New trolls on the block: Prepared Food Photos and Daniel DeSouza / CopyCat Legal

AdLife Marketing and Communications, a company specializing in photographs of food for use in grocery story advertisements, has a sorry history of abusive copyright infringement claims. In 2021, it moved from Rhode Island to Florida, changed its name to Prepared Food Photos, and began to be represented by Florida lawyer Daniel DeSouza, through a firm called CopyCat Legal.

DeSouza is following the same cynical playbook as what I saw from the Higbee firm, but even more aggressively, and more offensively. I recently had occasion to tangle with DeSouza when he sent a blistering demand letter to an Asheville North Carolina acupuncturist. We responded with a lengthy refutation of the demand, also strongly worded, and DeSouza has withdrawn his client’s demand. But there are lessons to be learned from our exchange.

The Origins of Prepared Food Photos: AdLife’s Copyright Infringement Enforcement Scheme
I wrote about AdLife a couple of years ago after seeing several demand letters sent on its behalf. The wrinkle on copyright trolling for AdLife is that, after many years of making its photographs of food available through various stock service for very low fees, AdLife canceled its contracts with those services and began limiting its business to customers who were ready to pay a monthly subscription fee, currently pegged at $999 per month, for access to all of the photographs in AdLife’s database of photos. Although I do not have the exact date when AdLife made this change, the information I have from one of the stock companies with which AdLife previously contracted is that this change appears to have happened about the same time as when AdLife registered its copyrights in the photos, a step that it would need to take to start filing lawsuits and issuing demand letters.

This change would have considerably limited AdLife’s customer base to large supermarket chains who need many food photos for their advertising circulars. But this change may also have been intended to provide the basis for an extremely aggressive infringement enforcement campaign: Even when a target has used only one photograph, AdLife has argued that actual damages and statutory damages alike have to be based, not on the few dollars that might have been paid for a license to use one food photo but the $999 monthly fee which AdLife supposedly lost when the target did not pay for licensing.  Over the course of the three-year limitations period for copyright infringement actions, that would add up to nearly $36,000. (DeSouza counsel refused to respond to my question about how much revenue his client earns from infringement claims as compared to actual subscriptions.)

When the Higbee firm was sending the demand letters, the settlement demand was $4525 or $2525 (it’s not clear to me why one figure was used on some demands and the other on other demands). That sounds like an amazing bargain compared to $36,000.   I have had contact with a number of the targets of those demand letters who paid settlement amounts because they could not afford to resist, even though they thought they had used the photos with permission, or because their insurance company preferred to pay four figure settlement to avoid the risk and expense of litigation.

Daniel DeSouza Ups the Ante – but Relies on Misleading Assertions

But DeSouza’s demand letter seeks a much higher payment: $30,000 must be paid within 21 days or DeSouza will file suit. (See the bright red language on page 4 of the demand letter).  His demand letter claims over and over, supported by legal citations, that the case law would support much higher damages award, not only $36,000 but multiplied by a factor of three to five. Again, the idea is to make a $30,000 starting point for negotiations sound eminently reasonable. Single-photo users are likely not to have a lawyer and not to find a seasoned copyright litigator to consult.  When received by a non-lawyer, or when viewed by a local practitioner with no background in copyright law, it is an intimidating demand letter.   And no doubt that impact is intended.

But his demand letter is full of misleading statements and omissions.

For example, the letter repeatedly accuses the recipient of “unauthorized use,” contending that “[t]o our knowledge, our client did not authorize you to use or display the foregoing photograph” (emphasis in the original). The clear implication here is that DeSouza has a record of previous licenses and licensees, and the target of the letter is not one of them.  So, the letter repeatedly puts the burden on the target to provide evidence of its permission to use the photo. But, in fact, what I have learned is that, throughout the many years in which it was allowing its photos to be licensed through stock services, AdLife did not collect any information about who was licensing its work. So, as a practical matter, Prepared Foods Photos never has knowledge of whether or not a use was authorized through a stock service.

Moreover, at least a large portion of the photographs in the Prepared Food Photos catalogue were taken in 2001, but the copyright in these photos was not registered until 2016. As a result, Prepared Foods cannot claim either statutory damages or attorney fees if the allegedly infringing use began before the copyright was registered— but its demands are often sent to old users. When I first considered DeSouza’s demand letter to the Asheville acupuncturist, considering the fact that the acupuncturist’s use had begun more than a dozen years before, I just assumed that DeSouza had not bothered to check the Wayback Machine at archive.org. But as I have continued my investigation, I discovered that, in seeking default judgments above $30,000, DeSouza repeatedly represents that he uses the Wayback Machine to try to ascertain when an alleged infringer began infringing. So why does he send threats to obtain statutory damages and attorney fees to people whose use began before the date of registration?  Is DeSouza engaging in deliberate deception or willful blindness when he sends these threats to longtime users of a single photo?

Even though courts generally say that actual damages are to be calculated based on what a “reasonable buyer” would have paid for the “actual use” made by the infringer, demand letters sent to targets who have allegedly infringed the copyright in a single stock photo are based on the fantasy that a reasonable buyer seeking to use that one photo would have paid a $999 per month subscription fee for the entire period of months during which the infringement continued (up to three years, the statute of limitations for copyright claims). If that were really the law, and if that amount could be multiplied by a factor of three to five, that makes the demanded $30,000 settlement sound like a bargain.

But it isn’t.

In fact, so far as I have been able to determine, Prepared Food Photos has never succeeded in contested litigation on the damages theory articulated in its demand letter. DeSouza’s demand letter cites two decisions from 2022 in which he obtained high levels of damages against users who infringed only a single one of his client’s food photographs, but as I noted in response to his demand letters, both of them were default judgments. When I challenged DeSouza on this point, he told me that there were six cases in which the company had won damages on the theory set forth in his demand letters. But he admitted that they were all default judgments. (He did not respond to my request that he identify the other four so that I could read the ex parte briefing he submitted in support of each.)

Nor does it seem at all likely that his theory could succeed in litigation. After all, a reasonable buyer who wanted to use only one Prepared Food Photos image, confronted with a demand for payment of $999 per month, would not take that deal – it would go find a food photograph that was available at a reasonable price. After all, Prepared Food Photos, nice as they may be, are not sui generis. There are equally nice for photos on a variety of stock photo sites, available for chump change, comparable to what the Asheville acupuncturist would have paid.  And Prepared Food Photos has decided, for whatever reason, not to serve the market of users seeking only one or two food photos.

And although Prepared Food Photos has never won that issue in a contested case, it lost on that theory in a different case in which AdLife, represented by Richard Liebowitz, sought a default judgment of $30,000 against Buckingham Brothers, a small food market that used a single photo of pork.

The judge in that case took it upon himself to second-guess AdLife’s ex parte briefing. The court not only refused to award that amount but imposed sanctions for the default judgment motion, holding that it would be improper to award anything approaching $30,000 in damages for the infringement of a single stock photo. 2020 WL 4795287, at *7 (N.D.N.Y. Aug. 18, 2020). There were, to be sure, other circumstances in the Buckingham Brothers case supporting the sanctions against Liebowitz. But the court’s rejection of $30,000 damages award for a single stock photo was a significant aspect of the ruling.

It is unfortunate that judges in other cases have not shown the same due diligence as the judge in the Buckingham Brothers case. But it is also unfortunate that DeSouza, in his default judgment motions in the two 2022 cases, did not call the Buckingham Brothers decision to the attention of the judges from whom he was seeking these high awards. That poses a possible ethical issue because, when a lawyer is pursuing a remedy ex parte, many courts hold that he must call contrary authority to the court’s attention even if it is not controlling.

The important lesson, both to judges and to the targets of DeSouza’s bullying letters: do not take what he says at face value.

UPDATE:

Discovery in litigation against Prepared Food Photos revealed serious questions about the veracity of its claims about its supposed uniform, $999 per month subscription model.  Targets of its demand letters, and defendants which it sues for copyright infringement, should seriously consider raising these issues with the courts.