My Analysis of Corbis vs. Nick Starr Case Outcome

[Matthew Chan]

I have to thank Photo Attorney for this one. Their website is one that just keeps giving. I just love taking a stated benefit used by the opposition, reversing that benefit, and throwing it back in the face.

Well, get ready for a cream-pie-in-their-face session. It's a little long but you guys will love this. If you don't want to read all this, jump to the very last few paragraphs. It is all you need to know to understand why this case is such a big deal.

Carolyn E. Wright's small mention in Point 1 of this post http://www.photoattorney.com/?p=3866 states:

For example, in Corbis Corp. v. Nick Starr, the court awarded the plaintiff more than $100,000 for the copyright infringement and attorneys’ fees. In that case, a small local business hired a web designer to build the business’ website. Because the web designer used Corbis’ photos without a license, the Court held that both the web designer and the business owner were jointly liable for the infringement.

I thought to myself, "Why have I not heard of this Corbis lawsuit before if it was such a huge win for the stock photo companies?"

If it was such a big deal, I am guessing that every copyright extortion attorney in the U.S. would have used this case and clubbed it over every extortion letter recipient. Well, it turns out things are not what they seem.

Carolyn E. Wright is technically correct but she is not telling the full story. The details is what pretty much destroys this "winning case".

First off, you guys need to read the 3 critical case rulings relating to the Corbis vs. Nick Starr case. You need to also read these in chronological order to fully understand my analysis.

September 2, 2009
http://scholar.google.com/scholar_case?case=9868916324876924961&q=corbis+vs.+starr&hl=en&as_sdt=80003

June 25, 2010
http://scholar.google.com/scholar_case?case=305916010928355284&q=corbis+vs.+starr&hl=en&as_sdt=80003

September 3, 2010
http://scholar.google.com/scholar_case?case=12341933908994271521&q=corbis+vs.+starr&hl=en&as_sdt=80003


In the September 2, 2009 ruling, the judge did find the web developer to be "directly liable for copyright infringement as a matter of law". In the past, we have said that the web developer has no liability by virtue of the fact that the website is owned by the domain owner. The thought was that domain owner owns the website and that they bear the ultimately responsibility.  But it appears this line of thinking is no longer true especially in those cases where the client entirely relies upon the web developer for producing the website content. (I have not yet conferred with Oscar Michelen on this but I at this moment, I am changing my previous position.)  Web developers who entirely create, develop, and manage websites for technically unsophisticated clients appear to have some degree of responsibility and liability for alleged infringements. Web developers can try to "run away" but the client is potentially able to drag them back into the conflict.

The clients who hired the web developed was found to be "vicariously liable for" the web developer's "copyright infringement as a matter of law". The judge felt that the client had the right and ability to stop the copyright infringement but failed to do so.  The client also had a financial interest in the images.

Corbis obviously felt the infringement was willful and said the images had a digital watermark which the defendants removed. However, the court felt they didn't prove that point and there was no way of telling where the image originally came from. Because of this uncertainty, the court could not find "they acted willfully as a matter of law."

Corbis accused the defendants for not confirming "the legal propriety of the pictures, they acted with reckless disregard of the Copyright Act." The court disagreed because it is only "one relevant factor in assessing willfulness." The reason why had to disagree with that point was the fact that "nearly all instances of copyright infringement would be willful, even the most ignorant and innocent."

At the conclusion of this ruling, the issue of the web developer's direct infringement, the client's vicarious infringement, and both defendants' joint and several liability.

The issue of attorney's fees would be continued later.


In the June 25, 2010 ruling, the issue at hand was determining costs and attorneys' fees.  The court pointed out that at THEIR DISCRETION "allow the recover of full costs by or against any party" and that they "may also award a REASONABLE attorney's fee to the prevailing party as party of the costs."

The court pointed out that the key requirement for an award of attorneys fees is that the documentation be of sufficient detail in support of hours charged and the value associated with those hours. There also has to be a high degree of certainty that the hours reported were actually and reasonably expended. That means that the winning attorney cannot just arbitrarily make up hours, values, and frivolous tasks.  All of these items would be reviewed by the court.

The court also pointed out that items lumped into billing on a daily basis vs. an hourly or other more detailed basis makes it impossible to determine the amount of time and reasonableness of each task.

The court found that the Corbis attorneys invoices to be inadequate and provided little detail. The court ordered the Corbis attorneys to provide invoices that listed the attorney, a description of the work, and the time spent on the work.


In the September 3, 20102 ruling, Corbis sought an award of costs and attorneys' fees in the amount of $237,569.70 ($238K). The judge allowed attorney's fees of $75,880.50 ($76K) and costs of $19,762.13 ($20K) totaling $95,642.63 ($96K).  Essentially, Corbis was awarded only 40% of what they requested!

It also stated that during the 4-day trial on determining damages, the jury awarded Corbis a measly $14,280 for 4 images (or $3,570 per image).  While costly, it is certainly not anywhere close to the ridiculous $30,000 that has been often stated in extortion letters.

There were several issues discussed to arrive at that conclusion.

The court ruled that Corbis was the "prevailing party" despite the argument by the defendants Corbis did not prevail in all the issues.

The court felt they needed to look into the "Fogerty Factors". "This nonexclusive list of factors includes: "'frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.'"

"Because the list of factors is nonexclusive, 'not every factor must weigh in favor of the prevailing party and other factors may be considered as well.'"

The court found that the defendants were NOT frivolous or objectively unreasonable. However, the court felt that some award of attorneys' fees was appropriate in this case.

The court stated that "Corbis is not, however, automatically entitled to its actual attorneys' fees under the Copyright Act, but rather "a reasonable attorney's fee". This statement is tremendously huge and significant!

The court used a "lodestar" approach which is determined by multiplying "the number of hours reasonably expended on the litigation . . . by a reasonable hourly rate."

"After calculating this amount, the court should consider the factors mentioned in Fogerty and review the documentation relating to hours expended and the prevailing market rate for the work."  This is another huge and significant point.  Not what was actually paid but what the prevailing market rate is for the work!

Corbis was charged $200-$295 for associates and $505-$595/hour for the partner working on the case.

The court did NOT find that reasonable even if Corbis actually paid those hourly rates!

The court stated: A leading treatise notes that the attorney fee provision in the Copyright Act "does not authorize an award of the actual attorney's fee whatever it may be, but only of a `reasonable' attorney's fee." This amount may be "less than the fee that would be proper between client and attorney."

Pow, bang, another big hit against Corbis.

The court found: "In other cases involving counsel of varying levels of experience, I and other courts have found reasonable hourly rates for the Toledo area[9] in the range of $165-$350/hour for lead counsel or a partner, and in the range of $150-$200/hour for co-counsel or an associate."

Based on the information before me regarding counsel's experience, prior case law, and my knowledge of the rates charged by counsel in the Toledo area, I find that reasonable hourly rates in this case are: $350/hour for Zych; $170/hour for Ridings and Sherban; $180/hour for Roach; $150/hour for Mirshak, Ritzert and Brosky; $120/hour for Yonker (a law clerk); and $75/hour for McCready (a staff person).

Ouch for Corbis! The judge based his calculation on "market rates" for attorneys fees from the local Toledo, Ohio area (where the defendants are from) despite the fact that Corbis is based in Seattle, Washington.

The court found that Corbis "sufficiently demonstrated that most hours worked were actually and reasonably expended."

Corbis included the costs to fly two attorneys to both Seattle and New York to prepare witnesses for trial (both billing travel costs, travel time, and witness preparation.)

The court stated: "I find the costs of these two trips are excessive and should not be entirely borne by defendants. I thus eliminate the fees for this trip for one attorney — Zych — while permitting the fees for the other — Ridings.

The lodestar attorney fee amount is thus $126,467.50"

But that is not the end of it. 

The court stated: The product of reasonable hours times a reasonable rate does not end the inquiry. "There remain other considerations that may lead [me] to adjust the fee upward or downward." I may adjust the lodestar based on what is "reasonable under the circumstances" of the specific case." These considerations include: 1) the degree of success achieved by the prevailing party, 2) the relative complexity of the litigation, 3) the relative financial strength of the parties, id.; 4) the damages awarded, id.; and 5) whether the losing party acted in bad faith.

While Corbis clearly prevailed in its copyright infringement action, "its present victory results in a monetary recovery far less than what it sought." This litigation was, additionally, not complex.

I therefore find that a further forty percent reduction of the lodestar amount is appropriate to "award only the amount of fees that is reasonable in relation to the success obtained." and in light of the relative level of complexity of the case and the damages awarded.

The court further reduced his calculation of attorneys fees by another 40% because Corbis spent too much time and made it too complicated on this case!  LOL!

Hence, The court awarded Corbis only $75,880.50 in reasonable attorneys fees out of the $217,276.29 Corbis actually spent in attorneys fees. The recovery of attorney fees was only a measly 34.9% or just a little more than a third of what they actually spent! A big fat ouch here!

Regarding Corbis costs, Corbis requested $22,293.41.  These costs include phone charges, filing fees, service of process costs, electronic legal research costs, photo copies, mailing expenses and attorney travel, lodging and food expenses. Defendants specifically object to the costs incurred for: 1) depositions; and 2) witness preparation.

The court did "agree with defendants' objection to the costs related to witness preparation. I thus reduce by half the costs billed for both the Seattle and New York witness preparation trips."

Another Ouch against Corbis.

The court awarded Corbis costs in the amount of $19,762.13 out of the $22,293.41 they spent on costs. Corbis recovered 88.6% of its costs. Not bad but still a net loss.

SUMMARY
Carolyn E. Wright, through her Photo Attorney blog mention, paints this case as a win on her blog. However, when you dig down further into the details, it was a very huge, expensive, and costly "win" for Corbis.

On paper, they "won" $14,350 in statutory damages ($3,570 per image). A far cry from the $30,000 per infringement. They also recovered $75,880.50 in attorneys fees and $19,762.13K in costs. All total they "won" $109,992.63 ($110K).

And what did it take (cost) to "win" that total of $110K against the two defendants? It cost Corbis a staggering $238K (nearly a quarter million dollars) to win $14K in statutory damages!

Assuming Corbis collected the entire judgment from the defendants, Corbis still lost $127,577.07 in the whole deal, not to mention the two years of energy, stress, and employee distraction it took to litigate this.

How many photographers do you know are willing and able to spend 6-figures to win a copyright infringement case? That is why I say the people who settle for extortionate amounts are both legally ignorant, dumb, and spineless.

It is safe to say the ONLY parties that won were the attorneys on both sides.

Good job, Carolyn in quoting this "winning" case. ELI will be talking about this "winning" case for some time to come.

[Moe Hacken]

Nice work breaking it down, Matthew! Especially this brief and accurate summary:

It is safe to say the ONLY parties that won were the attorneys on both sides.

Carolyn Wright shows a lot of cheek claiming this as a win. I bet Corbis and the photographer didn't take home that winning feeling.

[Mulligan]

Matt, thank you. That's stellar work and very useful.

[Greg Troy (KeepFighting)]

There is a lot of information here and I will be going back and re-reading it again to take it all in but this was indeed a very costly win for Corbis.
 It is also very interesting that they found they web designer partly liable especially since it was not proven who provided the images as each blamed the other.  Perhaps web designers should start providing a warning about copyright infringement and the dangers of the so called “free” images and not using anything unless you created the image or got it from a government site where the images are copyright free.

Matthew once again hit the nail on the head; while Carolyn E. Wright can say that this was a win for her, I’m not sure how current or potential clients would feel about her abilities if they knew the win ended up costing her client (Corbis) a 127k.

[April Brown (AuctionApril)]

Matthew - another great analysis.

[Robert Krausankas (BuddhaPi)]

A couple of quick notes to add..

This was just a referenced case on the photoattorney.com site, Carolyn was not involved in this case, nor does she state this..She or Leslie Burns whom assisted with the article did however pick a really bad example, certainly not a "win" I would be bragging about, and I would venture to guess Corbis would like like to see anymore of these "wins"..

Now onto the web designers and developers, and I'll speak for myself here, but I find that even educating and "providing a warning" generally falls on deaf ears although I try my best to give them fair warning. I have all of my clients supply any images to be used with the exception of layout elements, that I may create from scratch, if they don't supply me images, they get no images, it's as simple as that. I also go the extra step in my contracts to state that my clients will hold harmless my company should any issues arise. I'm considering requiring clients to supply me with license / reciept copies to keep on file, so I know they have obtained images properly, but at this point I think it would be overkill.. Bottom line is today's web developers need to change with the current environment, to be proactive in not just protecting themselves, but also in educating their client base to the best of their abilities.. Something the stock photo industry refuses to do. Besides these forums I find myself discussing this issue almost on a daily basis, and if I was confident in my public speaking abilities I would go so far as Jerry ( McFilms) and address meet-ups and groups in the area. I would hope that most if not all legitimate web designers/developers are already aware of these issues, but we'll always have the fly-by-nighters and side businesses that won't know any better..

There is a lot of information here and I will be going back and re-reading it again to take it all in but this was indeed a very costly win for Corbis.
 It is also very interesting that they found they web designer partly liable especially since it was not proven who provided the images as each blamed the other.  Perhaps web designers should start providing a warning about copyright infringement and the dangers of the so called “free” images and not using anything unless you created the image or got it from a government site where the images are copyright free.

Matthew once again hit the nail on the head; while Carolyn E. Wright can say that this was a win for her, I’m not sure how current or potential clients would feel about her abilities if they knew the win ended up costing her client (Corbis) a 127k.

[Greg Troy (KeepFighting)]

Thank you for the clarification on the case being just a reference case, I thought it was one she had been involved in.

BuddhaPi, I knew you would inform any of your clients as to the dangers of pictures off of the net, but I wonder how many others do.  I know when I was having my site designed,  I had 3 face to face meetings with the designers and never once was I told about this, but in fairness to them I provided all the images which were all shots I took of my work.  But still, if I had been told about it I would have never looked for a “free” picture to use in my blog a year later. 

I imagine it would be frustrating to warn people and have them not listen.  If they are not listening either they don’t care about infringement or they think it will never happen to them, which is just as bad as it means they know it’s wrong but they are playing the odds that they won't get caught.

A couple of quick notes to add..

This was just a referenced case on the photoattorney.com site, Carolyn was not involved in this case, nor does she state this..She or Leslie Burns whom assisted with the article did however pick a really bad example, certainly not a "win" I would be bragging about, and I would venture to guess Corbis would like like to see anymore of these "wins"..

Now onto the web designers and developers, and I'll speak for myself here, but I find that even educating and "providing a warning" generally falls on deaf ears although I try my best to give them fair warning. I have all of my clients supply any images to be used with the exception of layout elements, that I may create from scratch, if they don't supply me images, they get no images, it's as simple as that. I also go the extra step in my contracts to state that my clients will hold harmless my company should any issues arise. I'm considering requiring clients to supply me with license / reciept copies to keep on file, so I know they have obtained images properly, but at this point I think it would be overkill.. Bottom line is today's web developers need to change with the current environment, to be proactive in not just protecting themselves, but also in educating their client base to the best of their abilities.. Something the stock photo industry refuses to do. Besides these forums I find myself discussing this issue almost on a daily basis, and if I was confident in my public speaking abilities I would go so far as Jerry ( McFilms) and address meet-ups and groups in the area. I would hope that most if not all legitimate web designers/developers are already aware of these issues, but we'll always have the fly-by-nighters and side businesses that won't know any better..

There is a lot of information here and I will be going back and re-reading it again to take it all in but this was indeed a very costly win for Corbis.
 It is also very interesting that they found they web designer partly liable especially since it was not proven who provided the images as each blamed the other.  Perhaps web designers should start providing a warning about copyright infringement and the dangers of the so called “free” images and not using anything unless you created the image or got it from a government site where the images are copyright free.

Matthew once again hit the nail on the head; while Carolyn E. Wright can say that this was a win for her, I’m not sure how current or potential clients would feel about her abilities if they knew the win ended up costing her client (Corbis) a 127k.

[Matthew Chan]

Isn't it interesting that how through two sets of eyes, we look at the cases in very different lights and focus on different things?

In this narrow instance, Carolyn and I do agree that the web developers are no longer off the hook anymore as we previously thought. Nevertheless, as a practical matter, copyright infringement lawsuits in small cases are still very much a waste of time and a huge expense. It is almost always a net loss.  A "paper win" but ultimately a "financial loss".

http://www.photoattorney.com/?p=3686

[Robert Krausankas (BuddhaPi)]

Carolyn Wright and her collection lawyers have to keep the fear factor in tact, without it the money stops coming in from extortion letters

Isn't it interesting that how through two sets of eyes, we look at the cases in very different lights and focus on different things?

In this narrow instance, Carolyn and I do agree that the web developers are no longer off the hook anymore as we previously thought. Nevertheless, as a practical matter, copyright infringement lawsuits in small cases are still very much a waste of time and a huge expense. It is almost always a net loss.  A "paper win" but ultimately a "financial loss".

http://www.photoattorney.com/?p=3686

[Oscar Michelen]

Let me just put in my two cents on this case.

First: Matt - website owners can always look to their web developers for payment of damages awarded against them  (indemnification) when the website owners did not personally handpick or provide the images used on the website. The problem is that many website owners outsourced the work to companies in India, Bangladesh, Sri Lanka and other world outposts so good luck trying to get any money out of them. But the website owners are not off the hook. They are ultimately responsible for the content on their website and have an obligation to ask and make sure that any intellectual property put on their site is legally obtained and licensed. Also, the developer will likely be seen to be an agent of the owner making the owner potentially responsible for their actions.  So what would happen is that after a determination that there was an infringement, the court would then determine the share of responsibilty between the owner and developer (totaling 100%). How much gets put on the owner will depend on how much input the owner had in selecting the images; the experience and know how of the owner; what steps the owner took to find out about the legality of the images; and what the owner was told about the source of the images.  But "joint and several" liability means that even if the court finds the owner 10% responsible and the developer 90% responsible, the plaintiff can still collect the whole 100% from the owner and make the owner try to get the 90% from the developer. That's why its best for website owners to pay a little extra to go with a reputable web devloper who won't get you into this mess to begin with but who will be there should a mistake be made and a Getty claim arise.

Second: The defendants here did not make a strong enough argument on the compilation registration issue. How do I know that?  Because in support of his giving judgment to Corbis the judge cited two cases that said registration of a collection provides protection to the individual works of art within the collection: While the case law in the Sixth Circuit is silent on this issue, other courts have found that registration of a collection extends copyright protection to each copyrightable element in the collection."); Sefton v. Jew, 201 F. Supp. 2d 730, 748 n.14 (W.D. Tex. 2001) (citing Szabo v. Errisson, 68 F.3d 940, 944 (5th Cir. 1995)).  But in both of those cases, there was only ONE author and all of the collection was published at the same time.  That is simply not the case here.  Also, this is not a collection but a compilation and the Copyright Act specifically states that a compilation registration does not give protection to the individual works fo art within the compilation. Also, did the defendants' lawyer show Muench/Bean to the court? Those cases are directly on point as I  believe it was an artist who had assigned his photos to Corbis that was involved so the declaration by Judge Preska that this method of registration was invalid would have a lot of weight.

Third:  Even with all of this, there is no way to spin this case other than as a loss to Corbis.  They are in the business of making money and this case cost them a ton of money and time.  I wonder whether the defendants were even able to pay the judgment or did they declare bankruptcy?           
           

[Matthew Chan]

Thanks for the additional insights. That was helpful to me.

I also like the clarification on the "joint and several liability". I never quite understood that phrase. You explained it so well that even I could understand it.

I wondered the same thing about the two defendants so I googled them.  Both of those businesses still exist so I am guessing there was some workout on the payment issue.

I really believe the rulings on Corbis vs. Nick Starr are important on so many levels despite the fact it was a "win" for Corbis.

With more "wins" like this, who can afford to stay in business?