Earlier this year, I confronted Daniel DeSouza over his law firm’s demand for a “settlement” of $30,000 based on the claim that Asheville acupuncturist James Whittle had infringed the copyright of Prepared Food Photos by posting a colorful image of fruits and vegetables taken by its corporate predecessor Adlife Marketing and Communications. My response explained the many flaws in his purported claims against Whittle, including the preposterous theory of damages, and DeSouza promptly dropped his demand.
But his law firm, CopyCat Legal, continues to use an almost identical demand letter, repeating the same phony claims, with only two changes – the photos and the targets change with each letter, and he is letting a subordinate lawyer in the firm, Lauren Hausman, take the fall for the overstated demands. Regrettably, my public rebuttal of this posturing has not deterred CopyCat Legal from using the same methods to try to gain unjustified profits from other individuals and small businesses on whose web sites CopyCat’s image search technology can find its clients old photos.
But some of his targets (or their local lawyers) have found the blog post, entitled New Trolls on the Block, which does appear to have emboldened some resistance to Prepared Food’s excessive demands. We have recently been contacted by various farmers who used stock photographs of the sort of meat that they had for sale in local markets. As in the Whittle situation, the use of a photo that could easily be obtained for a license fee of a few dollars is said to merit a demand for a settlement of $30,000, based on the contention that Prepared Food only sells $999 per month subscriptions to its entire database, with a one-year minimum prescription period, so that damages for the three-year limitations period would be $36,000. But as I explained in the Whittle situation, courts routinely say that infringement damages for lost license fees must be based, not what on the copyright owner charges, but on what a reasonable buyer would pay a reasonable seller for the one infringed work. And no reasonable buyer, confronted with a demand for $11,988 for a single stock photo, would pay that price; it would just go looking for similar stock photos available on some other site. And although Prepared Food’s standard demand letter recites that courts have endorsed its damages theory, the cases cited in its letter were default judgments where there were no arguments on the other side, and Daniel DeSouza admitted to me that he has never won damages on that theory in a contested case. I asked him recently whether he has won damages in a contested case since then, and he refused to answer that question. I take that as an implicit admission that he has still not won a contested case on that issue.
Demands to Farmers Who Used a Single Generic Meat Photo
The farmers from whom we have heard recently are in a somewhat different posture from Whittle, whose alleged infringement began in 2013, long before AdLife Marketing registered its copyrights in 2016, pulled its photos from stock sites, and shifted to the current enforcement strategy. The farmers from whom we have heard posted a single photo more recently, advertising a cut of meat that was then available for sale. As in the Whittle situation, stock photos of this sort were widely available on stock sites for license for barely ten dollars are more, but the farmers from whom we have heard posted photos more recently, after the copyright was registered. Consequently, Prepared Food Photos has a potential claim for statutory damages—so the part of its standard demand letter threatening to seek such damages is not a lie. It has a potential claim for statutory damages. Hence, such farmers are exposed to a statutory damages award, of $750 or greater
But would it be any greater? If we are right that the proper calculus of actual damages places the market value of the lost license fee at less than $15 dollars, then even using the common approach of multiplying the approximate actual damages by a factor of two to five, to create deterrence to mindless infringement, the calculation produces a figure well below $100. So Debbie Lingerfelt, whose family farm raises animals in rural Virginia and sells meat at local markets, and posted a photo of a brisket in December 2022, offered to pay CopyCat Legal $750 – the minimum statutory damages amount But that wasn’t enough to satisfy Prepared Food’s greed; it counteroffered to settle its claim for $23,000, offering the explanation that this was still an excellent deal considering that it is less than two times the cost of a two-year license. (The fact that the photo was posted in December 2022 and immediately removed in response to a March 2023 demand letter appears not to have been considered in CopyCat’s contention that the cost of a two-year license was an appropriate measure of damages). In a series of emails, a paralegal from CopyCat told her that the offer was not nearly enough to settle the case; and even though Lingerfelt had referred to fact that she had an attorney, the paralegal continued to try to “negotiate” a settlement price with her directly (an ethical no-no), telling her that at most Prepared Foods would come down to $23,000.
At that point, she sent Copycat Legal a check for $750 and bluntly refused to pay more. The paralegal responded that the check was not enough. I then stepped in directly, calling CopyCat on its ethical violation and explaining, in detail, that $750 was the most Prepared Food Photos could reasonably expect to win, and that the only way it could get more would be to sue Lingerfelt in the Eastern District of Virginia. CopyCat Legal promptly responded that it would accept the $750 payment so long as Lingerfelt was willing to sign an agreement reflecting a $750 settlement amount (and oddly suggesting that this amount was to be paid in the future), promising not to tell anyone how little Prepared Food was willing to accept to avoid having to sue for its money, and agreeing to be sued in Florida in the future.
Lingerfelt has rejected these demands; indeed, she sees no need for any settlement agreement. After all, Prepared Food has the check, and all it has to do is cash it. Prepared Food apparently insists on having a settlement agreement, so we are waiting to see whether it files suit. (Interestingly, when our client Curt Archambault sent a $750 check to Adlife Marketing after the Higbee firm threatened to sue him for using an image of a turkey dinner in seeking donations for his church’s Thanksgiving food drive for the homeless, Adlife did not sue him but it also never deposited the check. Perhaps it prefers getting nothing to accepting a low damages payment that might be seen as setting a bad precedent).
What is Prepared Food Photos’ Real Business?
As I have thought about this situation, and considering the number of lawsuits that Prepared Food Photos has filed over the past several years, securing default judgments in the mid-five figures, and not having to confront a single adversary litigant on its way to securing payments, I began to wonder whether Prepared Food is really in the business of licensing the use of copyrighted photographs. Or is its only the business suing for copyright infringement? CopyCat’s response to my questions leads me to believe that its real business is suing, not licensing.
After all, in assessing the market value of the lost license fee, the standard question would be, what has been the price paid for licenses for this photo in the past? When, at my suggestion, the targets of the Higbee firm ask this question, they often get a response with examples; many of the examples prove to be inapposite, but the Higbee firm recognizes that this is a legitimate question.
But when I asked Daniel DeSouza, how many year-or-longer subscriptions Prepared Food Photo has, and what fraction of its income comes from the sale of licenses and what fraction from litigation and demand letters, he initially ignored the questions, until I gave him a deadline, at which point he said he was unwilling to be “deposed” on that issue. That response really tells me the answer – and I think it likely means that CopyCat is not going to file suit against Lingerfelt after being paid $750, because it knows those issues will be part of the discovery on the issue of the lost license fee,
Prepared Food Photos v. Arcadia Academy – Where the Damages Issue May be Joined
But that discovery could well ensue in a case now pending in the Eastern District of Missouri, where CopyCat is representing Prepared Food Photos against Arcadia Academy, a bed and breakfast and event space provider in southeast Missouri which, in 2013, placed a photograph of a paper tray of fried chicken on one its Facebook page. Nine years later, it received the standard demand letter from CopyCat Legal, to which it responded, without counsel, by taking down the photo and offering a small $500 payment to avoid having to incur the cost of getting advice from copyright counsel. In a series of emails, CopyCat’s paralegal rejected this demand and asserted that the $500 offer was not “made in good faith.” Having not received what it regarded as an acceptable offer, CopyCat filed suit, no doubt expecting to collect another default judgment. But Arcadia responded by hiring counsel who has moved to dismiss on statute of limitations grounds, contending that the continuous presence of the photo on Arcadia’s Facebook page did not present a new incident of infringement every day the photo remained up. CopyCat responded by invoking the discovery rule, saying that because it did not locate the infringement until August 2022, its suit filed in February 2023 was timely. The papers on the motion to dismiss can be found here.
If the Prepared Foods lawsuit survives this motion to dismiss, the case will get into discovery. Because the allegedly infringing use began well before the copyright was registered, the only damages issue in the case will be actual damages, and Arcadia will be able to compel Prepared Food Photos to answer the questions on which Daniel DeSouza told me he is unwilling to be deposed. I expect that Arcadia may also want to explore the question of why AdLife decided to stop licensing individual photos and offer licenses only to its entire database, at the same time that it was registering its copyright in all of its past photos. The only reason for registering would have been to enable the filing of infringement lawsuits. Was its whole objective in registering, as well as in switching to a monthly license to the entire database, to enable claims for huge damages in litigation, making it unnecessary to sell licenses at all? The methods used to identify potential targets for litigation will also be fair game for discovery, going to the reasonability of its failure to find the alleged infringement earlier.
At this moment, it appears that Prepared Food Photos is likely to survive the motion to dismiss, because, I am told, at the initial scheduling conference the judge observed that although the statute of limitations defense appeared strong on its face, it might be better decided on summary judgment. And if this case proceeds to summary judgment, and Prepared Food loses on the statute of limitations issue, that dismissal would be with prejudice, and Arcadia will be in a position to move for an award of attorney fees. The very unreasonableness of Prepared Food Photos’ settlement posture, demanding a payment of $30,000 from a small local business for alleged infringement of a single stock photograph, when the business had expressed concern about the potential expense of hiring a copyright lawyer to defend against litigation, might well be a factor making making its position sufficiently unreasonable to warrant an award of attorney fees under the Kirtsaeng factors, as was decided in Bell v Oakland Community Pools, the case cited in my letter to CopyCat Legal about Lingerfelt. Given Prepared Food’s history of hiring well-known copyright trolls to pursue large numbers of infringement claims seeking exaggerated damages – first Richard Liebowitz, then Mathew Higbee, and now CopyCat Legal— an award of fees might be just the only way to deter this company from making outrageous demands.
The judge’s remark at the Arcadia scheduling conference that the statute of limitations issue would be a summary judgment issue rather than a motion to dismiss issue was also my initial reaction to the motion to dismiss. But there is actually a reasonable argument, not yet made to the Court, that the motion to dismiss should be granted on the face of the complaint. In several cases over the past few years, judges have dismissed on statute of limitations grounds lawsuits brought by what they euphemistically called “seasoned litigators” who relied on the discovery rule to justify suing over infringements that had occurred many years before. Minden Pictures v. Complex Media, 2023 WL 2648027, at *3 (S.D.N.Y. Mar. 27, 2023) (plaintiff had filed 100 infringement suits); Minden Pictures v. Buzzfeed, Inc., 390 F. Supp. 3d 461 (S.D.N.Y. 2019) (plaintiff had filed forty infringement suits); Lixenberg v. Complex Media, 2023 WL 144663, (S.D.N.Y. Jan. 10, 2023) (plaintiff had filed nearly twenty such lawsuits). In Minden, the court noted that the plaintiff “uses sophisticated methods to detect infringing images, . . . enlisting technology companies that crawl the internet to identify infringing uses. . . . Given that Plaintiff’s business is designed to protect and enforce the copyrighted works that it licenses, and employs intricate means of doing so, it is not plausible that Plaintiff, in exercising reasonable diligence, would not have discovered the alleged infringing use here until nearly ten years after the infringement occurred.” This language could have been written with Prepared Food Photos v. Arcadia Academy in mind.
In each of the cases, the complaint was dismissed on its face, not at the summary judgment stage; so, too, in the Missouri case, the trial court could easily rule that, given its litigation history, the plaintiff has not plausibly alleged that it could not reasonably have discovered the infringement before February 13, 2020.
So, after all, the Arcadia Academy litigation might not produce the discovery that eviscerates CopyCat Legal’s excessive damage demands. Only continued resistance by informed targets, or trial judges who take seriously the obligation to protect absent defaulters against spurious damages claims, can do that.