This is a tale of excess.
It begins with a demand letter from CopyCat Legal over the signature of its only partner, Daniel DeSouza, threatening to sue Charles Peralo for the use of fourteen celebrity photographs on his various vlogs about those celebrities unless Peralo promptly paid $282,500 as a settlement. In a series of articles, I have criticized DeSouza for his excessive and, at times, dishonest claims for huge amounts of damages for fairly innocent infringements on the copyright in stock photographs of food and similar matters (for example here, here and here. This matter is a bit different — based on a review of the demand letter and its attachments, it appears Peralo was using celebrity photos whose typical licensing fees (and hence potential claims for actual and statutory damages) may properly run quite a bit higher. Even so, a demand for nearly $300,000 in settlement seems significantly over the top.
Peralo’s Excessive Reaction
Instead of responding to the demand letter with a sensible settlement, Peralo himself went way overboard. He called CopyCat Legal on the phone and started insulting the woman who responded to the call, including crude references to her sexual organs. He also posted a pair of TikTok videos chastising DeSouza, whom he repeatedly called “Scamming Dan,” proclaiming that fair use gives him every right to use photos in his comments on the news, and displaying several photographs of DeSouza and his staff, some doctored in unflattering ways. One of the videos made the sensational claim that DeSouza had “bragged that he scammed a doctor out of $203,000” in a copyright case that netted the photographer only a $10,000 jury verdict, and that DeSouza could not have worked as many hours as was needed to justify the fee because only a few days work was needed. Falsely putting such words in DeSouza’s mouth, by accusing him of having “bragged” about scamming, could easily be found to be a false statement of fact. Peralo also appears to have accused DeSouza of causing the photo in question to be placed online to sucker potential defendants into infringements for which they could then threaten and file infringement suits. Peralo urged his many online followers to shower the DeSouza firm with criticism; the result included a series of venomous comments and threats.
In a second vlog, Peralo repeated some of the same accusations against DeSouza. But he added the discussion of another case that DeSouza had handled, in which summary judgment was granted against a “Eclipse Sportswire” on standing grounds, because Eclipse did not have sufficient interest in the photos in question to sue on the copyright; attorney fees were then awarded against the plaintiff, both because DeSouza took unreasonable position’s on his client’s’ behalf, but also in part because of the outlandish amount of damages sought in the case (sound familiar?); the district judge expressly relied on the outlandish damages claim in adopting the magistrate judge’s recommendation on fees. DeSouza was alleged to have left his client to bear the full cost of those fees, and to have refused to pay a share of the attorney fees even though it could well be argued that the award was DeSouza’s fault. And, Peralo claimed, the client had then begged him not to discuss this case because DeSouza had allegedly threatened to sue for defamation. (I could not entirely verify what happened in this situation because Serio, the owner or Eclipse Sportwire, angrily refused to respond to my fact-checking, saying that what he told Peralo had been off the record).
DeSouza’s Excessive Lawsuit
In the end, Peralo achieved the objective of not being sued for infringing the copyright in 14 images; instead, DeSouza has sued Peralo personally (and in the name of the CopyCat Legal firm) claiming defamation, unfair trade practices, and “unauthorized publication of name or likeness.” In the original and then this amended complaint discussing the second video, DeSouza claims a large amount of damages, alleging that two existing clients cited Peralo’s criticisms in explaining why they had decided not to hire him for future matters. (DeSouza does not allege as actionable damages the decision of his client not to authorize him to sue on the 14 photos, which deprived DeSouza of the benefits of his standard cut of copyright damages he might have expected to obtain in such a case. DeSouza has not yet responded to my question whether he filed the libel suit only after learning that the client had decided not to hire him to sue for infringement.)
Peralo initially filed a conclusory motion to dismiss that has all the hallmarks of a pro se paper; after the court denied that motion and ordered Peralo to file an answer and to participate in a conference to draft a joint scheduling order, Peralo took no further action, prompting first a contempt sanction for violating the order to file an answer. DeSouza filed a motion for a default judgment, asking for an order deeming all of his factual averments to have been admitted as true, seeking judgment of liability and a hearing on the amount of damages, and praying for the entry of an injunction forbidding Peralo from ever again mentioning his name or his law firm’s name, or displaying any images of himself of his staff.
At that point, Peralo finally took steps to protect himself from the lawsuit, filing a motion seeking to lift the entry of default and a very detailed opposition to the default judgment motion — this document bore all the hallmarks of having been prepared by a lawyer, and indeed a footnote at the end indicated that an unnamed lawyer had been involved. Peralo also moved to have the court appoint a lawyer to represent him, pleading poverty. DeSouza reacted to these filings with fury, contending first that Peralo had bragged about the hundreds of thousands of dollars he had made from vlogging (and hence did not need to have counsel appointed). DeSouza also accused another Florida lawyer, Griffin Klema, of drafting Peralo’s pro se papers and acting unethically in a variety of ways (Klema is representing the defendants in a Seventh Circuit case seeking an award of attorney fees, in which I recently filed an amicus brief. Klema, in turn, has filed a motion to strike the brief containing these accusations, stoutly denying the veracity of DeSouza’s statements about him and asserting that DeSouza’s statements about him were knowingly false. (Because I have spoken to a different lawyer who acknowledged having provided written work that aided Peralo’s defense, I have to credit Klema’s denial that he drafted Peralo’s papers).
Assessment of These Papers
A total mess in this case, displaying ample bad judgment on the part of both Peralo and DeSouza.
First, Peralo has every right to criticize DeSouza, and in my view, there are many aspects of DeSouza’s copyright trolling practices that merit criticism. On the other hand, there are some isolated statements about DeSouza in Peralo’s vlogs that are likely to be treated as statements of fact and likely to be found to be false. One egregious point is the assertion that DeSouza “bragged about scamming a doctor out of 203,000”, including $193,000 in attorney fees for a few days work that only obtained the client $10,000 in damages. So, too, the accusation that DeSouza and his firm were engaged in placing photos onllne to bait possible infringement. I have seen that accusation made against Prepared Food Photos, but I doubt very much that Peralo had any basis for accusing DeSouza of involvement in that kind of deception. So DeSouza could well prevail on at least part of his defamation claim. And if DeSouza can show that he lost paying business because of Peralo’s false statements (as opposed to the true statements, or the statements of nonactionable opinion), his potential damages claim could be quite a bit higher than a 40% share of the possible recovery in a copyright lawsuit against Peralo. Moreover, if the case gets to a jury, the foul and abusive language in Peralo’s videos is not likely to play well.
On the other hand, many parts of DeSouza’s complaint are unlikely to succeed, and some are clearly foreclosed by controlling precedent – had they been filed in state court they would have been subject to dismissal under Florida’s anti-SLAPP law. First, much of what Peralo says in his vlogs is pure hyperbole and much is plainly opinion – ill-informed opinion to be sure, in many respects, but statements of opinion. Defamation claims can only succeed over false statements of fact. And a number of the statements in Peralo’s blog not only appear to be true, based on what I have been able to discover, and reflect poorly on DeSouza in ways that could easily discourage clients from hiring him. Thus the Streisand Effect could easily deprive DeSouza of much of the value that he apparently seeks to obtain via the defamation action.
Moreover, DeSouza has opened up several cans of worms, calling attention for example to the Eclipse Sportswire case cited above, in which a DeSouza client suffered a serious financial loss for which DeSouza refused to help pay. For DeSouza to amend his complaint to make an issue of Peralo’s discussion of that case, even if DeSouza is right that Peralo got some details wrong, strikes me as a boneheaded move. And the gist of Peralo’s account may well be accurate; it resembles something that happened in the Pool World case – when PFP owner Joel Albrizio realized how big an award of attorney fees might be issued against his company, he apparently asked DeSouza to help cover this expense, which DeSouza angrily refused to do. Albrizio appears to have patched up his relationship with DeSouza, who continues to represent Albrizio’s company, Rockefeller Photos, in abusive litigation that is highly profitable for both of them.
Similarly, the gratuitous attacks on Griffin Klema in one of DeSouza’s filings, unsupported by any affidavit or other evidence. which led Klema to file an affidavit and brief refuting the accusations, effectively parades these attorneys’ mutual hostility in public records in a federal court in which both of them have their offices. This briefing is unlikely to give local federal judges a favorable perspective on DeSouza.
Moreover, the non-defamation claims that DeSouza has added to the case, and the injunction he has asked the court to issue against Peralo, are flatly improper. DeSouza contends that Peralo’s display of various photos of DeSouza and his staff infringe his right under Florida law to control commercial uses of his name and likeness – the use of the names and likenesses are said to be commercial because Peralo makes money from his videos. But the Florida courts (in such cases as Tyne v. Time Warner Entm’t Co. and Loft v Fuller, and the US Court of Appeals for the Eleventh as in Valentine v. CBS, have refused to allow plaintiffs who are unhappy with the way they have been portrayed in communicative works to invoke the Florida name or likeness statute to suppress such negative portrayals. Rather, the statute forbids only “the unauthorized use of a name to directly promote the product or service of the publisher. Thus, the publication is harmful not simply because it is included in a publication that is sold for a profit, but rather because of the way it associates the individual’s name or his personality with something else.” Likewise, the decision of the U.S. Court of Appeals for the First Circuit in Universal Communications v. Lycos, limiting the reach of a related Florida statute. DeSouza also alleges that Peralo’s statements about him constitute a deceptive trade practice, but under Hustler Magazine v Falwell, the First Amendment does not allow a plaintiff to avoid meeting the necessary proofs for a defamation claim by restating it as a different state law claim. And the proposed default judgment that DeSouza has asked the judge to enter, forbidding Peralo to make any mention of DeSouza or his firm, or to show any image of DeSouza, regardless of whether the statements are true or false, would be an impermissible prior restraint under the ruling of the United States Supreme Court in Organization for a Better Austin v Keefe. Consequently, if Peralo eventually hires a lawyer to defend the libel case, which he ought to do because a substantial award of damages is possible if he defaults, he should be able to fend off a large part of the litigation.
It is an old saying that a lawyer who represents himself has a fool for a client. I have to wonder whether, had DeSouza been represented by an outside lawyer, that lawyer would have made the same litigation choices.
Dangerous misinformation in Peralo’s videos
Peralo repeatedly makes an unsupportable claim about his use of the photos against which DeSouza’s demand letter (but not his defamation lawsuit) was directed: he repeatedly asserts that his use of the photos cannot be the basis for a valid copyright claim because, he says, his videos are comments on the news and hence his use of the photos is fair. This is plainly wrong and it would be disappointing if Peralo’s thousands of online followers are encouraged to follow Peralo’s advice in this regard. The fact that a photo (or any other copyrighted work) is used in the course of new reporting is one consideration in assessing the defense of fair use, but it is not enough in itself – otherwise, news publications that do not employ their own photographers would be free to use any photo they wanted without paying a license fee. And that is plainly not the law.
From my own work in this area, it is apparent that many small business owners assume, without basis, that the use of photographs to illustrate their websites can be defended as fair use so long as it is on a part of the website that does not directly promote their products (for example, blogs about the subjects of their work). This incorrect belief is the reason why so many businesses get caught up in DeSouza’s reign of terror, not to speak of the efforts of many other copyright trolls. In my experience, many of the recipients of copyright infringement demand letters genuinely but wrongly believed, at the time they used photos, that fair use covered their use of copyrighted works simply because they were discussing situations of interest to their readers.
It appears from DeSouza’s papers in the libel case that Peralo’s vlogs have a broad reach, and that Peralo is proud of his broad influence. Peralo would be doing a great service to his followers if he would give them harsh news about the limitations of the fair use defense that he so blithely asserts in the two videos that are the subject of this mostly inflated defamation lawsuit.
Disclosure a Florida lawyer suggested that I make myself available to Peralo to talk about his possible defenses to the litigation. I was unwilling to risk forming an attorney-client relationship with Peralo. In addition, I credit DeSouza for his willingness to discuss the facts with me
