retailer had infringed Prepared Food Photos’ copyright in a stock photo of vegetables on a grill, Prepared Food Photos has agreed to pay Pool World for its consent to dismissal of the action. Pool World agreed to keep amount of the payment confidential.
It has been more than a year since I last blogged about Prepared Food Photos’ depredations, explaining our initial discovery showing that Prepared Food Photos’ claim that it charges a minimum of $999 per month for subscriptions to its database of photos was an outright lie, and showing as well that established precedent barred damages claims based on these supposed subscription agreements. See this blog post, citing this letter. As I explained in my most recent blog post, the claim of a $999 per month minimum, and hence the argument that Prepared Food Photos was entitled to $11,988 in actual damages for each year of alleged infringement, was a scam. (Indeed, we learned recently that, for a period of time in 2019, PFP was even offering a subscription to its entire database of photos for as little as $29.99 per month, an offer limited to small retailers with no more than three locations)
But there was an ethical impediment to continued blogging as the case proceeded – as the date of the jury trial in its lawsuit against the Spokane retailer Pool World grew closer, the rule barring public statements by lawyers that could affect a jury’s consideration led me to keep silent. Now that the case is over, the gory details can be published here.
Additional Discovery Reveals the Truth about Prepared Food Photos
Since that last blog post, Prepared Food Photos continued to delay the litigation, first through dragged out mediation about which it was never serious, then moving to dismiss the suit while paying only taxable costs, which we successfully opposed on the ground dismissal would deprive Pool World of its entitlement to seek an award of attorney fees. After that motion was denied, Prepared Food Photos stalled on document discovery seeking to show that most of the subscription agreements were entered to settle claims of past infringement. After our motion to compel that discovery was granted, Prepared Food Photos produced financial records that were heavily redacted. The unredacted documents had to be compelled by a motion to enforce the earlier discovery order. Then, on the eve of depositions, they had to be cancelled. the first time because Prepared Food Photos represented that its main witness had had a family crisis that prevented her from traveling, and the second time, three months later, on the ground that its president had been hospitalized. Somehow, there was always a reason why Pool World could not cross-examine PFP’s witnesses.
But in meantime, we were able to obtain sufficient discovery to serve a motion for Rule 11 sanctions, which forced Prepared Food Photos to amend its complaint. Initially, Prepared Food Photos initially proposed to amend in a way that maintained its fiction of a $999 per month minimum, see Exhibit AAA in this document, but when we warned PFP’s lawyer that such an amendment would still be susceptible to a Rule 11 motion, PFP amended to drop both the allegation that it had been charging a minimum of $999 per month, and the allegation that its main business was creating fine photographs and licensing access to such photographs. We had learned in discovery, for example, that in every year beginning in 2019, at least one of PFP’s subscribers was paying at the rate of only $99 per month; indeed, we learned recently that, for a period of time in 2019, PFP was even offering a subscription to its entire database of photos for as little as $29.99 per month, an offer limited to small retailers with no more than three locations. Yet Prepared Food Photos continued to file complaints, affidavits and briefs claiming the $999 per month minimum.
Even though depositions continued to be postponed, our document discovery enabled us to move for summary judgment, showing more than a hundred undisputed facts that painted an unflattering portrait of Prepared Food Photos. These included that (1) most of the work done by Prepared Food Photos employees entailed searching for alleged infringers and making infringement claims, (2) that roughly 95% of Prepared Food Photos’ income comes from threatening and bringing copyright infringement claims, (3) that Prepared Food Photos was not authoring any new photographs – in other words, that Prepared Food Photos is a classic copyright troll.
The undisputed facts also established that Prepared Food Photos had been securing this enforcement income (4) by lying in demand letters and court filings about its subscription policies and (5) by using deliberately deceptive and coercive statements intended to intimidate the recipients of its demand letters and lawsuits into paying excessive settlements far in excess of the level of damages that Prepared Food Photos could reasonably expect to recover in contested litigation with knowledgeable counsel on the defense side.
In addition, we secured documents from Getty Images, the company that had previously licensed the photo at issue in this case, along with some 4700 other photos, for average license fee of about a dollar per use – of which Prepared Food Photos’ predecessor Adlife received a tiny fraction, as little as twelve cents. THIS was the lost license fee that Prepared Food Photos would properly be awarded should the case go to trial.
These documents afforded some spectacular numerical comparisons. Over the course of six years from 2010 to 2016, Adlife received slightly more than $11,000 per year in total income from Getty Images for licensing 4700 photos (among them the Grilled Vegetable Image at issue in this case), but in 2023 alone PFP bullied a single company named “Healthy’s” into paying $10,000 to settle a single infringement claim for use of the Grilled Vegetable Photo. And although the documentation we secured in discovery showed that Prepared Food Photos was making roughly $50,000 per year in subscription income – most of it from subscriptions obtained as part of settlements of claims for past infringement – it was garnering far more in infringement settlements, nearly two million dollars per year once CopyCat Legal had begun masterminding its enforcement strategy. Great work by a plaintiff’s lawyer, even if it was based on deliberate lies by Prepared Food Photos. (CopyCat Legal firm owner Daniel DeSouza has represented that, until our discovery in this case exposed the truth, his firm was in the dark about the real facts. We have accepted his representation).
Motion for Summary Judgment
Our motion for summary judgment was also supported by a pair of expert reports, one showing that the market value for the photograph that Pool World had used was a few dollars at most, and a second from a lawyer with extensive experience in representing the targets of claims from copyright trolls explaining the harms caused copyright trolls and showing how the various tactics employed by Prepared Food Photos over the past several years fits the model of a copyright troll to a T.
Our summary judgment motion made three main arguments. First, we urged the court to rule, as a matter of law, that Prepared Food Photos’ contention that the supposed $999 per month minimum fee could provide a proper measure of actual damages for its lost license fee was contrary to the undisputed facts about its subscription arrangements and contrary to established Ninth Circuit law, which allows the lost license fee to be based on the market value of “the thing used” and not “what the owner would have charged.” Second, we argued, as a matter of first impression, that because the discovery rule is an equitable exception to the copyright act’s three-year statute of limitations, Prepared Food’s inequitable conduct in pursuing infringement claims should deprive it of the benefit of the discovery rule. Third, more conventionally, we argued that PFP’s inability to document diligent searches for infringements of the photograph that Pool World had allegedly infringed should preclude it from argument that could not reasonably have found the infringement before June 2, 2020, nearly ten years after the alleged infringement was committed.
At this point, Prepared Food Photos blinked. An adverse ruling on the statute of limitations would have made Pool World the prevailing party, triggering a possible application for an award of attorney fees in a very large amount. But a ruling on Pool World’s damages argument would arguably have been even more threatening to Prepared Foods Photos, because a determination that its argument for damages in the tens of thousands of dollars per infringement was improper as a matter of law could have been cited as res judicata in all future cases, endangering the basis for its revenue model.
As a result, Prepared Food Photos was ready to negotiate over the amount of money that it would have to pay to get Pool World’s consent to dismissal of its lawsuit with prejudice. Pool World, which had decided to defend this case on the merits to set an example for other small businesses and to put a stop to Prepared Food Photos’ copyright bullying, was willing to allow Prepared Food Photos to keep the amount of its payment confidential. The result was the settlement agreement that has now been signed and, much to Prepared Food Photo’s chagrin, posted on the docket of the case.
Two Other Recent Failures by Prepared Food Photos
Our case is not the only recent lawsuit in which Prepared Food Photos has been successfully resisted. The Florida law firm of Stearns Weaver provided pro bono representation to a Massachusetts company called WeNeedaVacation.com, taking two depositions of PFP officers that we were able to cite in our briefing to the court in the Pool World case. After cross-motions for summary judgment were denied, and the case was set for trial in June 2024, the case was dismissed in late May 2024, based on an entirely confidential settlement. However, because, in our discovery, we were able to obtain the CopyCat Legal ledger showing all infringement payments received on behalf of Prepared Food Photos, and because the court granted our motion to unseal that document so long as none of the names of companies making infringement payment was identified, I am able to say with confidence that WeNeedaVacation.com did not make a payment to Prepared Foods Photos in connection with the dismissal. Whether Prepared Food Photos made a payment to WeNeedaVacation.com to get out of the case I cannot say.
Equally important, Prepared Food Photos went to trial in a recent infringement suit in Milwaukee, Prepared Food Photos v. Jaber, and although the plaintiff received a jury verdict (because there was no serious defense to the claim of infringement by one of the two defendants), the jury awarded only $200 in actual damages and $1000 in statutory damages (page 90 here). The defense attorney in the Jaber case took the opposite tack from our defense of Pool World – he took no discovery, apparently because he did not want to give any signals of how he was going to try the case. Rebecca Jones came to Milwaukee to testify (apparently, the putative family emergency that prevented her from being deposed in our case was not operative) and the lawyer took her apart on cross-examination. The trial transcript is linked here. He achieved this success without even having the benefit of the discovery in our case that would have proved that Jones was lying when she testified that the minimum monthly subscription fee was $999. PFP moved to set aside the jury verdict, relying in part on the supposed $11,988 per year subscription fee that was based on Jones’ false testimony, which CopyCat Legal’s counsel by this time knew was false, but even without knowing of that falsehood the trial judge was having none of it. Cross motions for awards of attorney fees and costs are currently pending. /
Future Dealings With Prepared Food Photos
The results in the Pool World, WeNeedaVacation and Jaber cases should give heart to the owners of other companies who receive threats of infringement litigation from CopyCat Legal on behalf of Prepared Food Photos. These cases can be defended successfully, and Prepared Foods will back down when it faces a serious defense. Moreover, the most important information needed to defend has been filed in support of our summary judgment motion and unsealed pursuant the the right of access to court records. And although there is a protective order covering some of the files in our case, at our insistence, the protective order allows sharing of documents as needed to defend against other copyright claims. And by now there is a small coterie of lawyers in private practice who are so fed up with the bullying they have seen from Prepared Food Photos that they are prepared to substantially discount their rates, or even provide pro bono and contingent representation, to help put a stop to this nonsense.
Apart from simply saying no, there is a sound way to respond to threats of litigation. Even if the target of the litigation does not have a tenable statute of limitations or licensing defense to an infringement claim, and if the target’s use began after the copyright in the image was registered – that is, if Prepared Food Photos would have a claim to be awarded statutory damages and attorney fees — then the wisest course may well be to send off a check for $750, which is the minimum amount that a court can award in a case involving statutory damages. Given the judicial rule of thumb that statutory damages ought to be a small multiple of the lost license fee — a rule of thumb the CopyCat Legal often deployed in its demand letters and default judgment briefs for Prepared Food Photos — $750 is really the amount most likely to be awarded if the case is well litigated on the defense side. And in the end, if a company has infringed the copyright in a photograph, it OUGHT to pay a fair amount of damages for the mistake.
I myself have used that strategy when writing on behalf of clients threatened by Prepared Food Photos, but small businesses and individuals representing themselves have also taken this approach, and CopyCat Legal consistently has not sued in those circumstances (several examples are cited in ¶ 100 of the Statement of Material Fact in the Pool World case). I have seen a number of others use that tactic to forestall litigation by CopyCat Legal. CopyCat Legal does not sue in those cases because it makes its money through a high volume of making threats and grabbing settlements, and it really is not interested in getting bogged down in cases where it actually has to do serious work.
Indeed, even if the matter proceeds to litigation, it is not too late to deploy the offer of a $750 check. It may be sensible tactic to serve a Rule 68 offer of judgment in the amount of $750 so as to cut off Prepared Food Photos’ ability to threaten to impose the costs of litigation on a losing defendant. In retrospect, I have some regret that we did not serve such an offer of judgment at the outset of the Pool World case, because it became apparent during the litigation that both Prepared Food Photos’ owner, and its counsel, were basing their assumptions about the pressures they could bring to bear on Pool World on their certainty that, even if their damages recovery was only a few dollars, Pool World would have to pay their costs.
A second point about the future is that there is another company name to consider. Since the beginning of this calendar year, Prepared Food Photos has not filed a single infringement lawsuit. Instead, about two dozen suits over infringement of photos in the PFP database have been filed by a company named Rockefeller Photos, and indeed I have seen a number of CopyCat Legal demand letters over such infringements sent in the name of Rockefeller Photos. Although the complaints in these cases recite that Rockefeller Photos represents the interests of a number of photograph owners, so far as I have seen, Prepared Food Photos is the only such company. It appears that Joel Albrizio, the owner of PFP, is also the owner of Rockefeller Photos, and similarly the officers of PFP are the officers of Rockefeller Photos.
It is not clear why Rockefeller Photos has been created, but it is my guess that the stench of PFP’s reputation as a copyright troll has become so great that Rockefeller Photos is an attempt to create a new persona without the same reputational baggage. In the circumstances, all of the defenses that potentially apply to PFP will apply to Rockefeller Photos as well, but there may be one other: when a company named Righthaven was created fifteen years ago for the sole purpose of pursuing infringement claims, courts ultimately held that it lacked standing to sue for infringement, and the company collapsed under the pressure of sanctions rulings. It remains to be seen whether the Righthaven precedent can be brought to bear against Rockefeller Photos.
Third, now that the falsity of its claims about a supposed $999 minimum subscription fee have been exposed, Prepared Food Photos is potentially vulnerable to countersuits by the companies that were tricked into paying large settlements by the false statements in demand letters about PFP’s subscription minimum. Section 164 of the Restatement of Contracts provides that a contract that is procured by fraud can be voidable at the option of the defrauded party, and now that we know that PFP was lying to the many businesses that received the CopycatLegal demand letters about the facts of its subscription agreements, it seems quite possible that businesses that paid many thousands of dollars to avoid being sued for using a photo whose market value was only a few dollars may well be able to void their settlement agreements, then dare PFP to sue them and face the same result as in Pool World, WeNeedaVacation or Jaber. Moreover, inspection of the CopyCat Legal ledgers shows that there were several hundred such victims, and the number whose settlement payment was $11,988 shows that they must have been influenced by the lie about a $999 per month minimum fee (known to PFP to have been false all along, and known to CopyCat Legal to have been false once it produced the subscription agreements in discovery during the fall of 2023). And, because there was a common scheme to defraud – virtually the same letters were transmitted on more than two thousand different times – a lawsuit might well be brought as a class action.
An enterprising lawyer pursuing such an action might also consider whether the extortionate character of the demand letters and followup emails might qualify as criminal extortion, which can be a predicate crime for a civil RICO claim. When PFP amended its complaint in response to our service of a Rule 11 motion, we gave serious consideration to including a RICO counterclaim in Pool World’s answer. After consulting with some experienced criminal lawyers, we decided that such a counterclaim would be tactically unwise, in part because it would needlessly complicate the litigation, giving Pool World extra burdens of proof, and in part because many federal judges detest RICO cases. Because our equitable conduct argument on the statute of limitations appealed to Judge Rice’s discretion, making a RICO claim might have been counterproductive. But a lawyer representing a business that was bullied into overpaying a settlement would surely want to consider that option, either under federal RICO or a state-law equivalent.
Credit Where Credit Is Due
Before closing this post-mortem on the Pool World case, I need to give thanks to our litigation team. beginning with colleagues at the Litigation Group who read all the papers, including the draft emails to opposing counsel, as well as Phil Malone at Stanford’s Juelsgaard Clinic. And more so to Steve Kirby, our local counsel in Spokane, who, unlike Phil and me, is a lawyer in private practice, not on a salary, whose representation was truly contingent, but who devoted himself to the case and poured more than a hundred hours into it (unlike Prepared Food Photos local counsel who, so far as we were able to tell, was just a silent name on all the papers). Thanks as well to Jessica Teal, our pro bono expert on the market value of the photo, and Aaron Arce Stark, who poured far more time into his expert report than his modest expert fee might have justified.
But the real hero of this defense is Pool World. It could easily have paid a small tribute to resolve this case, but its owner and its management were committed to defending this case to the hilt, hoping to save other small businesses from the sort of bullying to which Prepared Food Photos was trying to subject it. From my very first conversation with them, it was clear to me that they and I were on the same page about why this case was worth doing from a public interest perspective. An affidavit from business manager Pat Flynn explained Pool World’s motivations in this case, including the decision not to refer the case to their insurance company lest Prepared Food Photos be paid off in their company’s name. Pool World’s leaders never flinched when they had to devote extensive staff time to discovery responses, or paying expert witness fees and, prospectively, paying for its lawyers’ travel expenses and deposition costs. They read every paper before it was filed to ensure accuracy.
Prepared Food Photos and its counsel could never quite get their heads around the fact that they had sued a defendant that was ready to defend itself on principle, despite the cost. Prepared Food Photos and its counsel have made millions of dollars badgering small businesses into excessive settlements because they did not understand the law and felt unable to afford to defend themselves. Those businesses who will be saved from that fate because of this case owe Pool World a huge debt of gratitude.
And so do its lawyers.
