Orphan Works Update

Because of the concerns raised by the textile industry, the bill may not come out of the House Judiciary Committee before Congress recesses for the summer.

The Orphan Works Act will not leave the Judiciary Committee before fall. That’s the news from Ms. Corinne Kevorkian, Senior Vice President, General Counsel & Secretary of F. Schumacher & Co., one of our allies in the fight against the Orphan Works Act:

“On July 20, the Decorative Fabrics Association, the National Textile Association and the American Manufacturing Trade Action Coalition sent [a] letter in opposition of the Orphan Works Act to the leadership of the House Judiciary Committee.

“We have since heard from members of [Representatives] Coble and Inglis' staff that, because of the concerns raised by the textile industry, the bill is not coming out of the House Judiciary Committee before Congress recesses for the summer, which is good news.

“In the meantime, DFA and NTA continue to have discussions with staff members in Senators Specter's, Hatch and Leahy's offices in order to put the marker down in the Senate that this proposed legislation has serious problems. NTA and DFA will also try to schedule meetings with staff members of the full HJC [House Judiciary Committee].”

Textile companies joined this fight shortly after June 20th, when we met with greeting card companies and others at the Jacob Javits Center in Manhattan. It was they who brought this bill to the attention of the textile and manufacturing industries and all groups met by conference call on July 11th to discuss strategies for opposing HR5439.

Our congratulations to the textile manufacturers for getting the word out to these critical Congressmen. In their letter, the organizations said this:

“Unfortunately, HR5439 poses a significant new and unanticipated risk to the textile and home furnishing sector. Under the bill, commercial or non-commercial infringement of any visual art, past, present, and future, regardless of age, country of origin, published or unpublished, is permissible whenever the rights holder cannot be identified or located. Because the U.S. Copyright Office does not have a searchable database for visual designs (and no such searchable database otherwise exists) the rights holder of many creative designs will go unidentified — even in cases where the rights holder would have clearly sought to protect its legitimate rights or where such designs were previously or are currently exploited by the rights holder.”

This development points up the need to keep writing our Congressional representatives with clear and reasoned arguments for defeating or seriously amending the Orphan Works Act.

Our groups continue to work towards amending or killing this poorly conceived legislation.

— The Board of the Illustrator’s Partnership

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Blue Girl Revisited

The Blue Girl infringement letter we published Wednesday has really hit a chord with working artists. It seems everyone understands its implications. We’ve received only one critical response, but since it anticipates the criticism we expect from the bill’s advocates, we think it’s worth addressing:

Argument: The Blue Girl case is “a standard copyright infringement case.” Since the artist’s name was on the promotional piece, she only needed to show the postcard in court to prove her name had been taken off.

Answer: If that was so, why did the case cost her four years and tens of thousands of dollars in legal fees?

Argument: “Because it was willful infringement, this is not a true orphan works case.”

Answer: Of course it’s not. That’s precisely the point.

The facts of the infringement were not self-evident: Michiko might have been able to prove that someone had removed her name and information, but she could not have proved WHO did it. That took four years of discovery.

Under current law, this was an ipso facto infringement case. The only question was who removed the name. Since it was a reasonable bet that discovery would yield an answer, Michiko was able to get a contingency fee lawyer (i.e. the lawyer knew that someone besides the plaintiff would have to pay).

But under Orphan Works law, years of litigation might yield nothing more than that SOME PERSON OR PERSONS UNKNOWN removed the name. So unless the infringer had a sudden Perry Mason Moment (“I’m guilty. I took the name off. Fine me!”), any user would be entitled to the presumption of good faith (“there was no name on the picture when I found it”). This means no practical lawyer would be likely to take the case unless the plaintiff was rich enough to pay for years of litigation, regardless of the outcome.

The problem with this bill is not with how responsible users will avail themselves of true orphaned work — but how bad actors will abuse a law that emasculates the penalties for infringement, inviting - and rewarding - abuse. The existing remedies for infringement are the only effective mechanism the law gives us to protect our work.

— Brad Holland, for the Illustrators’ Partnership

Unwilling Orphan

The story of Michiko Stehrenberger and her “Blue Girl” art

We’ve asked for permission to share this letter because it demonstrates the kind of abuse which is going on now, but which the Orphan Works bill would legalize. Because this is a real-life example, not legal theory, we’ve asked several artists to fax copies of this letter to their own Congressional representatives. Nothing else we’ve read better exposes the danger lurking behind this proposed legislation. We’ve added the boldface.

July 12, 2006

Congressman Jim McDermott

1035 Longworth House Office Building
Washington, DC 20515

1809 7th Avenue, Suite 1212
Seattle, WA 98101-1399

RE: HR 5439
Via Facsimile

Dear Congressman McDermott,

As a constituent and small business owner, I am writing to express my opposition to the Orphan Works Act now before the House Judiciary Committee.

This bill concerns me deeply because for 15 years I have made my living licensing my work to major corporations and media outlets. I have taken great care to protect the value of my intellectual property and I am concerned that the provisions of this bill have been drafted so broadly that it will undermine those efforts and undermine the value of my work to my clients. For me, the issues at stake are not hypothetical; they are a matter of experience. I would like to offer a brief account of my own experience as a cautionary example of the damage this bill could do.

The Orphan Works Act would limit or remove penalties for infringement of works whose owners are said to be hard to find. The claim is that this will provide a safe harbor for responsible users of works whose creators have died or abandoned their copyrights, and the premise is that the law will be used by those acting in good faith.

I was the plaintiff in a recent copyright infringement case, however, and I can testify that the full remedies of the law were necessary for me to prove that the infringement, which involved the removal of my name from a registered work of art, was a willful act — one conducted in bad faith by a major corporation which would not, even when confronted, admit to their abuse of my property rights.

Because existing copyright law permitted me the ability to be awarded full damages, injunctive relief and legal fees, I was able to persuade a lawyer and the necessary expert witnesses to take my case on a contingency basis. After four years of perseverance, this finally allowed me to bring the case before a judge and achieve a resolution.

Under the Orphan Works Act, however, the infringer could have asserted a “good faith” orphan works defense and said, in effect: “Go ahead and sue me!” In that event, I would have had to risk upfront out-of-pocket legal fees and court costs in the hopes of establishing the infringer’s bad faith. I would also have had to weigh that risk against the fear that a successful “good faith” defense (whether merited or not) by the infringer would have limited my award to a paltry usage fee — far from enough to cover the nearly $100,000 that the suit would eventually cost me. And I would also have to risk it while knowing that there would be NO LIMIT to the amount of money the infringer could then extract from me in a counterclaim.

Here are the details: In 2000, my copyrighted image, Blue Girl, was infringed by the world’s second largest tobacco corporation. Although the infringer knew how to contact me beforehand, they instead chose to use my artwork without my knowledge or permission in a series of poster-sized cigarette advertisements that ran in 16 states and reached an estimated 8 million readers. They even branded my art with their logo right on a focal point of the image, changing my work into a cigarette endorsement.

My art is registered with the U.S. Copyright Office and bore my copyright line and contact information. I released it on a promotional postcard I had designed, which I later discovered they had used as the source scan for their infringement.

The date of the company’s action is relevant, because the tobacco companies had already been forbidden from targeting teens and kids through the use of cartoon characters in their advertising. The Master Settlement Agreement, negotiated with the states’ Attorneys General, went into full effect in June of 2000, yet just two months later, the tobacco company started using my cartoon character in their ads. By utilizing my art, the company sought to benefit from the strong appeal that my style and characters have among my core audience of teens and kids at a time when my client base consisted of youth-focused companies such as MTV, Playstation, Hasbro and Lego.

The blatant affiliation of my artwork with their tobacco products went very much against my wishes and intentions. I had already turned down a potentially lucrative offer from a competing cigarette company years earlier because I didn’t want to promote tobacco use. Additionally, this unwelcome use of my art had the potential to harm my professional reputation among the children’s book editors and publishers with whom I was developing professional relationships.

The intentional “orphaning” of my work was total. My original promotional postcard piece contained a copyright notice and website information precisely so that potential clients would know how to contact me. The art also contained a prominent hand-signature on the image itself. This means that all three forms of identifying information had to be deliberately removed in order for a user not to find me. In other words, far from being hard to identify or locate (the standard the Orphan Works Act would use to define an “orphan”), the point of my Blue Girl image was to encourage users to find me. Yet it took only one person to find my image and sell it to the tobacco company, and somewhere in those transactions my contact information was completely removed.

Under the Orphan Works Act, this unauthorized third-party infringement would have made my image an orphaned work. And even if I suspected that the removal of my contact information had been conducted in bad faith, how would I be able to prove it?

Thankfully, the current Copyright Act allows for the “discovery” process through depositions from the defendants' staff members as witnesses. In my case, this enabled us to use the defendants’ own testimonies, provided under oath (information which they refused to provide to us otherwise) to establish that the removals of my copyright line, web address, and signature were deliberate.

With proof of “willful infringement” we were able to settle out of court by reaching an agreement consistent with the range of statutory damages figures for willful (rather than “innocent”) infringements allowed under the law.

The current Copyright Act allows for these statutory damages to be determined by a jury. The figure can be as high as $150,000 per infringement, plus reimbursement of legal costs. This is not the amount of my settlement figure — a confidentiality agreement prohibits any disclosure of that amount — but the settlement was presumably sufficient to punish a willful infringer who had acted in bad faith, and we can hope that it will in some way be adeterrent against future infringements by the same company.

However, this kind of resolution would have been problematic if not impossible under the Orphan Works Act. Without the instrument of discovery, I could not have risked the cost of proving to a judge that this had been a bad faith infringement, even despite strong outside factors pointing to that conclusion. Without the full range of remedies available under current copyright law, I would not have been able to take the essential steps necessary to establish the specific details behind the company’s actions.

In my case, expert witness costs, depositions and court costs approached the $50,000 range alone, and substantial attorneys' fees had to be paid as well. Of course, it is easy to say that this was not a true orphan works case because the infringement was proven to have been conducted in bad faith — but the company’s bad faith was not self-evident to a court without discovery testimony, and it cost me nearly $100,000 in legal fees to prove that.

All this goes to show that the problem with permitting “good faith” infringements of “orphan work”: no unscrupulous infringer who gets caught will admit to having willfully removed an artist’s name and risk exposing themselves to penalties exceeding $150,000. Instead, they’ll claim the work they infringed had no name on it and assert an orphan works defense.

Nor is a small claims court, as proposed by the Copyright Office, a rational solution for this kind of abuse. If I had had to pursue my case in small claims court instead of Federal court, there would have been no discovery process, and therefore no way to ascertain the facts. A judge would have had to weigh conflicting stories and would have likely “split the difference.” My awards for damages would likely have been limited to smaller dollar amounts — in my county, the current small claims maximum limit is $4000 — and since that sum would be less than the prevailing market rate for a standard commissioned ad with a typical transfer of rights, what would the tobacco company have learned? That the deliberate “orphaning” of an artist’s work is a rational business decision! What would stop them from making it a standard practice?

All this would have the effect of devaluing my work, because its market value is determined by the licensing potential locked in by exclusive rights. For example, the infringed version of my artwork with my name and contact information removed is still floating around out there for others to find and use. Under current law, these new infringements would also be actionable, which means the current law acts as a barrier to further abuse. But under the Orphan Works Act, no subsequent infringers would be exposed to liability, the barrier to abuse would disappear, and I could no longer avail myself of the full licensing potential ebbing from my work. That first act of intentional infringement would have made my image, in many quarters, a true “orphan”— unless, of course, a user’s “reasonable search” had led them to the tobacco company, and the company had charged them a licensing fee for the use of “their” Blue Girl image. This is just one of the possible bad scenarios I can imagine arising from the passage of this bill.

Aside from the confusion and crisis over the source of authorship of newer non-abandoned works, this would harm the lifetime value of these works as well. Illustrators, graphic designers, authors, painters, character designers, product designers, concept licensors, and other creators (not to mention their agents and business clients and others along the licensing chain) all make their living from the authorized repeat usages of this work. The Orphan Works Act will potentially harm all of these small businesses by wiping out the protections for the ownership of the core properties upon which these businesses are based.

In my own business of illustration and character design, the value of an image increases as the image gains in popularity. This can make third and fourth uses of an image more valuable than the primary usage fee, and this allows me to keep control of its licensing potential. This acts as both an incentive and a reward for artists to successfully develop an image or icon based on their own knowledge and instincts regarding trends, marketing, and other cultural factors.

In other instances, the opposite principle applies: a client will purchase exclusive first-rights to a particular image for a substantially higher fee. In exchange, the client receives increased control of how they can display that image to the public. This higher fee guarantees them exclusivity — an exclusivity that I will no longer be able to guarantee my clients under orphan works legislation. In one swoop, this bill could potentially devalue all the artwork I have so far created and hope to create in the future.

The authors of the Orphan Works Act have drafted their “limitation on remedies” because they say infringers need “certainty” that their actions won’t expose them to great financial loss. But except for the current penalties for infringement, what other mechanism does the law provide to prevent abuse? “Certainty” is not something any of us have in the commercial marketplace, so why should infringers uniquely be entitled to it?

This bill would make it cost-prohibitive for creators to pursue infringers, even when we expect (as I did in my case) that their actions were deliberate. No creator could afford to challenge a major infringing corporation on an issue of copyright without hope that the ordeal of litigation would be rewarded with justice. If an infringer has to pay only after they get caught and if there are no additional penalties imposed for doing so, and if creators are forced to lose money in order to protect their intellectual property, then this creates a massive problem and an injustice against those who strive to innovate new and original work in our marketplace.

Because this is my livelihood, and I am the exclusive controller of the usage of my work (including what sorts of products, services, events and clientele my imagery endorses to the audiences and fan bases of people who follow the progress my work) I do feel it is my responsibility and right to have reasonable control of the integrity of any affiliations with my work, especially since the current Copyright Act has already established this as appropriate.

It takes an infinite number of transactions to make the clockwork of the marketplace work, and I believe that any government should be very careful before passing laws that would interfere with such essential free market relationships. I’m grateful for the fact that the existing copyright law has protected my work, but I’m alarmed that Congress might now consider stripping away the existing protections.

Thank you for taking the time to read this letter. As a woman who has worked for 15 years as a freelance creator, my professional experience has shown me that our current copyright protections are essential, and should not be sacrificed.

Please vote against the upcoming Orphan Works bill so that we can keep these vital protections in place and continue to provide incentives to innovation in our marketplace, without exposing small business owners to such overwhelming legal and financial risks. Thank you!

Sincerely,

Michiko Stehrenberger
Seattle, Washington

© 2006, Michiko Stehrenberger. All rights reserved. Author grants permission expressly for the use of the Illustrators' Partnership of America. The Blue Girl image and its infringement can be viewed at: http://www.michiko.com/illustratorspartnership/bluegirl

This may be posted or forwarded in its entirety to any interested party.

Orphan Works Update

“Sponsors are likely to plow ahead full steam”

We’ve been advised that the sponsors of the Orphan Works bill “are likely to plow ahead full-steam.” They’re expected to “try to get the bill up to a House vote as soon as possible, maybe even this week or next,” before our opposition can affect the outcome. In short, we were told “it is paramount that the opposition scale up quickly.”

To write your Congressional representative, enter your zip code into http://www.house.gov/writerep/
Remember to note in your first paragraph that you are a.) a constituent; b.) a small business owner; c.) opposed to the Orphan Works Act.

To write members of the House Judiciary Committee, go to the IPA Orphan Works Resource Page and follow the instructions there: http://www.illustratorspartnership.org/01_topics/article.php?searchterm=00175

This may be posted or forwarded in its entirety to any interested party.

Orphan Works Advocates

Here's a reminder that your letters opposing the Orphan Works Act of 2006 are important. Congress is hearing from many advocates who support the bill and are determined to push it through. Here's a sampling:

Human Advocacy Network
http://capwiz.com/humanitiesadvocacy/issues/alert/?alertid=8870326
Public Knowledge
http://www.publicknowledge.org/node/487/act
Indy Filmmakers Go to Washington
http://www.publicknowledge.org/node/439
The Association of American Universities hires Ropes & Gray to lobby on “orphan works” legislation
http://www.thehill.com/thehill/export/TheHill/Business/062706_bottomline.html

For additional information about Orphan Works developments, go to the IPA Orphan Works Resource Page for Artists
http://www.illustratorspartnership.org/01_topics/article.php?searchterm=00185

This may be posted or forwarded in its entirety to any interested party.

Key Congressional Districts

We’ve been advised of three more Congressional districts that merit special attention in opposing the Orphan Works Act. Would all artists in the following area codes: (262), (513), and (630) please email your representatives:

Representative James Sensenbrenner ( R-WI 5th) Fax (262) 784-9437 (Chairman of the House Committee on the Judiciary)

Representative John A. Boehner (R-OH 8th) Fax (513) 779-5315 Fax in DC (202) 225-0704

Representative J. Dennis Hastert (R-IL 14th) Fax (630) 406-1808 (House Majority Leader) Fax in DC (202) 225-0697

When you write, remember to note in your first paragraph that you are a.) a constituent; b.) a small business owner; c.) opposed to the Orphan Works Act. Give a brief account of your professional status. You can verify that this is your representative by entering your zip code into http://www.house.gov/writerep/

We’d also like several artists from these area codes to contact us for an additional mailing to these congressmen. To volunteer, just tell us you’re willing to help, hit “Reply” and for reference, please note your area code. We’ll e-mail you individually to explain how you can help.

Thanks.
The Board of the Illustrators’ Partnership

This may be posted or forwarded in its entirety to any interested party.

Tech Law Journal Analysis of H.R. 5439, The Orphan Works Act of 2006

by David Carney, Publisher and Author of Tech Law Journal

David Carney is author and publisher of the respected Tech Law Journal. These excerpts are from his analysis of the Orphan Works Act. We quote from it with permission. The emphasis (in bold) is ours.

The [Orphan Works] bill is supported by representatives of libraries, museums, and universities. It is also supported by the trade groups that represent the major copyright industries, including the music, movie, book, and software industries. All would be net beneficiaries of the bill. While the bill would weaken the protection afforded to creators, it would primarily harm individuals and very small businesses. Representatives of those who create works in photography, illustration, and the visual arts have adamantly opposed the Copyright Office's proposal.

The Copyright Act now contains no requirement that a creator register a work for the copyright to exist. The Berne Convention, to which the U.S. is a party, prohibits the imposition of such formalities.This bill does not expressly require registration, or other formalities. However, the [bill’s] language, especially the reference to registration, is in the nature of a reinstitution of formalities.

Limitations on Remedies. The bill would substantially limit the copyright holder's ability to recover financially, or obtain injunctive relief, for infringement. The bill provides that “an award for monetary relief (including actual damages, statutory damages, costs, and attorney’s fees) may not be made, other than an order requiring the infringer to pay reasonable compensation for the use of the infringed work.” (Parentheses in original.) The bill does not define the term “reasonable compensation”.

[T]he bill provides for the recovery of no monetary relief where the infringement was “without any purpose of direct or indirect commercial advantage and primarily for a charitable, religious, scholarly, or educational purpose”. The bill also provides that the “owner of the infringed copyright has the burden of establishing the amount on which a reasonable willing buyer and a reasonable willing seller in the positions of the owner and the infringer would have agreed with respect to the infringing use of the work immediately before the infringement began.” Satisfying this burden would likely require copyright owners to retain expert witnesses to perform analyses, write reports, and testify in depositions and trial. The cost of this would not be recoverable, but in many cases would likely exceed “reasonable compensation”.

The bill also limits the owner's right to exclude. It provides that “the court may impose injunctive relief to prevent or restrain the infringing use, except that, if the infringer has met the requirements of subsection (a), the relief shall, to the extent practicable, account for any harm that the relief would cause the infringer due to its reliance on having performed a reasonably diligent search under subsection (a).”Subsection (a) of Section 514 is the language stating when an infringer qualifies for the limitations on remedies.

The bill also imposes an almost complete ban on injunctive relief where the infringer “recasts, transforms, adapts, or integrates the infringed work with the infringer's original expression in a new work of authorship”. The bill provides that in these situations, “the court may not, in granting injunctive relief, restrain the infringer's continued preparation or use of that new work, if the infringer . . . pays reasonable compensation . . . ” The bill would limit remedies in actions for infringement.

[T]here are asymmetries in the limitations on remedies. The bill would preclude the recovery of attorneys fees by the plaintiff in an action for infringement where the court accords Section 514 status to the defendant. However, nothing in the bill limits the attorneys fees recoverable by the defendant in such an action who successfully asserts counterclaims. Also, while the bill limits the plaintiff in such an action to “reasonable compensation”, there is no parallel limitation of the recovery of damages by the defendant for counterclaims.

Retroactive Application...The bill would extend to any works, not just those created after June 1, 2008...Since 1978 many creators have relied upon the Copyright Act of 1978, and employed business practices based upon the protections of the 1978 Act. Now, Rep. Smith proposes legislation that would have the effect of depriving certain creators of the ability to enforce their copyrights because they did not take steps that the Copyright Act of 1978 did not require them to take.

Title of the Bill is Not Descriptive . . . [N]either the Copyright Act, regulations, nor this bill define the term “orphans”. Under this bill, a single copyrighted work could be accorded orphan status in one legal proceeding, but not accorded orphan status in another. Moreover, while the use of the word “orphan” in this bill is a metaphor that suggests the death of parents, or metaphorically, of authors, the bill would result in Section 514 status being extended by courts to works that were infringed immediately upon creation, where the author is alive, in business, and licensing the work. In particular, there is no minimum age for a work to be accorded Section 514 status.

— David Carney, from the Tech Law Journal
For the full text of the analysis please see
http://www.techlawjournal.com/topstories/2006/20060522.asp

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