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« on: March 12, 2013, 04:53:47 PM »
Here is a summary of my story of attempted extortion at the hands of Masterfile. I am sharing this to add to the growing pool of information and encourage others to discuss their situations and take action. Please note that if I were to receive my letter today, given what I now know, I would proceed rather differently from the beginning. Therefore, this is definitely not meant to be taken as an example of how to proceed with your own situation.
In the Fall of 2012, I received MF's standard "Notice of Copyright Infringement" letter via FedEx stating that I had published one of their rights-managed images on my business website, demanding that I pay a retroactive license fee of over $2400 within 10 days, and signed by a "Copyright Compliance Officer." Included with this letter was a one-page "FAQ" about copyright infringement, two copies of an invoice for the retroactive license, and a screen capture of the image allegedly appearing on my website.
I was completely blindsided by this letter and to be honest, a bit shaken up. At that point I had never heard of MF before and knew nothing about copyright trolls and their racket. It seemed to me at the time to be a very serious and legitimate matter. I am a very honest and by the book person and I was sickened to think that I may have unintentionally done something wrong. In hindsight, I now know that is exactly their intention, to scare you into thinking you're in trouble, threaten you with legal action, and telling you to do exactly what they say and pay them within 10 days or face legal consequences (aka extortion).
I did some quick research to verify that MF was a real company. I figured the best course of action was to be cooperative, reply within their stated time frame, and honestly explain the situation in order to resolve things. I sent a letter via registered mail to them within their 10 day window. In this letter I stated that I immediately complied with their cease and desist request and that the image no longer appeared on my website. I explained that the image in question was used as a temporary place holder while my website was being developed. It was on a secondary page that received virtually no traffic and was only publicly viewable for a combined total of several hours. I explained that to the best of my knowledge the image was not copyright protected. It is extremely generic in nature and appears on dozens and dozens of other websites (none of which indicated its copyrighted nature). Very similar images are available for free from several sources or can be purchased for a small fraction of the retroactive licensing fee being demanded. Also, my business was new and had yet to generate a single dime of revenue. Therefore, their demands were wholly disproportionate to the alleged infringement. However, I was willing to act in good faith in order to resolve the matter quickly and made an offer of $150 to completely settle the matter.
I did not get any response from MF until two months later when a letter from NCS IP Solutions arrived stating they had been retained by MF. The letter threatened further costs and escalated proceedings if I didn't pay the full demand amount within 30 days. I was rather stunned by this since I had never gotten a response from MF. The fact that a collection agency was now involved greatly added to the fear and intimidation factor.
I did not reply to NCS, but instead emailed the copyright compliance officer at MF using the email address provided on their original letter. I indicated that I was following up regarding their claim and that I had submitted a response by registered mail but never heard back from them.
A few days later I got an email from MF stating that they had in fact replied via email and they copied that reply into the current message. I noticed that their original reply was sent to an info@ address that was no longer active. I have no idea where they got that address from as I certainly didn't provide it to them. The response was very long and basically refuted all of the points I made in my letter using obscure, cherry-picked references to the Copyright Act, as well as references to various seemingly unrelated cases where the courts ruled against the defendants and awarded large damages. They defended their demand by stating that it was 3X the value of the actual license as per their terms and conditions for unauthorized use. They also cited the fees that Getty and Corbis charge as evidence that their demand is in line with industry standards. They included a certificate of registration for the image in question and an artist agreement. However, they were now willing to settle for $1,000 which was the regular fee for licensing the image for one year, plus the external costs in locating the infringement, and their internal costs in enforcing the copyright. But, if I could show proof that the image was on my site for less than 1 month, they would be willing to settle for $500, which is the regular fee for an image on a secondary page for a period of up to one month, plus their external costs in locating the infringement. They stated that this offer would expire in 7 days.
I replied to MF via email within their 7 day window thanking them for the reply and indicating that the info@ address they had used is no longer active. I appreciated their willingness to try to resolve the matter amicably. However, I still felt the amount being demanded was disproportionate to the alleged violation. Given the details I had already provided, I felt my offer of $150 was extremely fair and most certainly exceeded what my actual costs would have been for use of a virtually identical image for such a short period of time.
MF responded via email stating that a one month license is the lowest fee they accept and that they are still willing to settle for $500 provided I can show proof that the image did not appear on my site for over one month. If I could not provide this proof, they were willing to settle for $1,000. They stated that this offer would expire in 7 days.
I replied to MF via email within their 7 day window indicating that their demand was not reasonable. I explained that I did not have the knowledge or technical resources to provide the proof they were seeking, but again explained that the image in fact appeared on my site for a very short amount of time. I then stated that the burden of proof should not fall on the accused, it should fall upon MF. However, I was willing to offer $250 in order to settle this matter quickly and move on with my life. This amounts to over 30% of the cost for an entire year’s license in payment for an image that was only used for a matter of hours. I felt this was more than fair.
MF responded via email rejecting my offer and restating their demands for $500 provided I can show proof that the image did not appear on my site for over one month, otherwise $1,000. They stated this offer would expire in 5 days.
Three days later I received another letter from NCS stating that since I had not responded to their original settlement offer that they must now make a formal demand for resolution. Failure to respond within 10 days would result in further action.
I replied to NCS within their 10 day window by sending a letter stating that the matter was currently being negotiated directly with MF and that I dispute the claims and demands being made. I have asked for detailed substantiation of the claims being made which MF has not yet provided. As such I invoked protection under the Fair Debt Collection Practices Act and asked that they immediately cease all further communication with me.
I replied to MF via email within their 5 day window stating my disappointment that they were not willing to resolve this matter in a fair and amicable way. I then requested legally binding proof documenting the exact amount of time that the image in question appeared on my website and was publicly viewable. I also requested full documentation of the third party costs they incurred in relation to this claim. After all, if they were demanding payment, I was certainly entitled to detailed substantiation of their claims.
MF replied via email stating that I was the one who had to provide proof that the image did not appear for over a month. They then restated their demand to settle for $500 with proof or $1,000 without. They stated that this offer would expire in 4 days at which point the file would be passed on for further action.
I replied via email within their 4 day window requesting detailed substantiation of the claims they were making. If they were demanding payment for a one-year license in addition to compensating them for external third party costs, I was certainly entitled to substantiation of these demands. I stated that if this substantiation could not be provided, then their demands were not reasonable. Making demands for payment and threats of legal action without providing suitable substantiation equates to extortion. I was still willing to settle this matter amicably, fairly, and reasonably provided they could produce the proper substantiation.
4 days later I received an email from NCS stating that they had been retained to represent MF and reiterating MF’s demands.
7 days later I received another email from NCS asking that I please call them immediately to discuss MF’s claim in order to settle this very serious matter.
I replied to NCS via email the same day stating that I had already sent a letter to them explaining that I dispute the claims and demands being made and have asked MF for detailed substantiation, which has yet to be provided. As such I asked them again to cease all further communication with me. I stated that their email was a violation of this request and that if they do not comply I will be forced for file complaints with the AG of my state, the AG of Florida (where NCS is located), the BBB, the FTC, as well as State and Federal congressional representatives and senators.
3 days later I received an email from NCS advising me that this matter is not governed by the FDCPA as this is not a debt. MF has informed them that I discontinued correspondence and as a result they have asked NCS to make contact to settle this very serious matter. If they are unable to settle, then as a last resort, this claim will be released back to MF’s legal department for escalation.
I replied to NCS via email the same day stating that this indeed was not a debt, instead it was a claim which I was disputing and actively discussing with MF. As such, I am legally afforded protection from threats and harassment from a third party collection agency. I stated that MF’s claim that I discontinued correspondence was untrue. In fact, MF was the one who had not responded to my requests for detailed substantiation of their claims. I asked NCS again to immediately cease all further communication with me.
I have now not heard from MF in over a month or from NCS in over 2 weeks.
My current position is that I have tried repeatedly to settle this matter fairly with MF. They have been unwilling to provide detailed substantiation of their claims and demands and have instead resorted to threats, intimidation, and harassment in an attempt to force a settlement. I feel strongly that there is a need to protect artists against copyright infringement. However, it has become clear that MF is not trying to protect artists; they are simply involved in a bottom-feeding, money-grabbing extortion campaign for their own benefit.
I am no longer willing to settle with them. I will no longer accept email communication and will now only communicate with MF via postal mail and only if they are willing to provide the detailed substantiation I have requested. I will not communicate with NCS at all.
I am in the process of filing formal complaints against both MF and NCS with the AG of my state, the AG of Florida (where NCS is located), the BBB, the FTC, as well as State and Federal congressional representatives and senators.
I am also now aware that the image in question was registered as part of a compilation containing over 100 unrelated images by various authors. There are many deficiencies in this registration method (only one date of publication is given for all the images, they do not list where and when each image was first published, they do not list the nationalities or domiciles of the authors, they do not name the title of each individual work, etc.) This registration method has been held invalid by district courts in New York and California. In addition, the Copyright Act itself states that compilation registration does not provide protection for the individual images contained in the compilation. Therefore, I feel that MF’s claims against me are extremely weak at best.
I feel strongly that until a large enough number of victims stand up, fight, and make regulators and lawmakers aware of what is happening, these extortion campaigns will not stop.
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